Tuesday Report, May 18, 2010
Special to the Texas Low Income Housing Information Service
In the depths of the recession, homebuilders are touting a Second Real Estate Coming and throwing up thousands of new units – while thousands of repossessed and unsold units set vacant. In another peculiar market, builders are now selling condo bomb shelters at $1.75 million per unit as paranoid buyers seek to avoid natural and man-made catastrophes.
Meanwhile, the federal mortgage modification program has bottomed-out as banks find ways to stall restructuring loans.
For a pdf version of the full articles, plus contextual stories on social, environmental and legal issues, contact Bo McCarver at bmccarver@austin.rr.com
Building Is Booming in a City of Empty Houses
By David Streitfeld New York Times May 17, 2010
LAS VEGAS — In a plastic tent under a glorious desert sky, Richard Lee preached the gospel of the second chance.
The chance to make money on the next housing boom “is like it’s never been,” Mr. Lee, a real estate promoter, assured a crowd of agents, investors and bankers. “We’re going to come back like you’ve never seen us before.”
Home prices in Las Vegas are down by 60 percent from 2006 in one of the steepest descents in modern times. There are 9,517 spanking new houses sitting empty. An additional 5,600 homes were repossessed by lenders in the first three months of this year and could soon be for sale.
Yet builders here are putting up 1,100 homes, and they are frantically buying lots for even more.
Las Vegas is trying to recover by building what it does not need. It is an unlikely pattern being repeated in many of the areas where the housing crash was most severe.
http://www.nytimes.com/2010/05/16/business/16builder.html
Home construction up, building permits fall
By Alan Zibel Associated Press May 18, 2010
WASHINGTON — Construction of new homes rose more than expected in April, but new building permits fell sharply, signaling that the building industry’s rebound could be short-lived.
The Commerce Department said Tuesday that construction of new homes and apartments rose 5.8 percent last month to a seasonally adjusted annual rate of 672,000. The increase was from an upwardly revised March level of 635,000.
The result was the highest since October 2008 and was driven by a 10 percent increase in the single-family market.
Analysts surveyed by Thomson Reuters had expected construction to rise more modestly to a rate of 650,000.
Building permits, a gauge of future activity, sank 11.5 percent to an annual rate of 606,000, the lowest since October 2009. Analysts were expecting a slight dip to a rate of 680,000.
Home sales have rebounded this year, helped by low mortgage rates and two government tax credits – $8,000 for new buyers and $6,500 for current owners who buy and move into another property.
Full story at: http://hosted.ap.org/dynamic/stories/U/US_HOUSING_STARTS?SITE=TXDAM&SECTION=HOME&TEMPLATE=BUSINESS.html&CTIME=2010-05-18-08-35-47
Chase’s Foreclosure Disgrace
By Greg Kauffman The Nation May 16, 2010
Here’s the problem with the Obama Administration’s approach to foreclosure prevention: it depends entirely on the banks voluntarily doing the right thing, even when homeowners have held up their end of the bargain to prevent a foreclosure.
Take the case of three homeowners in Queens, New York. Each one met the requirements for a “permanent” modification of their mortgages–which means a reduction of payments for five years–as laid out under the Administration’s Home Affordable Modification Program (HAMP). They did so by making three months of trial modification payments to JP Morgan Chase and verifying their incomes. They had contracts with Chase and fulfilled their obligations under those contracts.
So how did Chase reward them?
Permanent modifications denied. Delinquency reports to credit rating agencies issued. And the cherry on top–foreclosure.
Full story at: http://www.thenation.com/article/chases-foreclosure-disgrace
U.S. Mortgage Program Stalling, Data Shows
By David Streitfeld New York Times May 17, 2010
The pace of new mortgage modifications is beginning to stall, data released on Monday indicates.
The number of households enrolled in a trial modification barely budged in April, a sharp contrast to the rapid growth of the government program in the winter months, according to the Treasury Department and the Department of Housing and Urban Development.
Nearly 300,000 homeowners have received permanent modifications under the program, which reduces the borrower’s interest rate and often extends the life of the loan and postpones payment on the principal.
About more 637,000 borrowers are in the trial phrase, which takes at least three months. But the number of new trials is beginning to level off, leading to worries that the potential pool of eligible households is rapidly diminishing.
