The Housing Bubble

Some updates from California. “Sales of existing single-family detached homes dropped 25 percent in the Bay Area from second-quarter 2005 to second-quarter 2006, Prudential California Realty reported, while the inventory of active listings increased 34 percent. Sales of existing single-family detached homes dropped 35 percent in Napa County in second-quarter 2006 compared to second-quarter 2005, and fell 32 percent in Sonoma County and 30 percent in Solano County.”

“Despite a significant increase in multifamily housing starts, California’s overall residential real estate construction in June was down 10.9 percent from a year ago, the California Building Industry Association announced. Last month, building permits were pulled for 12,292 single-family homes statewide, down 24.9 percent.”

“‘Several metropolitan areas had a major increase in multifamily permits, predominantly related to vertical condominium construction in their urban cores.’ CBIA Chief Economist Alan Nevin said. ‘The principal areas with gains are Los Angeles, the Bay Area and Orange County.’”

“Nevin attributes the slowdown to a substantial unsold inventory of homes, both under construction and completed. He says that the depletion of that single-family inventory is under way as builders are offering concessions throughout the state.”

“San Diego County’s new housing market is beginning to look like the TV game show ‘Let’s Make a Deal,’ as builders throw in offers that include spiffy appliance packages, pet services and even a set of new wheels.”

“‘As we are now able to sit back and look at the market, I think what we’re going to recognize is that the second half of 2004 and first half of 2005 was the peak,’ MarketPointe President Russ Valone said. ‘The market peaked, and it’s now looking at where it’s going to settle in.’”

“Market watcher Sharon Hanley in Oceanside said the percentage of home-sale cancellations has run as high as nearly 40 percent certain weeks this year. ‘It’s getting tougher and tougher to get the tail-end stuff (final homes) sold,’ she said.”

“Higher cancellations are occurring at condo and conversion projects, she said, adding, ‘We’re starting to see (developers) take them off the market and go back to rental. Builders are pulling back on new phases. That’s been going on for six months. They’re cutting staff significantly.’”

The Conta Costa Times. “Long-term fixed home loan rates are getting closer to those on shorter-term adjustable mortgages, but many East Bay home buyers still prefer the riskier ARMs because they offer lower monthly payments.”

“The majority of new home buyers want the least expensive monthly payment possible, broker Jay Damato said. For many buyers, the only way to afford a lifestyle of two cars, good schools and a nice house is with an adjustable-rate loan.”

“And Jason Doolittle, loan consultant in Danville, said that these alternative loans show no signs of slowing down. ‘There’s definitely not been a run on 30-year, fixed-rate mortgages,’ he said. ‘People say, ‘I’m not ready to pay another $855 a month.’”

“For other buyers, lower payments are often the only option. Hans Johnson, a demographer based in San Francisco, said it all came down to monthly income for Bay Area home buyers. ‘For many people, it’s not a question of choosing a fixed-rate or adjustable-rate mortgage, it’s, ‘Do I buy the house with the adjustable rate or not?’ he said.”

“Local brokers said that they have seen those trends continuing. ‘Cash flow is king,’ said Bob Visini, spokesman for LoanPerformance. ‘Some people, as long as they have a house, good credit and a write-off from Uncle Sam, are as happy as clams. Maybe they don’t care about building equity in their house.’”

“Robert Kleinhenz, deputy chief economist with the California Association of Realtors, agreed that riskier mortgages today leave little financial choice. ‘There has been an increase of the number of households who have used these alternative loan products,’ he said. ‘If we had a serious economic downturn, we would see the housing market at considerable risk.’”

Some housing bubble reports from Wall Street and Washington. Paul Muolo, “This past week Merrill Lynch declared that housing is in a bear market and that a ‘buyer’s market’ for homes should last for ‘years.’ Merrill notes that the unsold inventories of homes continues to pile up, and that resale prices are flattening in the single-family market, while declining for condominiums.”

The Associated Press. “More and more developers are canceling or delaying condominium projects as home sales slow, construction costs soar and lenders balk at financing units that might not sell. What’s making the situation worse is a glut of high-priced condos and too few people who can afford them.”

“In Philadelphia, a city cluttered with condominium construction, Old City 205 won’t break ground after the housing market softened and increasingly picky buyers balked at its price tags from $400,000 for a studio to over $2 million for a three-bedroom penthouse.”

