Bo McCarver’s weekly housing news compilation – 12/30/2008

The year ends on a dead beat as the housing industry continues to free-fall with no landing place in sight. Local markets in Texas follow the national trends as defaults soar and mortgage lenders find other uses for their money.

Galveston continues to falter as the city’s leadership neglects its workforce and speculates on a future as a gambling town.

For a pdf version of the full articles, plus contextual stories in social, economic and legal areas, contact Bo McCarver at bmccarver@austin.rr.com

Housing: More help may be needed
As home prices continue their dramatic fall, policymakers debate how much to intervene.

By Mark Trumbull           Christian Science Monitor         December 24, 2008
A steady decline in US home prices shows no sign of ending – a pattern that promises to intensify the search for additional policies to heal the housing market.

Today, some two years after the housing market peaked, widening job losses mean that the downward momentum remains as strong as ever. On Tuesday, twin reports confirmed the trend. The sales volume of both new and previously owned homes dropped more than expected in November. The median price for preowned homes plunged 13 percent from a year before, the largest drop in records going back to 1968.

Home Prices Fell at Record Pace in October
Associated Press        December 30, 2008
A closely watched index shows home prices dropped by the sharpest annual rate on record in October.

The Standard & Poor’s/Case-Shiller 20-city housing index released Tuesday fell by a record 18 percent from October last year, the largest drop since its inception in 2000. The 10-city index tumbled 19.1 percent, its biggest decline in its 21-year history.

Both indices have recorded year-over-year declines for 22 straight months. Prices are at levels not seen since March 2004.

Prices in the 20-city index have plummeted more than 23.4 percent from their peak in July 2006. The 10-city index has fallen 25 percent since its peak in June 2006.

None of the 20 cities saw annual price gains in October — for the seventh consecutive month.

How one family’s mortgage is linked to meltdown
By Daniel Trotta         Reuters           December 28, 2008
HAMPTON BAYS, New York – Cynthia Goldrick’s daughter is in and out of the hospital for brain surgery, her mother has Stage 4 lung cancer and her father has moved into a home for the elderly.

So when the Goldrick family’s adjustable rate mortgage reset while husband Patrick was off work for a job-related injury, it eliminated the thin margin between their income and the mortgage payment and put them on the road to foreclosure.

While these circumstances may seem extreme — a perfect storm of bad luck — the basic economics of a hike in mortgage rates and a bank’s inability or unwillingness to modify terms have been shared by many Americans over the past year.

Breaking Up Is Harder to Do After Housing Fall
By John Leland         New York Times       December 30, 2008
When Marci Needle and her husband began to contemplate divorce in June, they thought they had enough money to go their separate ways. They owned a million-dollar home near Atlanta and another in Jacksonville, Fla., as well as investment properties.

Now the market for both houses has crashed, and the couple are left arguing about whether the homes are worth what they owe on them, and whether there are any assets left to divide, Ms. Needle said.

Silver Lining of Subprime Slips Away in Calif. Suburb
By Karl Vick       Washington Post         December 28, 2008
STOCKTON, Calif. — Venice Circle is a loop lined with taupe homes and green lawns, a clear sign that drivers have left the freeway south of town and entered Weston Ranch, a 21st-century Levittown. The subdivision sprang up in asparagus fields 80 miles east and a world away from the urban settings buyers were delighted to escape: gritty, violent east Oakland, and grittier, deadlier Richmond nearby.

This bedroom community is populated overwhelmingly by minority families, who were lifted by a wave of easy credit over the Altamont Pass and into dream homes. And if Stockton today is the foreclosure capital of the nation — as several surveys show it to be — it also showcases a little-known upside of the “subprime crisis”: the elevation nationwide of hundreds of thousands of African Americans into homeownership.

Developers Ask U.S. for Bailout as Massive Debt Looms
By Ling Wei and Jon Hilsenrath       Wall Street Journal      December 24, 2008
With a record amount of commercial real-estate debt coming due, some of the country’s biggest property developers have become the latest to go hat-in-hand to the government for assistance.

They’re warning policymakers that thousands of office complexes, hotels, shopping centers and other commercial buildings are headed into defaults, foreclosures and bankruptcies. The reason: according to research firm Foresight Analytics LCC, $530 billion of commercial mortgages will be coming due for refinancing in the next three years — with about $160 billion maturing in the next year. Credit, meanwhile, is practically nonexistent and cash flows from commercial property are siphoning off.

Florida proposes tough new rules for mortgage brokers
By Jack Dolan, Matthew Haggerman and Rob Barry       Miami  Herald       December 27, 2008
After months of stinging criticism for letting crooks and con artists prey on Florida borrowers, regulators have proposed sweeping changes in state law that would make Florida one of the most tightly regulated mortgage markets in the country.

The provisions call for annual criminal background checks for everyone selling mortgages in Florida, a ban on the most toxic types of loans and reviving a state fund that used to compensate victims of mortgage fraud.

