The Housing Bubble

The LA Times reports from California. “Housing construction in California dropped sharply last month, led by a steep decline in single-family homes. In October, the number of permits declined 29% compared with a year ago, the California Building Industry Assn. said. Builders are backing off constructing new homes until they can sell existing inventories.”

“That prompted a 47% plunge in single-family permits, the trade group said.”

The Sacramento Bee. “It’s little more than a giant hole in the ground, but already the 53-story Towers hotel and condominium project is $70 million over its original $500 million budget. Meanwhile, sales of the Towers’ condos are slow, and developer John Saca has switched general contractors.”

“One thing is clear: Saca admits the Towers, at Third Street and Capitol Mall, is being pinched between a weak housing market and rising prices for materials.”

“Besides funding challenges, Saca also said the condo market has gone soft with the rest of the housing market, and the Tower’s sales are ’slowing down.’ He also has a condo competitor, Craig Nassi, who has plans to build the Aura tower two blocks east on Capitol Mall and Sixth Street.”

The Desert Sun. “Last month sales of previously owned homes and condominiums plummeted compared with a year ago across the Coachella Valley. Sales of existing single-family homes dropped 24 percent last month and existing condominium closings fell 54 percent compared with October 2005, according to DataQuick.”

“Overall, sales of new and resale single-family homes and condos in the valley declined 17.8 percent last month compared with October 2005. The dip in sales comes as more valley homeowners are putting their residences on the market.”

“Across the valley, there were 8,076 homes on the market in October and almost 8,600 by mid-November, said Greg Berkemer, executive VP of the California Desert Association of Realtors. That compares with 5,384 home listings in November 2005 and 2,800 listings in November 2004.”

“Fred Bell, executive director of the Desert Chapter of the Building Industry Association, said cautiously optimistic home builders will continue to aggressively manage their cash and reduce inventory. ‘I think we’re still in a challenging market,’ Bell said. ‘Conventional wisdom is that we’re going to remain in a challenging market for the next 24 months.’”

The Record Net. “A total of 179 building permits for single-family homes were pulled in San Joaquin County in October, down 43.4 percent from 316 in September, and down 49.7 percent from 356 in October 2005.”

“The question in potential buyers’ minds is, said Tom Doucette, president of Frontiers Community Builders, will the market continue to get softer? ‘The problem is uncertainty about the direction of pricing: Is it at or near the bottom?’ Doucette said. ‘That’s creating some hesitation. People want to buy at the best time.’”

“Alan Nevin, chief economist for the California Building Industry Association, said that new-home construction in California is expected to continue cooling off till the end of the year. He predicted that 2006 will end on the lower end of his 170,000-180,000 permit projection made earlier this year.”

“‘The primary decline is in the single-family sector, where half of the decline is in the Riverside/San Bernardino, Sacramento and San Diego areas,’ he said.” “Even with the decline, total production this year is expected to be the sixth-highest since 1989.”

The North County Times. “Hoping to avoid flooding the market with a glut of new homes, builders in San Diego and Riverside counties started construction on half as many single-family houses in October as they did in the same month a year earlier.”

“‘It is very much driven by their need to try to clean up their balance sheets by year’s end,’ said Borre Winckel, executive director of the Riverside County chapter of the Building Industry Association of Southern California.”

“Winckel said builders remember all too well the bloated inventory they were stuck with during the 1990s after a period of overbuilding, and they want to avoid getting into a similar predicament. ‘They don’t want history to repeat itself,’ he said.”

“Economist Alan Nevin cautioned against concluding that the sharply lower numbers for 2006 signal a housing market headed into the tank. ‘It is not a crisis situation,’ said Nevin, whose association represents the state’s 6,700 home builders and related businesses.”

“Robert Campbell, a San Diego economist who closely tracks the market, disagreed that a rebound is around the corner. ‘This is clearly a normal cyclical downturn,’ Campbell said. ‘Welcome to the roller coaster ride of real estate. It goes up and it goes down, and now we’re going down. This is going to be a very slow, painful downturn.’”

“Economist Christopher Thornberg said construction won’t rebound for some time because the leveling off of home values will squeeze homeowners’ ability to buy bigger, more expensive houses. ‘You’re not going to be earning capital gains in this market for a long time to come,’ Thornberg said.”"

“‘There’s never been a housing bubble in California that has shaken itself out that quickly,’ he said, noting the market declined for several years in the 1990s before rebounding. ‘And this is absolutely the biggest housing bubble, price-wise, that we have ever had in California. This is not going to disappear overnight. Demand for (new) housing is going to be weak for a while.’”

A housing report from the Arizona Republic. “Those mountain vistas, star-filled skies and expensive furnishings in Ahwatukee Foothills are coming at a steep price - sometimes of the home itself. Homeowners, many strapped with some of the highest credit-card debt in the Valley, are falling behind on their mortgage payments and facing foreclosure at nearly record rates.”

“‘Basically, it’s something we saw coming last summer, and even up to a year ago,’ said Rock Argabright, an agent in Ahwatukee. ‘Home buyers were signing up for no-money-down, adjustable-interest-rate mortgages, so they have no equity in their homes. They trapped themselves as the value of their homes started sliding. It really was written on the wall, it was going to happen.’”

