The Housing Bubble

The Voice of San Diego reports from California. “New downtown condos were gold in 2004. Buyers rushed to deposit thousands of dollars to secure their spot. And so the company building apartments on Little Italy’s West Beech Street decided, eight floors in, it’d be better as condos.”

“The project, called Acqua Vista, was sold to K. Hovnanian Homes, which would finish construction on the two towers and change the project to condos. It was the first downtown project to be converted for sale before the apartments could even be rented.”

“But now, 14 of the building’s 383 units are in foreclosure, according to RealtyTrac. Thirty-eight units are on the market, some listed at a loss.”

“‘It’s the black hole of condominium values,’ said Anthony Napoli, a Little Italy Realtor, of the building.”

“The way in which downtown proceeds in the coming months could serve as a bellwether for overstocked markets nationwide. That’s why the 14 foreclosures in one complex stand out so starkly. The number of units for sale in Acqua Vista is more than double that of the building with the next largest pool of units for sale, said Lew Breeze, a downtown Realtor.”

“The addition of nearly 6,000 condos and apartments-turned-condos between 2001 and 2006 upped downtown’s residential quotient by almost half. But as these distressed owners, and the lenders who enabled them to buy, try to recoup as much of their debt as possible, the owners of the surrounding units could see their own values drop.”

“At least half of the owners currently in foreclosure eschewed down payments and used mortgages to cover the whole purchase price. For many in the project who financed 100 percent, it is proving difficult or impossible to refinance or sell without losing money.”

“‘The people that bought (in Acqua Vista) came late to the party,’ Napoli said. ‘They thought, like everybody, that things were going up. They thought they would make a killing.’”

“One distressed unit, is a 1,249 square foot penthouse. The owner, Carlos Espinosa, is a real estate agent himself and purchased the unit for $983,000 directly from the builder in June 2005, covering the entire cost with mortgages. He also owns another unit in the building, which he has listed on the MLS for $1.6 million.”

“The unit in foreclosure, has been listed on the MLS for 250 days with an asking price of $999,000 to $1.15 million.”

“As buyers have started thinking twice before making a deal, Acqua Vista has a few too many deal-breakers for units to sell at the same prices they garnered two years ago, Napoli said. ‘When a market turns, quality can still get you some value,’ he said. ‘But poor quality will plummet.’”

“Among the 14 distressed units, two have received notices of default, the first stage of foreclosure. Eleven of the units have been repossessed. One unit, No. 206, was scheduled for auction April 4. The owner of No. 421, which is scheduled for auction at 10:00 a.m. on Thursday, financed 100 percent of the $515,000 purchase price with New Century Financial Corporation when she bought her condo in January 2006.”

“Not much can distinguish one one-bedroom unit from another in a condo tower, so owners are often at the mercy of what price their neighbors’ units sold, or auctioned, for. That could worsen the foreclosure trend in Acqua Vista and in similar projects in the region.”

The LA Times. “There were 5,977 foreclosed homes on the auction block in Southern California in the first three months of the year, up from 711 in the same period last year, according to DataQuick.”

“There were six homes on the block this day. They were bought in 2005 and 2006, at the crest of the housing boom, by buyers who financed the entire purchase. That means the homes are probably worth the same, or less, than the amount the buyers owe. No one bid.”

“At 10:30 a.m., Travis Toth, an auctioneer hired by other trustees, stepped up to market a foreclosed condominium near La Cienega and West Jefferson boulevards in Los Angeles. The opening bid was $259,592, which was the sum owed on the mortgage plus about $20,000 in processing fees.”

“Right away, two men and a woman produced cashier’s checks to identify themselves as serious bidders. With cellphones at their ears and hands cupped over their mouths, the bidders bumped up the price in $1,000 and $100 increments.”

“After 10 minutes of back-and-forth, the auctioneer calmly declared, ‘Sold.’ The winner politely declined to give his name to a reporter except to say that he had been doing this for 11 years.”

“Whatever his identity, he appeared to have scored a bargain. The final sale price was $267,500, more than $100,000 below its estimated value.”

The Wall Street Journal. “Lenders, stung by a surge in defaults, have rediscovered the virtues of caution over the past few months, eliminating many of their no-money-down loan offerings. That tightening is ‘really starting to bite,’ says Ed Mixon, a real-estate agent in Monarch Beach, Calif.”