The fund would provide up to $50,000 for people who can prove they were scammed by rogue brokers. Regulators quietly killed a similar fund more than 10 years ago, then used the money to pay for operating expenses, like salaries and conferences at five-star hotels, The Miami Herald reported in September.
Terry Straub, finance director for the Office of Financial Regulation, which is drafting the new bill, said restoring the fund is “the equitable thing to do.”

The measures would add to a regulatory overhaul that began in September after a Miami Herald investigation showed the agency allowed more than 10,000 people with criminal records to work in the mortgage profession between 2000 and 2007.

Area mortgage lenders getting crushed by refi applications
By Barry Shlachter        Fort Worth Star-Telegram       December 28, 2008
Some mortgage lenders, having laid off support staff during the past year’s meltdown, are finding themselves deluged with refinancing requests as rates fall below 5 percent.

And the lenders have fewer back-office workers to handle all the paperwork.

McLennan County experiences record number of home foreclosures in 2008
By Mike Copeland        Waco Tribune-Herald        December 26, 2008
Foreclosures continue to set a torrid pace in McLennan County, with postings up in December and for all of 2008.

The county ended the year with 1,110 foreclosure postings, a 13 percent increase over the 909 last year, says Foreclosure Listing Service.

Three local motels in foreclosure
By Judith McGinnis
         Wichita Falls Times-Record         October 27, 2008
Foreclosure filings on more than $8 million in Wichita Falls motel property were made public Monday, real estate that includes Quality Inn and Suites, Comfort Inn on Maurine Street and the Ramada Inn on Maplewood.

The newly built Ramada Inn opened only six months ago.

“The foreclosure is underway and we are evaluating our options,” said A.C. McGraw with BB&T Corporation, lender for the properties. BB&T, according to McGraw, is the nation’s 14th largest financial holding company.

All three properties are owned by Everest Enterprises Inc.; local Everest co-owner is Ramesh “Ram” Chandra. Employees at the Ramada Inn said Ramesh Chandra and his daughter Puja Chandra, the Ramada’s general manager, were on family vacation this week. Attempts to contact Puja Chandra for comment by phone were unsuccessful.

In a May 13 TRN story, Puja Chandra said Everest Enterprises was in the process of selling the Quality Inn.

Barring other arrangements, the properties will be auctioned off at the Wichita County Courthouse Nov. 4, Election Day, to satisfy the debt.

Developer Davis scrubs planned Titan condo project
By Nancy Sarnoff        Houston Chronicle      December 29, 2008
Randall Davis has cancelled plans to build Titan, a 25-story luxury condo tower set for Post Oak Boulevard, because of the economic crisis.

The local developer said he was unable to reach his lender’s 40 percent pre-sale requirement needed to secure financing for the 80-unit building.

Since Davis announced the project last year, he’s sold about 20 units.

“In the last four or five months, I haven’t had any sales as the world stood still,” he said. “Since I can’t get a loan, I’m forced to temporarily cancel the property. I hope to resurrect it again .”

The project was slated for a 25,000-square-foot tract on Post Oak Boulevard near Garrettson.

Davis had an option to buy the land from McDonald’s, which has a restaurant on the site.

FEMA experiments with housing option
By Rhiannon Meyers       Galveston County Daily News       December 24, 2008
GALVESTON – Daniel Dang hauled what few belongings he had from a moving truck into an apartment just one building away from the one he was forced out of by Hurricane Ike.

The 22-year-old medical student had lived in Galveston two months when Ike slammed ashore Sept. 13, flooding his East End apartment with 2 feet of water, ruining most of his furniture and forcing him to live in a Pelican Island dormitory for two months.

On Tuesday – as part of an experimental Federal Emergency Management Agency program – Dang moved into Carelton Courtyard apartments, the same complex he lived in before the storm, where he will stay rent-free for the next five months.

Repairs held up by holdback policy
By Leigh Jones       Galveston Daily News       December 26, 2008
GALVESTON – Augie Janner has interviewed eight roofers in her search to find someone to fix the damage Hurricane Ike did to her family home on Avenue P 1/2.

But none of the contractors was willing to wait for Janner to get the balance of her claim from the Texas Windstorm Insurance Association, the state’s insurer of last resort.

Janner already has a check for about $41,000, but the estimated repairs, including the new roof, will cost almost $68,000. Insurance association representatives told her the agency would pay for the balance of the work, but only after she gave them receipts proving the repairs were made.

Few Ike victims find housing with voucher
By Rhiannon Meyers         Galveston County Daily News      December 28, 2008
Deborah Wilson thought she’d be out of the Econo Lodge and into an apartment by Thanksgiving.

But Thanksgiving came and went, and Wilson – displaced by Hurricane Ike – could not find a landlord willing to accept a federal voucher that pays for her to rent an apartment or house until she can move back into Galveston’s public housing developments.

“We’re running into this red tape,” she said. “It’s just stressful. It’s very stressful.”

