CA MN gambling

Mercury News

Renters Julie Herning and her husband Oliver have been trying to buy a home near San Jose's Japantown since February. With a slow housing market, and with enough money for a healthy down payment, they figured they finally had a shot at owning a piece of property.

What they didn't expect was the competition - so fierce that they've been outbid on four houses priced around $500,000.

"It's kind of crazy," Julie Herning said. "One person I called said I would have been the 13th offer on the property."

Bidding wars have remained common in high-priced places like Cupertino and Los Altos, where stellar school districts are the big draw. But with more than 900 houses for sale in Santa Clara County for $450,000 or less, many home buyers assumed that market was soft and are shocked to find themselves outbid on foreclosed, bank-owned properties in this price range.

"The REO market is cooking hot right now," said Jason Chan Lee of Intero Real Estate, who has numerous clients trying to buy "REOs." The term refers to "real estate owned" by banks and other financial institutions that have foreclosed on the properties.

Banks eager to unload their REO inventory - which forms a large chunk of the cheapest houses for sale in the county - have been lowering the listing prices. It's become common to find bank-owned houses in South San Jose priced at roughly $400,000 that last sold in 2005 or 2006 for $600,000 or more, for example.

Advertisement
Click Here!
style='font-weight: bold'>Spurring buyers' interest

Lower prices have helped spur buyers' interest in bank-owned homes, especially because "regular" sellers generally have not brought their asking prices down to meet the banks' prices. Also, trying to buy homes in "short sales," another option for entry-level buyers, has proved frustrating, time-consuming and often fruitless for many buyers.

A short sale occurs when a mortgage lender gives approval to homeowners to sell for less than they owe on their mortgage in an attempt to avoid foreclosure. The trouble is, lenders often take months to approve the transactions, the foreclosure happens after all, and the property becomes an REO.

With more demand for REOs, multiple offers abound, Lee said.

"It's a secret nobody knows," he said. "You have to write a full-price offer. If you want it, everybody wants it."

The competitive landscape has discouraged the Hernings, who thought they'd have an easy time buying because "all you hear about is 'Oh, the market is terrible,' " Julie Herning said.

"We had no idea we'd still be sitting here going, 'What's going on? Are we going to find a house?' "

As with "regular" listings, it's the bank-owned homes in the best condition that are most likely to attract a flood of offers. A bank-owned three-bedroom home for sale on Allegro Lane in South San Jose, for example, has new kitchen cabinets, a stainless steel dishwasher, and pristine Pergo floors, with views of downtown San Jose. It's listed at $429,500, and got five offers after only two days on the market, said listing agent Peter Carey of Realty World.

But not all REOs are as inviting. A few blocks away at a three-bedroom bank-owned house on Harmony Lane listed for $389,900, dirty water is stagnating in the backyard pool, unfinished construction remains in the family room, and a bedroom has been painted haphazardly in a deep-red color.

One San Jose resident, a mobile-home owner who has been looking for a house since February with a budget of up to $550,000, bid unsuccessfully on several short sales and half a dozen REOs before getting a bank-owned Evergreen house for $540,000 that was listed at $529,900. The buyer, who did not want to be identified, said he's investing despite fears that valley home values may continue to fall.

"I have a feeling it's still risky to buy a house at this moment, but I want my kids to go to a good school, so I'll take a chance," he said. "I might stay there for 10 years. I look for the long term, not the short term."

Some agents who specialize in REOs said about half the buyers now scouring the market for deals on bank-owned properties are people who want to live in the homes, while the other half are seeking investment property to rent out. But even at today's REO prices, some investors are waiting to buy because they can't get enough monthly rental income to cover their mortgage and expenses.

'Gambling on better times'

True, Carey said, but the ones buying now are "gambling on better times" in the future, he said, hoping to buy property in the $400,000s that will eventually gain value.

It's not clear that the recent flurry of competition for REOs will last long.

Sen Dharmadas made an offer a few weeks ago on a bank-owned home in Los Gatos - a rare find compared to the number of bank-owned properties available in San Jose or Gilroy. He offered the full list price of $775,000, and his was the lowest in a field of about five offers, he said. He raised his bid by $12,000, but the bank chose another, higher offer.

"Because of that we almost lost hope," said Dharmadas, a software engineer. "Getting an REO is very difficult."

CA CCT FB 1998!

Contra Costa

More than 100,000 homeowners in Contra Costa and Alameda counties may see their property taxes fall this year as home values continue heading south.

While good news for financially strapped individuals, the reductions mean local governments could miss out on tens of millions of dollars in badly needed revenues.

The assessed value on 65,000 to 75,000 single-family homes in Contra Costa could drop this year, meaning a loss of roughly $40 million, according to Assessor Gus Kramer. Homes are taxed at 1 percent of their assessed value, plus whatever bonded indebtedness is attached to the property.

Alameda County is anticipating 30,000 to 40,000 reductions.

"Our review won't begin until May," Alameda County Assessor Ron Thomsen said, "but we're probably looking at $2 billion in assessed values being removed from the assessment rolls — that equates to $20 million in taxes."

While the numbers are only estimates, Kramer said the reductions in his county will probably range from 2 percent to 20 percent. The value of many homes could fall to 2002 and 2003 levels. And in East Contra Costa, some homes may return to 1998 levels.

"We're seeing sales that indicate they should be rolled back to that level," Kramer said. "More than 50 percent of properties on sale on the open market, in Antioch particularly, are bank-owned. The banks in East County are the market-makers of real estate."

Kramer said when banks "dump" homes at
Advertisement
Click Here!
drastically reduced costs, the price of surrounding real estate drops further.

Contra Costa this year will review the value of 150,000 properties — more than half the total of single-family homes in the county — compared with last year's review of 50,000 properties and reductions on 22,500 homes.

In Alameda County, officials will take a look at 65,000 homes purchased between July 1, 2004, and Dec. 31, 2007, Thomsen said. Last year, Alameda County reduced the value of 6,000 homes after reviewing 34,000 properties.

Thomsen said it is not yet clear what areas of Alameda County will be hit the hardest. Such is not the case in Contra Costa.

"The I-680 corridor does not seem to be as hard hit as other areas," Kramer said. "Prices are down, and the number of sales are down, but it's not as severe. It's the further you get away from the 680 corridor that you see the areas hit the hardest."

Contra Costa cities most affected by the housing slump include Antioch, Brentwood, Oakley, and parts of Pittsburg, San Ramon and Richmond.