“Mr. Mixon recently had to advise one of his clients, a young woman with a good job and credit record, to put off her dream of buying a $300,000 condo in Laguna Niguel, Calif., until she could come up with more than her current nest egg of $5,000 for a down payment.”

“A year ago, he says, she could easily have obtained a loan to cover 100% of the condo’s price.”

The California Aggie. “Home prices in Davis, which saw a steady decline during the past year, have leveled off and are anticipated to increase, local real estate experts said.”

“‘They seem to have leveled off over the first three months, but we’re seeing inventory starting to rise a little bit,’ said local realtor Joseph Whitcombe.”

“‘Many potential buyers are waiting for a better deal or more choice later on,’ said Andrew LaPage, analyst for DataQuick. ‘Before, people thought it was better to buy now or get bought out later on.’”

“The same scenario is also impacting other areas around Davis that are seeing an influx of new housing tracts. In nearby Woodland, home sales dropped by 48 percent from a year ago, and prices fell by as much as 14 percent.”

The Times Herald. “The local real estate roller coaster’s descent may be slowing, so now may be a good time for buyers to hop on, some local experts say. Home sales in the Vallejo area and statewide are still falling, but at a much slower rate.”

“The median price of homes sold in Vallejo and Benicia fell slightly from a year ago, said Jeff Dennis, Solano Association of Realtors president. But quarterly numbers are almost meaningless, he said.”

“In Vallejo, sales dropped about 33 percent in 2006 over 2005, but only 30 percent so far this year, Dennis said.”

“‘We are still experiencing high inventory, especially in Vallejo, and longer times on the market, so I expect more price reductions to reduce the more than 1,000 homes for sale here,’ Dennis said.”

“‘None of this is the end of the world. The predictions of the whole market going in the tank have been proven wrong. Our area is being hit, but it’s only as significant as you want to paint it,’ Dennis said.”

“Benicia mortgage broker Mitchell Chernock of Sky Valley Financial, Inc. says he sees a less rosy local real estate outlook.”

“‘Every day we talk to people who are under water in their mortgage,’ Chernock said. ‘How can you expect home prices to rise with a record number of homeowners going into foreclosure? With rising interest rates and adjustable mortgages skyrocketing, people will need to get out of their homes, and they won’t be able to sell them.’”

Some housing bubble news from Wall Street and Washington. “National City Corp., the Ohio bank that sold its subprime mortgage unit to Merrill Lynch & Co. last year, said profit fell 31 percent as it set aside more money to cover bad loans. National City put $107 million into a reserve to cover bad loans, quadruple the amount from a year earlier, citing a ‘difficult environment’ in the mortgage market.”

“Delinquencies reached a four-year high last year, cooling demand from investors who buy loans and package them into securities. National City said last month it would hold on to more of its mortgages rather than selling them at depressed prices.”

From Reuters. “Net charge-offs rose 21 percent to $147 million, including $53 million for nonconforming mortgages. These include ‘Alt-A,’ short for ‘Alternative-A,’ which are between prime and subprime in quality.”

“‘The secondary market in mortgages has stabilized, but gain on sale, particularly in the Alt-A slice, has been under pressure,’ National City President Peter Raskind said.”

From Bloomberg. “Washington Mutual Inc., the biggest U.S. savings and loan, will cut back on terms that make subprime home loans more likely to default and step up ‘Alt-A’ lending to restore profit at its mortgage unit by year’s end.”

“The company, which lost $113 million on home mortgages in the first quarter, is making fewer loans that don’t document a borrower’s income and cutting second mortgages, executives told investors Friday.”

The Associated Press. “American Home Mortgage Investment Corp. said Monday first-quarter profit shrank 44 percent because of mounting payment defaults and sagging home prices.”

“CEO Michael Strauss said in a statement a ’severe disruption’ in that market forced prices for mortgages down. Mortgage lenders across the country are reporting that investors in the first quarter lost their appetite for mortgage debt as home prices slumped and borrowers defaulted on loans more frequently.”

“AHM said it set aside $60.5 million in anticipation of missed payments on loans. Most of the reserve was for a type of loan in which the lender doesn’t verify the borrower’s income and the home doesn’t provide enough collateral for the debt. AHM said its charges for loan delinquencies should diminish in the future because the company stopped issuing this type of loan.”

“Credit Suisse is being sued by a Florida insurer that says it lost money on investment-grade bonds backed by subprime mortgages sold by the bank.”

