KeNo's Housing and Economic Portal: Monday April 26 Housing and Economic stories

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Lauderdale officials want to tear down abandoned new riverfront condos - (www.sun-sentinel.com) Waterfront buildings with condos that just five years ago were outfitted with granite countertops and quickly snapped up by dozens of investors stand vacant today, abandoned, and in ruins. Hunks of countertops are scattered about. Not a window or door remains. Every shred of metal was a target for looters. The walls are gaping where opportunists ripped in for copper piping. "It looks like Beirut out there,'' city building official Val Bohlander told elected officials. The only resident is a homeless man living in the stairwell. A couch, clothes hangers, cans of food and a 4-foot Winnie the Pooh are among the remnants of the community that called this pocket along the north fork of the New River home. Once they left, criminals loved the place — so secluded, and empty, and open. Fort Lauderdale officials plan to make a dire move this summer, to demolish all five buildings. The case will be taken to the city's Unsafe Structures Board, which could order the the buildings torn down. Tucked in a corner of riverfront land on a dead-end road, behind a funeral home, New River Condos could be a public monument to the foreclosure crisis. So many different owners, so many foreclosures, so many banks. And no one cares enough to save it. Just about everyone walked away, city officials said. If it were still an apartment complex, with one owner, rescuing it would be easier. But the four-decade-old complex was renovated in 2005 and converted the next year from rental to ownership. Investors were elated to find waterfront condos for $150,000 or less. All told, 53 purchasers bought the 58 riverfront condos on Northwest 24th Avenue, off Sistrunk Boulevard in northwest Fort Lauderdale. City officials said the "overwhelming majority'' are in foreclosure; most owners were investors, they said.

Detroit Faces Bankruptcy - (www.detnews.com) Mayor Dave Bing and the City Council must reduce the size of government and slash the city's budget deficit to stave off bankruptcy or state receivership, according to a report released Monday. Without draconian cuts and changes aimed at downsizing government, the city could end up with a "possible" general fund deficit between $446 million and $466 million to its $1.6 billion budget. "Detroit city government must be restructured," according to the report from the Citizens Research Council of Michigan, a nonprofit that has studied Detroit finances for decades. "The new structure must reflect both the reduced tax base and the limited ability of state government to provide shared revenues." The city's dramatic population loss, high unemployment and other ills have had adverse effects on the city. And now government must respond in a dramatic way to downsize and make sound budget choices, the report argues. Report author Bettie Buss, a senior research associate for the council, said her charge was to look at the underlying economy of the city and relate it to the budget challenges.

Analysis of California Pensions Finds Half-Trillion-Dollar Gap - (www.nytimes.com) An independent analysis of California’s three big pension funds has found a hidden shortfall of more than half a trillion dollars, several times the amount reported by the funds and more than six times the value of the state’s outstanding bonds. The analysis was commissioned by Gov. Arnold Schwarzenegger, who has been pressing the State Legislature to focus on the rising cost of public pensions. Graduate students at Stanford applied fair-value accounting principles to California’s pension funds, using a method recently devised by two economists working in Illinois, Joshua D. Rauh of Northwestern University and Robert Novy-Marx of the University of Chicago. The Stanford group’s finding does not suggest that California has to come up with half a trillion dollars all at once; pensions are paid slowly over time. But the possibility that the state’s public pension funds are much deeper in the hole than reported could help explain why the required contributions to the funds have been rising every year, contributing to California’s annual budget drama. The finding also raises vexing legal issues, because public debts in California are supposed to be approved by the voters. The voters have, in fact, duly authorized all of the state’s general obligation bonds, but the much larger pension debt is appearing out of nowhere. Calpers challenged the research, saying it was “out of sync with governmental accounting rules and actuarial standards of practice.”

U.S. MBA Mortgage Applications Index Declined 11% Last Week - (www.sfgate.com) Mortgage applications in the U.S. declined last week as the biggest jump in mortgage rates since June led to a fifth straight drop in refinancing. The Mortgage Bankers Association's index fell 11 percent in the week ended April 2. The Washington-based group's refinance measure plunged 17 percent, while the purchase gauge rose 0.2 percent. The average rate on a 30-year fixed mortgage rose to the highest level since August as the economy showed signs of strengthening. The end of a tax credit for homebuyers and rising foreclosures this year represent hurdles to a sustained recovery in housing. "We're concerned there won't be a lot of underlying demand for housing once the tax credit is gone," Adam York, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina, said before the report. "It's going to be a long slog."

Goldman says did not "bet against" clients - (www.reuters.com) Well, CEO Goldfein has proven to be a lying varmint in the past and should be prosecuted…. Goldman Sachs Group Inc said it did not intentionally "bet against" securities in the mortgage market during the financial crisis, dismissing suggestions that it unfairly made money by placing bets against its clients. "As a market maker, we execute a variety of transactions with clients and other market participants ... which may result in long or short risk exposures to thousands of different instruments at any given time," Goldman said in an annual letter to its shareholders. Goldman said it did not generate enormous net revenue or profit by betting against residential mortgage-related products. However, following its decision to reduce its exposure to risky mortgage securities, the bank said it lost less money than it otherwise would have when the residential housing market began to deteriorate rapidly.

Houseowners balk as property tax bills stay high - (www.usatoday.com) Javier Hyland was furious when he got his latest property tax bill from Miami-Dade County. First, the county put the value of his ocean-view apartment at $417,000. He can't see any way the place is worth more than $400,000 after a meltdown in the South Florida real estate market. Worse, the county assessed his neighbor's bigger, nicer, newer flat at only $407,000: "Is that fair?" asks Hyland, a pricing manager for a shipping company. The property taxes in dispute amount to just $360. But Hyland, 37, is appealing his assessment anyway, even though it will mean trudging into city offices to make his case. He'll probably have to stand in line: 143,000 Miami-Dade property owners appealed their property tax bills last year. And Harvey Ruvin, the county's clerk of courts, expects a similar deluge in 2010. Property tax appeals in the county hit 104,000 in 2008 compared with an average 40,000 in normal years. From Florida beachfronts to Nevada deserts, fed-up homeowners are challenging property tax bills that have stayed high despite the housing crisis.