Route to Recovery

A trip through the epicenters of the recession

America’s Route to Recovery: Part Two – A New Revolution

Dec 29, 2009 22:28 UTC

For the Reuters multimedia project Route to Recovery, a team of journalists toured America to examine the impact of the recession and posted their reports on reuters.com. For the last installment in the series, reporter Nick Carey has written an extended overview of the challenges and opportunities facing the country.  The second part of this three-part report is below. Click here for part one.

Leslie Taito is executive director of Rhode Island Manufacturing Extension Services (RIMES), a nonprofit that provides consultation for small and medium-sized manufacturers in Rhode Island, a state of 1 million people.

Rhode Island was the home of America’s first mechanized cotton mill, but since Taito arrived 16 years ago, the number of manufacturers here has fallen to 1,945 from 2,800. Still, she believes that all of those that are left can be helped to survive and thrive — and the best way is to get smart and not try to compete with low-cost Chinese producers.

“Manufacturers have to specialize and find a niche where they develop high-end goods that are not sold just based on cost,” Taito said. “Sure, China can make it cheaper than we can,” she said, while weaving in and out of traffic en route through the heart of Providence. “But what they don’t have is the design or engineering capabilities that we do.”

ROUTETORECOVERY/

Maria Montero carries plastic products for quality control inspection at Blow Molded Plastics in Pawtucket, Rhode Island November 17, 2009.   REUTERS/Brian Snyder

One of the companies that RIMES has worked with in the past is Pawtucket-based Blow Molded Specialties, which makes products from hot plastic that is blown into molds where it sets. Its clients are predominantly in the healthcare sector.

President and majority owner Tom Boyd describes how the company’s largest customer switched production of a basic product to Mexico because it could be made there for 2 cents apiece instead of 8 cents in the United States.

That company had accounted for some 35 percent of business. “That was nearly the end of us,” Boyd said with a wry smile.

So instead of trying to compete on low-cost products, Boyd’s company specializes in high-end, complicated and intricate products, and even develops products for customers.

In the company’s meeting room, he shows off some of the firm’s products including one which looks almost like a plastic accordion and is about the same size, with evident pride.

This, he explains, is a plastic bellows his firm developed for a healthcare company, whose name he says he cannot divulge. It has a special function. Conventional practice in organ transplants has been to ship organs on ice. But Boyd says it has been found that a better way to ship organs is to keep them functioning, and the bellows he holds in his hands is part of a device to keep a set of lungs pumping while in transit.

Asked how much Blow Molded charges for a pump like this, Boyd shrugs his slight shoulders. “Maybe a few dollars each. And we only sold a few of them.”

But then he leans forward with right eyebrow and right forefinger raised. “Ah, but you see, the money’s not in the product,” he said, his grin widening. “The money’s in the engineering. We bill our customers for the development work we do.”

Communities around the country say they want to attract small firms like Blow Molded rather than focus on major corporations, for the simple reason that when a giant plant shuts down, it is almost impossible to replace the jobs lost.

The classic example is Wilmington, Ohio, where empty store fronts on Main Street are grim testimony to what happened when DHL axed nearly 10,000 jobs.

“When a big company like that goes, it leaves a very large hole to fill,” said Mayor David Raizk (pronounced “risk.”)

“I’d rather see 200 small companies with 50 employees each than one big one,” he said. “You can lose one, two or even 10 of those and find a way to replace them. Big companies are great when they’re in town, but when they leave they devastate communities.”

ROUTE-RECOVERY/

A pelican flies near a fisherman in Pensacola, Florida November 11, 2009. REUTERS/Carlos Barria

One such small firm is Computer Technology Solutions Inc, the largest privately-held software firm in Alabama, which has added some 40 jobs this year and now employs 150 people. “If that’s what we can do in a recession, imagine how we can do when the economy improves,” said president Sanjay Singh.

CTS got its start in a business incubator run by the University of Alabama in Birmingham. Singh said that unlike big corporations — which tend to be bureaucratic, slow-moving and inclined to withhold responsibility from young employees — CTS gives its 20-something employees multimillion-dollar projects to run on their own.