“The problem is that most everyone’s largest investment is their home, and real estate values have fallen over the past year.”

“‘What they’ve done is gotten a second (mortgage) on their home and lived on the second. Then maybe the wife got pregnant, or someone lost their job, and now they have to refinance and their house value is slowly sliding,’ said Argabright. ‘One of the saving factors is that our home prices haven’t fallen as much in Ahwatukee as other parts of the Valley.’”

“Scott Nelson, a certified financial planner in Ahwatukee, believes many residents got into trouble by buying too much of a house.”

The Review Journal from Las Vegas. “In Las Vegas, local research firm SalesTraq reported 2,581 new home closings in October, down 22 percent from the same month a year ago. It was the fourth straight month of declining sales.”

“‘The future seems clear,’ said real estate consultant Steve Bottfeld. ‘October is not the end of the buyer’s market in Las Vegas. But October data does tell us that the Las Vegas housing market is much closer to the end of the buyer’s market than most people believe.’”

The Financial Times. “If you buy a house this month in Nevada’s bone-dry Las Vegas valley you can probably get a swimming pool and a Florida vacation thrown in for the price of a new home.”

“The perks are among the incentives being offered by property developers desperate to fill tens of thousands of homes that stand empty in the billowing dust after a whirlwind of speculative construction swept the southern and western states.”

“Anna Klinger, a Nevada real estate agent, says: ‘The developers are repenting for what they did. They built too much, too fast.’”

“The large builders admit that the slowdown has been more severe than they expected at the start of this year. David Rosenberg, chief US economist at Merrill Lynch, says: ‘I think the latest barrage of data told you that housing hasn’t bottomed. We’re not going to hit bottom for the entire sector until the tail-end of 2007.’”

The Nevada Appeal. “Housing market information isn’t cheery. A weakening national housing market will continue to be felt throughout the nation in 2007, said John Mitchell, western region economist with U.S. Bank.”

“Some local residential real estate agents are worried, but they’ve heard this prediction before. ‘It’s exactly what we know,’ said Chris Kallas, a Realtor in Minden, after the meeting. ‘I don’t want to be negative. We’re hoping for the correction to finish.’”

“The Carson City housing market hit a high in 2005 when the median price of a single-family home jumped 34 percent over a year to $348,500. It has inched down to $310,000 in September, according to the MLS.”

“Broker Mike Veatch said recent 10 percent to 15 percent price declines are eased by the huge gains seen in the last few years. ‘My view is we are returning to a normal real estate market in this area,’ he said. ‘As far as a slow down, we have hit the bottom of the trough.’”

Some housing bubble reports from Wall Street and Washington. CNN, “Home prices rose in the third quarter but at a slower pace than in the second quarter, a government agency said Thursday, the latest sign that the housing market is still trying to find a bottom. The Office of Federal Housing Enterprise Oversight (OFHEO) said that housing prices nationally edged up just 0.9 percent from the prior quarter.”

“Five states; New York, Rhode Island, Michigan, New Hampshire and Massachusetts, recorded lower prices for the quarter, according to OFHEO, with Michigan also showing a year-over-year decline of 0.6 percent. It was the first time in six years any state reported falling prices over a 12-month period, according to the agency.”

From Reuters. “The data ‘provide more evidence that the long-forecasted national deceleration in house prices is occurring,’ said James Lockhart, the OFHEO director.”

“Quarterly price declines occurred in more than half the cities in California, OFHEO reported. The West and Northeast regions of the United States saw weak gains in the quarter.”

From MarketWatch. “The OFHEO index is considered the best gauge of home values, because it doesn’t depend on the mix of houses sold as do the median prices for new and existing homes. It compares apples with apples by tracking mortgages written for the same houses over time.”

“Prices fell on a quarter-to-quarter basis in 15 cities in California, including San Francisco, San Diego, Oakland and Sacramento. The biggest year-over-year declines were seen in Anderson, Ind.; Ann Arbor, Mich.; Springfield, Ohio; Holland, Mich.; and Greeley, Colo. In all, 18 cities recorded price declines over the past year.”

“‘The slowdown is not unexpected,’ said Lockhart. ‘There are still some areas where appreciation rates remain very high, but now they are the exception rather than the norm.’”

From Bloomberg. “A gauge of business activity unexpectedly showed a contraction in November as production and orders at U.S. companies weakened, according to a Chicago-based purchasing managers’ group.”

“The National Association of Purchasing Management-Chicago said today its business barometer fell to 49.9 this month, the lowest since April 2003, from 53.5 in October. A reading lower than 50 signals contraction.”

“The Chicago report ‘will likely raise concerns that the housing slump may be spreading, especially in the Midwest, where the weakened auto industry is especially important,’ said David Resler, chief economist at Nomura Securities International Inc.”

“Caterpillar Inc., the world’s largest maker of earthmoving equipment, said on Nov. 3 it plans to cut jobs at U.S. factories…to cope with a slowdown in the economy next year. ‘It will be a more challenging year than the past two,’ Caterpillar CEO James Owens said. ‘We’re going to hit some turbulence.’”

The Savannah Morning News. “Weyerhaeuser Co. announced Wednesday it will permanently close its Mountain Pine veneer and plywood mill, eliminating 340 jobs in the rural Arkansas town.”