“The suit, filed last week by Bankers Life Insurance, is ‘one of three to five in the pipeline’ involving securitizations by Credit Suisse, said Dale Ledbetter of one of two law firms representing Bankers Life.”

“‘We suspect that once people understand what occurred here, there’s going to be a lot more,’ Ledbetter said. A total of $302.6 million of bonds were originally issued in the deal.”

“Bankers Life claimed that divisions of Credit Suisse caused it to lose money by overstating how much of a loss after foreclosures that the insurance on the loans would cover. It also says that the bank accepted ’shoddy, inferior’ loans, failed to buy back fraudulent ones, and covered up delinquencies of homeowners, according to the complaint.”

“Payments were being advanced on borrowers’ behalf to ‘maintain the illusion’ that defaults were not occurring, the suit says.

“Moody’s Investors Service, citing more subprime mortgage loan losses than forecast, has downgraded the ratings on 27 different pools of securities created over the past two years by Lehman Brothers Holdings.”

“Bonds created through Lehman’s Structured Asset Investment Loan Trust from 2005 and 2006 were cut because of ‘higher-than-anticipated rates of delinquency,’ Moody’s said Friday.”

“‘The servicers have started to sell the properties and therefore losses have started to come in,’ said Nicolas Weill, Moody’s chief credit officer for its Structured Finance Group in New York.”

From The Record. “We’ve come a long way since the giddy heights of 2005, when the real estate market peaked. Hovnanian Enterprises Inc., the nation’s sixth-largest home builder, has lost a total of more than $174 million for the past two quarters, its first losses in at least nine years.”

“In an extensive interview last week with The Record, Ara Hovnanian, the company’s CEO, talked about his company, the housing market and the home-building industry, where they are, and where they’re headed.”

“Q. How’s the outlook for housing for the rest of 2007? A. ‘My response is different today than it would have been a couple of months ago. Had you asked in January or February, I would have said it really looks like the market is stabilizing. Then this whole issue regarding the subprime mortgage industry came out, and that caused sales to dip.’”

“‘Now my prognosis is not as optimistic as it was. Obviously, the industry is still selling a lot of houses, but the recovery and spring bounce-back we had been hoping for seems to be stalled.’”

From MarketWatch. “A sharp drop in investment-home sales offset a record number of vacation-home purchases to bring down the overall share of second-home purchases in 2006, the National Association of Realtors reported Monday.”

“‘We expected the drop in investment sales because speculators left the market in 2006, which caused investment sales to fall much faster than the primary market,’ David Lereah, the association’s chief economist, said in a news release.”

“The median price of a vacation home was $200,000 in 2006, down 2.0% from $204,100 in 2005. Investment-home prices were also down, with the typical home costing $150,000 last year, down 18.3% from $183,500 in 2005.”

“‘The drop in investment prices comes as no surprise, but for vacation-home prices to edge down in a record market is a bit puzzling,’ Lereah said. ‘It may result from a large dumping of inventory on the market by speculators, especially in the condo sector, with long-term, second-home buyers taking advantage of the glut and buying at negotiated discounts.’”

“David Lereah, chief economist of the National Association of Realtors, is leaving NAR to join a new business entity next month, NAR said Monday.”

“Lereah has directed NAR’s research division, regulatory and industry relations division and other activities. He will leave the association in mid-May, NAR said.”

Chicago Business reports from Illinois. “Dashing hopes that the housing slump would soon bottom out, new-home sales in the Chicago area fell even faster in the first quarter as the market meltdown spread from the suburbs to the city. Residential developers in the Chicago area sold 5,341 homes in the quarter, down 35% from a year earlier and the weakest showing in more than 11 years, according to a report.”

“‘Everybody was waiting for spring,’ when buyers re-emerge, but ‘it just didn’t come,’” says Tracy Cross, president of a Schaumburg-based real estate consulting firm. ‘This is definitely the steepest downturn we’ve seen’ since the early 1980s.”

“Recovery now appears further away, particularly in the city, where developers continue to build despite the precipitous drop in sales.”

“‘We’ve seen continued softening in April,’ says Dan Star, Illinois division president for Dallas-based Centex Corp.. ‘Traffic is down. Contracts are down. I think this will go on for another six months or year or longer.’”