“If you give young people responsibility, they deliver,” he said. “We don’t hang over our employees’ shoulders waiting for them to get things done, we just let them do it.”

GREEN ECONOMY A LONG HAUL
There are great expectations that alternative energy or the “green economy” will help move America forward.

According to Lisa Frantzis, managing director for energy at Navigant Consulting Inc, in 2009, 7,000 megawatts of wind power was installed in America with the creation of 70,000 jobs — 50,000 direct and indirect jobs, plus 20,000 service-related jobs. Solar power saw 300 megawatts installed with the creation of 60,000 jobs.

Jay Paidipati, a Navigant managing consultant who works with Frantzis, said because of the industry’s breadth and relative youth, it is hard to make forecasts. “I would feel comfortable saying that the number of green jobs will be in the millions,” he said. “Just how many millions, I don’t know.”

ROUTE-RECOVERY/

Mesquite Lake Cattle Manure Power Plant is seen in El Centro, California, November 3, 2009.  REUTERS/Lucy Nicholson

It will be years, however, before that potential is realized. One of the main problems is the mass of rules and regulations that make building plants a lengthy process.

Imperial County in southern California has hit on a novel way to get around red tape, using a provision of state law that allows local authorities to streamline the approval process for building a plant, as long as it is under 50 megawatts.

This loophole enables officials to handle the approval process in as little as a year, compared to several years at the state level.

“Getting anything done in California is hard,” said Imperial Valley Economic Development Corporation CEO Tim Kelley, at his office in El Centro some 100 miles (160 km) east of San Diego. “But it is less hard to get it done here.”

This area has 360 days of sun a year and has suitable geological conditions for geothermal power — there are 10 such plants already. Thirty others for solar, geothermal and wind facilities, are in the process of acquiring permits.

Red tape is not the only challenge.

Paul Rich is chief development officer at Deepwater Wind LLC, which aims to develop America’s first offshore wind farm, in Rhode Island. The farm, which would eventually provide 15 percent of Rhode Island’s electricity, should come in two phases. The first test phase with six to eight turbines could be installed off the coast by 2012. By around 2015 the wind farm would contain around 100 wind turbines.

Rich described the coast between Maine and Maryland as the “Saudi Arabia of wind,” predicting an “enormous, exponential leap in jobs, manufacturing and infrastructure.”

Part of the reason for the long lead time is the need for extensive tests of local wind conditions, he said.
“It won’t happen overnight,” Rich said. “We are trying to create a truly new industry here and it has to be done right.”

“A far bigger concern for us is finding a qualified workforce to run and maintain the wind farm when it becomes operational.”

In blighted states like Michigan, many former manufacturing workers are already training for green jobs, even though relatively few have been created.

Matthew Derra, 41, lost his job at struggling auto supplier American Axle & Manufacturing Holdings Inc in July 2008. Now he is taking an associate degree in renewable energy and wants to find a job maintaining wind turbines.

“There’s nothing out there in my old field of work,” he said. “And there will be thousands of people out there chasing every green job, but I have to try.”

“I can’t just sit home and watch television.”

ROUTETORECOVERY/

April Metts watches television at her apartment in Providence, Rhode Island November 18, 2009.  Metts was homeless for several years before getting into her subsidized apartment as part of the Housing First RI initiative.   REUTERS/Brian Snyder

Even in California, which has America’s most aggressive climate change regulations, just 159,000 of the state’s 18 million jobs are considered “green” as of the start of 2008, according to public policy group Next 10.

Still, there are encouraging signs that money is flowing into renewable energy even in a sluggish economy.

Bill Gibson, is a business broker and principal of Gibson & Associates Inc in Pensacola, Florida. Gibson finds buyers for companies that want to sell.

He noted that companies selling luxury items are having trouble finding buyers because gun-shy banks won’t lend for that kind of investment, but he has noticed a lot more interest in renewable or alternative energy firms.

“There are definitely going to be haves and have-nots,” Gibson said. “Green energy is part of the future.”

The green energy industry is also seen as an opportunity for manufacturing firms to retool.