“‘These are just really tough times for this industry,’ said Kathy Stacey, a Weyerhaeuser spokeswoman in Arkansas. ‘The housing market didn’t just fall off, it plummeted. It is tough all over the wood products industry.’”

The Daily Business Review reports from Florida. “No one can point to any single reason for Palm Beach County’s drastic downturn in home prices, but real estate players identify a slew of contributing factors.”

“Susie Van Pelt, an agent in North Palm Beach, has a listing for a waterfront condo at Flagler Pointe in West Palm Beach priced $5,000 less than the year-old purchase price. The unit isn’t selling even though the price is $80,000 less than a comparable three-bedroom water-view listing in the same building.”

“With the huge supply of homes on the market, some sellers are in a panic. The people who are forced to sell are the ones dragging down the median price, said (realtor) Kim Stevens in Boynton Beach. Stevens recently sold a Lake Worth home that was appraised at $380,000 but sold for $318,000. Two years ago, she said the home would have sold for more than $400,000.”

“Based on the current market index, Palm Beach County has a 47-month inventory backlog.”

“A surge of new Palm Beach County construction is contributing to the flooded market, Stevens said. After buying land at boom-high prices, investors and builders cannot afford to sit on the sites. ‘We got caught up with a lot of inventory,’ said Bregman, who represents clients who bought up tracts of land during the heyday. ‘When the merry-go-round stops, there is a lot of product out there.’”

The Herald Tribune. “George Fischer’s for-sale sign is one of roughly 7,600 in the Sarasota MLS. That is more than double the 3,700 homes listed for sale in mid-November 2005. Neither figure counts condominiums. That number of condos for sale, too, has more than doubled in the past year.”

“Meanwhile, real estate brokers are having trouble making these puppies play. They are closing on houses at the rate of 73 per week. At that speed, it would take two years to get rid of just today’s inventory.”

“In response, sellers have gradually, painfully lowered their prices, to the point where the median price is nearly back to 2004 levels.”

“Fischer has not even managed to get a lowball offer. ‘It is almost as if there aren’t any true buyers out there, or there is no urgency,’ Fischer laments. ‘Because there is such a glut on the market, people feel they don’t need to make a decision, because the house will always be there.’”

“‘The activity has just died,’ said Peter Magnuson, a Sarasota real estate investor who chairs a local real estate investor club. ‘People have lost money, and they just haven’t realized it yet.’”

“It is people who bought at the peak, like Fischer did in May 2005, who are hurting. Fischer paid $320,000 in May 2005, just as the market was topping out, and then put $30,000 more into the place, for an outlay of $350,000, not counting monthly carrying costs. So even if Fischer gets his asking price, and even without counting any closing costs except the 3 percent commission, he would be in the red on the deal.”

“‘It is going to happen more and more in the next two to five years,’ said Stan Geberer, an economist at a real estate consulting firm. ‘Almost everybody who bought in 2005, if they try to sell in 2006, is going to be upside down.’”

From Florida Today. “A total of 512 housing construction permits were issued countywide in October, according to statistics from the Home Builders & Contractors Association of Brevard. October’s total, which includes single-family homes, condominiums and apartments, was the highest monthly number in Brevard since 554 permits were issued in April. However, it was lowest total for October in five years, the association’s monthly report shows.”

“The median sales price for an existing single-family home in Brevard was $212,400 in October, down from $238,200 a year earlier, according to a report Tuesday from the Florida Association of Realtors.”

“Franck Kaiser, CEO of the association, said builders are trying to sell off their inventories of new homes left over from a flurry of construction, which ended not long after the surge in local housing prices ended last year.”

“In Brevard, home sales have slowed in part because many homeowners have been trying to sell their homes at last year’s higher prices, said (broker) Betty McCluskey. ‘People can’t get over a year ago when they saw their neighbors getting such big numbers’ for their homes, McCluskey said.”

“To stimulate the local housing market, builders and others are hoping to persuade county commissioners to delay a scheduled increase in a county transportation impact fee on each new single-family home. The delay could help the market, said Dave Armstrong, treasurer of the Florida Homebuilders Association and a local home builder.”

“‘Right now, the animal is wounded and we don’t want to kill it,’ Armstrong said about the housing market.”

The Boston Globe reports from Massachusetts. “The median price for a single-family home has fallen 7.8 percent since hitting a peak of $370,000 in June. Sales of single-family homes fell 16.5 percent from the previous October to 3,239. In each of the past three months, single-family home sales fell by more than 20 percent.”

“Some agents say the October numbers forecast a slow winter. ‘The importance of October is that’s the tail end of the selling season before you get into the holiday, and everybody was hoping it would’ve been a little better,’ said Arthur Shannon, an agent in Danvers. October, he said, ‘tells us how we’re going to sit throughout the next few months.’”

“‘Buyers have started to move forward,’ David Wluka, president of the realtors’ association, said yesterday. Still, at the end of October, there were 33 percent more homes and condos for sale statewide than a year earlier.”

The Daily News. “Massachusetts home and condo sales fell by double-digit percentages in October and home prices continued to decline as part of a market correction that may still take several months to conclude.”

“The October home price decrease is the sixth-straight monthly drop compared to the same months last year, and the drop in home sales marks the 20th of 21 months where the number of home sales have dropped in the state. The latest 11 months of decreases were marked by double-digit percentages, reflecting the sharpest and most sustained slowdown since the 1989 to 1991 period, according to the Warren Group.”