“The supply of unsold condominiums in downtown high-rises under construction is growing even as demand is declining. Speculators have all but disappeared from the market. And developers are likely to face stiff competition from the resale market, as thousands of owners of recently built condos put their units back up for sale, Mr. Cross says.”

“‘You should see continued erosion in the city,’ he says.”

The Beacon News from Illinois. “The vast flow of people moving west into Kendall and Kane counties have insulated the area, although there’s no denying things have slowed even here, said Dee Rechenmacher, a Realtor with Pilmer Real Estate and president of the Aurora Tri-County Association of Realtors.”

“‘This time last year, I had many multiple-offer situations,’ Rechenmacher said. That hasn’t happened yet this year, even though the traditional home-buying season is well under way.”

“That doesn’t mean houses are doomed to languish on the market for months, she said, but ’sellers have to get realistic with their pricing.’”

“Buyers now have the upper hand in the market, agreed real-estate expert Chip Wagner of the Headrick-Wagner Appraisal Group in Naperville. ‘The investors pretty much left the market once the interest rates started creeping up,’ Wagner said. And the entire Fox Valley area is now over-supplied with homes.”

“Perhaps buoyed by the area’s status as the second-fastest-growing county in America, developers nearly doubled their building permit requests last year in Yorkville.”

“The city now has more than a 12-month supply of houses on the market. Realtors said that level of supply makes for intense competition on prices, between new and existing homes, with the latter often being forced to sell for little more than owners originally paid.”

The Rockford Register Star from Illinois. “Clarice bought a home on Rockford’s near west side in 2005 with her then-fiance, Anthony. When it came time to sign for the home, they were looking at a mortgage of 11.85 percent, more than double what then was the national average of 5.65 percent for a 30-year mortgage.”

“‘I didn’t want to take the keys. I was crying. I didn’t want the house, not at that price,’ Clarice said. The Register Star agreed not to use the couple’s last name. ‘But we prayed and my husband said, ‘God wants us to have this house.’”

“The couple couldn’t make even their first payment. Within six months, the financial institution that had bought their loan started foreclosure proceedings.”

“Foreclosures increased 38 percent between 2005 and 2006 in Boone Winnebago and Ogle counties, from 661 to 912, according to county records.”

“Put another way: 7,190 homes and condominiums sold in the Rock River Valley in 2006, meaning it’s possible nearly 13 percent sold because the owner no longer could afford the home. A look at the foreclosures filed in Winnebago County by ZIP code since the start of 2006 showed no areas are immune.”

“Marve Stockert, executive director of the Illinois Association of Mortgage Brokers, which has about 1,000 member institutions, said there is no doubt 2007 is going to be a tough year. ‘In the next 12 to 15 months, people are all of a sudden going to see their payments go up 15 percent,’ Stockert said. ‘People are going to be stretched way beyond their limits.’”

“Todd Kudlacik of Byron, who, according to a Register Star database of real estate transactions, has bought 81 homes and sold 74 homes on Rockford’s west side since the beginning of 2005 through his Rockford-based company, said the market on the west side of Rockford is going to be flooded with homes for sale, cheap.”

“‘The foreclosures have already happened,’ Kudlacik said. ‘What’s going on now is banks are building a portfolio of houses and they are going to turn them loose all at once.’”

“Kudlacik said this is actually the worst time to get into home restoration. ‘There aren’t many buyers out there when you are finished,’ he said. ‘I bought a group of seven foreclosure houses last week and I walked through and saw that three had been rehabbed. The owners bought them, poured a bunch of money into them, got over their heads and lost them.’”

The Pioneer Press from Minnesota. “The West Side Flats condo project (is) going back to the drawing board. Developers have halted the project and are returning down payments, all seven of them.”

“It’s no secret that the condo market is soft, and real estate experts say it is especially difficult to sell buyers on a speculative idea such as the West Side Flats when so many completed condos are flooding the market.”

“‘I think the biggest problem is the condo market is oversold,’ said Ralph Peterson of Coldwell Banker Burnet. ‘They way overbuilt, way too fast.’”

“Peterson added that another barrier to sales is price. Lower-priced condos still sell, while the West Side Flats condos were priced from $250,000 to more than $1 million.”

“The news should not be taken as a sign that the Mississippi River falls short as a selling point for development and St. Paul in general, said Patrick Seeb, executive director of the St. Paul Riverfront Corp. ‘We’re in the middle of a pretty profound slowdown in the housing market,’ he said.”

