KeNo's Housing and Economic Portal: Sunday July 18 Housing and Economic stories

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Gulf spill plays havoc with real estate - (www.theglobeandmail.com) The phone call was short and to the point: A buyer who had agreed to spend $500,000 (U.S.) on a beachfront home with a stunning view of the Gulf of Mexico was backing out. The cancelled sale was a blow to real estate agent Linda Henderson, but it wasn’t a surprise. Globs of thick, pungent oil are washing up on the shores of Alabama’s Dauphin Island, and the smell on some days is enough to drive the island’s predominantly senior population back into their homes. It’s also enough to drive real estate agents to despair. “I can tell you that things have pretty much dropped to dead,” she says. “We were on track for our best year since Katrina. This is devastating – you can say that the spill killed the real estate recovery.” The end of the recovery is a particularly frustrating development for the Gulf Coast states of Louisiana and Mississippi, where foreclosure rates have consistently been among the lowest in the country. The region’s relatively tight mortgage rules kept a lid on home prices during the housing bubble and prevented the boom-and-bust pattern seen in many other regions of the U.S. But just as prices were stabilizing and sales were increasing, the spill has brought activity to an abrupt halt.

China's Desert Ghost City Shows Property Madness Persists - (www.bloomberg.com) Yu Jiang looks into the front window at his two-bedroom apartment in the center of Kangbashi, in China’s Inner Mongolia, and says he may buy another. The place has been empty for three years, as are as many as 90 percent of the units near it. Designed for 300,000 people, Kangbashi, the new urban center of Ordos prefecture west of Beijing, may have only 28,000 residents, Bank of America-Merrill Lynch said in a May 10 note. Standard Chartered Bank called it “the Dubai of northern China” for its vacant skyscrapers and more than 1.1 trillion yuan ($161 billion) worth of new public buildings and local wealth. Unlike in Dubai, where home prices have fallen more than 50 percent since mid-2008, buyers are still piling into Chinese housing. Yu says he sees no reason why the threefold gain on his investment shouldn’t grow. “The future of Kangbashi is bright,” said Yu, 52, who runs a house-decoration business. “Government offices have moved here so the economy will develop well. Prices will rise.”

Florida woman files BP claim over botched house sale - (www.mcclatchydc.com) Finally, Joan Dickinson was about to sell her Anna Maria home. The island resident had her two-bedroom house on the market for about two years before buyers came forward with an offer she was willing to accept. Then, the unthinkable happened. The buyers walked. "In my contract, the reason they stated they were not going to close on the home was the BP oil spill," said Dickinson, whose beachfront home is listed for $848,000. "I was supposed to close my home on May 17, and May 7, the buyers walked away. Every month I'm here in my home past May 17 it's an economic damage." Dickinson said she filed a claim with BP but has gotten the "run around" from the company on whether it has been reviewed. She declined to say how much money she is hoping BP will pay. Dickinson's case appears to be a rare instance of the oil spill threatening local property sales. And, while Manatee County remains free of tar balls and sheen, island Realtors say the Deepwater Horizon spill has sparked concern among buyers.

Prison Inmates Get Housebuyer Tax Credits - (www.cnbc.com) early 1,300 prison inmates wrongly received more than $9 million in tax credits for homebuyers despite being locked up when they claimed they bought a home, a government investigator reported Wednesday. The investigator said 241 of the inmates were serving life sentences. In all, more than 14,100 taxpayers wrongly received at least $26.7 million in tax credits that were meant to boost the nation's slumping housing markets, said the report by J. Russell George, the Treasury Department's inspector general for tax administration. Some taxpayers received the credit for homes purchased before the tax break was started. In other cases, multiple taxpayers improperly used the same home to claim multiple credits. Investigators found one home that was used by 67 taxpayers to claim credits. "This is very troubling," George said. "Congress created and modified the homebuyer credit to stimulate the economy and help taxpayers achieve the American dream, not to line the pockets of wrongdoers."

Buyer-bait tax credit offers no boost to Las Vegas home sales, prices - (www.lasvegassun.com) A last-minute jump in home sales expected by people taking advantage of a federal tax credit that expired April 30 hasn’t materialized so far, according to the latest statistics. SalesTraq reported Tuesday that existing home closings in Las Vegas in May fell to 4,186, down from 4,323 in April and 1.6 percent below sales levels of May 2009. The National Association of Realtors reported Tuesday that May’s sales fell 2.2 percent from April and analysts said that was a worrisome sign for the housing market this summer. That nearly matches the 2.3 percent decline reported for Southern Nevada by the Greater Las Vegas Association of Realtors. Under the tax credit, buyers had until April 30 to purchase a home and June 30 to close to qualify for $8,000 for first-time buyers and $6,500 for existing homeowners. The full breadth of the last-minute sales push through the end of April may not be known until this summer because Congress is considering extending the closing deadline to Sept. 30. Analysts said much of the boost from the tax credit came in 2009. The bigger beneficiary appears to be the new-home market in Las Vegas, but not by much. The 515 closings in Las Vegas are up 33 percent over May 2009, but it is only 35 closings higher than April. Existing home prices fell from $126,000 in April to $122,847 in May, which has been within the range of prices since April 2009.