“‘This market is paying the price for overheated appreciation,’ said Nicolas Retsinas, of Harvard University. ‘It was clear for a long time that it couldn’t be sustained, but it did last for a while.’”

“Retsinas said homebuyers should do their homework when shopping and look forward to at least five to seven years in the home they buy if they don’t want to lose money. ‘If you think you’re going to buy a home to make money, you’ll be disappointed,’ he said. Retsinas also warned buyers to be wary of the condo market, which is investor dominated, and thus, more susceptible to a downturn, he said.”

The Boston Herald. “Boston house prices plunged last month at their fastest pace in more than 13 years, erasing all gains recorded since early 2004, new figures show. The Warren Group reported yesterday that median house-sale prices in Suffolk County, which mostly consists of Boston, fell to $325,950, a stunning 13.31 percent decline from October 2005.”

“That drops prices back to May 2004 levels. It’s also the sharpest 12-month pullback since 1993.”

“David Wluka, president of the association said the smaller sales drop-offs show him that ‘the market correction may be about over.’ But Wellesley College housing economist Karl Case is less optimistic. ‘All of the indicators, sales volume, prices, everything, are pointing downward,’ he said.”

The Sun Chronicle. “Condominiums, increasingly the single-family home alternative for buyers in Southeastern Massachusetts, may finally be losing momentum in a softening real estate market.”

“Condo sales in the area declined 36 percent in the third quarter, compared with sales results for the same quarter in 2005. Statewide, the drop in the number of condominium sales exceeded that of single family homes for the second straight month according to The Warren Group, ending a decade-long trend in which condo sales outperformed single family home sales virtually every month.”

“‘For a long time, as real estate was appreciating, condos trailed somewhat behind single-family homes,’ said Terry Egan, for the Warren Group. ‘As sales began to decline, condos also seemed to trail somewhat timewise. Now they seem to have caught up.’”

“Market watchers said a large number of newly-completed condos arriving on the market at a time when sales are already depressed added to an already bulging inventory.”

The Boston Channel. “Buyers and sellers are carefully crunching the latest housing numbers, and in Massachusetts…it reflects the most sustained slowdown since the bubble burst of 1989 to 1991. One Duxbury house has been on the market for about one year now. Two weeks ago, the sellers dropped the price yet again. It is now $60,000 less than where it started.”

“Several miles away, homeowner Robert Burnham can relate. His experience is nearly identical. ‘There is a house we would like in a retirement community, which we are not able to move. We are very much like many people my age that can’t get out of their home to retire,’ he said.”

“‘It means we’re still in a real estate slump. We are still seeing a lot of houses on the market. Buyers and sellers can’t quite come to an agreement,’ said Tim Warren. Burnham has decided not to drop his price again. He’s taking his house off the market for the winter, making a few changes and then will try again in February. Warren said that he thinks it’s a good strategy.”

From the Times in New Jersey. “Sales of newly built homes continued their slide last month, the government reported yesterday, renewing fears the housing slump would continue for the long haul. The Northeast region experienced the biggest decline in new- home sales, dropping 39 percent in October from September.”

“Industry watchers say the housing slump is likely to continue. ‘It may not be until 2008 until the market bottoms out,’ predicted James Hughes, dean of the Bloustein School of Planning and Public Policy at Rutgers University.”

“The problem, Hughes said, is the ‘extraordinary gains’ in the market played out over seven years, from 1998 to 2005. When the highs last a long time, ‘it takes time to adjust,’ he said.”

“The 39 percent drop for the Northeast came as no surprise to Patrick O’Keefe, chief executive of the New Jersey Builders Association. ‘The evidence is overwhelming that the state’s housing markets are weak and will continue to weaken,’ O’Keefe said. ‘This market in New Jersey particularly, given the economic concerns outside the housing sector, cannot see its bottom.’”

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The North County Times reports from California. “Home sales in the San Diego region decreased 19.2 percent last month compared to the same period a year ago, while the median price of an existing home was down 4.5 percent to $574,530 from $601,850 in October 2005, a Realtors group reported.”

“In neighboring Orange County, sales were down 21.4 percent last month when compared to a year ago, while the median home price was off nearly 3 percent, to $681,340 from $701,520 in the year-ago period.”

The Orange County Register. “Sluggish housing sales and wobbly home prices have prompted developers to rethink projects that would have injected thousands of new condominiums into the county. With rising land prices and construction costs, developers would lose money if they lowered their prices, experts say.”

“They’re scrapping some projects and, in at least one high-profile case, reverting to apartments. Just six months after it entered a contract to sell condominiums in Orange, homebuilder K. Hovnanian Homes backed out in August because of slow sales in the spring and summer, said Brad Perozzi, managing director of developer Trammell Crow Residential.”

“‘I don’t think it’s any secret that the housing market is declining,’ said Jim Reichert, Orange’s economic development director. ‘It’s just part of a never-ending cycle.’”

“In Irvine Standard Pacific Corp. decided against building 445 condos at the corner of Main Street and Von Karman Avenue, according to the builder. Standard Pacific walked away after leaving a cash deposit.”