The Journal News reports from New York. “In Westchester, the median price for houses was $635,000, down 2.3 percent from a year earlier and the second quarter in a row of year-over-year declines. Real estate agents said buyer resistance to high prices in the county had helped drive them down; last quarter’s median was well below Westchester’s record of $716,126 set in the third quarter of last year.”

“‘Most of the new stuff is coming on with reasonable prices,’ said J.P. Endres, president of David Endres Real Estate in New Rochelle.”

“Westchester and Putnam are seeing growing inventories of property for sale, but as a smaller market, Putnam may be feeling the effect to a greater degree. The number of single family houses for sale at the end of last quarter, 942, was up 48 percent over three years earlier.”

“The number of months of inventory in Putnam, a measure of the amount of time it would take to sell all the houses for sale in the county, reached 20 in the first quarter. It’s the biggest first-quarter number since 1998, when it stood at 22.”

“Michael Barile, a retired builder, said he sees a disturbing trend in the growing number of foreclosures in the county. About 90 percent of the properties are being taken over by the bank at foreclosure sales, and at some point they’re going to wind up back on the market, he said.”

“‘When I built in the 1970s and 1980s, you never saw inventory over 500,’ he said. His daughter has been trying to sell a one-bedroom house in Carmel for $209,900. It’s been on the market two months, even though she cut the price by $10,000, he said.”

“Buyers are finding that getting financing is not as easy as it was a year ago. ‘To get approval is not very easy now,’ said Sonia Velasco, broker in Yonkers. ‘They have so many foreclosures coming up that they’re really making sure the buyers are really qualified and are able to keep the house.’”

The Gotham Gazette. “A crush of foreclosures in Queens, Brooklyn and the Bronx is raising alarms and leading many to call on city and state authorities to do more to go after the unscrupulous people at mortgage brokerage firms, at banks and on Wall Street who, they say, are fueling the problem.”

“Through March, more than 1,200 foreclosures had been filed this year in Queens on one- to four-family properties, a 57 percent increase over the same period last year. About 3,600 were filed in all of 2006 in the borough, according to the Neighborhood Economic Development Advocacy Project.”

“In Brooklyn, over 1,100 foreclosures had been filed from January to March compared to about 3,300 for all of last year.”

“The rates of subprime lending here are higher than the national averages. About 23 percent of home purchase loans are subprime, up from just 6.5 percent in 2002. Nationally, the proportion of home purchase loans that are subprime is 17 percent.”

“Queens attorney Oda Friedheim sees the city’s numbers as ominous. ‘The subprime market is going bust and so we will see more foreclosures,’ she said.”

“Kevin Squires, a loan officer at a Queens mortgage company, said the first scenario is common as homeowners are bombarded daily with offers to refinance their homes. The advertisements blare across virtually every medium.”

From Newsday. “Thomas and Joy Geist have lived in the same house in East Meadow for more than 50 years. Currently, however, the Geists’ house is a source of family worry. The couple, who paid off their original mortgage 30 years ago, are struggling to make monthly payments on a new $280,000, 30-year mortgage that their lawyer is contending should never have been made to them.”

“‘How can you give a 30-year loan on a paid-off house to an 82-year-old person?’ the plaintiffs’ Manhattan-based lawyer, Jacob Zamansky, said in a recent interview. The suit accuses members of the mortgage industry, including a Glen Head bank and two Long Island-based mortgage brokers, of ignoring numerous ‘red flags’ signaling that the loans shouldn’t be made.”

“With home foreclosures rising nationally, lawmakers are considering legislation that would impose suitability requirements on the mortgage industry.”

“The effort is hotly opposed by the industry. ‘It’s a bad idea, because rather than protect borrowers, it would prevent borrowers from getting access to credit,’ said Kurt Pfotenhauer, a senior VP for the Mortgage Bankers Association.”

The Times Union. “Home foreclosure filings in the Capital Region surged in the year’s first three months, according to newly released statistics. The five-county region’s first-quarter foreclosure filings climbed 93 percent when compared with the same period last year, according to RealtyTrac.”

“Foreclosures in Albany County jumped 109 percent, while filings in Rensselaer County spiked a staggering 218 percent. Rensselaer County, in fact, had more foreclosures filings in 2007’s first three months (54) than it had all of last year (51).”