“‘We’ve gone through the biggest real estate boom in the last eight or nine years and some of these projects haven’t started yet. Do you think they’re going to start building now?’ said real estate executive Allan Domb, dubbed Philadelphia’s ‘condo king.’ Domb in Philadelphia said he’s gotten half a dozen phone calls the past four weeks from developers asking if he would like to buy their properties.”

“A big part of the problem is that many condo projects are priced high, in part because developers have to recoup the high prices they paid for land. But most buyers can’t afford it. ‘The sweet spot of the market is probably $250,000 to $700,000,’ Domb said. ‘That’s what the majority of the population can afford. Many condos are priced higher. That’s part of the problem.’”

“As if investors in homebuilding stocks need more to worry about. Now add this concern: Companies writing down their land values because they aren’t worth what they paid for them. It’s not a matter of if that could happen, but how serious and widespread those write-downs turn out to be.”

“Not only would that reduce already weak earnings, but it could lead to further erosion in the ‘book value’ of many homebuilders. Analyst Rick Murray notes that during past housing-cycle slumps several builders took impairment charges totaling as much as 5 to 10 percent of their book value on an annual basis for several years.”

The Washington Post. “The current federal funds rate is ‘in a vicinity’ of the right level even though news on inflation has been ‘disappointing,’ San Francisco Federal Reserve President Janet Yellen said on Monday.”

“‘It might be thought that policy should continue to tighten until the inflation data move back to a rate consistent with price stability. But I would argue that a gradual approach is likely to be better,’ said Yellen, a voting member of the Federal Open Market Committee this year.”

“Yellen said the two-year string of rate increases..should cut demand in interest-rate sensitive sectors such as housing, autos and consumer durables. In particular, ’significant moderation in the rate of house-price appreciation’ is likely to restrain growth, she said.”

From Bloomberg. “Federal Reserve Bank of St. Louis President William Poole said he’s undecided on whether the central bank should raise interest rates at its next meeting in eight days. Poole (described) his stance as ‘50- 50. I’m still totally noncommittal.’”

“Recent data show slowing economic growth, while inflation has ’tilted’ upward, Poole said. Containing inflation is the Fed’s ‘primary’ goal, he added.”

A pair of reports from the Arizona Republic. “State and local officials are investigating a months-long work stoppage that has left about 200 unfinished houses in Casa Grande and Maricopa withering in Arizona’s summer as home buyers wonder whether they’ll ever be able to move in.”

“As the Valley’s housing market ebbs, smaller builders like Turner-Dunn, which may have arrived late to capitalize on Pinal County’s gangbusters housing market, are more prone to failures, said Jay Butler, at Arizona State University. Unlike big builders, they can’t absorb rising labor and materials costs, struggle with credit and sometimes lack experienced management that can deal with a cooling market, Butler said.”

“‘If you look at the numbers nationally, the market is slowing tremendously,’ Butler said. ‘With small builders, the problems just cascade.’”

“It’s unclear with Turner-Dunn whether there was fiscal malfeasance or the company was knocked down by the market. But one thing is fairly certain: Turner-Dunn is unlikely to step in and help buyers and owners solve their problems, consumer real estate attorney Chris Combs said.”

“‘If a builder doesn’t even have the money to build a house, I’m pretty sure the buyer isn’t going to see their earnest money,’ Combs said. ‘And if they paid for home upgrades, those are probably long gone too.’”

“In the meantime, insulation yellows in the sun, motorists slalom through streets with 4-foot piles of decorative gravel, wood frames warp and twist like rubbery candy, sun-bleached work orders stapled to walls show work last performed in March. Frustration builds with buyers whose contracts have no timelines for completion while nearby, half-finished homes are cannibalized by new residents for doorknobs and other fixtures.”

“At least eight subcontractors have filed about 100 liens for more than $1 million on finished or unfinished homes in Turner-Dunn Construction Inc. developments in the Pinal County cities of Casa Grande and Maricopa.”

“With liens, the homeowners’ credit can be ruined, and they can’t sell their houses, Richard Marsh, former president of the Land Title Association of Arizona said. ‘This happens a lot when the residential real estate market slows down and smaller builders become overextended,’ Marsh said. ‘It penalizes the homeowner, but the idea is to protect the (subcontractors).’”

“David and Sharon Bickford, who moved into their Casa Grande house in April, have been hit with two liens totaling about $4,000. ‘They could actually take our house,’ said David, who hopes his title insurance will cover the liens.”

