The Star Tribune reports from Minnesota. "In a stagnant housing market, optimists already are calling 2007 the year of recovery. 'To me, the stars are all starting to align,' said Todd Shipman, outgoing president of the Minneapolis Area Association of Realtors. Is that shameless optimism or an educated guess?"

"The market will face plenty of challenges during the coming months, including increasing mortgage foreclosures, stagnant home prices and a glut of homes for sale. 'It's going to be a slow recovery,' Shipman said."

"The theme of the coming year will be absorption, as sellers step back to avoid stiff competition and buyers step forward to take advantage of low interest rates and seller flexibility. George Karvel, professor of real estate at the University of St. Thomas in St. Paul, said that during the recent five-year run-up in prices, future demand was satisfied, leaving a dearth of buyers and too many listings."

"At the end of the December, a seven-month supply of existing homes was on the market in the Twin Cities metro area, according to the Minneapolis association's weekly housing-supply outlook."

"'I think we're all feeling quite cautiously optimistic that the worst is behind us,' said Wendy Danks, marketing director for the Builders Association of the Twin Cities."

The Journal Sentinel from Wisconsin. "Mortgage foreclosure lawsuits in the five-county Milwaukee area are up 33% over last year, putting more than 5,000 households in jeopardy of losing their homes, court records show."

"The largest number of foreclosure actions has occurred in Milwaukee County, where nearly 3,600 such lawsuits have been filed this year, compared with 2,702 in 2005, also a 33% increase."

"In Washington and Waukesha counties, the number of foreclosure suits increased 49% and 30%, respectively. In Ozaukee County, 14 sheriff's foreclosure auctions are scheduled for next month alone. For all of this year, Ozaukee County had 30 such auctions."

"'Families' incomes did not keep pace with everything else that was happening, and the final victim was the houses,' said Kathryn Crumpton, manager of the non-profit Consumer Credit Counseling Services of Greater Milwaukee. 'I tell them that they are being held hostage by their mortgage payment. It's just way more than they can afford.'"

"Doug Gordon, president of Wauwatosa Savings Bank, said homeowners without significant equity in their homes are less likely to try to stave off foreclosure. 'They don't tend to fight to keep them as much,' Gordon said. 'Mostly, there's not as much of an incentive to save the house because the person doesn't have much in it.'"

"Borrowers with minimal equity in their property are becoming more common, he said. 'I don't think that we have ever experienced as high loan-to-value mortgages as we have today,' Gordon said."

"During the heady days of advancing home prices, many people tried to get as much house as they could, and some stretched beyond their financial means, according to the managing principal and portfolio manager of an investment firm that specializes in bank stocks."

"'People said, 'If I don't buy today, that house is going to cost about 10% more in six months,' said Robert C. Ollech of Fortress Partners Capital Management Ltd. in Hartland. 'That was the go-go attitude two or three years ago, but that has come to a screeching halt,' he said."

From CNN Money. "Mike and Mary Ott thought they had a good plan. They would sell the mobile home they owned outside Montello, Wisconsin, and buy a house in town. Well, they bought the house they wanted, but they didn't sell the mobile home. Now, thanks to the housing slump, they have two homes, only one of which they can really afford."

"'We have just enough extra every month to cover the new mortgage,' says Mike Ott."

"In early 2006, the two started looking seriously for a new house. After a couple of months the Otts agreed to buy a four-bedroom, two-bath built in 1905 with a modern addition. The Otts put their mobile home up for sale in February. They didn't want to rent a place during any gap between selling their old place and moving into the new one, since that would mean having to move twice. So they didn't push the sale of their house very hard. Perhaps they should have."

"Their real estate agent suggested a $42,000 price, which the Otts thought was too high. They priced it at $39,500 and then $37,500. They got some lookers and even a couple of offers, but those deals fell through. Now the home is priced at $32,000, just $1,000 more than Mary paid for it nearly six years ago."

"During the past six months or so, the market has cratered. 'The market is pretty slow,' says Mike, 'and getting slower every day.'"

"When they put their home on the market there were a couple of neighbors selling their mobile homes also. Since then, more and more for sale signs have appeared on lots all over the park. As August approached, the couple started to fear that they would have two houses and few options."

"'The park doesn't allow us to rent,' says Mike. 'Our stress levels rose as the closing date came nearer.'"

"The Otts are fortunate that they can just afford to carry both places. 'We're just able to make the payments on both places,' says Mike. But if there's an emergency or an unexpected expense they don't have the cushion the money from the sale would provide."