“‘We’re getting more and more calls from people in a panic,’ said Bobbi Carter, director at a nonprofit that works to keep defaulting mortgage holders in their homes. TRIP had 33 mortgage-default clients for all of 2006, Carter said, and has already had that many for the first three months of this year.”

“Those working with local homeowners facing foreclosure say they are seeing a large number of middle- or higher-income families in trouble. Guy Criscione, an Albany bankruptcy attorney who said he’s seen an ‘unbelievable’ number of foreclosure clients in recent months, said many are couples with combined incomes of over $100,000 who still can’t make mortgage payments.”

“Sandra Demars, an attorney in Albany, said some of the office’s foreclosure clients are unable to cover rising tax payments, while others, facing spiking housing costs, borrowed at levels they can’t afford.”

“The RealtyTrac information, Demars said, ‘is reflective of what we’re seeing and what we were afraid was going to happen.’”

“Observers found the sharp increase in the Capital Region troubling, and worried it might be a warning of worse numbers to come.”

“‘We are so not at the apex of this problem,’ said Kirsten Keefe, a lawyer with the nonprofit Empire Justice Center in Albany.”

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The Orange County Register reports from California. “Former Fountain Valley residents Billy and Betty Lambright moved to this dairy land east of Chino in July, paying $620,000 for a new two-story house. A few months after they moved into their tile-roofed dwelling, the builder dropped the price for the same model by $45,000, plus free upgrades.”

“‘They gave me a good deal, they said. But after that, they dropped the price to $575,000,’ Lambright said. ‘You can’t cry over spilled milk.’”

“The Inland Empire had the biggest percentage increase in mortgage defaults in Southern California and the second highest gain in foreclosures, according to DataQuick. Foreclosures were up 829 percent, compared with 733 percent regionwide. Only Ventura County had a bigger jump in foreclosures.”

“Scott Chappell, a past president of the Multi-Regional MLS, cited statistics showing that the number of defaults ending in actual foreclosures rose from 8 percent in the fourth quarter of 2005 to 32 percent in the fourth quarter of 2006.”

“‘Those are huge numbers,’ Chappell said. ‘We’re thinking we’re going to have the same things we had in the mid-’90s.’”

“People like Lake Elsinore resident Charles Lucas are feeling the effect of that rise. Lucas put his four-bedroom, two-story home near the lake on the market for $499,900. That was in June. Almost a year and 12 price-reductions later, they’re still looking for a buyer, despite a $100,000 price hit.”

“‘(It’s) an expense and quite strenuous,’ he said of the dozen or so open houses and constant impromptu showings.”

“The glut of homes for sale has forced some owners into foreclosure, said real estate agent Pat Crowe of Perris.”

“‘I know of one home in the Perris area, she had over $100,000 in upgrades. Even though she dropped her price $50,000, she couldn’t get anyone to come out and look at it,’ Crowe said. ‘So she had to give it back to the bank. It’s not a good scenario, but she’s not the only one going through it right now.’”

The Contra Costa Times. “Median home prices continued to drop in March in most East Bay cities, with only a few modest gains in unexpected places. Walnut Creek prices dropped 8.6 percent, Concord prices fell 4.8 and Oakland prices decreased 1.2 percent from March of last year.”

“Kathy Thomas, an agent in Pleasanton, said she has seen drops in prices in the Tri-Valley area. San Ramon had a drop of 14.1 percent in median price, from $855,000 to $734,600.”

“‘There’s so much new construction out (in San Ramon); it’s all about the saturation level,’ she said. ‘People are more choosy because they can be and also make lower offers.’”

The San Francisco Chronicle. “As you may know, I’m opposed to any type of taxpayer bailout of subprime mortgage borrowers or lenders. Yet I believe our state regulators and law-enforcement agencies should be doing much more to pressure lenders and brokers to clean up the mortgage mess they helped create.”

“While the problem is usually blamed on an explosion in loans to borrowers with subprime credit, the real problem ‘is the way these loans were structured and sold,’ says Jeffrey Berns, a Tarzana (Los Angeles County) lawyer who is preparing to file suits on behalf of hundreds of borrowers who took out option ARMs.”

“Bob Bishop got an option ARM from IndyMac Bank when he refinanced his condo in San Rafael last year. He says his loan broker, Paul Mikhail, told him that he would get a 2 percent rate and that his payment would be fixed for five years. Mikhail warned him that interest could be added to his principal, but ‘He said the most this is going to increase would be about $10,000 over five years,’ Bishop says.”