Some housing bubble reports from New York. “Doctors Patricia Sheiner and Michael Silver loved their dream house in New York’s suburban Westchester County. But they’re not living the dream anymore. The family put the 7,000-square-foot home up for sale and moved to a smaller house in December to save on their mortgage payment, utilities and taxes. Now, it’s an albatross they can’t sell despite dropping the price.”

“‘We bought our other house feeling our other house would sell quickly,’ Patricia Sheiner said. ‘And then the market suddenly died. It died. It’s a hardship for anybody to pay two mortgages,’ she said. They didn’t believe one of the hottest real estate markets in the country would cool off so quickly.”

“Drive around almost any wealthy suburb these days and you’ll see a lot of very big houses, so-called ‘McMansions,’ under construction everywhere. But the once red-hot housing market has cooled off and the big homes are starting to give a lot of people some serious headaches. As for doctors Sheiner and Silver, realtors say their empty house may be on the market for months more, even if they drop the price again.”

The New York Times. “In what may be a ‘rude awakening,’ as one real estate agent put it, the number of Long Island homes being put up for sale, combined with those sitting on the market, is climbing skyward, according to a report from the MLS of Long Island last month.”

“At midyear, there were 75 percent more homes on the market in Nassau County and 65 percent more in Suffolk County than a year earlier. Brokers report far fewer buyers in recent months.”

“More homeowners with adjustable-rate or interest-only mortgages are trying to refinance their homes with fixed-rate mortgages as their payments begin to rise, said Bethany Marten, a Baldwin-based broker, who is also a mortgage broker.”

“Many of the ‘option’ adjustable-rate mortgages that were popular with cash-poor buyers when home values were rising rapidly are no longer available, according to Robert Campbell, a professor of real estate financing at Hofstra University.”

“Georgianna Velardi, a broker in Long Beach, said she had recently seen more sellers looking for a way out of high mortgage payments. A couple in their late 30’s came in to price their three-bedroom ranch. The interest rate on their mortgage had risen to 9.5 percent, from 3.5 percent three years ago. They didn’t have the equity or good credit to qualify for refinancing at a lower rate.”

“To make matters worse, the City of Long Beach raised property taxes 25 percent. ‘They needed to get out because they were so overwhelmed,’ Ms. Velardi said.”

“‘It’s not going to bottom out immediately,’ Ms. Marten said. ‘We’re going to see, I believe, what we saw in 1988: a flattening, a gradual downturn and then down and down until it hits bottom.’”

The Sun Sentinel reports housing starts are up in parts of Florida. “Despite all the talk about a dearth of buildable land in South Florida, Broward County recorded an increase in housing starts during the second quarter. Broward had 900 starts, up 54 percent over the second quarter of 2005, according to West Palm Beach housing analyst Brad Hunter.”

“‘I don’t know specifically what explains it,’ Hunter said. ‘But land is scarce, that story hasn’t changed.’”

“Broward has 2,724 finished vacant homes and homes under construction, which represents a 16-month supply of inventory. In other words, that’s the amount of time it would take to fill up those homes if no others were built.”

The St. Petersburg Times. “Only half as many homes were sold in Pasco County in the first six months of this year compared with the same period last year, figures released Tuesday by the county’s property appraiser show. For the first time in five years, the county’s median home sale price inched down.”

“Meadow Pointe, Ballantrae and Wilderness Lake Preserve still rank among the top 10 communities for ‘housing starts’ in the Tampa Bay area. Pasco’s annual figure for housing starts through May still shows 14 percent growth.”

“‘Supply has caught up with demand,’ property appraiser Mike Wells said. ‘When that happens, sellers have to become realistic, and what they’re asking for their product. The investor has moved on. I do think that builders are probably competing with investors that they sold houses to a year ago.’”

“As prices soften, market watchers say investors are getting burned off. The number of investor homes is difficult to quantify. About a third of Pasco homes are listed as nonprimary residences. Wells said that number has grown to 30 percent currently.”

The News Press. “Two out of three Floridians live in areas so risky that State Farm and regulatory loss models conclude rate increases of more than 50 percent are needed to cover losses. Realtors say Florida’s housing market is suffering. Reports last week showed single-family home sales in June were down 29 percent from 2005, off by as much as 48 percent in Naples.”

