KeNo's Housing and Economic Portal: Monday November 9 Housing and Economic stories

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TOP STORIES:

Boynton Beach, FL condo towers has 395 units, no buyers - (www.palmbeachpost.com) The Promenade, Boynton Beach's newest condo, boasts a luxurious lobby decorated in tones of cream and mahogany. Its two pools are filled, and the gym is stuffed with equipment. But nearly two months after receiving a certificate of occupancy from the city of Boynton Beach, the downtown property has not closed any sales of its 395 units. "My clients have not heard one thing - not one thing - from the developer. It's a big building sitting there doing nothing," said June Dunlea of Tauriello & Co. Real Estate in Delray Beach. Dunlea represents several buyers with contracts in the Promenade. An associate in the condo's sales office said the building is set to start closings in January. However, it appears that only one of the two towers will open then. The developer is trying to get buyers with contracts in the south tower to move their contracts to the north tower, so that at least one tower can be filled and opened, according to Lisa Bright, president of Boynton Beach's Community Redevelopment Agency. The reason for the change: To comply with Fannie Mae requirements that 51 percent of a condo be pre-sold before Fannie Mae will buy mortgages made to that condo. Bright said the last she heard the complex was 40 percent presold with more sales in the north tower than the south tower. Fannie Mae is working with developers so that new condominiums do not end up as glitzy, but vacant, ghost towns. Hence, "we agreed to recognize each (Promenade) tower separately and approve financing for the individual towers if certain pre-sale conditions are met," said Amy Bonitatibus, Fannie Mae spokeswoman.

Property taxes going up in Chicago and Cook County - (www.newsblogs.chicagotribune.com) Probably not much of a shock, but it’s now official: Collectively, homeowners and businesses in Cook County are being hit up for 4.2 percent more in property taxes this year than last. The semi-annual round of property tax bills will be arriving in mail boxes across the county in coming weeks, and most will be bigger than last year. As a prelude the Cook County Clerk’s office on Tuesday unveiled a snapshot of some of the complex number crunching behind the calculations. Results will clearly vary from house to house, shop to shop and factory to factory, but the total property tax burden for Chicago taxpayers will rise more than 6 percent over last year, the clerk’s office said. Suburban taxpayers as a group will see a lower increase, but it is difficult to come up with a comparable projection because most communities are comprised of a plethora of taxing districts that apply to some residents and not others. Some highlights, or lowlights, in the data:
* Despite last year’s housing market crash, tax officials calculate that property values for tax purposes rose 8.23 percent in suburban townships and 9.96 percent in the city. The calculation includes an array of moving parts, not the least of which is the gradual phase out of a program to limit assessment increases that was implemented at the height of the housing market boom earlier this decade.
* Some of the biggest percentage tax increases were logged by smaller taxing bodies. But among major taxing bodies one of the largest hikes belonged to the Chicago Board of Education, where the increase topped five percent, from $1.9 billion the previous tax year to $2 billion this year. The increase for the city government is 1.6 percent.
* Countywide, the increase for the Cook County government is negligible, though it stands at 4.5 percent for the Forest Preserve District which is a separately taxed arm of county government. Taxes for the Metropolitan Water Reclamation District will rise 4.5 percent.
Thanks to a record number of assessment appeals, this year’s second installment of property tax bills will be going out about three months late—although the bills rarely get mailed out as scheduled in August.

