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January 24, 2008

Sales of existing homes worst since the Great Depression?

From Biggest Drop in Existing Home Sales in 25 Years in the New York Times:
Sales of existing homes fell in December, closing out a horrible year for housing in which sales of single-family homes plunged by the largest amount in 25 years. The median home price dropped for the entire year, the first time that has occurred in four decades.

The National Association of Realtors reported that sales of single-family homes and condominiums dropped by 2.2 percent in December to a seasonally adjusted annual rate of 4.89 million units.

For the year, sales of single-family homes were down by 13 percent, the biggest drop since a 17.7 percent plunge in 1982. The median price for a single-family home dropped 1.8 percent to $217,000.

That was the first annual price decline on records going back to 1968. Lawrence Yun, the Realtors' chief economist, said it was likely that the country has not experienced a decline in housing prices for an entire year since the Great Depression of the 1930s.

That 40 acres and a mule in Missouri is looking better every day...grow some tomatoes, sweet corn, milk the cow, gather eggs, just like my grandfather did 75 years ago.

January 19, 2008

Zound Bite: Lake Las Vegas defaults on $560 million loan

In Business excerpt:
The developer of Lake Las Vegas, Transcontinental Corp., in Henderson is in default on a $560 million loan and has until the end of the year to find buyers for its remaining undeveloped land or the development could face foreclosure, a Lake Las Vegas official said.

A group headed by investment banker Credit Suisse has, for now, waived any default obligations, after Lake Las Vegas, the lake resort community did not meet its debt obligation on a sales volume quota by Sept. 30,

Housing foreclosures, projects abandoned, Lake Las Vegas in default, Cosmopolitan in default, and the new Town Center looks to be a giant "white elephant;" will anyone doubt that the recession is already here?

November 30, 2007

"Experts" to meet in Las Vegas to discuss condominium market

Press Release Newswire is reporting The Third Annual Las Vegas Symposium on Constructing, Financing, Developing and Operating Condo-Hotels and Branded residences is being held December 3-4, 2007, at The MGM GRAND Hotel and Casino.

Organized by The Information Management Network (IMN) to better equip finance and commerce investors---over 600 builders, owners, developers, analysts and financial lenders both nationwide and internationally will exchange knowledge on today's condo-hotel market.

Las Vegas real estate expert, Paul Murad, will lead a Round table Session answering this and other relevant questions. Plus, Paul will chair the panel on the Las Vegas Market, which will include speakers Mark Birtha, Vice President of Marriot International Lodging Development, and Anthony Pearl, Vice Presient and Associate General Counsel of Harrah's Entertainment, among others. The panel will address the changing market, how to launch a successful condo-hotel project, the benefits of buying a condo-hotel unit, demographics and projected Las Vegas market trends.

Strangely, I have a thought or two on the downturn of condominium sales which aren't related to the obvious credit crunch that seemed to take the "experts" by surprise. Maybe some people--like me--refuse to buy an albatross--I mean condo--where they are stuck living next door to other people without adequate insulation to block obnoxious smells, loud music, while enjoying poor construction with the added pleasure of being forever beholden to an association run by people lower on the evolutionary scale than school board members.

October 7, 2007

Zound Bite: Las Vegas home market rebound?

From a Las Vegas press release:

"Mark your calendars, investors, home owners and anxious home sellers: The Las Vegas real estate market will rebound on March 31, 2008," predicts, Don Foster Scoggins, Nevada Certified General Real Estate Appraiser with AppraisersofLasVegas.com, Las Vegas' number one appraisal firm as rated by: 'In Business Las Vegas'.

And the next day Don can say, "April Fool's!"

September 28, 2007

Harry Reid's land deals lead to a lawsuit by a public interest group

Senate Majority Leader Harry Reid's longtime relationship with a powerful Nevada real estate developer has given rise to a lawsuit by a public interest group.
Judicial Watch wants to know if the Nevada Democrat and other state politicians exerted undue pressure on the federal government on behalf of his friend.

Mr. Reid was at the head of the Democrats' campaign against the "culture of corruption" in Washington. But for years, the Los Angeles Times reported, Reid was active in clearing hurdles to the development.