“Combine inflated home prices with tripled insurance premiums, and, ‘My gosh, your first-time homebuyers are priced out of the market,’ said Pensacola broker Dan Gullahorn.”

“Rather than pay a $2,300 insurance bill, Harold Cameron has put a ‘For Sale’ sign in front of his St. Petersburg home. He says he’ll head to Georgia, where Social Security is more likely to cover the cost of living. ‘This was going to be my home when I moved here 23 years ago, but I’m not going to suffer that kind of a loss,’ Cameron said.”

The Miami Herald has this roundtable discussion. “Dulce Suarez-Resnick: ‘Some colleagues in my office are leaving, some of my customers and even some family and friends. They are selling their home and moving to Central Florida because they can afford to live there on their fixed income.’”

“State Sen. Steven Geller: ‘They’re moving to North Carolina, they’re moving to Georgia. They’re getting out of Dodge.’”

“Heather Carruthers: ‘Usually in Key West, there are about 400 homes on the market. There are 1,400 homes on the market right now. Every time you pick up the paper, the prices have been slashed.’”

“‘People can’t even get out now with the equity. Nobody’s buying. A gentleman gave his son a house in Key West. The guy’s a cop. He can’t afford to stay there because his windstorm is so high.’”

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The news this Sunday is the price-problem recognition by the media. “Around the country, houses that used to sell in days are now sitting on the market for months. After five years of paradise for sellers, once again it’s a buyer’s market. The pressure now is on sellers, and especially builders, as the market is saturated with a record glut of unsold homes for buyers to choose from.”

“‘In terms of closing sales, they have got to offer significant discounts,’ said Ivy Zelman, housing analyst for Credit Suisse First Boston. ‘I have builders right now who are advertising make me an offer, which is definitely scary.’”

“Zellman said that high prices are things of the past for now. ‘People are going to have to come to the reality that if they want to sell their house,’ Zelman said. ‘They’re going to have to lower the price.’”

“Chevy Chase is one of those Washington, D.C., neighborhoods where lots of folks want to live. Although prices have softened only slightly so far, bidding wars are now a thing of the past as buyers mull over an inventory of unsold homes that has tripled since the same time last year.”

“‘We just don’t know if it’s the right time to buy anymore,’ says Ruth Zitner, who has been shopping for a home in the neighborhood for the past year. ‘So we’ve decided to just wait and see.’”

“That attitude is fast turning the housing market on its head, in once hot neighborhoods from South Florida to San Francisco. The nation’s largest home builders are reporting rising cancellations of orders for new homes. Meanwhile, nationwide sales of existing homes fell by 8.9 percent in June, compared with a year earlier, and by as much as twice that in places like Boston.”

“With sellers increasingly anxious to unload their properties, inventories of unsold homes have swelled to more than a six-month supply, an increase of over 50 percent in a year.”

“‘Sellers have tried to hang in there and get their price,’ says David Wyss, chief economist at Standard & Poor’s. ‘But there comes a point where they’ll have to give in.’”

From New Hampshire. “The latest headlines on the subject of existing home sales confirmed what everyone connected to the residential real estate industry has known for almost a year, it’s a marshmallow soft market and getting softer by the month.”

“When I talked to a few local Realtors, they confirmed the trends. Kathy Rush said, ‘We have double the listings on the market. We don’t have double the buyers.’”

“The psychology of the buyer pool has changed. As one agent told me, the residential real estate market of the past five to six years was like a voluntary Ponzi scheme with all the participants assuming they could make hefty and relatively quick profits from their investments.”

“Pam Bailey said she underwent training initiated by Coldwell Banker earlier this year. The goal was to really educate sellers that the market had shifted and, though they won’t say it, but I will, the Ponzi carnival was, if not over, then certainly sidelined.”

“‘This isn’t rocket science,’ said Angela Stamoulos, the training manager for Coldwell Banker. ‘We do a lot of analysis and we saw the amount of inventory. We saw different things that needed to be emphasized. We used real data to educate sellers on what’s happening,’ Stamoulos said. ‘There are always buyers, but it’s that homes are most likely overpriced.’”

“Barbara, the seller of the house she’s lived in for nearly five decades and who asked that I not give her full name, (said), ‘It was very helpful that Pam explained the market to me. When we first hooked up, the market was good. Now, it’s less good.’”