The lost revenues from reassessments could be bad news for school districts and city and county governments already stretched thin by the statewide budget crunch.

Alameda County Auditor-Controller Patrick O'Connell said the county receives 15 cents of every property tax dollar.

"At most, if we're going on the $20 million figure, that would be a reduction of $3 million for the county," O'Connell said. "Our budget is close to $2 billion, so $3 million isn't a lot by comparison — but we hate to lose any of it."

From 2000-01 to the present, Contra Costa experienced annual growth in property tax revenue of 8.8 percent. Contra Costa Auditor-Controller Steve Ybarra — hazarding a guess — said the county this year will see about 5 percent growth.

Schools typically receive 50 percent of property tax revenues, Ybarra said. Special districts, such as fire, parks and sewer, receive 28 percent.

"We are in communication with the counties and monitoring what's going on," said Dave Collins, the East Bay Regional Park District's assistant general manager for finance and administration. "We have been conservative with our budgeting to allow us to make adjustments without hopefully having to lay off people or cancel some of our operations."

Collins said the state budget is of greater concern right now.

"That's a wild card," he said. "We're waiting for them to tell us how bad it is."

After schools and special districts, the county and cities receive 12 percent and 10 percent, respectively, of every property tax dollar, Contra Costa's Ybarra said.

Kerry Breen, Brentwood's business services manager, said the city will probably see no more than a 2 percent to 3 percent growth in property tax revenue this year.

"I don't know how far back you'd have to go to see it that bad," he said. "The year we're in now was at 13 percent, and we had five years when we were seeing 20 to 25 percent in annual growth."

Brentwood's situation is not uncommon.

Greg Rogers, San Ramon's administrative services director, said the city is expecting about 4 percent growth this year, compared with 8 percent in years past.

"We're not expecting a reduction in property tax," Rogers said. "We're just not expecting it to increase very much."

Rogers said a "good portion" of San Ramon's housing has a low assessed value because of Proposition 13. Passed in 1978, it places a cap on property tax increases. Those homes are not subject to adjustments because their market value is higher than their assessed value.

"Out to the east, we have a subdivision buildout of 11,000 homes," Rogers said. "Most likely, we'll lose out on reassessments in that area."

In Richmond, city officials have reduced their revenue expectations to balance the books.

Finance Director James Goins said the city is anticipating 3 percent growth in property taxes this year, compared with an average of 5 percent to 6 percent in recent years.

Schools will also be taking a hit, Ybarra said, but the news is not all bad.

Ybarra said a school district's level of funding is derived from a formula that takes into account daily attendance. If a district does not receive its full share of property tax revenue, the state makes up the shortfall.

"We have 18 school districts in the county," he said, "and they all receive backflow from the state. The schools are in better shape than the county is."

Denise Porterfield, the Antioch school district's chief business official, said schools are guaranteed the state funds through Proposition 98, which establishes the formula for K-12 school funding.

"One of the things being discussed at the state level is whether to suspend Prop. 98," Porterfield said. "If that should ever go forward, there would be an impact."

Meanwhile, the prospect of a lower property tax bill is little consolation to Ted Diaz, who purchased a 3,000-square-foot home in Pinole last year and is feeling the pressure.

A 61-year-old lab support worker with the U.S. Department of Agriculture, Diaz purchased the three-bedroom, 31/2-bath home in the high-$500,000 range, he said. Today, a house identical to his in the same subdivision is selling for $499,000.

"I happen to be one of those who got a bad loan," said Diaz, who has an adjustable-rate mortgage. "It's going to cap in five months and go up about $200. I'm close to retirement age and thought this would be a good investment.

"Everything is coming down on me right now," he said. "I'm just trying to get by from day to day, and hope I make the right decisions."

Reach Simon Read at 925-779-7166 or sread@ bayareanewsgroup.com.
REASSESSMENTS
Anyone who wants their property value assessed can call their county assessor's office and make a request. The reassessment is free. The Contra Costa County Assessor's Office can be reached at 925-313-7400. The Alameda County Assessor's Office can be reached at 510-272-3787.

CA MN FB

Mercury News

There's still plenty of pain ahead for Silicon Valley's housing market as more homeowners faced the threat of foreclosure in the first three months of this year than during any quarter on record.

Mortgage lenders sent a record 3,074 "notices of default" in the first quarter to Santa Clara County homeowners who were behind on their loan payments, according to DataQuick Information Systems. That's up 42 percent from the fourth quarter of 2007, and up 191 percent from the first quarter of 2007. The previous record was set in the final three months of 2007, with 2,162 notices.

Notices of default are the first step in the foreclosure process, and lenders usually send them a few months after homeowners have stopped making mortgage payments.

The foreclosure problem in Silicon Valley is not nearly as severe as in the Central Valley, where it verges on epidemic in some communities. But with home values dropping in most of Santa Clara County, it's become harder for strapped homeowners to sell their homes for enough to pay off their loans, and a greater portion of them ultimately will be foreclosed upon.

That means the record-high number of defaulting homeowners is almost sure to result in an unprecedented tide of foreclosures later this year.

"The most reliable indicator of foreclosures and defaults is the up and down of home prices," said John Karevoll of DataQuick, which released the mortgage default data Tuesday.

He said most
Advertisement
loans in default and foreclosure last quarter were originated in late 2005 and into 2006, when mortgage lenders' criteria were lax, "teaser" rates held payments artificially low and many borrowers took out loans they couldn't afford, often with little or no down payment. Karevoll said one scenario is that defaults will stay largely confined to what he calls that "loans gone wild" category. But if the country is in a recession, other types of borrowers will face economic stress and the foreclosure problem will worsen.

"We're in the middle of all this, and it's impossible to say" which scenario is more likely, Karevoll said.

The trend of record-breaking loan defaults also played out across the Bay Area and statewide in the first quarter.

Californians received a record 113,676 notices of default in the first quarter, up 39 percent from the previous quarter, and up 143 percent from first quarter 2007.

The number of California homes actually foreclosed upon shot into record territory, too, with 47,171 foreclosures. A year earlier the total was less than a quarter of that, at 11,032.

As bad as the news may appear, foreclosures are still relatively rare in Silicon Valley. And the effects here are mild compared with those in the Central Valley and other areas popular with first-time buyers where home values zoomed three or four years ago and are plummeting now, experts said.