Of the 5,000 Galveston County families who have received disaster housing assistance program vouchers, 2,300, or 46 percent, have found rental houses or apartments, said Harish Krishnarao, executive director of Galveston Housing Authority, which is administering the federal program. The other 2,700 families are either still living in hotels or with relatives.

Casinos the answer to Galveston’s woes?
City that was ‘wide open’ in a past era weighs gambling as path to Ike recovery

By Harvey Rice        Houston Chronicle          Dec. 21, 2008
GALVESTON – Casino gambling is increasingly seen by some as a way to revive this island city, which is reeling from Hurricane Ike and 3,000 layoffs by its largest employer.

The Strand Merchants Association believes gambling would bring in tourists with more money who would patronize the downtown historical area shops, many still struggling to reopen after being inundated with as much as 10 feet of storm water Sept. 13.

The increased tourism could help replace the patrons who won’t be coming back because they were laid off by the University of Texas Medical Branch last month, casino gambling supporters say.

They point to Biloxi, Miss., where casino gambling contributed $22.5 million to city coffers in fiscal year 2008.

Urban Planning: A Roundup
How Austin is working toward getting better by design

By Katherine Gregor         Austin Chronicle      December 24, 2008
Conventional wisdom: An economic downcycle is the ideal time to invest in urban-planning efforts. Without the pressures of fast-paced development activity created by a go-go market, a city can make thoughtful, measured decisions and develop policies that will positively shape the next development cycle. As we bear up for this recession, the city of Austin happens to be on the cusp of starting a new comprehensive plan. Seems it couldn’t come at a better time.

The Downtown Austin Plan, a number of other city master-planning and urban-design efforts, and the final push to complete neighborhood planning also all are in progress. But without development activity (and battles), Austin has sunk into planning inertia in past downcycles. Historically, it’s taken a crisis to motivate us to “let’s never do that again” action. Are we now a “big” enough city to stay the course and calmly sustain – even step up – our planning investment during this recession for a more livable tomorrow?

With that question in mind, it’s timely to jog through a year-end review of the many urban-design and -planning efforts in play at the city of Austin.

Austin to consider comprehensive growth plan
How should the city develop in the years ahead? Initiative seeks ideas for crafting a vision.

By Kate Miller Morton      Austin American-Statesman      December 29, 2008
When Austin last approved a comprehensive growth plan, the Armadillo World Headquarters was still standing, MoPac ended at Far West Boulevard and the city’s population was half of what it is today.

Next year, the city will begin the arduous process of rewriting the now ironically named Austin Tomorrow Comprehensive Plan in an open process that is sure to stir passionate arguments about how Austin accommodates the rapid growth that city leaders project by the end of this decade.

No Furnaces but Heat Aplenty in ‘Passive Houses’
By Elizabeth Rosenthal        New York Times        December 27, 2008
DARMSTADT, Germany – From the outside, there is nothing unusual about the stylish new gray and orange row houses in the Kranichstein District, with wreaths on the doors and Christmas lights twinkling through a freezing drizzle. But these houses are part of a revolution in building design: There are no drafts, no cold tile floors, no snuggling under blankets until the furnace kicks in. There is, in fact, no furnace.

Homelessness Official Wins Praise With Focus on Permanent Housing
Detractors Cite Mangano’s Frequent Travel, Including Trips Abroad

By Derek Kravitz       Washington Post         December 30, 2008
Since he became the Bush administration’s homelessness czar in 2002, Philip F. Mangano has attempted to sell officials in the United States and around the world on his preferred solution for getting people off the streets, asking them to focus on providing permanent housing instead of temporary shelters.

With a small staff and budget, the former seminarian and music agent has taken his ideas on the road, traveling an average of 18 weeks per year, records show. His critics contend that his tenure has been more public relations than substance, and Democrats in Congress have tried in vain to cap his travel budget.

Businesses on board Fort Worth homelessness plan
By Leslie Wimmer         Fort Worth Business Press        December 22, 2008
As Fort Worth’s plan to end homelessness moves forward, more North Texas businesses are chipping in to help.

Mike Guyton considers his company’s involvement as a matter of simple economics. Guyton is vice president of customer operations with Encore Electric Delivery and a board member with United Way of Tarrant County.

Laws to Track Sex Offenders Encouraging Homelessness
By Karl Vick          Washington Post         December 27, 2008
LOS ANGELES — Upon release from state custody, Ross Wollschlager began an intensive search for a home, one that abided by the restrictions imposed on convicted sex offenders in California — and, in various versions, by about 30 other states. Obliged by law to return to Ventura County, the convicted rapist was forbidden to sleep within 2,000 feet of a school or a park.

He ended up in a tent on the dry bed of the Ventura River.

Strict new laws aimed at keeping track of sex offenders after they leave prison appear to be having the opposite effect, encouraging homelessness in a population believed more likely to re-offend if cast into the streets without structure or family support, say prosecutors, police, parole officials and experts on managing sex offenders.