MORTGAGE MELTDOWN: Builders anticipate bleak '08 - Business

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Nov. 28, 2007
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MORTGAGE MELTDOWN: Builders anticipate bleak '08

Las Vegas housing market termed 'soft' by chief execs

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GROUPS AGREE TO WORK ON FORECLOSURE ISSUE

DETROIT -- A mortgage industry group agreed Tuesday to help the nation's mayors raise public awareness about ways to avoid foreclosure as part of an effort to address the U.S. housing crisis.

The agreement was announced following a meeting in Detroit organized by the U.S. Conference of Mayors and attended by mayors from across the country. The mortgage bankers association also plans to help cities get access to information on homes in foreclosure to ensure those properties don't blight neighborhoods.

"The foreclosure crisis has the potential to break the backbone of our economy," Douglas Palmer, mayor of Trenton, N.J., and president of the mayors group, said following the meeting at the MGM Grand Detroit.

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Two homes are seen for sale Tuesday in Lockport, N.Y. U.S. home prices fell 4.5 percent in the third quarter from a year earlier, the sharpest drop since Standard & Poor's began its housing index in 1987.
Photo by The Associated Press

U.S. homebuilders meeting in Las Vegas said the housing market probably will weaken in 2008 as foreclosures rise and banks tighten lending standards.

Demand has deteriorated in many markets, limiting the prospect of a rebound in new home sales, chief executive officers for D.R. Horton and Beazer Homes USA said Tuesday at a JPMorgan Chase & Co. conference at Mandalay Bay.

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Next year "is going to be worse than '07 for us and for the industry in general," said Donald Tomnitz, CEO of Fort Worth, Texas-based D.R. Horton, the fourth-largest U.S. homebuilder.

The housing slump that began in 2005 has erased about $36 billion in stock market value for the largest 15 homebuilders this year through Monday. New home sales dropped 23 percent in the year through September.

California and Florida housing markets continue to weaken and the Las Vegas market is "soft," Tomnitz said. New home sales in Phoenix will likely worsen in 2008, he said.

Ryland Group of Calabasas, Calif., has cut inventory by an estimated $373 million in 2007 to contend with the slump, CEO Chad Dreier said at the conference.

Separately, a new report showed that U.S. home prices fell 4.5 percent in the third quarter from a year earlier, the sharpest drop since Standard & Poor's began its nationwide housing index in 1987 and another sign that the housing slump is far from over, the research group said Tuesday.

The S&P/Case-Shiller quarterly index tracks prices of existing single-family homes across the nation compared with a year earlier.

The index also showed that prices fell 1.7 percent from the previous three-month period, the largest quarter-to-quarter decline in the index's history.

A separate S&P index covering 20 U.S. metropolitan areas showed a home price drop of 4.9 percent in September from a year earlier. Only five metro areas -- Atlanta, Charlotte, N.C., Dallas, Portland, Ore., and Seattle -- showed an increase in prices, but S&P noted that the pace of increases is slowing.

Tampa and Miami led the index with the biggest year-over-year declines at 11.1 percent and 10 percent, respectively. It also showed drops in San Diego of 9.6 percent; Detroit, 9.6 percent; Las Vegas, 9 percent; Phoenix, 8.8 percent; and Los Angeles, 7 percent. The S&P's 10-area index decreased 5.5 percent in September from 2006.

On Thursday, the Washington-based Office of Federal Housing Enterprise Oversight is to release its third-quarter index of U.S. home prices.

The government's calculation of home prices has remained in positive territory. It is calculated on loans of $417,000 or less that are bought or backed by government-sponsored mortgage companies, Fannie Mae and Freddie Mac -- excluding many of the riskier loans that have soured this year.

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Please enter your name Name: Please enter your email Email: Please enter a comment COMMENTS : (word count limit is 300) You have reached the maximum number of words allowed Current Word Count: Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background. HousingDoom wrote on November 28, 2007 03:08 PM: A few corrections for my good friend "HousingBloom". First I am a retired auditor for a large lending institution which did not indulged in subprime lending, mostly commerical developments. I can tell you that these VERMIN Brokers and developers, made millions and in many cases aided and abetted loan fraud. The Nevada state Real Estate agency wont do anything to curtail these abuses. It will take a Federal Grand Jury to indict and convict these cast of characters. Barring this, the market place is now weeding the obvious lowlifes out of the business. Blind Article? wrote on November 28, 2007 02:36 PM: I don't see the author of this "news" article... hmmmmm lol!!! HousingBloom wrote on November 28, 2007 01:49 PM: HousingDoom: GlVAR shills and the grifters in the real estate industry cant avoid the payback coming from the speculative run up of 40 to 50% in 2003-2005! It was a great run , and I am glad I owned a home during those great times. As the equity I took out , I was able to pay off my car and all my debt, and have a few nice steak dinners. I am not looking to sell and unlike HousingDoom I still have a job and can pay my bills. I love America ! Jason Voorhees wrote on November 28, 2007 12:23 PM: Well, as in the past few will be held accountable. Incorporating in this country is like getting a license to steal. roger wrote on November 28, 2007 11:45 AM: I don't know if the intent of this article is to somehow make a person feel sorry for these builders, but I can say it won't work on me. If anything it furiates me to think that it would be something we should be concerned over. Think of the tremendous profits these companies had to have made while selling new homes when prices peaked, it must have been unreal. These same houses are now being sold at huge discounts and the companies are STILL making money, while people who bought these houses already are facing the possibility of losing any equity they may have. I'm with HousingDoom all the way on this one. Just like all the corporate scandals of the past years someone needs to be held accountable. It's all about greed, and usually when you dig deep enough you can find someone isn't exactly following the rules. Think of the recent article about the realtors who are going to walk away from their current homes because they can now buy the same house cheapers. This is a conscious effort to contribute to the housing problem in this city, and we should think these same people wouldn't manilulate the RMLS system to inflate prices? yeah... HousingDoom wrote on November 28, 2007 10:01 AM: This is another indicator along with the local Prudential bankrupcy of the coming economic crisis! Get real people, all the deniers, GlVAR shills and the grifters in the real estate industry cant avoid the payback coming from the speculative run up of 40 to 50% in 2003-2005! You knew that was nuts and fueled by greed and insanity at every level of the real estate business. Now these lowlife,scum have brought about the greatest economic downturn since the great depression and the common people will suffer while these rats will be smoking their Cohibos and drinking their imported wine while the world burns! I agree with those who say break up the monopoly GLVAR has with the RMLS system. Investigate these firms and their Brokers for fraud and RICCO violations! They were all in cahoots to manipulate the market and encourage "fip this house" mentality! Put some of these folks in prison and then hear the squeals from these stuck pigs! John O'Neill wrote on November 28, 2007 09:42 AM: This is just the first sign that corporate comunism is on its way. All that "your" government does is to please big corporations, not you. Third world nation status: Here we come! (its okay, I got mine already) bt wrote on November 28, 2007 04:54 AM: Save your money,then spend it. Screw the banks and credit companies because that`s just what they are doing to YOU.