Judicial Watch is suing the Bureau of Land Management for documents related to the 43,000-acre Coyote Springs housing and recreational development northeast of Las Vegas, now in its early stages. The lawsuit alleges the bureau failed to respond to a Freedom of Information Act request of March 8.

Lawyer and lobbyist Harvey Whittemore, a shareholder in the law firm of Lionel Sawyer & Collins, is the driving force behind the project and a political contributor to Mr. Reid. Mr. Whittemore has employed Leif Reid, a son of the senator, as an attorney.

I wonder just how many politicians and atttorneys are going to get rich from this, especially after the glowing support by Senator Reid, Senator Ensign, former Governor Kenny Guinn, President and CEO of the Nevada Development Authority Somer Hollingsworth, Joe Pantuso of the Southern Nevada Homebuilders Association, and Pat Mulroy of the Southern Nevada Water Authority to name a few.

For more on Coyote Springs see
Water for new town flows to lobbyist: Whittemore gains water rights for development without contention seen in other parts of Nevada
Huge development under way in Nevada desert

September 27, 2007

August New Homes Sales at Lowest Level in 7 Years

According to the Commerce Department sales of new homes dropped by 8.3 percent in August from July to a seasonally adjusted annual rate of 795,000 homes, the lowest level since June 2000.

With the credit problems, the sub-prime lending fiasco, loss of jobs in the construction market, plummeting value of the dollar fueled by a bailout of the largest financial institutions coupled with a seemingly reckless half point drop by the Federal Reserve which seems designed only to bolster the stock market, record crude oil prices, and a plethora of presidential candidates already bought by special interests, 2008 looks like a good year for a recession. It also looks like a good year for Democrats to win the White House. They don't fix recessions; they ride them out and then take credit, but that's just good politics.

August 21, 2007

More Mortgage lender closures

Capital One Financial Corp. said Monday it will cut 1,900 jobs and close its wholesale mortgage banking business.

The company will close 31 GreenPoint locations in 19 states, after just acquiring them last December when it paid $13.2 billion for North Fork Bancorp Inc. For more go to Capital One slashes jobs, mortgage industry swoons.

Another financial coup by the wizards of high finance. Obviously, they majored in beer drinking during college and not sound investment. What I hope is that Capital stops sending me applications for credit cards every week. I would consider telling them to stop but I figure they would double their attempts just because I noticed the previous attempts. Along with HSBC, these credit card companies are wearing out my shredder. If every telemarketer, unsolicited mailer, and spammer went out of business, do you suppose unemployment would exceed ten percent? Hey companies, the only thing I can't seem to say no to is a good book. How about sending some free samples for reviewing?

August 19, 2007

Another Mortgage Company Bites The Dust

In Yahoo News First Magnus Financial Corp. has laid off 99 percent of its nearly 6,000 employees nationwide and closed all of its more than 300 offices.

According to a notice filed with the state Friday, the Tucson-based company that originated home loans and then sold bundled loans into the secondary loan market expects to retain only about 60 of its employees.

First Magnus officials said a bankruptcy filing was possible.

Several mortgage companies down and more to come while the Federal Reserve bails out the big boys like Bear Stearns, involved in the subprime mortgage hedge fund investment crisis, and ordinary people lose their homes

August 17, 2007

Housing woes continue in Nevada and now jobless rate rises

Las Vegas Sun reports Nevada's unemployment rate rose for the fourth consecutive month, hitting 4.9 percent in July as the housing slump continued and private-sector employers weren't able to provide a lot of temporary summer jobs.

The state Department of Employment, Training and Rehabilitation reported Friday that the seasonally adjusted rate was the highest since January 2004, and exceeded the national rate of 4.6 percent.

Everything that Las Vegas promised a few years ago has vanished. Jobs, affordable housing, water. The Las Vegas area has now made the top ten for least affordable housing in the country, only behind cities like Los Angeles, New York City, and Boston.

August 9, 2007

Median home prices drop $10,000 during month of July

According to the Greater Las Vegas Association of Realtors, the median price of single family home dropped by $10,000 in one month.

The median price in July was $295,000 as compared to $305,000 in June and there are a record number of homes for sale.