“What concerns me is when I hear people talking about manufacturing in the past tense,” said Virg Bernero, mayor of Lansing. “If we want wind turbines, someone here should manufacture them.”

ROUTE-RECOVERY/

The Vulcan statue is seen at Vulcan Park in  Birmingham, Alabama November 14, 2009. The Vulcan statue is a symbol of old times at the iron industry in Birmingham.  REUTERS/Carlos Barria

GEEKS AT THE TABLE
Laurie White, president of the Greater Providence Chamber of Commerce, keeps a board covered in bad news — headlines from The New York Times, The Washington Post, The Boston Globe and The Economist about how badly the economy of the state has been faring. Rhode Island’s unemployment rate was 12.7 percent in November, the second highest in the country after Michigan.

“Our problems have made not just national but international headlines,” White said. “That motivates me to find a new way forward.”

Rhode Island is pinning its hopes on a strategy dubbed “Strengthening Providence’s Knowledge Economy.” It has involved bringing together local and state government, the Chamber of Commerce, the Rhode Island Economic Development Corporation (RIEDC) and hundreds of small hi-tech software companies.

“The geeks have finally been offered a seat at the table,” said business consultant Jack Templin.

White said there was an easy explanation: “The geeks are just about the only ones creating jobs right now.”
Companies like Working Planet, which handles algorithmic online market research for its clients, are now at the table.

“Up until a few years ago the chamber was focused on major companies and its existing membership base,” said Working Planet Marketing Group Inc president and co-founder Soren Ryherd. “Over the past three years the chamber has done an about face and is now also about the smaller companies that are creating jobs.”

“We have also become more organized because we need to reach the local universities so we can find and retain top talent,” he added.

Mike Saul is the interim executive director of the RIEDC and has spent much of his career as a “turnaround guy” taking poorly performing companies and making them thrive. He wants to do the same here, in part because three of his four children, like many of the state’s offspring, live outside Rhode Island because there was no work here for them.

“In any turnaround that is going to work you have to ask where is the enterprise value that I can push forward,” he said. According to Saul, the state’s education system and its wind potential create much of its enterprise value.

“Rhode Island’s attempts at economic development have been episodic in the past, but this time everyone is on the same page,” Saul said. “A crisis makes things happen. It helps individuals reinvent themselves and will help this country reinvent itself.”

Part Three – The Mind Factory

ROUTETORECOVERY/

A U.S. flag decal is stuck to the window in a door to the Harrington Hall homeless shelter in Cranston, Rhode Island November 18, 2009.    REUTERS/Brian Snyder