For example, 67 percent of the homes sold in San Joaquin County in the first quarter had previously been foreclosed upon, and home values drop fast when those properties hit the market at deeply discounted rates, Karevoll said. The median price of all homes sold in that county fell 36 percent in March from a year earlier.

In Santa Clara County, just 11 percent of first-quarter sales were of previously foreclosed homes, and the median price of all homes - new and resale houses and condos - fell 9 percent in March.

The total value of the loans foreclosed upon in Santa Clara County in March alone was $194.8 million, said Sean O'Toole, founder of ForeclosureRadar.com, which tracks California defaults and foreclosures daily. That's up from $41.7 million a year earlier. O'Toole said foreclosures will keep rising in the county. It takes an average of 145 days for defaults to wind up as foreclosures, he said. "Even if we saw a turnaround in defaults starting next month we wouldn't see a drop in foreclosures for probably five months," he said.

One San Jose homeowner who owns six rental properties in Santa Clara and Santa Cruz counties said he stopped paying the mortgage on one of the Santa Cruz properties in February, though he has yet to receive a default notice. He said he's trying to avoid foreclosure by arranging a short sale, a transaction in which the lender lets the owner sell for less than the balance on the mortgage. He's facing trouble on some of his other properties, too.

The homeowner, who did not want to be identified because he doesn't want co-workers to know his predicament, said the renter moved out of the Santa Cruz property recently and he can't rent it for nearly enough to cover the mortgage. He paid $770,000 for the beachfront house, but figures it's worth $500,000 now.

"Of course, with the market going down you can't sell anything," he said.

Statewide in recent quarters, only 32 percent of homeowners who had received default notices were able to escape foreclosure by getting up to date with their payments, refinancing or selling. A year ago, 52 percent were able to stave off foreclosure, DataQuick said.

Contact Sue McAllister at smcallister@mercurynews.com or (408) 920-5833.
RePrintPrint Email Return to Top

CA CCT already in recession

Contra Costa

Foreclosures are a third of all home sales in California as the majority of homeowners in default lost their homes in the first quarter of the year, DataQuick Information Systems reported Tuesday.

About 68 percent of homeowners in default during the first few months of 2008 lost their homes, typically owing around $11,474 and were about five months behind when their lender started to foreclose, DataQuick said.

There were 47,171 homes lost to foreclosure during the first quarter, the highest since DataQuick began recording data in 1988. Last quarter's total rose 48.9 percent from 31,676 in the previous quarter, and jumped 327.6 percent from 11,032 in first quarter 2007. In the last real estate cycle, trustees deeds, which is when the lender officially forecloses, peaked at 15,418 in third-quarter 1996. The all-time low was 637 in the second quarter of 2005.

The majority of loans in default, or at least 90 days behind in payments, were originated from August 2005 to October 2006 and were typically 23 months, up from 16 months a year ago.

Lending institutions sent homeowners 113,676 default notices during the January-to-March period. That was up by 39.4 percent from 81,550 the previous quarter, and up 143.1 percent from 46,760 for first-quarter 2007, according to DataQuick, the highest since DataQuick began recording defaults in 1992.

"The big 'if' right now is whether or not the economy is in recession. If it is, the foreclosure
Advertisement
problem could spread beyond the current categories of dicey mortgages, and into mainstream home loans," said Marshall Prentice, DataQuick's president.

But some economists say that the economy is already affected.

"We're already in a recession," said economist Christopher Thornberg. "You have falling prices and so many people underwater they realize there's no point in staying in the home and will walk away."

On home equity loans and lines of credit, homeowners were a median eight months behind on their payments. Borrowers owed a median $3,512 on a median $60,000 credit line. Although 113,676 default notices were filed last quarter, they pertained to 110,392 homes. The difference is the result of some borrowers defaulting on multiple loans, such as a primary mortgage and a line of credit or second mortgage.

Last quarter's default numbers were a record in almost all of the state's 58 counties. The only exception was Los Angeles County, which was hit hard by the recession of the early 1990s.

Of the homeowners in default, an estimated 32 percent emerge from the foreclosure process by bringing their payments current, refinancing, or selling the home and paying off what they owe. A year ago it was about 52 percent. The increased portion of homes lost to foreclosure reflects the slow real estate market, as well as the number of homes bought during the height of the market with multiple-loan financing, which makes 'work-outs' difficult.

There are 7.9 million houses and condos in the state, DataQuick reported. Foreclosure resales accounted for 33.1 percent of all California resale activity from January to March. A year ago it was 3.2 percent.

Foreclosure resales vary significantly by area, from 5.1 percent in San Francisco County to 66.7 percent in San Joaquin County. On a loan-by-loan basis, mortgages were least likely to go into default in San Francisco, Marin, and San Mateo counties. The likelihood was highest in Merced, San Joaquin and Stanislaus counties.

About 70 percent of homeowners at least two months behind on their mortgage payments are not getting any help avoiding foreclosure, according to a group of state banking regulators and attorneys general.

Federal programs established by the Bush administration and Congress along with the mortgage industry are failing to keep property owners in their homes, the Washington-based Conference of State Bank Supervisors said in a report released Tuesday.

"While there has been a lot of effort put in by servicers, there has been little change for homeowners," Mark Pearce, North Carolina's deputy banking commissioner, said on a conference call Tuesday. "We are still treading water in dealing with the large number of borrowers who need assistance."

Barbara E. Hernandez covers real estate. Reach her at 925-952-5063 or

CA MN condos

Mercury News

The 17 brand new cottage-style condos near downtown San Jose were supposed to sell swiftly, especially since they were priced to be affordable to low- and moderate-income people, and the developer offers generous loan programs for first-time buyers.

But in the eight months since the for-sale signs went up on West Alma Avenue at Almaden Avenue, only one condominium has sold, even though the developer, non-profit Neighborhood Housing Services Silicon Valley, has cut prices twice.

With home buyers reluctant to buy in a declining market, even non-profit developers who aim to provide affordable housing to the valley's lower-income residents are getting hammered by conditions in the real estate market.

"No doubt this property would have sold out in four to six months but for the subprime debacle," said Ed Moncrief, executive director of Neighborhood Housing Services Silicon Valley, the developer and home-buyer assistance organization that spent the past four years and nearly $10 million bringing the 17-unit project, Villa Almendra, to market. "We hit the market just as the realization of some gray cloud over the future hit."

Two-bedroom condos at Villa Almendra once priced at $535,000 now are offered at $450,000. The units come with new appliances, two-car garages and granite countertops.