“Consultant Tim Strader said a handful of other builders, including Shea Homes, have dropped housing projects in the commercial hub near John Wayne Airport.”

“Walter Hahn, a real estate economist in Irvine, said more developers likely will continue to abandon expensive high-rise and condo projects across the county. ‘All their pro formas were based on rapid sell-outs,’ Hahn said. ‘They paid a bundle for the land.’”

“Speculators have abandoned the market and are selling whatever homes they still own. And buyers with the riskiest loans are trying to sell to avoid higher payments, Hahn said. The county is likely to see its next recession when the market corrects itself in about three years, Hahn said.”

“‘What we’ve seen in the past few years was a hyper market, with speculators and investors,’ said Mark Boud, owner of Real Estate Economics in Irvine. ‘Those kinds of buyers are completely gone.’”

The Daily Bulletin. “Ventura, Orange and San Diego counties all saw declines from October 2005. The Riverside/San Bernardino metropolitan area saw 37.6 percent fewer home sales last month than in the same period a year earlier. Five different cities saw prices tumble, with the 10.4 percent decline in Upland the largest among local cities.”

“Three factors continue to impact the market, as economist John Husing pointed out recently. Unsold inventory is at 7.2 months, more than double a year ago. Foreclosures are up from historic lows, with several thousand homeowners entering the process each month. Speculators are still in the market, pushing supply artificially higher.”

“‘Once those three factors are dealt with, the market will get back to normal,’ Husing said. What’s normal?”

The Pasadena Star News. “In a continuing trend, some San Gabriel Valley cities registered a decline in their median home price. The biggest occurred in Alhambra, where the median home price fell 10.6 percent to $474,000, compared with $530,000 in October of 2005.”

“Other cities with declines included Claremont (-5.1 percent), Monterey Park (-4.1 percent) and Rowland Heights (-3.6 percent).”

“Phyllis Fritz, owner of Coldwell Banker Millennium in Glendora, said the current housing market is better for buyers. Fritz said…media reports predicting a possible housing collapse have put some potential buyers on the sidelines. ‘That’s one of the things that I think is stalling the market a little bit,’ she said.”

“‘Right now, people with no money are able to find sellers who will cover their closing costs,’ said (broker) Marty Rodriguez, in Glendora. Rodriguez said about half of the offers under $600,000 involve 100 percent financing.”

The Tribune. “For the second month in a row, after eight years of year-over-year gains, the median price of San Luis Obispo County homes fell in October. The median price of an existing, single-family home was $560,980 in October, representing a 7 percent decline from October 2005, according to the California Association of Realtors.”

“September had been the first month the median price fell since December 1998.” “Further downward movement in home prices is likely in November as well in part because of the seasonal trend and because home prices were at lofty levels last fall, said Robert Kleinhenz, deputy chief economist at the California Association of Realtors.”

“Sales, meanwhile, continued their downward spiral, off 43 percent from October 2005 and down 39.9 percent from September 2006. ‘We’ve seen sales declines which are large, and in many cases, larger than what we have seen for the state as a whole,’ he said. ‘It is symptomatic of a decline in second-home purchases to longer-term normal levels.’”

The San Francisco Chronicle. “Retired tennis stars Andre Agassi and Steffi Graf finally have found a buyer for their Tiburon estate for $20 million, or about $3 million less than what they paid for it in 2001.”

“The property was put up for sale because Agassi and his family were using it infrequently and the tennis star’s financial advisers wanted him to dispose of it, said Bill Bullock, whose firm represents Agassi and Graf.”

“‘When they considered the annual cost of that property to sit there vacant, they decided that they needed a little inducement for the marketplace and they started reducing the price,’ Bullock said.”

“After initially listing the Agassi property at $24.5 million, the price was reduced several times before Agassi dropped it six months ago to $21 million. The tennis stars have branched out into real estate development and have invested in a condo hotel project in Idaho with Miami developer Bayview Financial.”

The Denver Post reports from Colorado. “New-home sales in metro Denver are down nearly 20 percent through the first nine months of the year, a new report says. Existing-home sales declined 9.5 percent compared with the same period last year, according to a report by the Genesis Group. ‘The resale market is facing significant downward pressure on prices,’ the report said.”

“Aggressive building and lending practices also have contributed to a wave of mortgage foreclosures, which has helped fuel the downturn, experts say. Many parts of the metro area, particularly in Adams, Arapahoe and Weld counties, have seen home prices depreciate in recent months.”

“New-home sales have fared worse in northern Colorado than existing-home sales, said (realtor) Dave Pettigrew. ‘The cost of new construction is relatively high, and builders are bucking a lot of competition in the resale market,’ he said.”

“‘New-home builders have been under a lot of pressure, and they continued to build for too long and were not as aware of the warning signs as they could be,’ Pettigrew said. ‘If they had stopped construction a year ago, we wouldn’t have so much inventory.’”

“Declining home prices can feed on themselves once they get started, said Tom Dunn, an economist with the Colorado Legislative Council. ‘Do you want to buy something today that is going to be worth less tomorrow?’ Dunn asked.”

“Nearly three out of 10 new- home contracts in the metro area were canceled in the third quarter, compared with only one out of five during the third quarter of 2005. The seven- county metro area recorded 14,164 foreclosures in the first three quarters of the year, up 34.2 percent from the same period a year ago.”