Also, prospective buyers bid for nearly 100 homes and condominiums when the largest single home foreclosure auction in Las Vegas history took place this past Sunday.

Just might mean another drop during the month of August.

August 6, 2007

American Home Mortgage Corp. files bankruptcy; housing loan woes hit Bear Stearns

American Home Mortgage Corp. filed for bankruptcy protection on Monday, the latest casualty of a mortgage industry that has plunged into distress.

The New York-based real estate investment trust, one of the largest independent U.S. home loan providers, filed for protection from creditors with the U.S. Bankruptcy Court in Delaware.

The filing came after American Home closed most operations on Friday, laying off all but about 750 workers. The company started the year with more than 7,400 employees.

Another casualty in the home loan market is Bear Stearns Cos co-president and co-chief operating officer Warren Spector, who resigned on Sunday, amid a credit risk crisis at the investment bank. (Yahoo News)

Bear Stearns said that, effective immediately, Alan Schwartz has been named the company's sole president.

Spector's departure follows Bear Stearns' assertion on Friday that it is weathering the worst storm in financial markets in more than 20 years after a major rating company warned mortgage credit problems could hurt the investment bank's profits.

Standard & Poor's warned that the recent collapse of two Bear Stearns-managed mortgage funds could hurt the company's performance and reputation for an extended period.

The collapse of the funds triggered a downturn across credit markets, put a damper on corporate buyout financing and sparked fears about Wall Street's trading and banking profits.

One day you're up and the next day you're out. At one time Spector was regarded as a possible successor to Chairman and Chief Executive James Cayne and now he probably just has a measly multi-million dollar parachute package to console him in his fall from grace. But just think, if this credit crisis gets bad enough, our government might just step in and bail out the "big boys" like it has for Lockheed (1970), First Pennsylvania Bank (1980), Penn Central Railroad (1970), Chrysler (1978), Continental Illinois (1984), and even New York City in 1975; because we wouldn't want corporate officers to suffer just because they don't know how to manage a company, unlike small business owners who don't donate tens of thousands of dollars to our "two party" system.

August 1, 2007

Housing woes continue; American Home Mortgage Investment Corp. cries the blues; stock market reacts

From Yahoo News: Shares of American Home Mortgage Investment Corp. plunged 90 percent Tuesday after the company raised fears it may become insolvent, renewing concern about worsening credit quality in the mortgage market and killing a Wall Street rally.

The struggling mortgage lender said its financial backers have essentially pulled the plug. The Wall Street banks that lend American Home Mortgage money for home loans -- which include firms like UBS AG, Bear Stearns Cos., and JPMorgan Chase & Co. -- will not extend the company any more money, and some have demanded back the money they have lent.

And about our neighbors in California, the source of Las Vegas' housing woes...this article called Golden dream or foreclosures by the sea?a>

Christopher Thornberg of Beacon Economics in Los Angeles says California's economic outlook will darken as a growing number of households slash consumer spending to meet rising mortgage payments, especially on adjustable-rate and subprime loans that became popular for those with weak credit.

"We have a lot more of these shady mortgages out here, so that doesn't bode well," he said. "We're due for a very traditional consumer-led downturn."

Analysts had expected California's economy to cool because its housing market has slowed from the torrid pace of recent years. Prices, long far above the national average, are flat or slipping as sales decline.

A report last week by DataQuick Information Systems pointed to additional trouble. The real estate trend tracking service tallied a record 17,408 homes in the state falling to foreclosure in the second quarter.

The foreclosures marked a jump of nearly 800 percent from a year earlier.

But what I find interesting is that this fall was in the works for months at the very least and it took until now for the Dow to react and on every Internet article page that I have read for the past several months on these issues are ... you guessed it--I hope--advertisements for home mortgages with incredible rates and guaranteed approval and...isn't this exactly what caused the problem to begin with?

July 26, 2007

Article on housing mortgage scams but look who advertises

Part of an aricle found on FOXNEWS.COM HOME > OPINION

Housing Boom Boomerangs on Vulnerable Homeowners
Wednesday, July 25, 2007
By Robert Massi

With mortgage rates rising, home prices falling and consumers hampered by more credit card, auto and bank debt than ever, there has never been a more fertile time for scams that target homeowners.