But Moncrief's group is facing stiff competition from others. Developer Barry Swenson Builder, for example, has new studio condos nearby
Advertisement
starting at $294,000, and there are single-family houses selling for less than $450,000 in some East Side and South San Jose neighborhoods.

Desperate to sell, the non-profit now is willing to accept offers from any buyers, not just those who need the special loan programs. And the group will give away a 2008 Toyota Prius in a random drawing to one of the first eight buyers who close escrow before September.

Still, Moncrief hopes his organization's financing programs will make his project more attractive than the others. Neighborhood Housing offers 30-year fixed mortgages at below-market rates through the California Housing Finance Agency, and a variety of deferred-payment second mortgages that can significantly reduce borrowers' monthly expenses.

But few are biting.

A low-income first-time buyer in Santa Clara County - making no more than $84,900 annually for a family of four, for example - could potentially qualify for roughly $146,000 worth of deferred repayment loans to buy a unit for $545,000. While the borrower would have to put down close to $16,000, monthly principal and interest payments on the primary mortgage of about $382,000 would be a little more than $2,300, but no repayment would be due on the deferred loans until the home is sold. Loan programs also benefit "moderate" income buyers, those making up to $126,600 for a family of four, for example.

Other affordable-housing developers in the Bay Area are hunting for buyers, too. They're anxious to raise money to pay back their construction loans and worried about financing future projects given today's credit market challenges. South County Housing, a non-profit developer and property manager for affordable housing, last weekend auctioned some of its unsold units at Forest Park, a development in downtown Gilroy. Bids started at $295,000; some townhouses were priced at $519,000 last fall.

"It's a really tough time," said Nancy Wright, a senior project manager for South County Housing. "The credit issues are so widespread, everyone is being affected."

The units at Villa Almendra went up for sale in August 2007, just as the credit crunch hit Wall Street and consumers' confidence plunged. Attendance fell at the non-profit's once-crowded buyer orientation sessions, and by the holidays the group knew it had a problem.

"It was noticeable from the silence we heard, I guess, in terms of home buyers not being there," Moncrief said. "They disappeared."

So the company cut prices, worked on a new marketing strategy and negotiated with the bank to delay repayment of its construction loan.

Its efforts will be boosted soon by the city of San Jose. Reacting to the drop-off in sales of "affordable" units, the city's housing department is offering $10 million in down payment assistance to low- and moderate-income buyers who buy in certain developments.

David Pyle and his wife, Katalina, are considering buying at Villa Almendra, and would qualify for many of the first-time home buyer programs. As an elementary school teacher in San Jose, Pyle would also qualify for the San Jose Teacher Homebuyer Program, which Neighborhood Housing administers for the city. The Pyles have been raising three kids in a two-bedroom apartment, David Pyle said, and with prices dropping, the time seemed right to buy a place with more room.

Amy Flores, who paid $590,000 for her three-bedroom condo late last year, is the lone homeowner at Villa Almendra. She's hoping the non-profit's efforts to sell other units pays off.

"It would be nice to have neighbors," she said.

Contact Sue McAllister at smcallister@mercurynews.com or (408) 920-5833.

CA MN wait

Mercury News


The Silicon Valley housing market got walloped in March, as median prices fell sharply and sales hit record lows for the month.

The median price of the previously owned houses that changed hands in Santa Clara County last month was $684,500, down 9.3 percent from March 2007. For resale condos, the median price fell by 1.3 percent to $513,000, according to DataQuick Information Systems.

For the nine-county Bay Area, the median price of houses sold last month plummeted 20.4 percent, the steepest decline in DataQuick's records, which go back to 1988. The counties with the worst depreciation were Contra Costa and Solano.

"It's very clear right now that a great deal of home buying is on hold," said DataQuick analyst John Karevoll. Last month was the slowest March on record in Santa Clara County, with only 1,105 homes of all types changing hands.

"The big issue everybody's watching right now is whether or not there is a recession," he said. "If you're looking at a recession, the distress is going to start to migrate into other categories" in addition to the primarily lower-priced neighborhoods now being affected.

Karevoll said it's a bit too early to tell how much of Santa Clara County's drop in median house price is because of depreciating home values and how much is because fewer homes in expensive neighborhoods are selling compared with last year at this time. One of the primary reasons for the slowdown in sales of high-end homes
Advertisement
Click here to find out more!
is that rates for "jumbo" loans - those of more than $417,000 - rose significantly following August's "credit crunch."

In March, 39 percent of home purchases in the county were financed with jumbo mortgages, DataQuick said, but the figure was 73 percent a year earlier.

An economic stimulus plan approved by President Bush in February aimed to improve the jumbo-rate situation by changing the rules about which loans can be guaranteed by government-sponsored companies Fannie Mae and Freddie Mac. But despite high hopes for change, rates for large loans have remained stubbornly high, thwarting some sales.

Still, at least buyers now know what to expect of loan rates, said Lisa Blaylock, a Coldwell Banker agent in San Jose. "Two months ago, we were still in limbo with what was going to happen with lending," she said. "Now, we're not waiting for something to happen."

Thursday, the average rate for a 30-year fixed-rate loan of less than $417,000 was about 5.81 percent, according to Bankrate.com. The average for jumbo loans was about 7.14 percent.

As home prices have fallen in much of Santa Clara County - with the exceptions of communities such as Los Altos, Palo Alto, Cupertino and Saratoga, where few homes are for sale compared with demand - more buyers are venturing out to look for bargains.

First-time home buyers Gina and Mark Yates are in escrow to buy a house in San Jose's Berryessa neighborhood after searching since September. The first house they made an offer on was a "short sale," a transaction in which owners try to get lender approval to sell for less than they owe on their mortgage.

"It took almost six weeks to get a 'nay' answer" from the bank, Gina Yates said. After that, they lost out to other bidders on a house in Milpitas, then bid on but eventually decided against a Milpitas house that was part of a probate sale. The Berryessa home, priced at about $600,000, is their fourth attempt, and they hope to move in May.

"If we didn't jump into the housing market right now we might lose the opportunity to do so," said Yates, a lifelong Bay Area resident who works as an operations manager for apartment developer AvalonBay. She said she thinks her new home's value may well drop in months to come, but she's not concerned.

"There are deals out there, but you need to be able to go with the flow and wait it out."

