The head of the Massachusetts realtors did a Q&A. "The red hot housing market in 2005 has begun to cool down this year. But David Wluka, owner of Wluka Real Estate in Sharon, says the market is returning to normal and not crashing. He said the roughly 20 percent decline in sales volume from January 2005 to January 2006 is a sign that prices are stabilizing."

"Why did the housing market cool down this year? Well, you just can’t maintain an overheated market forever. It’s a natural thing, (housing) markets go up and they go down."

"Expectations are different. People up until 2000 were looking at houses as an investment (where they would) retire and pay off the mortgage. The cycle of appreciation started and they started looking at it as a source of income."

"So (the housing market) is cooling down, but the plane is not crashing. It’s going to land. Maybe a bump or two on the way down, but the plane is going to land."

"How does a cooled-off housing market affect the seller, and on the other side of that, the buyer?"

"We’ve had a major problem educating ourselves as to the realities of the marketplace. And again, this is the short horizon versus the long horizon. All they see is what the neighbor sold their house for last month. For the sellers, even though it’s a short horizon and it’s money they’ve never really had, it’s money they saw come and go."

"For example, they say, 'I could have sold the house for $600,000 three months ago and now it’s only worth $550,000, I’ve lost $50,000.' No, they didn’t and its difficult to (educate them) to overcome that thought in their head."

"The buyers need education also (because) they were afraid of the (housing) bubble. I must say that I spent most of my last six months talking about the bubble, for which there’s no statistical proof."

"What kind of role will interest rates play in the housing market over the next year? The (Federal Reserve) is continuing to try to cool a market that’s heating up for non-housing-related issues. People become potential victims of getting into financial trouble. Because you have an expectation, the rates have gone up and there is a great temptation to take a mortgage vehicle that would let you still have (an expensive) house, but become dangerous on such things as zero-interest mortgages."

"Will we see more foreclosures because people can’t afford to pay their mortgage payments anymore? People who are on the margin and couldn’t afford conventional financing and probably shouldn’t have bought a house or should have reduced their expectations, which is more the case, those kinds of loans are going to be in trouble."

"It’s important to get the buyers to understand that just because the bank said they can afford it, doesn’t necessarily mean that they can."

The Lowell Sun. "Until this spring, Northern Middlesex County had managed to buck the statewide trend of increased foreclosure filings. That has now changed in a big way, according to Middlesex North Register of Deeds Richard Howe Jr."

"In March, the foreclosure process was started on 48 homes in the region, double the number from last year in that month. In April, 58 homes were threatened with foreclosure, up 76 percent from 2005. And during the first 30 days of May, 71 properties were hit with foreclosure filings, a startling 294 percent year-over-year increase.'

"'It was like a gas pump going up,' Howe said of tracking the foreclosure numbers this month. Howe suggested that because the housing boom was late in coming to the region, the wave of foreclosures may also have lagged."

"The conventional wisdom is that buyers, seduced by the booming residential real-estate market of recent times, entered into risky and unconventional mortgages that became huge liabilities when the market cooled."

"ForeclosuresMass reported that there were 1,227 foreclosure filings in the state in April, 44 percent higher than last year and almost 90 percent more than in 2004. Jeremy Shapiro, president and co-founder of ForeclosuresMass, said things are getting worse."

"Lowell Realtor Brian McMahon of ERA Morrison said that most properties being targeted for foreclosure belong to first-time homebuyers who do not have the resources to weather a fiscal crisis. 'They're used to paying $800 to $1,000 a month for rent, and now they're paying $1,500 to $2,000 a month,' said McMahon."

"Consumers who entered into 'interest-only' mortgages will not be affected until five years after signing the agreement, Howe said. Interest-only loans require that buyers pay only the interest on their home for five years, then they start paying off the principal and monthly payments skyrocket."

"'The interest-only phenomenon is kind of a ticking time bomb,' Howe said. 'The real crisis will hit in 2008 when all of those ... loans convert and people start defaulting in massive numbers.'"