A July 3 New York Times article put a face on the victims of the latest practice of "equity stripping." In this home loan scam, homeowners who have fallen behind in their mortgage payments sign over the deed to their property -- often unknowingly -- in exchange for promises of immediate cash and the chance to retain their home.

Once these unscrupulous lending companies have the deed to the property, they borrow against the equity in the home, pocket the cash and patiently wait for the inevitable: the homeowner again falling behind in payments. As holders of the property deed, these predatory lenders are then able to foreclose. Armed with misleading advertising -- and with an increasing number of homeowners seeking a quick fix for financial woes -- these companies are successfully exploiting some of the most vulnerable members of our society.

Advertisements on the page the article is found:

Refinance at 5.35% Fixed
Get $300,000 loan for $875/month. Calculate Your New Payment. Act Now!
Refinance.LoanOffer.com

Mortgage Rates at 3.0%
$150,000 loan for $391/month - refinance, home equity and purchase.
Refinance.LeadSteps.com

Go figure!

July 16, 2007

Las Vegas real estate market in the dumps and getting worse

From "Analysts see no end in sight to Las Vegas housing slump" in the Las Vegas Sun:

New homes sales through May were down 43.8 percent in Las Vegas from a year ago and resales were off by 34.7 percent, according to Home Builders Research.

Median new home prices have declined 4.4 percent to $308,874 and existing home prices slipped 3.8 percent to $278,000.

The inventory of homes for sale on the Multiple Listing Service climbed to a record 23,642 in June, with about 40 percent of them sitting vacant.

Real estate consultant John Burns said home prices in Las Vegas must drop by 33 percent, or about $100,000, before the market returns to normal conditions.

He said the housing cost-to-income ratio in both Las Vegas and Reno is 50 percent, meaning people spend half their income on housing. The national average is around 30 percent.

Basically, this just reinforces what I already knew; housing is way over priced, especially because of Californians flipping property, and wages in the Las Vegas valley are low since there is an abundance of workers moving to the area competing for jobs. Add heat, remove water, and I don't think this is "Paradise Valley." If housing prices were to drop 30 percent to stabilize the market, you just might see some home buyers suing developers for having overpaid. No wonder some developers are moving to Arizona and New Mexico ahead of the lawsuits.

July 11, 2007

Home foreclosures around the country--going, going, gone!

The New York Times from Georgia: "Despite a vibrant local economy, Atlanta homeowners are falling behind on mortgage payments and losing their homes at one of the highest rates in the nation, offering a troubling glimpse of what experts fear may be in store for other parts of the country."

"The real estate slump here and elsewhere is likely to worsen, given that most of the adjustable rate mortgages written in the last three years will be reset with higher interest rates," said Christopher F. Thornberg, an economist in Los Angeles.


A zip code-by-zip code analysis reported on lasvegasnow.com found that an area of North Las Vegas has one of the nation's 10 worst rates of home foreclosure. For the rest of the valley there are 8 in the top 100, and, according to the numbers from Realty Trac, there also are 24 zip codes in the top 500.

The largest number of foreclosures in this area have occurred in the North Las Vegas zip code 89031 -- the 8th worst in the nation. 89131, 89148, and 89129 also ranked in the top 50.

Other cities hit hard by foreclosures are Cleveland, Detroit, Denver--which never seems to have completely recovered from the days of the Savings & Loan debacle--and Sacramento.

Add credit card debt, leverage buyouts, hedge funds, money market manipulation, enormous debt owed to foreign nations, rising oil prices--the Iraq war will end when our econony collapses, not because politicians finally bring troops home.

July 8, 2007

Arizona to reap "benefits" of former Las Vegas developer

Apparently after selling 1,000 acres near Kingman, AZ--and giving control of development plans for over 7,000 more acres--to Jim Rhodes, officials at the state Land Department learned that Rhodes has admitted to illegally using his money to aid powerful politicians in Nevada; that he has repeatedly and successfully been sued over allegations of fraud, theft and self-dealing by his investment partners and others he's done business with; and that he has a long history of complaints for shoddy workmanship and construction defects from people who bought his homes.