“The inability of potential new- home buyers to sell their existing homes or to obtain financing is contributing to the high cancellation rates, said Dave Bracht, division president of Neumann Homes, which is selling off lots in areas where it has excess inventory.”

“‘A lot of builders are looking at peeling off excess inventory,’ he said. ‘We bought significant landholdings in too few places. We don’t need 400 lots in southeast Aurora.’”

The Idaho Statesman. “According to the latest Intermountain MLS statistics, the downturn in housing continued in October, with sales in the Treasure Valley falling 41 percent below the same month a year ago. ‘Even the Realtors can’t put a good face on that,’ said Ken D. Simonson, chief economist with the Associated General Contractors of America.”

“New home sales in Ada and Canyon County were off last month 50 percent and 38 percent, respectively, while existing home sales slumped 33 percent and 44 percent. New home sales in Ada and Canyon County were off last month 50 percent and 38 percent, respectively. The median price of an Ada County home has fallen 6 percent since July, from $248,900 to $235,000 last month.”

“Some sellers are being forced to consider drastic measures to market their homes. Victor Clark, a Meridian building contractor, considered offering a new Chevy truck or Suburban to anybody willing to pay $699,900 for a 3,550-square-foot, four-bedroom, 3-bath spec home he’s building in the Foothills overlooking Boise.”

“His goal, he said, has always been to keep from having to slash his price. ‘I think it’s imperative that people keep their prices up,’ Clark said. Cutting the asking price of a home simply devalues other homes for sale in the area, he said.”

“Don Hubble, owner of Meridian-based Hubble Homes attributes the continuing decline to the exodus of out-of-state investors who drove the market to record levels in 2005. ‘Now, not only aren’t they buying, I think they’ve turned into sellers,’ Hubble said.”

From USA Today. “During the real estate boom, home prices in the Sun Valley, Idaho area spiked almost as high as the peak of nearby Bald Mountain. The median home price is now about as high as San Francisco’s.”

“Sales of homes in Sun Valley and the adjacent town of Ketchum that are priced over $2 million are holding their own right now. But the rest of the market, with sales in the area down 50% from last year, looks as scary as a black-diamond slope.”

“‘I’ve been in real estate here for 18 years,’ says Mia Edsall, an agent in the southern part of the valley. ‘I’ve seen it slow but never like this. There are no buyers, and the reason there are no buyers is because they can’t sell the house they have. A lot of us (agents) are getting second jobs.’”

The Illinois realtors report on October sales. “October home sales were down 9.7 percent, compared to 14,430 sales in October 2005. Year-to-date home sales (including single-family and condominiums) totaled 145,678 in 2006, down 7.1 percent from 156,746 homes sold from January through October of 2005.”

“The Illinois median home sale price in October was $198,777, off 3.5 percent from $206,000 a year earlier.”

“‘Sidelined buyers should have confidence in the market and take advantage of the low interest rates and ample choices,’ said Robert Zoretich, president of the Illinois Association of REALTORS. ‘It’s shaping up to be the third best year for Illinois home sales.’”

The Chicago Tribune. “With the housing boom becoming an ever-more-distant memory, Chicago home sales took another hit in October, and real estate experts are saying wait until spring. Or until next fall. Or maybe longer.”

“The Illinois Association of Realtors said Tuesday that October’s combined single-family and condo sales in the Chicago area were 15.4 percent below last year’s sales. Chicago-area condo prices fell about 5 percent.”

“Pat Callan, a broker in Wheaton, said sellers who have reduced their prices are improving the logjam of properties for sale in DuPage County, where sales of all types of homes declined by nearly 28 percent in October. ‘The higher-end properties aren’t moving,’ Callan said.”

“‘There are still people out there waiting to see prices come down,’ Zoretich said. ‘But buyers are not listening. They’re really not. If people need to sell right away, they need to adjust their prices.’”

“The downtown condo market has slowed from jet-propelled to a mere chug, chug, chug. ‘Right now, sales for newly constructed condos are down about 10 percent from last year,’ says analyst Gail Lissner. She adds that statistic doesn’t really tell the tale because in 2005, the downtown market grappled with selling not only new construction, but also the conversion of 4,000 rental units to condos.”

“‘In 2008, we’re looking at 6,200 [new condos downtown], providing that everything currently announced gets delivered,’ she said. ‘That’s double the volume delivered this year.’”

The Sun Times. “If you own a home or property in Chicago, it’s probably worth more, maybe two or three times more, than it was three years ago, according to the Cook County assessor. And you’ll be taxed accordingly.”

“‘You don’t have any choice, you pay it or you have to move,’ said Leonard Gilbert, whose taxes on his Rogers Park home are jumping from $4,604 to $6,513. ‘I pay more in taxes now than on my mortgage.’”

The Times Herald from Michigan. “Struggling to make sales in a tough housing market, a Novi company interested in Port Huron development auctioned about 100 Livingston County properties last month.”

“William Russell, vice president and general counsel at Michigan Group Realtors in Brighton, said property auctions indicate sellers are ‘grasping at straws’ in their effort to sell properties at decent prices.”

“‘They don’t want to believe the degree the market has fallen,’ he said. Greeneisen said it is most difficult to sell higher-priced homes, especially homes priced at $500,000 or more - because people in the market for those houses can’t sell their current properties.”