A NEW REVOLUTION
Leslie Taito is executive director of Rhode Island Manufacturing Extension Services (RIMES), a nonprofit that provides consultation for small and medium-sized manufacturers in Rhode Island, a state of 1 million people.
Rhode Island was the home of America’s first mechanized cotton mill, but since Taito arrived 16 years ago, the number of manufacturers here has fallen to 1,945 from 2,800. Still, she believes that all of those that are left can be helped to survive and thrive — and the best way is to get smart and not try to compete with low-cost Chinese producers.
“Manufacturers have to specialize and find a niche where they develop high-end goods that are not sold just based on cost,” Taito said. “Sure, China can make it cheaper than we can,” she said, while weaving in and out of traffic en route through the heart of Providence. “But what they don’t have is the design or engineering capabilities that we do.”
One of the companies that RIMES has worked with in the past is Pawtucket-based Blow Molded Specialties, which makes products from hot plastic that is blown into molds where it sets. Its clients are predominantly in the healthcare sector.
President and majority owner Tom Boyd describes how the company’s largest customer switched production of a basic product to Mexico because it could be made there for 2 cents apiece instead of 8 cents in the United States.
That company had accounted for some 35 percent of business. “That was nearly the end of us,” Boyd said with a wry smile.
So instead of trying to compete on low-cost products, Boyd’s company specializes in high-end, complicated and intricate products, and even develops products for customers.
In the company’s meeting room, he shows off some of the firm’s products including one which looks almost like a plastic accordion and is about the same size, with evident pride.
This, he explains is a plastic bellows his firm developed for a healthcare company, whose name he says he cannot divulge. It has a special function. Conventional practice in organ transplants has been to ship organs on ice. But Boyd says it has been found that a better way to ship organs is to keep them functioning, and the bellows he holds in his hands is part of a device to keep a set of lungs pumping while in transit.
Asked how much Blow Molded charges for a pump like this, Boyd shrugs his slight shoulders. “Maybe a few dollars each. And we only sold a few of them.”
But then he leans forward with right eyebrow and right forefinger raised. “Ah, but you see, the money’s not in the product,” he said, his grin widening. “The money’s in the engineering. We bill our customers for the development work we do.”
Communities around the country say they want to attract small firms like Blow Molded rather than focus on major corporations, for the simple reason that when a giant plant shuts down, it is almost impossible to replace the jobs lost.
The classic example is Wilmington, Ohio, where empty store fronts on Main Street are grim testimony to what happened when DHL axed nearly 10,000 jobs.
“When a big company like that goes, it leaves a very large hole to fill,” said Mayor David Raizk (pronounced “risk.”)
“I’d rather see 200 small companies with 50 employees each than one big one,” he said. “You can lose one, two or even 10 of those and find a way to replace them. Big companies are great when they’re in town, but when they leave they devastate communities.”
One such small firm is Computer Technology Solutions Inc, the largest privately-held software firm in Alabama, which has added some 40 jobs this year and now employs 150 people. “If that’s what we can do in a recession, imagine how we can do when the economy improves,” said president Sanjay Singh.
CTS got its start in a business incubator run by the University of Alabama in Birmingham. Singh said that unlike big corporations — which tend to be bureaucratic, slow-moving and inclined to withhold responsibility from young employees — CTS gives its 20-something employees multimillion-dollar projects to run on their own.
“If you give young people responsibility, they deliver,” he said. “We don’t hang over our employees’ shoulders waiting for them to get things done, we just let them do it.”

GREEN ECONOMY A LONG HAUL
There are great expectations that alternative energy or the “green economy” will help move America forward.
According to Lisa Frantzis, managing director for energy at Navigant Consulting Inc, in 2009, 7,000 megawatts of wind power was installed in America with the creation of 70,000 jobs — 50,000 direct and indirect jobs, plus 20,000 service-related jobs. Solar power saw 300 megawatts installed with the creation of 60,000 jobs.
Jay Paidipati, a Navigant managing consultant who works with Frantzis, said because of the industry’s breadth and relative youth, it is hard to make forecasts. “I would feel comfortable saying that the number of green jobs will be in the millions,” he said. “Just how many millions, I don’t know.”
It will be years, however, before that potential is realized. One of the main problems is the mass of rules and regulations that make building plants a lengthy process.
Imperial County in southern California has hit on a novel way to get around red tape, using a provision of state law that allows local authorities to streamline the approval process for building a plant, as long as it is under 50 megawatts.
This loophole enables officials to handle the approval process in as little as a year, compared to several years at the state level.
“Getting anything done in California is hard,” said Imperial Valley Economic Development Corporation CEO Tim Kelley, at his office in El Centro some 100 miles (160 km) east of San Diego. “But it is less hard to get it done here.”
This area has 360 days of sun a year and has suitable geological conditions for geothermal power — there are 10 such plants already. Thirty others for solar, geothermal and wind facilities, are in the process of acquiring permits.
Red tape is not the only challenge.
Paul Rich is Chief Development Officer at Deepwater Wind LLC, which aims to develop America’s first offshore wind farm, in Rhode Island. The farm, which would eventually provide 15 percent of Rhode Island’s electricity, should come in two phases. The first test phase with six to eight turbines could be installed off the coast by 2012. By around 2015 the wind farm would contain around 100 wind turbines.
Rich described the coast between Maine and Maryland as the “Saudi Arabia of wind,” predicting an “enormous, exponential leap in jobs, manufacturing and infrastructure.”
Part of the reason for the long lead time is the need for extensive tests of local wind conditions, he said.
“It won’t happen overnight,” Rich said. “We are trying to create a truly new industry here and it has to be done right.”
“A far bigger concern for us is finding a qualified workforce to run and maintain the wind farm when it becomes operational.”
In blighted states like Michigan, many former manufacturing workers are already training for green jobs, even though relatively few have been created.
Matthew Derra, 41, lost his job at struggling auto supplier American Axle & Manufacturing Holdings Inc <AXL.N> in July 2008. Now he is taking an associate degree in renewable energy and wants to find a job maintaining wind turbines.
“There’s nothing out there in my old field of work,” he said. “And there will be thousands of people out there chasing every green job, but I have to try.”
“I can’t just sit home and watch television.”
Even in California, which has America’s most aggressive climate change regulations, just 159,000 of the state’s 18 million jobs are considered “green” as of the start of 2008, according to public policy group Next 10.
Still, there are encouraging signs that money is flowing into renewable energy even in a sluggish economy.
Bill Gibson, is a business broker and principal of Gibson & Associates Inc in Pensacola, Florida. Gibson finds buyers for companies that want to sell.
He noted that companies selling luxury items are having trouble finding buyers because gun-shy banks won’t lend for that kind of investment, but he has noticed a lot more interest in renewable or alternative energy firms.
“There are definitely going to be haves and have-nots,” Gibson said. “Green energy is part of the future.”
The green energy industry is also seen as an opportunity for manufacturing firms to retool.
“What concerns me is when I hear people talking about manufacturing in the past tense,” said Virg Bernero, mayor of Lansing. “If we want wind turbines, someone here should manufacture them.”