Union Pacific blames rail-traffic slump for 26% profit dip - (www.marketwatch.com) Union Pacific Corp. reported a 26% decline in third-quarter profit Thursday, citing a persistent slump in rail demand, particularly from the auto industry, in the face of the global recession. Shares of Union Pacific fell 2.9% to close at $61.12 but are still up 7% over the past year. The Omaha, Neb.-based railroad operator posted earnings of $517 million, or $1.02 a share, down from $703 million, or $1.38 a share, in the year-ago period. Revenue fell 25% to $3.47 billion from $4.63 billion, bogged down by a 30% decline in its auto-freight business and a 39% drop in industrial-products freight. Analysts polled by FactSet Research were looking for earnings, on average, of $1.01 a share on revenue of $3.73 billion. "As we enter the final quarter of 2009, business volumes seem to have stabilized, but at very low levels for Union Pacific," said Chairman and Chief Executive Officer Jim Young, in a statement. Separately, Burlington Northern Santa Fe Corp. reported a third-quarter profit of $488 million, or $1.42 a share, down from $695 million, or $1.99 a share, a year ago. Excluding a one-time favorable coal rate adjustment, earnings came in at $1.36 a share. Sales fell to $3.6 billion from $4.9 billion.

Paulson Met Secretly With Goldman's Board Last Year In Moscow - (www.bloomberg.com) Former U.S. Treasury Secretary Henry Paulson met privately with Goldman Sachs Group Inc.’s board in Moscow last year and kept the occasion off his official calendar, according to a new book about the financial crisis. Paulson, who was chief executive officer of Goldman Sachs before taking the Treasury post in 2006, arranged the meeting when he realized he’d be in the Russian city on business at the same time as the New York-based firm’s board was meeting there, according to Andrew Ross Sorkin’s“Too Big to Fail.” In his almost two years leading the Treasury Department, Paulson had only had one other private event with a company’s board, attending a cocktail party hosted by BlackRock Inc., according to the book. The meeting with Goldman’s board in late June 2008 was deemed a “social event” to ensure it didn’t violate U.S. government ethics rules, the book said. Still, Paulson aide Jim Wilkinson asked John Rogers, the firm’s chief of staff, to keep the plans quiet, the book says. In the meeting at the Moscow Marriott Grand Hotel, Paulson shared stories about his experience at Treasury and gave the Goldman Sachs directors his views on the economy, the book says. When they questioned him about the possibility that Lehman Brothers Holdings Inc. or another bank could fail, Paulson talked about the need for the government to gain the power to wind down troubled financial firms, the book says. He concluded by saying that while there could be tough times ahead, he thought the worst might be over by year end, the book says. Goldman Sachs CEO Lloyd Blankfein told a director of the firm the next day that he didn’t know why Paulson would say that, adding “it can only get worse,” the book recounts. Wilkinson and Goldman Sachs spokesman Lucas van Praag declined to comment. Rogers and Michele Davis, who served as Paulson’s assistant secretary for public affairs, didn’t immediately return calls seeking comment.

Houses: About to get much cheaper - (finance.yahoo.com) If you thought home prices were bottoming out, you may be wrong. They're expected to head a lot lower. Home values are predicted to drop in 342 out of 381 markets during the next year, according to a new forecast of real estate prices. Overall, the national median home price is predicted to drop 11.3% by June 30, 2010, according to Fiserv, a financial information and analysis firm. For the following year, the firm anticipates some stabilization with prices rising 3.6%. In the past, Fiserv anticipated the rapid decline in home-sale prices over the past few years -- though it underestimated the scope. Mark Zandi, chief economist with Moody's Economy.com, agreed with Fiserv's current assessments. "I think more price declines are coming because the foreclosure crisis is not over," he said. In fact, those areas with high concentrations of foreclosure sales will experience the steepest drops, according to Fiserv. Miami, for example, is expected to be the biggest loser. Prices are forecast to plunge 29.9% by next June -- after having already fallen a whopping 48% during the past three years. If Fiserv's forecast holds, Miami real median home price will tumble to $142,000 by June 2011. In Orlando, Fla., the second-worst performing market, Fiserv anticipates a 27% price collapse by June 2010, followed by a less severe drop the following year. In Hanford, Calif., prices are estimated to drop 26.9% and continue falling 9.5% in 2011; in Naples, Fla., they're expected to fall 26.8% and then flatten out. Other notable losers include Las Vegas, where prices have already fallen 54.6% and are expected to lose another 23.9% by June 2010. In Phoenix values have already collapsed by 54% and could fall another 23.4%. In both cities, Fiserv anticipates the losses to continue into 2011, but they will be less than 5%. Prices had stabilized: The latest forecast is at odds with the past few months of the S&P/Case-Shiller Home Price index. That report has given hope that most housing markets may have already stabilized because the composite index of 20 cities rose in May, June and July. Nationally, it found that home prices have gained 3.6%. Brad Hunter, chief economist for Metrostudy, which provides housing market information to the industry, however, expects a change in fortunes, however. "I'm afraid Case-Shiller may be just a temporary reprieve," he said. He pointed out that the tax credit for first-time home buyers helped support prices during the three months of Case-Shiller gains. By the end of November, the credit will have been used by 1.8 million homebuyers, at least 355,000 of whom would not have bought a house without the tax break, according to estimates by the National Association of Realtors. But the market assistance ends when the credit expires on Dec. 1. Hunter also sees a new wave of foreclosure problems coming from higher priced loans and prime mortgages. He expects a high failure rate for option ARM loans that were issued to prime customers so they could buy homes in bubble markets, such as California and Florida. In those areas, prices for even modest homes had skyrocketed.