Waiting it out is what many other prospective buyers have been doing, something that led to a record low number of home sales in March in Santa Clara County. Just 1,105 homes of all types - previously owned and new houses and condos - sold in March, down 46.2 percent from a year earlier. That makes it the slowest March in DataQuick's records. The previous low for March was in 1991, when 1,475 homes changed hands in the county.

Total home sales in the county rose a paltry 12.3 percent from February of this year; a normal increase from February to March would be about 40 percent. Nearly 14 percent of last month's sales were homes that had been foreclosed upon in the last 12 months.

Marc McIsaac put his nicely remodeled, four-bedroom South San Jose home on the market for $726,000 in February using ForSaleByOwner.com. and other Web sites. He since has dropped the price by $20,000. He said most of the potential buyers who have contacted him are looking for fire-sale deals for investment purposes.

"The first question out of their mouth is: 'Is this a bank-owned or short sale?' " he said. "You know they're not necessarily interested in buying your house as a family or whatever."

He and his wife, Kristin, don't really need to move, he said, though they had been hoping to. "We might pull it off and wait awhile," he said.

Contact Sue McAllister at smcallister@mercurynews.com or (408) 920-5833.

CA FB CCT

Contra Costa

Valerie Guerra's Livermore home has lost $100,000 in value through no fault of her own.

Guerra and her husband have paid their mortgage without fail. Yet foreclosures in her neighborhood and on her street have erased much of the equity in their house.

"I certainly believe my house is worth less than what we paid," she said. "But we're here for the long haul."

The Guerras are far from alone. Now that lenders have seized thousands of East Bay homes in default, the flip side of those failures has descended on the region's homeowners. Banks that have foreclosed on a property often unload the house at a discount to the loan amount.

No question, bank sales can be a great deal for buyers. But the same transactions can erase years of equity gains for those who own houses near a bank-owned property.

"I'm sure the foreclosures have affected our property values," said Mary Ann McFadden, a Fremont resident with two defaults on her block. "I feel sorry for the people who lost their homes."

Guerra and McFadden are among numerous homeowners who have been left behind in the wreckage of a housing market that not long ago was the envy of the nation. The dismal aftermath of a deluge of defaults has begun to engulf homeowners in the East Bay.

An Antioch woman said that her house has lost hundreds of thousands of dollars in value. A Fremont homeowner has seen her home equity shrivel. Some Brentwood residents have witnessed $150,000
Advertisement
to $250,000 in equity evaporate from their houses.

"Our values have dropped dramatically," said Kareen Bell, a Brentwood resident. She and her husband bought their home a few years ago for $865,000. Now, the house is worth slightly more than $600,000.

Some neighborhoods have eroded physically, visits to foreclosure-burdened cities show.

Foreclosed houses often display lawns choked with weeds or dying grass. Vandals menace some abandoned homes. Signs that advertise a bank-owned home, foreclosure auction or short-sale effort are posted at numerous residences.

"It's scary to see people moving out all the time," Bell said. "The house across the street from us is foreclosed. So is the one behind our home. So is the one down the street. At least six houses near us have been foreclosed."

Several foreclosures have jolted the Antioch neighborhood where Emissa Hutchings owns a house. Homes in her vicinity that a year or two ago were selling for $600,000 to $700,000 now are on the market for $300,000 to $400,000.

"I'm almost to the point where I don't want to stay in Antioch," she said. "I'm raising my grandkids. I wish I could move. But I'm stuck."

For the second time in less than a decade, the region must deal with the consequences of financial overexuberance.

"This is the tech bubble all over," said Guy Schwartz, manager of the Walnut Creek branch of San Ramon-based CMG Financial Services.

The dot-com bubble was inflated partly by investors who overestimated demand for Internet consumer services. This time, fast-rising home prices intoxicated Wall Street and Main Street alike.

"During the tech bubble, we were excited about how rich we were and we opened up those mutual fund statements," Schwartz said. "Then when the slump hit, we were talking about how much money we lost."

The collapse in property values has forced some owners to sell homes for less than what they owe on their loan. Such "short sales" also erode property values. Yet these deals provide no assurance of a sale — even if the house is being offered at a big discount.

Rafael Ayala bought a house in Brentwood in 2006 for nearly $700,000. He and his wife also obtained $630,000 in financing. The house is now worth about $450,000.

"It's hard to sell," he said. "People don't want to buy my house."

Jeff Vandevoir lives next door to Ayala. Vandervoir said that he will not walk away from his house and mortgage. He intends to pay his loan and will not jettison his obligations.

In 2005, Vandervoir paid $612,000 for the house, which has lost $150,000 in equity.

"I'm disappointed," he said. "I know the value is down, but it's only a paper loss right now. I'll ride it out."

The housing crash has not dismayed all homeowners.

Theodoor Janson, a Danville resident, said he thinks that numerous foreclosures would have to occur near his home to obliterate a big chunk of his equity. It would take more than one distressed loan to set a lower bar for values.

"If you wanted to sell or refinance your home, the appraiser would look at a number of sales," Janson said. "If 10 homes were foreclosed in your neighborhood, that would have a major effect. If it's one in 400 homes, that would not have much effect."

Some real estate insiders maintain that they have begun to witness at least the start of a revival of the housing market.

Jennifer Tiscareno, a residential agent with Keller Williams, said some new programs have begun to buttress the shaky housing sector.

"It's picking up a little," she said. "We're seeing more movement with foreclosure sales and short sales."

Most residents interviewed expressed a steely determination to be among the survivors of the "default nation" that has emerged in the East Bay.

"We have to hang on," Bell said of her Brentwood home. "We can't afford to sell, and we have to make our mortgage. We're going to do this."

Livermore resident Guerra realizes that the current nose dive for housing simply marks the reverse side of what had until recently been a remarkable surge in prices and sales.

"This is my third home and up to now I had experienced only skyrocketing values," she said. "I'm not pleased. But I'm also not crushed."

CA S Cruz

Mercury News


Look who's selling homes in Santa Cruz County.

Countrywide, US Bank, Deutsche Bank and Downey Savings and Loan sold homes in March. So did Wachovia and three other financial institutions.

Look what's not selling so fast: Million-dollar homes.

In March, only 11 percent of the sales were for more than $1 million and 20 percent were for less than $500,000, according to Gary Gangnes of Real Options Realty, who tracks the data. The trend was the reverse in February, with 24 percent of sales more than $1 million and 19 percent less than $500,000.

The switch pushed the median price of a single-family home down in March to $650,000 from $682,500 in February -- but not as low as $599,000 in January, when 33 percent of homes sold for less than $500,000. The median is the mid-spending point of what sold during the month.