GEEKS AT THE TABLE
Laurie White, president of the Greater Providence Chamber of Commerce, keeps a board covered in bad news — headlines from The New York Times, The Washington Post, The Boston Globe and The Economist about how badly the economy of the state has been faring. Rhode Island’s unemployment rate was 12.7 percent in November, the second highest in the country after Michigan.
“Our problems have made not just national but international headlines,” White said. “That motivates me to find a new way forward.”
Rhode Island is pinning its hopes on a strategy dubbed “Strengthening Providence’s Knowledge Economy.” It has involved bringing together local and state government, the Chamber of Commerce, the Rhode Island Economic Development Corporation (RIEDC) and hundreds of small hi-tech software companies.
“The geeks have finally been offered a seat at the table,” said business consultant Jack Templin.
White said there was an easy explanation: “The geeks are just about the only ones creating jobs right now.”
Companies like Working Planet, which handles algorithmic online market research for its clients, are now at the table.
“Up until a few years ago the chamber was focused on major companies and its existing membership base,” said Working Planet Marketing Group Inc president and co-founder Soren Ryherd. “Over the past three years the chamber has done an about face and is now also about the smaller companies that are creating jobs.”
“We have also become more organized because we need to reach the local universities so we can find and retain top talent,” he added.
Mike Saul is the interim executive director of the RIEDC and has spent much of his career as a “turnaround guy” taking poorly performing companies and making them thrive. He wants to do the same here, in part because three of his four children, like many of the state’s offspring, live outside Rhode Island because there was no work here for them.
“In any turnaround that is going to work you have to ask where is the enterprise value that I can push forward,” he said. According to Saul, the state’s education system and its wind potential create much of its enterprise value.
“Rhode Island’s attempts at economic development have been episodic in the past, but this time everyone is on the same page,” Saul said. “A crisis makes things happen. It helps individuals reinvent themselves and will help this country reinvent itself.”

COMMENT

I read one comment saying that their 2 children on graduation will have $100K in education debts.
Here in Sweden we can study right thru university completely free of charge, and even get a very generous monthly allowance to help with books and food etc etc

Posted by George | Report as abusive

Short sale a good deal for couple looking to make a move

Nov 16, 2009 16:10 UTC

ROUTE-RECOVERY/

PENSACOLA, Florida – As it turns out, the Akermans’ inability to buy three years ago has turned out to be a good thing.

“We’ve been talking about moving for three years,” said Daniel Akerman, 36, who works for the county fire service. “But we weren’t ready financially to buy.”

“We’ve outgrown our old house and feel secure enough to buy at this point,” said Robin, 37, finishing off Daniel’s thoughts outside the house they just bought through a short sale.

