House OKs Controversial Housing Plan

The House approved a federally backed bailout for the housing market; as skimpy as it may seem. Not supported by the White House, the foreclosure prevention package was passed in a 266-154 vote.

The package will let FHA insure up to $300 billion in new loans over the next four years as long as lenders agree to reduce the mortgage principle. The lender would have to cut the amount owed to no more than 85% of the current appraised value. If they FHA insured loans went into default, then the FHA would pay the lender the remaining principal owed.

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St. Joe Quarterly Numbers Up from Last Year

The Q1 2008 Earnings Call Transcript was posted on the 6th.

Reported was an increase in net income up to $32.1 million from $19.7 million first quarter 2007. This increase was mostly attributed to strong rural land sales.

Significant progress in four areas was noted:

Construction has begun on the new Panama City – Bay County International Airport following favorable jurisdictional decisions
The completion of a successful equity offering that virtually eliminated all debt (the sale of 17 million common shares of stock – apprx $580 million)
57,000+ acres of non-strategic rural lands were sold for more than $91 million
A new CEO will be appointed next week, Britt Greene

Peter Rummell was quoted, “we’re taking important steps to be properly positioned when [the markets improve]. . . we have become a leaner, more nimble company.”

“At the construction site of the new Panama City Airport, at West Bay, the first quarter saw the combination of a decade of hard work. Each day the airport authority continues, construction brings us one day closer to a new airport capable of tracking better our service and stronger economic development for the region.

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Fed Cut Interest Rates .25% Wednesday

In what is likely to be the last rate cut – baring any more financial market blowups – in a while, The Fed cut the federal funds rate another quarter point Wednesday from 2.25% to 2%. The rate 5% as recently as September.

The statement “downside risks to growth remain” was removed from the Fed statement indicating to many analysts that we should start to see signs of recovery and that we are showing fewer signs of a downturn.

“They haven’t closed the door to further cuts, but they’ve shut it part way,” said Mark Zandi, chief economist for Moody’s Economy.com. “They’re saying they believe they’ve done enough.”

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Analysts say Northwest Florida already prospering

Assuming the current climate of the Florida real estate market, many investors are weary of St. Joe stock. With it peaking at around $80/share in mid 2005, shares were at $42.30 this morning. One thing that may not be as commonly known is the powerful position St. Joe is actually in.

If you remember a couple of weeks ago, I quoted Bob Toll in his “hunker-down” statement:

“You move from an expansion mode to protecting your balance sheet immediately. . . Then you hunker down, build up your cash, wait for the blood in the streets and take advantage of the opportunities.”

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Have Panama City Beach Condos Hit Bottom Yet? Probably Not.

From www.condosaletrends.com

Jason’s April 12, 2008 article titled “Have We Hit Bottom Yet?” implies that because there are no negative newspaper stories concerning the current real estate market, that we must be nearing the bottom. Jason quotes NAR chief economist, Lawrence Yum predicting “Notable Improvement” in 2008. I have been following Yum’s analyses and predictions from the months leading up to the top of the real estate bubble (mid to late 2005) up to his latest prediction. The thing that stands out about Yum’s analyses is that he has been 100% wrong on every prediction. We all want to believe that the bottom of this market cycle is near.

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Existing Home and Condo Sales up in March

Although the numbers are down from the same period last year, from February to March, the number of existing home and condo sales is up in Florida. With 9,142 total existing single-family home sales in March, this marks a 10% increase over February’s 8,310 number.

Condo sales were up over 13% in March compared to February 2008 with 3,145 total sold, compared to 2,765 condos sold in February.

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Housing Starts Lowest in 17 years

Housing starts, down almost 12% from February are the lowest they’ve been in 17 years. With 947,000 starts, building permits were also down to 927,000, from 984,000 in February.

The nationwide foreclosure rate is up 57% from last March with nearly 235,000 homes hit with foreclosure filings last month alone. Of this number, 51,393 homes were actually lost to foreclosure with “1 in every 538 households being affected by a filing in March.” (The Business Journal of Phoenix)

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Have we hit bottom?

Has the real estate market nationwide hit bottom? I hear Realtors all the time say that business is picking up for them. In addition, I was looking through the New York Times Real Estate section, and not one article in the 18+ articles posted was negative. Not one article was telling of how we are all doomed to suffer endless real estate woes for the next million years or that prices have dropped again for the umpteenth time.

The National Association of Realtors is predicting a “notable improvement” in the real estate market in the second half of 2008. Lawrence Yun, cheif economist for the NAR, said “Existing home sales could start to show a sustained increase within a few months, unless there are some additional economic problems or excessive inflationary pressure,” he said. “We’re looking for essentially stable sales in the near term, before higher mortgage loan limits translate into more sales in high-cost markets. The wider access to affordable credit should increase sales activity notably this summer as pent-up demand begins to be met.”

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Possible upturn in Luxury Real Estate Market

Pennsylvania-based home builder, Toll Brothers, agrees the real estate market is still soft in many areas, but seems to have bottomed out in other areas.

Quote:

“In the Naples-Fort Myers market, sales activity is definitely up for new homes on the market at reduced prices. That’s a definite contrast to late 2007, when you couldn’t give away a home regardless of price.”
In the Orlando market, it takes a real bargain to interest buyers, he says. Many buyers are walking away from deposits — a trend that’s prompted the company to require additional funds as its new homes move toward completion. Continue reading “Possible upturn in Luxury Real Estate Market” →

Foreclosures and what the government is going to do about it.

Thursday the Senate began a debate on taking measures to help curb foreclosures nationwide. Highlights for the bill:

Make loans backed by the Federal Housing Administration more widely available
Makes $4 billion available to communities to buy and rehabilitate foreclosed homes
Provides tax credits of $7,000 for buying a foreclosed home
Provides tax credits to homebuilders and businesses hurt by the housing downturn
Returning soldiers will be given an extra 6 months before foreclosure procedures could begin

This came after outcry that the government was more interested in bailing out the financial industry and less interested in the suffering American public. Many lawmakers are criticizing this bill saying that it isn’t going far enough.

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