Jamie Hogue, deputy state land commissioner, said officials at the agency were not aware of those things when Rhodes officials first contacted them about the property nine days before the auction.

If they knew then what they know today, they probably couldn't have done much differently because Rhodes met the bidder qualifications published before the auction, she said.

At that time, land department officials were concerned about who could bring the money to the table.

The character of the high bidder was not an issue, she said.

Character never seems to be an issue. Look how hard Las Vegas city councilmembers have worked to keep Rick Rizzolo's club open, county commissioners to give licenses to felons like Vinnie Faraci, and how many commissioners have been caught or investigated for bribery. Part of the information on Rhodes came to light from Erin Kenney testimony during the G-Sting trial, which showed that after being a commissioner she received $200,000 a year from Rhodes as a consultant, and, from another witness, that supposedly Kenney was paid $20,000 a month while commissioner.

Other names which continue to pop up stinking of corruption along with Rhodes:

Sen. Harry Reid, who got $10,000 in illegal contributions from Rhodes.

Jay Brown, the Las Vegas lawyer who worked for Rhodes and has recently been representing Signorelli in the "imaginary" transfer of Crazy Horse Too from Rick Rizzolo, which manueverings have been extensively covered by Steve Miller. Brown is a longtime friend and investment partner of Sen. Reid. Among Brown's other clients was Mike Galardi, former owner of Cheetahs, who was convicted of racketeering and bribery of Clark County Commissioners in the G-Sting trial.

Galardi has stated he and Mike Malone, the former county commissioner, paid cash to Kenny and Commissioner Kincaid-Chauncey, and arranged sexual favors for Herrera. All of it was done in return for favorable treatment from the commission, he said.

Galardi has also claimed that local cops, prosecutors, judges, even FBI agents and an assistant U.S. attorney had taken payoffs in the form of money, campaign contributions or free services at his strip clubs.

And interestingly, attorney Christopher Kaempfer, partner at Kummer, Kaempfer, Bonner, Renshaw, & Ferrario, apparently passed on a threat by the law firm's client Rhodes to Commissioner Mark James who sponsored freezing zoning in the Red Rock Canyon area, limiting the number of houses Rhodes could build there.

Yep. It takes a whole lot of character to be successful in Clark County, if the meaning of character is money, money, money!

For more go to "New land baron has checkered past," or "Commissioners want more answers from developer Rhodes."

June 26, 2007

Phoenix, AZ, Las Vegas, NV top list of cities most likely to see depreciating home values

PMI has published its economic and real estate trends for high risk, hHigh volatility, and low affordability MSAs (metropolitan statistical areas).

Riverside, CA, Phoenix, AZ, Las Vegas, NV, and West Palm Beach, FL rank highest on the index, with a 60 percent or greater chance that home prices will be lower in two years.

Phoenix has seen the biggest drop in the rate of appreciation of all 50 MSAs, from 37.33 percent in Q1'06 to 4.52 percent in Q1'07, and its volatility is the highest in the country. While
in-migration from California has slowed, reducing upward pressure on home prices, affordability continues to drop.

Las Vegas has seen a less dramatic, yet still significant, slowing of appreciation, from
16.06 percent in Q1'06 to 1.69 in Q1'07, coupled with a decline in affordability and low unemployment. Its volatility is the second highest in the nation.

But wait!

For the first time in five years, Nevada's unemployment rate exceeds the national average according to a Las Vegas Business Press article.

The seasonally adjusted rate jumped half a percentage point in May to 4.6 percent, topping the U.S. average of 4.5 percent.

In the Las Vegas area, unemployment was 4.2 percent, down from 4.3 percent in April but still significantly higher than the 3.8 percent rate of May 2006.

Terry Johnson, director of the state Department of Employment, Training and Rehabilitation, blamed the higher unemployment figure on a number of factors.

"People are continuing to move to Nevada at a tremendous pace, but unfortunately the labor market has not been able to absorb that growth as quickly as in the past," he said. "Nevada is near the low point of its business cycle."

