The Long Island Business News. "As the nation’s residential market softens, local real estate experts say the mad rush to rezone any available sliver of land to accommodate housing is over. 'The residential market is kind of in the toilet,' said Corporate Realty Services partner John O’Hara."

"Long Island’s housing market is no longer hotter-than-hot. With the days of double-digit annual gains apparently over, buyers are holding back, leaving the market flooded with unsold inventory. Suffolk County is 'going to watch it for the next few months,' according to Planning Director Thomas Isles. 'People are kind of taking the temperature of the chill is here, and residential rezoning is frozen.'"

"Is the developer 'willing to put up hard dollars today in a stabilizing or falling market in pricing while construction costs are going up?' broker Brian Lee asked. 'Are they willing to gamble? My guess is that there are a lot of people getting cold feet in the marketplace.'"

"At the height of the residential boom, rezoning applicants hounded the department for a decision; now, 'We’re not getting any pressure whatsoever,' Smithtown Planning Director Frank DeRubeis said. 'It’s sort of like standing around in the room – everybody’s looking at each other.'"

The Asbury Park Press from New Jersey. "Kara Homes Inc., one of the biggest home builders in Monmouth and Ocean counties, might be close to seeking protection from creditors under Chapter 11 of the bankruptcy law."

"The news has left people who have houses in the pipeline with Kara Homes anxious and uncertain. Middletown resident Gina Haspilaire and her husband, Richard, have been waiting to move into their home at Cottage Gate at Navesink in Middletown since March 2005."

"Now the couple want Kara to return their deposit, which is about $125,000, she said. The couple used money saved for their son's college education to pay for the downpayment, figuring they would replace it with money from the sale of their existing home. 'When we did this, my son had two more years to finish high school,' Haspilaire said. 'Now we can't sell our house, and they won't give us back the money.'"

"They don't want the house, which is completed but without a certificate of occupancy. She said she believes the contract was voided because the home wasn't delivered on time."

"Frederick Young said he had a contract for a condominium at another Kara development in Morris County. After he and his wife became ill over the summer, he wanted to cancel the contract and get his $19,000 deposit back but hasn't been able to get in touch with Kara."

"'This is the beginning of a very difficult market for builders and resellers alike,' said Patrick J. O'Keefe, chief executive officer of the New Jersey Builders Association."

The Home News Tribune. "'Every builder I know..is in an aggressive inventory-control posture,' O'Keefe said. 'They are not starting projects; they are deferring projects.'"

"Earlier this week, at least some Kara Homes employees received a letter from the company notifying them that they were being laid off and stating that Kara 'anticipates filing Chapter 11.' Under that provision of the bankruptcy code, creditors claims are frozen by the court while the company can continue to operate as it attempts to reorganize."

"Richard King gave a $46,000 down payment on a $461,000 three-story town house at Horizons at Birch Hill, Old Bridge last year. 'Everybody at Kara Homes is stalling for time,' he said. 'Kara Homes reps have said I would get the money back, and I have gotten nothing.'"

"Another problem home builders face is land bought in 2004 and 2005 that is worth less now, said James Hughes, dean at Rutgers University. 'That could hurt their balance sheets very significantly, if they have land that's a lot less value than what they purchased it for,' said Hughes, speaking about home builders in general."

"'The economic wild parties are often followed by prolonged hangovers,' Hughes said. 'Kara Homes may be having a real hangover; other private home builders may be waking up a little groggy.'"

The Star Ledger. "Not long ago, Kara Homes was riding high, scrambling to build more and more homes to meet the seemingly insatiable demand for $1 million estates and townhomes, single-family homes and adult communities. Then the housing market crashed, taking Kara along with it."

"Industry observers said the company, one of the biggest home builders in New Jersey, was competing against even larger rivals to develop in a state where land is at a premium. Therefore, Kara was forced to pay top dollar for acreage. The company may have lost its way as it became too focused on growing bigger and bigger so quickly, industry observers said."

"After the housing market crashed, Kara, the company was putting finishing touches on houses before buyers were found. The company attempted to move sales by dangling lucrative incentives, a recent trend in the business."

"Despite the efforts, Kara had to lay off employees, and bills from contractors started to stack up. At one development in Edison, a carpenter who arrived to repair a bay window in a $1.25 million home got a call on his cell phone and was laid off before he could finish the job, the homeowner said."

"There doesn't appear to be an end in sight. 'The big picture is the housing market continues to be oversupplied,' said appraiser Jeffrey Otteau. 'Unsold inventory is up by 60 percent year-to-date versus last year.'"

"Last year in New Jersey, 42,644 homes were on the market, Otteau said. Today, there are 68,281. 'The delta there is about 26,000 additional homes unsold offered for sale,' he said. 'It's a big number.'"

"'Clearly this is a weakened real estate market,' Otteau said. 'It's fair to say the entire home-building industry is feeling the strain of all this. And at this point, homebuyers are a bit apprehensive about moving forward.'"