The Washington Post has this report on tactics for selling in a down market. “If for-sale signs have sprouted like weeds in your neighborhood and the grass is growing up around them, it’s no time to panic, say real estate experts. It’s time to go back to the basics.”

“Some sellers also are dangling offers of vacations and cars. Others are turning to auctions, normally associated with foreclosures and fire sales. Some are just praying.”

“‘You have to look at what the contract prices have been recently, not at what the high-water mark was in 2005,’ said Linda Braley, an appraiser in McLean. ‘Those prices are gone.’”

“Even those who had their houses appraised for refinancing in the past year should look again before listing, Braley said. ‘In a market where not much is changing, you might have a shelf life of about six months on an appraisal. But in the current situation, it’s very difficult to keep up with prices.’”

“If a property sits two weeks with no interest, not even an agent dropping by, ‘it’s time to lower the price,’ said Margaret Ireland, chairman of the Northern Virginia Association of Realtors. The amount of the reduction depends on the price range. ‘If it’s in the $700,000-to-$800,000 range, you need a good $25,000 reduction,’ Ireland said. ‘For a house in the $1 million to $1.3 million range, it might take $100,000.’”

“Even a low price isn’t necessarily going to do the trick, said Candy Clanton, an agent in Fairfax. She says buyers are bargain-hunting. ‘My clients have reduced their prices 50, 60 and 70 thousand in some cases, but they’re just not seeing any traffic right now,’ she said.”

“If cutting the price doesn’t help, perhaps offering to give some of that money back to the buyer will work. Financial incentives come in many forms. There’s help with closing costs. Seller contributions can also be used to ‘buy down’ or reduce lenders’ interest rates, or to pay bonuses to agents.”

“Some sellers are going for the exotic in hopes of standing out. Vici Boguess in Old Town Alexandria has one set of sellers trying to tempt buyers with a week’s vacation on Kiawah Island near Charleston, S.C. The townhouse near the King Street Metro station has been on the market since January, dropping in price from $575,000 to $542,000.”

“The vacation ‘probably won’t sell the house, but the owners thought that it might make an agent take an interest in it, enough to bring a client to see it,’ Boguess said.”

“Owners of a million-dollar house in Alexandria offered a free Mini Cooper as a bonus, ‘but it didn’t work, and they sold the car when they had to move,’ said Dave Hawkins, broker in Alexandria. The house is still on the market, but the owners may rent it if it doesn’t sell soon.”

“Though many agents say auctions are stigmatized by their association with foreclosures..Homeland Auctions President Gloria Gardner said she ‘can’t keep up with all the calls these days.’ ‘We’re doing for real estate exactly what a Fourth of July sale does for retail.’”

Readers want to talk about adjustable rate mortgages. “ARM is pretty scary stuff. One may say ‘oh the interest rate only went up by a few percent!!’ (1) Say, you purchased an over-priced but normal $750K house in California with 2.00% APR interest only ARM… (just to be cool, of course, no downpayment). Your monthly payment is only $1,250. not bad… not bad.”

“(2) Come ARM reset, say additional 2.00%, bringing the total rate to 4.00% or 2x the original. (3) Now your payment’s $2,500 (4) Soon, it will be 6.00%; that’s $4,500… INTEREST ONLY…oops. Ps: don’t forget to add $700/month for tax, a few hundred more for blah, blah, blah..ouch!”

Another put a finer point on it. “Here are the actual numbers for your example. $750,000, 2.0% year one $1250 (actual accrued rate 7.7% current), year two payment $1343 (7.5% increase in the payment, balance up to $792,000), year three payment $1443 (balance up to $837,000), year four payment at 7.7% for 27 years- ———$6,147 ouch.”

Another replied, “I was a Math major in college so when I shopped for a mortgage it was easy to see through the ‘adjustable’ problem (especially because if you have a fixed mortgage you could always re-fi if rates dropped. And if you’re not stupid you’d refi for the remaining balance and not try to pull cash out.)”

“Adjustables only make sense if you actually have the cash in the bank to pay off the loan if you need to! Then you can take advantage of a low teaser rate for a few years. The mortgage industry simply takes advantage of the fact that people don’t do the math and realize that their $1250 payment can become $6147 in a couple of years….”

One had this to say, “Don’t mistake a plain vanilla adjustable rate mortgate with the exotic ones, such as the option-ARM, interest only, and teaser rate loans. A regular ARM makes a lot of sense when interest rates are high.”