A decline in home sales has cooled off the construction boom, Johnson noted. And casino jobs are off slightly due to the pending closure of the New Frontier and the implosion of the Stardust on the Strip. No new hotel-casinos have opened in Las Vegas in more than a year.

But not to worry.

The Las Vegas City Council has approved plans for an 85-acre development along the west side of Main Street. The project would include more than 9,000 hotel, timeshare and condo units, 3.5 million sf of permanent exhibition space, 1.2 million sf of commercial/retail space, a 22,000-seat sports arena and 300,000 sf of gaming area. (See more at lvoffice.com.)

So it is just a matter of time before those unemployed people are back to work. But I wonder at the end result of this cycle of building more casinos and hotel--going vertical--which brings more people to work on them, which means more projects have to be approved to be built (or we have too much unemployment), while we don't have the infrastructure of roads and schools etc. to handle the influx of new residents and we certainly will not have the water. But when Las Vegas really takes a hit, I imagine all our "far sighted" politicians and developers, as I have said before, will have retired to a quiet place far from the "madding crowd." Read that as leaving us with the traffic jams, violent crime, incredibly high cost of living--to "fix" some of the problems--and extreme thirst.

June 23, 2007

Former Las Vegas Councilman McDonald gets OK to buy land cheap

The Las Vegas Review Journal reported that Michael McDonald addressed the Las Vegas City Council on Wednesday and left with the council agreeing to sell him land for millions of dollars less than it's worth.

Alpha Omega Strategies, of which McDonald is president, plans to build 600 apartments for low-income senior citizens on the 13 acres at Decatur Boulevard and Vegas Drive.

The mayor and the rest of the council voted to sell the land to the former Las Vegas councilman because of a desperate need for affordable housing for the elderly, they said.

The city acquired the acreage -- including some parcels that were purchased during the years McDonald held his office -- for $8.5 million and two recent appraisals for the city valued the land at $9.2 million and $9.6 million, but the council is letting it go for $6.5 million.

Mayor Oscar Goodman acknowledged that flak might be coming the city's way.
"Only an idiot would say this transaction would not be looked at closely," he said.

Only an idiot would believe that our "good ole boy" network of developers and politicians, making sweetheart land deals from Senator Harry Reid down to McDonald, would care whether any transactions would be looked at closely. It is time for Las Vegas voters to finally care and vote out the city council (too late for Oscar who is in his last term). After all, anyone who buys property for $8.5 million and sells for $6.5 million, even in the current market, is simply cheating the citizens. Don't let the sound bite "affordable housing" fool you.

June 20, 2007

Corruption news in Nevada--same old, same old

In the Las Vegas Sun:
Trial for a developer, Donald Davidson, accused of bribing southern Nevada officials has been delayed until Wednesday while prosecutors and defense attorneys argue over whether too much time has elapsed to pursue one of the charges.

Jury selection was to have begun Monday but was postponed so U.S. District Judge Roger Hunt in Las Vegas could decide whether a conspiracy charge against the real estate consultant exceeded a five-year statute of limitations.

Davidson, 72, and his son, Lawrence Davidson, 40, were indicted in 2005 on charges of conspiracy, mail fraud and money laundering that could result in decades in prison and millions of dollars in fines on conviction.

Both men pleaded not guilty to accusations that they paid former Clark County Commissioner Erin Kenny $200,000 in exchange for her help in 2001 to allow a chain pharmacy to be built in northwest Las Vegas.

Lawrence Davidson, a former Las Vegas attorney, became a fugitive and a warrant was issued last October for his arrest after he failed to appear for a trial in a separate federal case.

Lawyers were arguing Monday whether a conspiracy charge contained in a second superseding indictment filed against Donald Davidson in 2006 exceeded the five-year time limit.

The revised indictment alleged Davidson conspired with Kenny on a proposal for a neighborhood casino in the Spring Valley area of Clark County outside Las Vegas.

Davidson's lawyer, Dominic Gentile, has argued that there was no evidence that Kenny received money for the casino vote. Even if Davidson and Kenny had an agreement before the vote, Gentile said, the act of conspiracy would have been completed once the vote took place.

Of course, the counter argument most likely is that it was part of an ongoing conspiracy of money for influence that included the later events also. Heck, maybe there was some tax evasion which should have been considered, bringing down the wrath of the IRS and a six year limitation, I believe.