“Some developers are using buyers’ interest in new homes to ensure success. Jeff Curtis is the principle developer for a 124-unit development of duplexes on Lakeshore Road set to break ground in the spring. ‘Everything has to be low cost,’ Curtis said. ‘It makes it affordable for people.’”

“‘If you can go buy something new for roughly the same price you can buy an existing home, people tend to buy the new one,’ agent Pat Moore said.”

“Until the housing market turns around, the glut of new subdivisions could make things worse for owners of existing houses. New homes in the area could force sellers to cut their price tags, experts said.”

“The developers’ optimism does little to soothe Mayland Skinner of Fort Gratiot, whose home has been on the market for four months. ‘I don’t have an optimistic feeling for the market,’ said Skinner.”

“Skinner is planning to lower the price on his home from $239,000 to $229,000 and may take it off the market until spring if there’s no buyer by December. The drop in price will put the house below its appraised value. ‘It will sell when the market’s ready,’ he said.”

Some housing bubble reports from Wall Street and Washington. “Sales of new homes fell 3.2% in October to a seasonally adjusted annual rate of 1.004 million, the Commerce Department estimated Wednesday. New-home sales are now down 25.4% in the past year. Measured out over the first 10 months of 2006 compared with the same period in 2005, sales are down 17.9%.”

“Median sales prices were up 2% in the past 12 months to $248,500. Home builders have piled on incentives, including offering free vacations and new cars, to sell homes and work off inventories. Such incentives are not subtracted from the sales price reported to the government.”

“Sales are reported when a contract is signed, not at the closing of the sale. Home builders have reported a large increase in cancellations in recent months. Cancellations are not reflected in the government data, so the reported sales are likely overstated.”

“The Commerce Department said…the number of homes completed and waiting to be sold rose by 6,000 to 166,000 in October.”

“The U.S. economy grew faster than first thought in third quarter on strong business investment, even as the housing sector posted its biggest decline in more than 15 years, the government said Wednesday. Investment in housing tumbled by 18 percent during the quarter. It was the biggest decline since a 21.7 percent slide in the first quarter of 1991.”

“Wolseley Plc, the world’s biggest supplier of plumbing and heating equipment, said it cut 2,000 U.S. jobs after a housing slowdown reduced earnings.”

“Copper fell to a one week low on speculation demand from homebuilders in the U.S., the world’s second-largest user of the metal, will slow as the pace of new construction declines. ‘Activity in housing is still very weak, and we are far from turning any corners here,’ Ed Meir, a commodity analyst said.”

“The Office of Federal Housing Enterprise Oversight, the regulator for mortgage financing concern Fannie Mae, said it intends to sue ousted chief executive Franklin Raines and former chief financial officer Timothy Howard in an effort to recover salaries from the time the company overstated earnings by billions.”

“An OFHEO report issued in May said that Fannie employees manipulated accounting to hit quarterly earnings targets and allow senior executives to collect performance bonuses between 1998 and 2004.”

“Former Federal Reserve Chairman Alan Greenspan said on Tuesday that the worst of the housing adjustment was over. But he also said there would be actual price declines in housing.”

“New signs appeared yesterday that the economy is stuck in a slowdown, but Federal Reserve Chairman Ben S. Bernanke made it clear he’s more worried about inflation and is not prepared to cut interest rates anytime soon.”

“The head of the nation’s central bank said in a New York speech that the ‘core’ inflation rate, which excludes food and energy costs, ‘remains uncomfortably high’ and could even trigger an interest-rate increase if not brought under control.”

“Carl Tannenbaum, an economist at LaSalle Bank in Chicago, said financial markets expected one interest-rate cut in 2007, and possibly two cuts. Now, with Bernanke’s statement, there’s a good chance interest rates will remain steady throughout next year, and possibly could be increased again, he said.”

“Lower oil prices and a U.S. commercial property boom will help offset the serious problem of a cooling housing market, Dallas Federal Reserve President Richard Fisher said in an interview.”

“German financial daily Handelsblatt said Fisher described the downturn in the housing market as a ‘very serious problem’ which had been exacerbated by keeping rates too low for too long.”

The Herald Tribune reports from Florida. “Prices remain the story in home sales, with Sarasota-Bradenton prices falling 18 percent in October, the second biggest drop in the state. The Charlotte County-North Port market was not far behind, with a drop of 17 percent, from $243,900 to $202,800.”

“Only Fort Myers-Cape Coral took a bigger fall, posting a 44 percent decline in median sales price, from $445,100 to $249,200, the Florida Association of Realtors reported on Tuesday.”

“Chad Roffers, president of Sarasota-based Sky Sotheby’s Realty, said the price decline goes hand in hand with slowing sales. ‘An 18 percent decrease feels about right. We’re seeing unit sales down by a third across the board and prices off by 20 percent from the peak in mid-2005,’ said Chad Roffers, president of Sarasota-based Sky Sotheby’s. ‘Those sellers who accept that level of value are seeing action. Those who hold out for 2005 prices are not.’”

“Budge Huskey, president and chief operating officer of Coldwell Banker Residential Real Estate, is not convinced that prices are done declining. ‘Sell now; you may get less in three months than today.’”