And lastly, “Should figure NegaAm for five yrs with a recast of the loan if and when it gets to 110% to 125% (depends on bank) of the original loan. The bank can authorize an appraisal at any time.”

“The cap on the loan could be as low as 9.95% or as high as 12.95%, in a rising interest rate, declining house value - expect to see more recasts as a result of value. Eg, I buy in housing development for 500K cash, friend buys similar unit same development 95% NegAm 5% down. I hate the 1 hr drive and decide to sell at any price. First offer is 425,000 I accept! All negam borrowers in the same development are subject to the new appraisal. Sayonarra.”

The US News and World Report. “Call it the worst worst-case scenario. The interest rate on your adjustable-rate mortgage jumps just as the housing market enters a prolonged slump.”

“Then something really bad happens: You lose your job. There’s a medical emergency. You get divorced. You fall behind on your mortgage payments, and the bank forecloses on your home. Those scenarios are now playing out for growing numbers of homeowners.”

“In the past, foreclosures have largely been the result of a bad economy. Yet this time around, with a record number of borrowers exposed to rising mortgage payments through adjustable-rate and subprime mortgages, the increase in foreclosures could be a bad omen.”

“Adjustable-rate mortgages worth over $1 trillion are due to reset in the next two years. ‘We’ve never had such a high percentage of loans come due at the same time, so no one really knows what will happen,’ says RealtyTrac’s Rick Sharga.”

Some housing bubble news from California. The North County Times. “Higher rates have had an great effect on buyers who hold homes as part of their investment portfolio, real estate agents say. Many such investors plan to rent out the houses for a year or two before selling for a profit, and people in the industry are divided over whether those investors’ reactions will tilt the rental market toward tenants or toward owners.”

“Danny Morris, who rents a house in Menifee, said tenants are in a pretty good position now, at least compared with people who own their house. Morris pays less than $1,400 a month to live in a 1,450-square-foot house. The average Southern California homebuyer, meanwhile, committed to a $2,437 mortgage payment last month, according to DataQuick.”

“‘It’s better for a renter right now than for a buyer,’ Morris said. ‘I know some of them have humongous payments, and there’s no way they can get that out of a renter.’”

“‘Right now you can’t go rent out a house for a positive cash flow or even break even,’ said Marsha Swanson, a longtime real estate agent who has also owned and rented out several houses over the years.”

“Pat Davis, who manages roughly 100 local rental houses, said she actually expects more houses to come onto the rental market in the next year. That’s because many investors are finding it more difficult to ‘flip’ houses, to sell them quickly for profit without renting them out. When the houses don’t sell, such investors are being forced to find renters just to cover the mortgages on the houses, Davis said.”

The San Diego Business Journal. “A risk that could sink the local economy is a housing slowdown, followed by more energy cost jumps and fallout from the city’s pension fund scandal.”

“‘The condo market is where most of the major correction is taking place,’ economist Lynn Reaser said. Another certain sign that the housing boom is over is the length of time houses are staying on the market, Reaser noted. ‘People who have their house on the market can’t believe they aren’t getting their asking price.’”

The LA Daily News. “It looks like this unwinding real-estate market is going to make more of a mess than expected. ‘I don’t think there is any doubt it’s going to be a harder landing than was originally forecast,’ said financial analyst Greg McBride. ‘The forecasts were made with the rose-colored glasses still firmly in place.’”

“In some places prices in June did something not seen in a long time, fall under year-ago levels. Of the 101 markets in Los Angeles County, the median price in 16 fell under the year-ago level, including Tarzana ($567,000, down 27.2 percent) and Calabasas ($1.1 million, down 17 percent), according to DataQuick.”

“A tipping point may be fast approaching here in the Valley, too. ‘The fact is appreciation has pushed affordability beyond the bounds of many buyers and that, coupled with a rising interest-rate environment is bound to have an effect on people,’ McBride said.”

The Orange County Register. “Orange County’s hot real estate markets led to the county’s biggest boost in property tax bills in 15 years. The county charged property owners $3.8 billion for the year ending June 30, a 10.5 percent jump from a year ago and the biggest year-over-year increase since 1991.”

“There was one troubling trend in the numbers, county treasurer John Moorlach said. The percentage of unpaid tax reached its highest level in eight years. Owners stiffed the county out of 1.52 percent of taxes owed. In dollar terms, the $57.7 million in unpaid taxes increased 44 percent vs. a year ago.”