Only 75 homes sold in March, the fewest number of sales for a month in 11 years, an indication of buyer reluctance despite lower list prices. The previous low -- 143 sales -- was set last March.

The unsold inventory index, which shows the time it would take to sell the homes on the market at current sales rates, rose everywhere in the county but Watsonville. In every area, there is more than an eight-month supply of homes, an indication that prices may decrease further.

Among the factors cooling the market: More foreclosures, dropping values and homeowners having difficulty refinancing
Advertisement
into more affordable mortgages, creating a cycle of more foreclosures.

Trulia, a real estate Web site, reported in February that the median price of a bank-owned, or REO, home in California was 24 percent lower than the median list price of homes for sale.

In Santa Cruz County, bank-owned homes are selling at a discount. Among the examples in March:

• 233 Vista Del Mar Drive, Watsonville: Foreclosed in December and sold by Downey Savings and Loan for $490,000. Previously sold for $829,000 in 2005.

• 52 Hawthorne Ave., Watsonville: Foreclosed in January and sold by US Bank for $305,000. Previously sold for $579,000 in 2007.

• 148 Holly Drive, Watsonville: Foreclosed in July and sold by Credit Suisse for $395,000. Previously sold for $685,000 in 2005.

• 612 Bonita Drive, Aptos: Foreclosed in September and sold by Citigroup for $465,000. Previously sold for $500,000 in 2003.

"REOs really drive down prices in an area because the banks are going to keep lowering the price on a home until it sells," said John Wake, an associate broker in Scottsdale, Ariz. "Joe Homeseller, on the other hand, often has the option of continuing to live in the home if he does get "his price" so prices don't fall as fast in areas without a lot of REOs."

Wake theorizes that the more a market is overvalued, the greater the declines in home prices and the faster the correction. He's seen that in the outskirts of Phoenix, where home builders had the market power to raise prices, and he's waiting to see if the corrections in the inner markets will be slower and weaker.

Neither the Santa Cruz Association of Realtors nor the Watsonville Association of Realtors tracks the number of REO sales, but judging from transactions listed in the weekly Santa Cruz Record, Watsonville has more bank-owned sales than other parts of the county.

Ganges doesn't specifically track REOs but he found 12 of the 28 homes sold in Watsonville in January, February and March were bank-owned. The 12 properties were on the market an average of 118 days before a purchase contract was obtained, he said. One sold in one day and two others in about two weeks; another took 295 days.

"I believe that there are more bank owned sales lately," said Stephen Pearson of Century 21 Classic Properties and president of the Watsonville association. "The majority of the homes on the market are short sales. That is changing as more of these homes are foreclosed."

Pearson, who is working as a listing agent for various banks, has noticed the price differential for REO homes.

"With a bank-owned property, they are sometimes priced under market value and are attracting multiple offers," he said. "They are also typically a 30-day escrow and you can get a response to your offer in days."

Compare that to a "short sale," where a buyer offers to buy a home for less than what is owed.

"Many times by the time you get a response the buyer has found something else," Pearson said.

Lenders are taking up to 60 days to respond, said Mary Saccullo of Santa Cruz Title Co., a speaker at Saturday's Housing Expo sponsored by the Santa Cruz Association of Realtors.

"I think they're overwhelmed," she said. "It was a trickle. Now it's not a trickle."

Home hunters who are looking for good deals should make sure their finances are in order, which could be a challenge given the current restrictions on credit.

"Be ready to make an offer when a property comes up," Pearson said. "The properties that are well priced sell fast."
Contact Jondi Gumz at 706-3253 or jgumz@santacruzsentinel.com.
March sales


1996: 154
1997: 196
1998: 207
1999: 192
2000: 228
2001: 165
2002: 179
2003: 162
2004: 230
2005: 195
2006: 159
2007: 143
2008: 75
SOURCE: Real Options Realty,
www.ror.com
March housing figures


single-family homes
Number of listings:
1,208 (11-year high)
Number of sales:
75 (11-year low for March)
Median price: $650,000
(was $682,500)
Average price: $707,546
(was $857,124)
Unsold Inventory Index: 16.1 months
•Santa Cruz: 9.4 months (was 6.3)
•Aptos: 10.3 months (was 10.2)
•Capitola: 11.6 months (was 9.4)
•Live Oak: 17.8 months (was 15.2)
•Soquel: 18.0 months (was 15.0)
•Scotts Valley: 18.2 months (was 13.7)
•SLV: 19.9 months (was 11.3)
•Watsonville: 23.4 months (was 32.3)

Condos
Number of listings: 290 (12-year high)
Number of sales: 20 (lowest in 11 years)
Median price: $424,850 (was $395,500)
Average price: $483,986 (was $402,773)
Unsold Inventory Index: 14.5 months (was 25.5)
Source: Real Options Realty,
www.ror.com

CA HS!

Wall Street Journal


The credit crunch has made it harder for Americans to indulge in their love affair with debt. So what are they doing?

Borrowing more.

While tighter lending standards have cut off all but the most credit-worthy borrowers from auto loans and home loans, many people are turning to credit cards and tapping more of their home-equity lines of credit to dig themselves in deeper. And lenders, once eager to lend to those with even spotty credit records, are trying to rein in borrowing by cutting consumers' available credit lines.
[Rising Balances]

Average balances on credit cards and home-equity lines of credit are growing rapidly, rising 9.5% and 8.1%, respectively, in the first quarter from a year earlier, according to new data from Equifax Inc. and Moody's Economy.com.

Borrowing is climbing quickest in the regions where house prices plunged most sharply, making it tougher for people to extract money in cash-out refinancings. (In a cash-out refinancing, a homeowner pays off a mortgage by taking out a loan that is larger than the original mortgage and then pocketing the difference.) Credit-card balances rose nearly 15% during the first quarter from a year earlier in California and Florida and more than 20% in Nevada -- all states caught up in the housing bust, according to Equifax and Economy.com.

The rise in borrowing shows just how addicted the U.S. consumer has become to credit. Even as borrowers are cut off in one area, they promptly look for new sources. Workers have increasingly been raiding their 401(k) plans to take out loans over the past year, according to plan administrators and nonprofit groups.