May 23, 2007

Zound Bite: Las Vegas Monopoly Game

As I am sure virtually everyone with a tv or newspaper or Internet connection has already heard, billionaire and MGM Mirage majority shareholder Kirk Kerkorian wants to buy the Bellagio and CityCenter in Las Vegas.

As the "big boys" play Monopoly (Hasbro) with Las Vegas casinos, I just can't pass Go until I figure out how to put gasoline in the old Ford. Thank you Harry Reid with being so concerned with high gasoline prices--and food prices and utility prices and immigration issues and health care and education and ...-- this year as you posture and strut ineffectively on the Iraq war.

April 26, 2007

Is California flood getting smaller?

The L.A. Times reports that for the first time since Nevada became a magnet for Californians in the 1990s, the Phoenix area has nudged Las Vegas aside as the No. 1 destination for people fleeing the Golden State and its soaring home prices.

The Arizona-bound are at the head of a long parade of bargain hunters marching out of expensive urban California and settling ever eastward, in Riverside, San Bernardino, Buckeye, and now Phoenix.

Tax returns for 2005, the most recent data available, show that a net 11,375 households -- representing nearly 29,000 people -- moved from California to Maricopa County in 2004. At the same time, a net 10,657 households with about 23,000 members moved from California to Clark County, NV.

Whew! Maybe with a respite from Californians coming to Nevada and their impact on housing prices, I might get a chance to finally buy a house. Nah, not a chance, now. I may have to move east to Missouri.

March 29, 2007

Mortgage crisis isn't just for poor people anymore

According to a Reuters report the U.S. mortgage crisis, that had been seen as the result of the rash of subprime loans made to mostly poorer borrowers, is now hitting the million dollar home market which was often financed through jumbo loans for more than $400,000 and so-called Alt-A loans that are above subprime and a step below prime.

Americans already are facing foreclosure at a record pace, according to the Mortgage Bankers Association. Lenders started foreclosure actions against more than one in every 200 U.S. mortgage borrowers in the last quarter of 2006.

The 2.2 million foreclosures due to bad mortgage loans may cost U.S. homeowners $164 billion, mostly from lost home equity, according to the Center for Responsible Lending, a Durham, North Carolina-based research group.

Those that are not getting hurt seem to be the banks, which have made the loans. The debts on the foreclosed houses is still a small percentage of the total loan debt extended. Plus, most of these loans are insured which pays back the bank for its losses. And then...the bank just might be the purchaser of the property at the foreclosure sale. An example is Deutche Bank, holder of a loan for a Korean homeowner with $509,000 of outstanding debt, who bought the property with a $100 bid at the Justice Center in Hackensack, New Jersey, last Friday.

In the last three months, the percentage of foreclosures for U.S. homes valued at more than $750,000 has climbed to 2.5 percent, the highest since early 2005, when RealtyTrac, a online marketplace for foreclosed properties, began tracking data. The overall rate of foreclosures also is on pace to increase by a third this year.

About 40 percent of homes bought last year were second homes or investment properties by speculative buyers.

For the past four years I watched as the frenzy to buy into the Las Vegas market appeared as driven as the 1990's need to own tech stocks. Always at the end of the run someone--or many someones--is left holding a chunk of something he or she can't afford to hold on to, hoping for another rise in the market. I have to admit that I only feel sorry for the lower end people trying to get into a starter home and had the market manipulated by that 40 percent who thought they would make real estate killings like they advertise in the infomercials or simply those who believe that six bedrooms and five baths with clubhouse privileges made sense for a family of three. By the way, did anyone notice that those real estate commercials disappeared at least six months ago to be replaced by how to win in the stock market infomercials while the stock market rose dramatically, only to suffer its own deflation? I don't know what impact our lemming investors actually have, but it appears many Americans want to be Donald Trump--and didn't he go bankrupt a few times? But I am not an expert in banking and mortgage financing issues. Instead of staying up late with financial reports and banking treatises, I might have a glass from a six dollar bottle of wine or maybe go for a walk in the desert because you know...thar's gold in them thar hills.

February 15, 2007