Under a short sale, the bank agrees to forgive some if not all of a borrower’s debt even though the home owner sells the home at a loss.

The home they have made an offer on – and are just waiting to close the deal on – sold for $225,000 during the peak, but they will $150,000 for it. It is twice as large as their old home and has a swimming pool – though it is badly in needs of repair work. The home has three bedrooms, a large master bathroom and front and back yards as well as the pool.

“We’re delighted with what we’re getting,” Robin, a nurse, said. “We’re getting a whole lot of house for our money.”

The Akermans’ only frustration with the short sale process was that it took so long. They made their initial bid in mid-July and have only just received approval.

“We weren’t in any rush so we were able to wait for the bank’s approval,” Daniel said. “If you can afford to wait then there are some great deals out there.”

Photo by Carlos Barria

Click here for more Route to Recovery

COMMENT

The states with the highest unemployment rates are not represented. ie Michigan & Oregon.

Posted by Renee | Report as abusive

Military families struggling to avoid losing large sums on their homes

Nov 13, 2009 20:37 UTC

ROUTE-RECOVERY/PENSACOLA, Florida – Sacrifice is familiar for members of the armed forces and their spouses, but Maritza Lee feels that losing large amounts of money on a house should not be one of them.

“When we signed up we knew there would sacrifices and we have made them,” said Lee, a realtor and Navy wife, whose husband is a pilot. “But it would be nice if the government could do something to help us.”

There are some 16,000 military personnel at the Pensacola naval complex here. Transfers every three to five years are a way of life for military families, which means selling their homes and moving on.

The trouble is that many families bought at the peak of the housing boom and now stand to lose a great deal of money.

“Foreclosure is not an option for many of these families,” Lee said. “They have to have security clearance for the work they do and bad credit would cost them that clearance.”

When Lee and her husband moved down from Virginia two years ago, they were unable to sell their house, which they bought for $359,000 and is now worth $300,000. They have rented that house out but are losing money on it every month.

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Mitchell Perry, 26, is a hospital corpsman in the Navy who bought a home here for $115,000 in 2006 at the peak of the market after he was transferred here from Virginia. This was the first home he and his wife bought. His wife has since moved back to Virginia with their children to work, as she could not find a job in the Pensacola area.

“It’s really tough to be apart, but if we weren’t both working we’d have trouble paying the bills,” he said. “Some military families can spend most of their lives being apart, but we’re not one of them. I didn’t marry the love of my life to be separated from her for so long.”

Perry refinanced his home to get a lower mortgage rate, but said the broker that approached him about refinancing did not explain to him that his mortgage would rise as a result to $125,000.

“I should have read the fine print, but at no point did anyone say my mortgage would go up,” he said.

Now Perry is due to be transferred in January, though he does not know where yet. The best he may be able to get for his home is around $90,000, now the bubble has burst. He does not want to sell at that price and be stuck with $35,000 in debt.

“There’s no way I want to still be paying a mortgage for something I don’t even own anymore,” he said.

Foreclosure is also not an option as he would lose his security clearance, which is vital to his job.

Lee, who is trying to help Perry, said his best option is to rent the home out. He will still lose some money every month as a result, as there are lot of rental properties on the market.

“There are no good options for me at this point,” Perry said. “But if I rent the place out then that will at least reduce my losses.”

Rene Dixon, 36, and her husband, a Navy supply officer, were transferred to Pensacola from Virginia in August and are struggling to come to terms with the fact that they bought their home for $485,000 in 2007 and now may get just $424,000 for it.

“We’ll break even if we sell for that much, but we’ll lose most of the $96,000 in equity from our previous home that we put down on the place,” she said. “I try to think of it as imaginary money, but this has not been easy for us.”

The Dixons are paying rent in Pensacola and paying their mortgage in Virginia while they try to sell their home.

“The two sets of bills have put a lot of strain on us,” Renee Dixon said.

Maritza Lee said there is a stigma attached to talking about financial difficulties among members of the armed forces, which means no one knows how widespread this problem is.