Now, mortgage brokers say some clients are calling them in a panic, worried that their bank will freeze their home-equity lines. Deborah McNaughton, president of Legacy Financial Services Inc., a mortgage lender in Placentia, Calif., says several of her clients have recently borrowed more from their home-equity lines of credit and stashed the money in bank savings accounts. Theresa Leick of San Juan Capistrano, Calif., a loan processor who works with Ms. McNaughton, pulled $21,000 from her available home-equity line of credit in February to park in a certificate of deposit.

"I'm fattening my reserves in case I have to go look for more work," says the 40-year-old Ms. Leick, who says she is concerned about losing her income because she works in the mortgage business. She says she would have preferred not to have tapped her home-equity line, "but if the bank takes away my comfort zone, that will make me lose sleep at night."

Across the country, consumers are increasingly relying on credit cards to stay afloat. This week, the Fed reported consumers are boosting their use of credit cards. In February, Americans had $951.7 billion in total revolving debt, most of it on credit cards -- a seasonally adjusted annualized increase of 5.9%. Although that increase has slowed from the 7.1% pace in January, it is up 8.2% from year-ago levels.

Credit counselors say they have started seeing more people turn to their credit cards to cover everyday items. "Food, fuel and medicine -- people are charging their day care, even their tithes to church, and any incidental items," says Gail Cunningham, a spokeswoman for the National Foundation for Credit Counseling in Silver Spring, Md.

In a conference call last month, Discover Financial Services Chief Executive David Nelms told analysts that sales growth in the first quarter "generally became more concentrated in everyday categories such as groceries, gas or discount stores, with less growth in specialized retail segments such as department stores and home improvement."

In a separate survey released last week, Discover said 52% of consumers it surveyed in March expected to spend more in April on household basics by cutting back on discretionary expenses, such as vacations, or by setting aside less money for savings and investing. That is an increase of 12 percentage points from its February survey and close to the highs seen last November, when gas prices spiked.

Major credit bureaus, including TransUnion LLC and Experian Group Ltd., say their own analyses of credit files show that more consumers are turning to credit cards. TransUnion last week said total credit-card balances increased 4.8% in the fourth quarter to $1,694 per user from the third quarter -- more than double the growth it has typically seen in prior years over the same period -- with the steepest increases in states that have been hit hard by the mortgage crisis, such as Florida, Nevada and California.

The Fed's aggressive rate cuts have helped make home-equity lines of credit, whose rates are typically pegged to the prime rate, more attractive compared with fixed-rate home-equity loans. For example, utilization rates on home-equity lines -- or the percentage of a credit limit that has been charged up -- increased to 46% in the first quarter, the second consecutive quarterly rise since early 2005, according to data from Equifax and Economy.com. That increase, however, is partly driven by banks cutting available lines of credit.

But home-equity lines, once a major alternative to credit cards, are also getting harder to access. In recent months, certain lenders, such as Countrywide Financial Corp., Washington Mutual Inc. and Bank of America Corp., have reduced or frozen certain borrowers' home-equity lines of credit, especially in markets that have been hit by a slump in housing values.

Earlier this year, J. Hwang of Fort Lee, N.J., tried to refinance the 7% rate he was paying on his mortgage but couldn't qualify because his bank was now requiring him to hold more equity in his home. Instead, he decided to take advantage of some credit cards' 0% balance-transfer offers and borrowed roughly $45,000 to pay down the balance on his home-equity line of credit.

Mr. Hwang's strategy: Since he won't have to pay any interest on the credit cards for about a year, he figures he will be able to save roughly $2,000 that he would have otherwise had to pay on his home-equity line of credit. Instead, he plans to use the savings to pay down the principal on his mortgage. "I didn't want to give my bank another penny for interest," says the 30-year-old health-care worker.

For the past several years, William Jordan, president of Sentinel Group Inc., a financial-planning and wealth-management firm in Laguna Hills, Calif., has been advising clients to pull equity of their homes and put the money into safe, liquid accounts so they have access to the money. He recently advised one of his clients, Matilda Compean of La Mirada, Calif., to refinance her mortgage and take out cash after she was having trouble making ends meet.

The 54-year-old client-services manager began working extra hours last fall to help pay for higher household expenses, such as gas, and to save money to buy a car for her daughter, who had recently totaled her car in an auto accident. So, in January, she refinanced her mortgage and pulled out $60,000 in equity to purchase the automobile and set aside an emergency cash cushion. Doing so, says Ms. Compean, "just gave me a lot of room to breathe. I was at my wit's end. I just kept thinking things would get better."

Write to Jane J. Kim at jane.kim@wsj.com

WSJ condotels

Wall Street Journal


For many investors, the condo hotel may go down as the Pets.com of the real-estate bubble.

Many buyers purchased the hotel rooms from developers hoping to get paid every time the room was rented. But condo hotels, which account for as much as 10% of all hotel rooms under construction and a much greater percentage in resort markets such as Orlando, Fla., and Las Vegas, are coming back to haunt many of the people who bought the units, the developers that constructed the buildings, and the operators hired to run the hotels.

Some projects also are being brought to the attention of regulators by investors.
[Condo photo]
"It's been a very bad investment," says one person who bought a unit at what's called the Signature at MGM Grand (pictured) -- which calls itself "more than a Las Vegas luxury hotel."

"It's been a very bad investment," said Moji Adekunbi, a 47-year-old engineer, who bought a $550,000 condo-hotel unit in the Signature at the MGM Grand in 2005 in Las Vegas, where one of every four hotel rooms being developed is a condo-hotel unit. Mr. Adekunbi counted on the cash flow from renting out his unit more than covering his $3,000-a-month mortgage payment, leaving him with a tidy profit.

He said the developer's sales staff led him to believe that the hotel would have 94% occupancy and $350-a-night rates, Turns out, he said he is netting only between $400 and $1,800 a month before his mortgage payment.

"I am in so much debt. I don't know how long I can sustain this," Mr. Adekunbi said. Making matters worse, many markets for these rooms are weak, meaning owners might lose much of their investment if they sell.

Representatives for the developer and the hotel operator said hotel-rental projections weren't discussed with customers before they bought their units, and some buyers made their own assumptions about rental income. "Some people's assumptions didn't pay off, and they are trying to find someone to blame," said MGM spokesman Alan Feldman.
[Interior of condo]

During the real-estate boom, many Americans scrambled to buy anything they could -- office condos, warehouse condos and high-rise residential condos, which are crowding the skyline of cities such as Miami.