Full story at: http://www.nytimes.com/2010/05/18/business/economy/18mortgage.html?hpw
Foreclosures high, but dropping
Experts: Home sales up, due in part to tax credits
By Dawn Cobb Denton Record May 16, 2010
Statistics show a flickering real estate market in Denton County.
Residential foreclosure postings in Denton County show a slowing-down in the second quarter from past records, according to Foreclosure Listing Service Inc. At the same time, home sales in the county have shown increases since January, according to a report from Texas A&M University’s Real Estate Center.
Officials say the statistics show an attempt at recovery, but for separate reasons and with potentially different outcomes.
Monthly totals for residential foreclosures during the second quarter of 2010 rose slightly compared with past years, but overall activity fell 4 percent from the first quarter and was only 6 percent above the second quarter of 2009.
Full story at: http://www.dentonrc.com/sharedcontent/dws/drc/localnews/stories/DRC_Foreclosures_0516.98c2977.html
Resources available for homeowners who fall victim to loan tactics
By Jared Janes McAllen Monitor May 15, 2010
It seemed like a harmless loan.
Holding down a steady job building scaffolds at refineries, Juan Rodriguez thought he could easily handle a $30,000 home equity loan to buy a new vehicle, catch up on taxes and pay off some debts. He took out the loan three years ago even after he found out at closing that the 9 percent rate he was originally promised would instead be 12.5 percent.
And then 14 months ago, Rodriguez was laid off from work.
The 47-year-old has been fighting ever since to keep his McAllen house, which was paid off before he took out the home equity loan. Perpetually behind on his payments by two months, he regularly gets letters warning that he’s at risk of foreclosure referral — all because of the home equity loan.
Full story at: http://www.themonitor.com/articles/need-38620-available-resources.html
Can you afford to live in your house?
By Sean Holslege Arizona Republic May 7, 2010
For years, renters and homebuyers were told they couldn’t afford a home if it cost more than 30 percent of their income.
Now, an influential research center has come up with another yardstick that it says more accurately measures whether your choice of housing is beyond your means: The combined cost of housing and transportation shouldn’t exceed 45 percent of your income.
By that standard, only half of the Valley’s neighborhoods are affordable for households earning the median income, according to the Chicago-based Center for Neighborhood Technology. Families earning less than $50,000 spend two-thirds of their income on those costs.
A higher share of Phoenix neighborhoods are out of reach for those families than are New York City neighborhoods for median-income earners there, the center said.
Full story at: http://www.azcentral.com/news/articles/2010/05/07/20100507arizona-homeowners-cost-of-living.html
Sign shows frustration with permit system
By Laura Elder Galveston Daily News May 15, 2010
GALVESTON — The sign catches the eye as you pass the Victorian-era house in the 1800 block of Avenue K.
Painted by hand on plywood, the message is: “The city of Galveston discourages rebuilding.”
That’s been said many times and in many ways since Hurricane Ike flooded thousands of houses and businesses 20 months ago. But rarely so publicly by the wife of a state district judge.
Sherry Mallia said she was driven to display the sign after months of frustrating encounters with often surly city employees as she and her husband, Judge Wayne Mallia, attempted to repair the historic house they share with their son, 16, and daughter, 11.
The Mallia house, built in 1882 and in the Lost Bayou Historic District, took in 2 feet of storm surge in September 2008 during Ike.
The family returned to the house in May 2009, using the upstairs and a makeshift kitchen and laundry in a first-floor room that wasn’t badly damaged.
Full story at: http://www.galvnews.com/story/156652
Fired housing worker alleges discrimination
By Mike Smith Beaumont Enterprise May 13, 2010
A former Beaumont Housing Authority case manager acting as her own attorney claims she was fired because she is a black woman, a complaint filed in federal court this week states.
Robert Reyna, the authority’s executive director, strongly denies the claims, but said the former employee is within her rights to sue.
In her filing, entered Monday in the U.S. District Court’s Eastern District of Texas Beaumont office, Dianne Simon said Reyna told her to return rent overpayments that Simon said were handled by a contracted company.
Simon said she told Reyna she could not prove whether the payments were correct because she did not handle them, whereupon Reyna “intimidated” her by telling her that “he would handle (Simon) ‘separately,'” the filing states.