“Lenders last month mailed 462 notices of default to borrowers who had missed several home mortgage payments, a 90 percent jump from a year ago, DataQuick says.”

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From Arizona. “Metropolitan Phoenix’s new-home market continued its slowdown in June. Demand from buyers continued to wane and builders pulled fewer housing permits again last month, down 26 percent from last year’s record pace, according to RL Brown. Some people who signed contracts to buy new houses are canceling deals because they can’t sell their existing houses.”

The Hartford Courant. “June is normally a robust month for home buying in Greater Hartford, but not this year: Sales of single-family homes took a 16.5 percent dive, and the median sales price barely budged, compared with a year ago.”

“‘It’s a significant number, and June is usually a pretty good month,’ said Ronald F. Van Winkle, a West Hartford economist. ‘But there isn’t anything that says to us the market is in a downward spiral, by any means.’”

The Reporter in California. “Inventory levels in Solano County rose 56 percent, year-over-year, according to a second quarter report. Sales for the county experienced a 29 percent decline over the same period last year.”

“‘Sellers have been surprised to see the lack of traffic coming by their homes and we’re starting to see the value in making price reductions in order to stand out on the market,’ said (realtor) Scott Kucirek. ‘Buyers are in no rush and were waiting to get the right deal, however, the properties in great condition or with sellers willing to make concessions spent significantly shorter time on market.’”

The Arizona Republic has this update on Phoenix. “The business of buying and selling houses provokes extreme emotional outbursts. People yell, they lose sleep, they cry, they’re stricken with buyer’s and seller’s remorse. That’s especially true these days in metropolitan Phoenix’s post-boom housing market, where nearly everything has reversed since last year’s frenzy.”

“The number of homes for sale on the Arizona Regional Multiple Listing Service increased nearly four times from June 2005 to last month, when it hit a level nearly double what experts consider healthy. Many homeowners had their assumptions of what a house is worth and how quickly it should sell recalibrated by the buying craze.”

“Real estate agent Neil Brooks was getting the feeling that his client was about to completely lose it. He’d seen it before. He had just broken some bad news about her house deal, and she wasn’t taking it well. ‘I was thinking, ‘OK, here we go,’ said Brooks. ‘Something’s going to happen. Something’s going to blow.’”

“He was right. The client whirled suddenly and whipped the phone at him. But he was ready. He ducked, and the phone shattered against the wall behind him. The client stormed out of the house.”

“Home prices have become a touchy subject. Builders are discounting speculative homes, and resale prices are flat, or down, in a lot of neighborhoods. Buyers are submitting lowball offers. Even some sellers and their agents are having trouble agreeing how much similar homes in the same neighborhood are worth.”

“Two houses on the same north Valley street, similar in size and age, are for sale. One lists for $749,000 and the other for $775,000. A third house came on the market on the same street a few doors from the other two. The new listing was similar to the others in size and age but priced at $659,000.”

“‘The neighbors were really mad,’ said (realtor) Thomas Stornelli in Scottsdale. ‘They knocked on the door and asked, ‘What are you thinking?’ For a lot of people, their home equity is their bank. It’s like taking money out of someone’s bank, their retirement account. People (future buyers) are going to use that house as a comp, even if it doesn’t have the same upgrades. It’s going to leave a mark.’”

“The owners of the least expensive home were equally upset. They were in the midst of a corporate relocation and wanted to sell quickly. Suddenly, angry neighbors were confronting them. One night, someone tore down their for-sale sign.”

“The market has proven everyone wrong. None of the houses had sold as of the third week of this month.”

“A woman walked into Barry’s Realty Executives office about nine weeks ago, sat down and began crying. She said she bought two houses last year, fixed them up and quickly sold them, making a $50,000 profit on each. She took her profits, threw in some extra money and bought five more houses. She spent money fixing them up, but when she put the houses on the market, she realized she had bought at the peak, Barry said.”

“‘Her eyes just started to well up, and she just started bawling,’ Barry said. ‘She said she couldn’t sell them for what she bought them for. She said her monthly payments were about $20,000.’”

“Barry suggested turning them into rentals. She told him she couldn’t get enough rent to make it worthwhile. ‘She was expecting to flip them,’ he said. ‘The market flipped her. She was devastated. People have forgotten that houses are not a liquid asset. They never were meant to be.’”