Some housing bubble reports from the Twin Cities. "Twin Cities home sales for May were down from a year ago, as the housing inventory continued its record growth, the local Realtors associations reported Monday. There were 5,039 closed home sales in May in the 13-county metro area. That is down 9.3 percent from a year ago."

"There were 5,749 pending sales in May, down 14.5 percent from 6,726 a year ago. New listings continued to soar in May, jumping 16.6 percent to 11,419."

"Following several months of increased listings, there was a record 30,179 active listings on the market in May, up a staggering 43.4 percent from 21,048 a year ago. There were 5.39 listings for each expected home sale in June, up 71.7 percent from last year at this time."

The Star Tribune reports on area foreclosures. "During the housing boom of the past five years, mortgage brokers flooded mailboxes and called homes offering once-exotic products. Such loans allowed people to buy more house than they could have afforded under traditional lending terms."

"The first signs of trouble are showing. In Hennepin County, sheriff's foreclosure sales totaled 1,042 in the first five months of 2006, up 62 percent from the same period a year ago."

"In Minneapolis, Paul Weingarden noticed the first waves last fall. 'My file count's way up, and I don't anticipate it going down anytime soon,' said Weingarden, a lawyer. 'A lot of these loans are adjustable-rate mortgages. Some are subprime mortgages, balloon mortgages, nothing-down mortgages. People are trying to buy more house than they can afford. And if there's any uptick in rates, they run into problems."

"'Nobody ever thinks that things will go bad. Nobody thinks property values will go down,' he said. 'And everybody presumes their income is going to keep going up, and they'll be able to handle anything that happens. That's not always true.'"

"Kelly Casey and her family managed to save their Cottage Grove home from a foreclosure sale this month. But she's not sure for how long. They swapped their 30-year fixed-rate loan for a three-year adjustable-rate mortgage with lower payments."

"But after a rough stretch, they're uncertain what will happen when their interest rate resets upward in February. 'It is a good loan; it's just that it's an ARM, and when it's up, I don't know what that means,' Casey said. 'I don't even understand my ARM loan like I should.'"

"Critics say lenders' relaxed standards for loan applicants made the problem worse. No industry officials contacted would comment on whether underwriters will become stricter. But Rick Sharga, of RealtyTrac, had this to say: 'They realize they made some bad loans, so now they're starting to tighten up their underwriting standards.'"

"That could compound the problem, Sharga said. Now somebody who shouldn't have had a loan, who is going into default, is not going to be able to qualify for the next loan."