“In the military we tend to suffer in silence as we don’t want others to know that we are in trouble,” she said. “But I’m getting calls from guys at other bases around the country asking me for help because they’ve heard from someone that I’m trying to help.”

“Big corporations help families when they move them,” Lee added. “If the government were to buy up houses when they transfer people that could help military families avoid financial difficulties like these.”

“I always felt protected being part of the military,” she said. “But we’re not. We’ve been left out in the cold.”

COMMENT

Why couldn’t we clean those to big to fail just like we’re doing doing in Iraq and Afghanistan? I think many millionaires already received loan modifications and wait Military won’t ?
Wow !

Selling only when you have to

Nov 13, 2009 19:39 UTC

ROUTE-RECOVERY/

PENSACOLA, Florida – Home owners here who don’t need to sell right now are staying put.

“Those people who aren’t in a hurry to sell their homes are taking them off the market,” said Denis McKinnon, senior vice president of the Gulf State Region of real estate firm Coldwell Banker. “They’re sitting this out until the market improves a bit.”

“It’s a great market for buyers,” he added, “but not such a good one if you have sell.”

Though the average home price in Pensacola has dropped close to 20 percent to $178,000 from the peak in 2006, local realtors say the that the best thing going for this northern part of Florida right now is that it has not been hit as hard by the housing slump as the southern part of the state.

“We didn’t experience the best of the boom up here,” said Rick Harper, director of the Haas Center for Business Research and Economic Development, “but that also means we’re not experiencing the worst of the downturn now that the bubble has burst.”

Parts of Florida have been decimated by the worst housing crisis since the Great Depression. Like Nevada and Arizona, a good portion of that collapse has come down to the second-home market. Home owners tend to find it far easier to give up their second home in a crisis than the one they live in most of the year.

ROUTE-RECOVERY/

Local realtors and others in this city of around 55,000 in the Florida Panhandle – the narrow strip at the top of the state that stretches to the west until it bumps up against Alabama – say that because Pensacola does not have much of a second-home market like the southern part of the state it was spared the rampant speculation of the south.

Non-performing mortgage loans here make up to 6 percent of the total here, compared to more than 15 percent in some southerly areas.

“The economic fundamentals up here are different,” Harper said. “The foreclosures we’ve seen here are more related to economic distress.”

Not that there has been any shortage of foreclosures and short sales, where a bank agrees to let a distressed home owner sell their home at a loss. According to data compiled by Metro Market Trends Inc (MMT), which monitors regional real estate trends, there were 3,018 foreclosures in Escambia and Santa Rosa counties – which make up the greater Pensacola area and have a combined population of around 450,000 – in the first 10 months of this year.

“If you live here then the people in foreclosure could be your neighbors, your friends or you could go to church with them or work with them,” said MMT co-owner Al Muller.

McKinnon said that property prices have remained fairly flat throughout this year, which makes him hopeful that the worst may be over.

ROUTE-RECOVERY/

“The market appears to have reached a bottom,” he said. “And even if it does end up falling further I think the declines will not dramatic.”

Stabilized or not, in this market Muller said it is hardly surprising that home owners that are not forced to move are trying to wait out the worst of the slump. The number of homes sold in Escambia and Santa Rosa is still below 600 month, down from more than 1,400 at the peak of the market in 2006.

“Home owners are either waiting for a better price or they are not selling because they cannot afford to take the loss,” he said.

McKinnon and other realtors here said that foreclosures or short sales form up to 30 percent of sales at the moment.

Deborah Mays, a realtor at Coldwell Banker, said that if a buyer has the patience they should consider a short sale. This is because short sellers are forced to sell and may have neglected home repairs while trying to pay their mortgage – which means that buyers have to be willing to invest in a home.

“If you can afford to wait and you can accept that you’ll have to invest some money in home improvements,” she said, “then you can get a lot more house for your money.”

Photos by Carlos Barria
COMMENT

The reality of Obama’s HAMP..”Hurting Any Modification Possibility” Program

http://www.associatedcontent.com/article  /2381656/why_obamas_home_affordability_ program.html?cat=3

Posted by larry25 | Report as abusive
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