Foreclosure figures spike in Marin - (www.marinij.com) The number of default notices filed against Marin homeowners in the third quarter of this year jumped 66 percent compared with the same quarter in 2008, according to a state real estate report. The 428 notices of default, the first step in the foreclosure process, were up from the 258 notices filed during the same July-through-September period last year, MDA DataQuick of San Diego reported Tuesday. The third-quarter figure was also a noted increase from the 381 notices filed in the previous quarter, from April through June. Marin had 345 default notices in the first quarter of 2009. Manny Fernandez, executive director of Marin Family Action, a San Rafael nonprofit offering assistance to families dealing with foreclosure, said just in the past few weeks the number of people coming to his office seeking such help has doubled. "It just keeps growing," Fernandez said. He said although the bulk of homeowners he's worked with made their purchase in the past three years amid the boom of subprime mortgages, longtime homeowners have also been snared in the foreclosure web. "Even people that refinanced within the last three years, they got caught up in the whirlwind of subprime loans," Fernandez said. "They got caught up in that boom, even though they had the house for 30 or 40 years." Actual Marin properties foreclosed on during the third quarter, represented by the 110 trustees' deeds recorded, showed a 26 percent decrease from the 149 deeds recorded during the same period in 2008. The number showed a slight uptick from the 105 trustees' deeds recorded in the second quarter of this year. Statewide, lenders filed 111,689 default notices during the past quarter, down 10 percent from 124,562 filed in the prior quarter, but a 19 percent increase from 94,240 notices filed in the third quarter of 2008. "It may well be that lenders have intentionally slowed down the pace of formal foreclosure proceedings," said John Walsh, DataQuick president. "If so, it's not out of the goodness of their hearts. It's because they've concluded that flooding the market with cheap foreclosures in this economic environment may not be in their best financial interests." The 50,013 trustees' deeds recorded across the state the past three months was up 10 percent from 45,667 over the previous three months, but down 37 percent from 79,511 deeds from July to September in 2008.

OTHER STORIES:

The burden of prudent savers: propping up Wall Street - (www.money.cnn.com)

Wall Street 40% Bonus Rise Fuels Buying of $43 Steaks - (www.bloomberg.com)

Why No Welfare Reform for Wall Street? - (www.huffingtonpost.com)

Report Shows Increase In San Diego Foreclosures - (www.10news.com)

Sun cutting up to 3,000 jobs as awaits Oracle deal - (www.sfgate.com)

Big insider-trading hedge fund case hits Silicon Valley - (www.sfgate.com)

Distressed condo sales in Miami - (www.dailybusinessreview.com)

U.S. housebuilder confidence ebbs on tax credit fears - (www.reuters.com)

Why the dollar is falling - (www.economist.com)

On the US dollar, Europe Sings a Classic Meatloaf Hit - (www.Mish)

Scammer Pretends To Foreclose, Then Rents Out Houses - (www.9news.com)