But condo hotels were one of the most dangerous investments of them all. Hotels are risky investments in real estate because occupancy can swing with the weather or the economy. Developers loved condo hotels. "It minimized the upfront risk to the developer, and shifted it to the individual unit owners," said Mark Lunt, a lodging analyst at Ernst & Young. Many developers said they insisted that buyers regard condo hotels as vacation homes that they would use rather than income-producing investments.

Some condo-hotel buyers are happy. But other buyers are suing developers to get out of their contracts, claiming they were misled. In Florida, a group of buyers is suing WCI Communities Inc., claiming the developer sold them condo hotels in the waterfront Resort at Singer Island as unregistered securities. The buyers said they bought the units as investments, not primarily for their own use. WCI said it intends to "vigorously defend" against the lawsuit, according to a recent Securities and Exchange Commission filing.

Other buyers are staging revolts inside high-end hotels. At the Trump International Hotel & Tower in Las Vegas a group of condo-hotel owners are clamoring to rent out their own hotel units using their own operator because they said Trump takes too much of the rental revenue. A Trump spokesman said the company's rental agreements are competitive with other condo-hotel rental-management companies in the area.

In other condo-hotel developments, a few buyers are talking to the SEC, alleging possible securities fraud, according to their attorneys. One issue could be whether developers sold these units as investments, which should have been registered with the SEC or other regulators. In some cases, lawyers said, a real-estate offering may be comparable to a security if the offering creates expectations of profits resulting from the efforts of a third party. An SEC spokesman declined to comment.

Historically, the SEC has suggested it wouldn't take enforcement actions against a condo-hotel developer as long as the company didn't provide prospective buyers with projections of income or expected occupancy, among other conditions.

Many developers were careful not to market condo hotels as investments, but "many others find it difficult to restrain themselves from creating expectation of investment returns and cash flow," said Rob Webb, a senior hospitality partner in the Cleveland office of law firm Baker & Hostetler LLP, which has represented condo-hotel developers in cases where buyers have tried to rescind their contracts. "All you have to do is find the developer's newspaper ads, and it could be a devastating blow."

Some buyers said developers should have registered their condo hotels as securities, which might have allowed them to review a detailed investment prospectus before they bought a unit.

For some buyers, a securities-law claim could provide a way to undo a purchase. "The rights of recovery are so much better if you can say it is a security," said Burton Wiand, a former SEC attorney who now practices at Fowler White Boggs Banker in Tampa, Fla.

If the transaction should have been registered, buyers can rescind the deal and get their money back, without having to prove fraud and misrepresentation, attorneys said.

Michael Trombley, a retired major-league pitcher who lives in Fort Myers, Fla., is one of several investors who have filed lawsuits alleging securities laws were violated in the sale of units in the Clearwater Cay Club in Clearwater, Fla.

"They were always trying to preach to people that the market is hot. This is a no-brainer. You'd better get in quick," said Mr. Trombley, 40 years old, who spent most of his career with the Minnesota Twins and Baltimore Orioles. In 2005, Mr. Trombley, along with five friends and family members, bought five units in the development for a total of about $2.2 million, according to his attorney, Bruce Barnes, taking out loans to finance the entire purchase price.

Mr. Trombley estimates the four units he holds are worth at best 40% of the original purchase price, he said. Carrying costs, meanwhile, are running about $14,000 a month.

Write to Michael Corkery at michael.corkery@wsj.com, Sara Lin at sara.lin@wsj.com and Ruth Simon at ruth.simon@wsj.com

AZ auction

Arizona Daily

There apparently is no shortage of deal seekers in the Green Valley real estate market.
Dozens of them turned out for Saturday's auction of nine new homes in Las Campanas Village. The house where the auction was held was packed with more than 100 bidders and spectators — so many that some had to sit outside on a patio and hear the action through a sliding-glass door.
But despite the rapid-fire chant from the auctioneer, the bidding came hesitantly and in increments of only $1,000 or so. Several of the winning bids landed around $140,000 plus a 10 percent auction premium. That's about $100,000 below the list prices for the two-bedroom homes, which ranged from about 1,680 to 1,760 square feet.
The developer, Mark Hughes, called it "a bad night in Las Vegas."
Retiree-oriented Green Valley, south of Tucson along Interstate 19, saw a surge of second-home buying and investment activity during the recent real estate boom, local real estate agents said. At the end of 2004, only about 200 homes were on the market, said Jack Woerner, a Coldwell Banker Success Southwest broker who tracks Green Valley listings.
But since the slowdown, the number of listings has soared to about 1,100, Woerner said.
"There's not really much of anything selling down here," said Hughes, who has 24 houses in Las Campanas Village that have been on the market about nine months. "This type of buyer does not have to buy."
Agents say part of the problem is a general slowdown in the second-home market. Some retirees who want to relocate to Green Valley are also having some trouble selling existing homes, especially in places such as Michigan, they said. And prices may have gotten too high too fast during the boom, they said.
Now prices are in retreat, and that's helping to bring back the buyers, agents said.
"Pricing is lower than it was back in the peak," said Gary Smith, an independent agent based in Tucson who is handling sales for Hughes. "People are getting good bargains, and there are a lot of properties to pick from."
Despite some buyers' difficulties selling homes in other markets, "the people are coming here to buy, still a goodly number coming with cash," said Steve Smith, president of the Green Valley Association of Realtors and no relation to Gary Smith.
But a drop in prices is not welcome news for some retirees who bought at the peak.
Winter resident Joe Morrow, who attended Saturday's auction, said his Green Valley house is probably worth about $150,000, compared with about $200,000 two years ago. Judging from the prices at the auction, he thought he might revise that estimate to the $120,000s or $130,000s.
Gary Beatty, an unsuccessful bidder on two properties, said he felt sorry for other buyers in the Las Campanas neighborhood who paid in the $230,000s or more. He bid about $137,000 on both tries on behalf of a brother. The winning bids were not much higher.
"This market is terrible right now," he said as he stood on the patio wearing a bright yellow hat, matching shorts and a backpack.
Hughes, the builder, said he probably will reduce the prices of his remaining houses based on the auction results. Only three of the houses, those that were "absolute" with no cancellation rights, were sold after the auction. Hughes made counteroffers for the other six.
The winning bids "were lower than I expected," he said.
● Christie Smythe covers real estate for the Star and writes a weekly column on the industry. Send news about commercial and residential real estate to her at Business, Arizona Daily Star, P.O. Box 26807, Tucson, AZ 85726; fax to 573-4144; or e-mail to csmythe@azstarnet.com.