“Sales of condominiums in the Sarasota-Bradenton market were off 51 percent from the same time a year ago. The median sales price dropped 27 percent, from $294,000 to $216,000. ‘Condos always go belly up when economy gets sluggish,’ said (realtor) Barbara Anson.”

“‘We now have to come back to reality,’ she said. ‘I am explaining to my sellers in Myakka that the bubble has busted. They’re not going to get $350,000-$400,000 for a 10-acre parcel like they used to. They’ll get $200,000.’”

“‘All I can say is nothing in my neighborhood is moving,’ Yetta Levitt said, noting that one of the less expensive, nonwaterfront homes in her 210-home subdivision sold last month for $410,000. ‘Prior to that sale, I believe the last sale was November 2005.’”

The Miami Herald. “The median price for existing single-family homes in Miami-Dade dropped to $356,000 in October, the lowest since August last year. In Broward, prices went down to $349,400, the lowest since April last year.”

“Ronald Shuffield, president of Esslinger Wooten Maxwell, contends that people who buy now may still see prices go down in 2007, as the market digests the enormous number of homes for sale. Nearly 65,000 homes are now listed for sale in South Florida, from 25,174 a year ago. The antidote, some industry players and watchers say, is still for prices to come down.”

The Sun Sentinel. “Palm Beach County’s October median declined $50,900, or 12 percent, on an annual basis, and experts say prices will keep falling into 2007.”

“Prices actually have fallen even more than that because sellers are giving buyers lucrative incentives, that aren’t reflected in the sales prices, analyst Jack McCabe said. ‘Sellers are not getting all that money in value for their properties because they’re having to pay a big chunk of that out as concessions,’ he said.”

The News Press. “Lee County’s housing market continued to slow in October, with sales and prices down and the inventory of homes for sale still going up. The median price of an existing home sold with the help of a Realtor was $249,200 in October, down 4.7 percent from $261,400 in September. People selling their homes in Lee County have seen prices fall steadily since the median price reached an all-time high of $322,300 in December 2005.”

“The number of homes on the market in the county in October was 13,260, almost five times what it was in October 2004.”

“In Collier County, the median price was down 17 percent from October 2005 to $420,000 and the number of sales fell 27 percent to 204. Charlotte County’s median price fell 17 percent to $202,800.”

“Warren and Tracy Pearce sold their three-bedroom, two-bath, lakeside house in North Fort Myers recently to move into a condo. ‘We’d had it for sale since February,’ he said, but at the initial asking price of more than $400,000 there were no takers.”

“The Pearces’ agent got them to reduce the asking price, it finally sold for $289,000. The Pearces paid $170,000 for the house 31/2 years ago.”

“When sellers are unable to get the price they need, agent Michael Burke said, increasingly, ‘It’s Plan B: rent it.’ Owners usually can’t break even on the expenses of keeping the home, he said, ‘but they’re easing the pain.’”

From Florida Today. “Brevard County’s housing market continued to slow in October compared with the same period a year ago. Condominium sales year over year plunged 69 percent, falling to 85 transactions from 273 in October 2005. The median sales price for condominiums in Brevard dropped 17 percent.”

“‘We still have to convince sellers we’re in a new phase and the asking prices they had last year are probably not realistic now,’ said Gene Collins, president of the Melbourne Area Association of Realtors. Daryl Adkins of Indialantic has been trying to sell his three-bedroom home for more than a year and has dropped his original asking price of $325,000 to $238,500.”

“‘It’s slow all over the county because there is so much on the market,’ Adkins said, adding higher taxes and insurance costs ‘aren’t doing us any justice either.’”

The Daytona Beach News Journal. “Gertrude Butler and her husband have been trying to sell their house since April, dropping the price twice, so they can move back to Delaware to be near their family. But, Butler said, ‘If we don’t sell this house, we won’t be going anywhere.’”

“The Butlers have dropped their price $12,900 in seven months. They started out asking $289,900, and now are asking $277,000 for their three-bedroom, two-bath, lakefront home in the Cypress Cove subdivision. ‘We’ve had people look and even a few really low offers,’ Butler said, admitting she feels discouraged.”

The Nassau Neighbors. “Jeff Timian was sure he was making a good investment this year when he bought and renovated a house in Fernandina Beach. But now, after the house has sat on the market for months, Timian’s sure thing isn’t so sure. He’s now offering it for sale below its appraised value.”

“This week it’s down to $225,000, he said. ‘I’m not going too much below $225,000. At that point, I still make money,’ he said.”

“Sales of single-family existing houses in the Jacksonville area, which includes Nassau Countym dropped 18 percent between July and September as compared to the same quarter in 2005. Condominiums fared worse. Sales plunged 49 percent between the same period in 2005.”

“Lou Goldman is the sales manager for a Yulee marshside subdivision. He said the current buyer’s market is a cycle that recurs in the real-estate industry, Goldman said. What complicates it is that the most recent ‘boom’ phase lasted a lot longer than usual, he said.”

“‘From 1992 to 2005 was the longest run there’s been,’ he said. ‘Most people don’t remember what it was like the last time it plateaued. The last one was from 1990 to 1992. This is a buyer’s market. You don’t have the urgency you have when there’s a seller’s market, because the prices aren’t going up.’”

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