Full story at: http://www.beaumontenterprise.com/news/local/fired_housing_worker_alleges_discrimination.htm
Condo owners’ lawsuits allege shoddy construction at Hilton
By Mark Toohey Austin American-Statesman May 12, 2010
The lawsuits call it the “Weeping Wall.”
In the basement garage of the Hilton Austin hotel, discolored streaks trace the path of water that seeps from cracks in the wall into cracks in the floor. The wall has become an emblem of sorts for apparent structural problems and mounting legal issues facing the downtown hotel, a 7-year-old facility the city government had built to boost tourism.
Most of the hotel’s difficulties aren’t well-known. But as Mayor Lee Leffingwell and the City Council consider possible city involvement in getting a second convention hotel built, the city’s attorneys are contending with hotel-related lawsuits with tens of millions of public dollars at stake.
The matter also raises questions about the contractor chosen for the project and the complicated financing scheme that will leave the city the Hilton Austin’s owner. For nearly three years, an assistant city manager has been fielding complaints from condo owners about leaks and noise.
Full story at: http://www.statesman.com/business/condo-owners-lawsuits-allege-shoddy-construction-at-hilton-681176.html?page=3
New vision for Capitol complex: More room for state workers, private development on state land
By Laylen Copelin Austin American-Statesman May 13, 2010
A state commission is re-imagining the future of state government’s physical presence in the heart of Austin a concept that would triple the amount of space at the Capitol complex, including joint development with private interests where there are parking lots or garages now.
The proposal, being crafted by the Texas Facilities Commission staff under the direction of new Executive Director Terry Keel, goes well beyond moving state employees from 2 million square feet of leased space across Austin to new state-owned buildings near the Capitol.
The concept, carried out over several decades, would remake downtown, potentially adding 7 million square feet of space, or the equivalent of 13 Frost Bank towers.
Of that, 1 million square feet would be in three new state office buildings. The proposal envisions the rest as joint development of underused state land with private interests.
The planners anticipate that the undertaking would comply with City of Austin development rules and respect the so-called Capitol view corridors. The plan is “parking neutral” — replacing lost spaces with underground parking — but anticipates that the Capitol complex eventually would be served by light rail and urban rail.
Full story at: http://www.statesman.com/business/new-vision-for-capitol-complex-more-room-for-678225.html?imw=Y
Companies will benefit if Haven is a success
David Hendricks San Antonio Express-News May 11, 2010
The name “Haven for Hope” can apply to more than San Antonio’s new $100 million, 37-acre center assisting up to 1,400 homeless people.
It can apply to downtown companies seeking a more pleasant business environment. With fewer people sleeping under bridges, in parks and outside commercial businesses’ front doors, downtown property owners will be able to lease more buildings, reducing the vacancies that are turning into eyesores, said Marco Barros, president and CEO of the San Antonio Area Tourism Council.
As the homeless learn skills and discipline at Haven for Hope, some of them eventually could become employees at San Antonio companies.
Full story at: http://www.mysanantonio.com/business/columnists/david_hendricks/hospitality_industry_pitches_in_for_haven_93457874.html
Fallout shelters for a new generation
Underground bunker berths and ‘survival condos’ purport to offer refuge from nuclear wars, terrorist attacks, giant tsunamis, 2012 — you name it. And they don’t come cheap.
By Alana Semeuls Los Angeles Times May 17, 2010
It’s tough to imagine the end of the world from Steve Kramer’s peaceful hilltop home in San Pedro, with its views of lush palm trees and red-tile roofs above a turquoise sea.
The 55-year-old respiratory therapist does it anyway. Terror attacks, civil unrest, dirty bombs, earthquakes, 2012 — Kramer believes he must be ready to face them all. That’s why he’s plunked down $12,500 to reserve spots for himself and his family in an underground concrete shelter near Barstow.
“I would hate to give all this up and live in a bunker,” said Kramer, glancing at sailboats out on the Pacific with his feet roosted on a glass coffee table. “I’m not trying to perpetuate doom and gloom, but you have to be prepared.”
Legions of Americans dug backyard fallout shelters to ride out atomic Armageddon during the Cold War. Now, with heightened concerns about terrorist attacks in the post- 9/11 world, a new generation is looking underground.
Full story at: http://www.latimes.com/business/la-fi-bunkers-20100517,0,3723845.story