“In fact, Bishop says, his principal is increasing at a rate of about $10,000 per year. When he called Mikhail to find out why, ‘He apologized and said this is what we were told by the lenders,’ Bishop says.”

“‘I would argue that if there was no apparent way for repayment down the road after these things started adjusting and it was readily apparent to someone who ought to know, we would investigate, get all the sides. Unless there was some sort of reasonable explanation (as to how the borrower would pay off the loan), I think that’s an actionable offense,’ says Tom Pool, spokesman for the California Department of Real Estate.”

“‘State courts have found that mortgage brokers are fiduciaries in these types of transactions,’ Pool adds.”

The Union Tribune. “The downturn in San Diego County home prices is beginning to show up in a surge of requests to reduce assessed valuations that determine property tax bills. San Diego County Assessor Gregory Smith said about 900 homeowners since January have requested reassessments based on falling prices in their neighborhoods.”

“By the mid-May reassessment application deadline, he expects as many 2,500 requests with 1,800 reductions likely to be granted, more than 26 times as many as last year.”

“County records indicate, for example, that a one-bedroom, one-bath condo on the third floor of Acqua Vista sold for $323,000 in March 2005, while a nearly identical unit three doors away sold in January for $300,000.”

The North County Times. “The signs are literally everywhere, as apartment complexes display banners and notices advertising discounts on deposits and first month’s rent. And some ‘for sale’ signs in front of single-family homes have recently been altered to read ‘for rent.’”

“Over the last six months, the rental market has shifted, giving renters more choices and greater opportunity to bargain for lower rents. In San Diego County, vacancy rates among large rental complexes jumped from 1.84 percent to 4.54 percent during the six-month period from October through March 31, the highest six-month rate since 1995, according to a survey.”

“In line with the countywide trend, the vacancy rate in North County has more than doubled in the last five years, to 4.52 percent. However, the vacancy rate in some North County communities, including Escondido, San Marcos, Fallbrook and Bonsall, spiked in the last six months, to 7.59 percent.”

“John Baker, property manager in Escondido, said that he has fielded an increasing number of calls from people wanting to rent out homes and condos that they own. ‘A lot of people bought condos with the intent to flip them,’ he said. Now that real estate sales in the region have slowed, they are looking to rent them out. ‘They figure they’ll ride out the market,’ he said.”

“Baker said that when he speaks with owners of homes they plan to lease, he has ‘to talk them down’ from the rents they hope to charge. He said last month that he tried to work with one woman but couldn’t because she wanted to charge a higher rent than was realistic. The amount he suggested ‘wouldn’t cover her costs,’ he said. ‘That sank her ship.’”

“Robert Griswold, who manages property, said he spoke with a woman in Temecula who owns three rental properties, two of them vacant. He advised her to sell one or two immediately ‘before the house of cards collapses.’”

Readers suggested a topic on the conventional wisdom on home prices. “Weekend Topic suggestion: ‘Spinning sound housing bubble remedies to appeal to political activists.’”

“The idea is that with presidential media coverage just warming up and campaign platforms being formulated, now might be a good time to try to push ’sound government policies to combat the housing bubble.’ Policies that will help manage the current crash (not bailouts) and that will prevent future bubbles from occurring.”

“Most importantly, how to spin those policies to appeal to political activists. Although the special interests that fund the campaigns will largely dictate the campaign pledges, if we can influence a groundswell of support from political activists for good policies, there’s some slim chance that politicians will one day pledge and then execute those policies because politicians know how dependent they are on activists to ‘get out the vote.’”

“For example, if you think that the tax advantages of investing in housing compared to other asset classes helped inflate the bubble, you could sell repealing those tax advantages with such spin as: it will put government finances back on a sound footing, redistribute wealth from the rich to the poor because wealthy homeowners will get a bigger tax hike than poor renters.”

“Academic studies have shown that the average worker does not benefit from housing tax breaks, all they do is transfer money that would have gone to the government in taxes to provide public services.”

“One can spin the exact same policies to activists, such as: the lifetime cap on the housing capital gains tax exemption created the housing bubble so that must be rolled back.”

“The current tax policies are a huge distortion of the sacred free markets and have caused over a trillion dollars of misallocation of capital into excess housing inventory instead of real productive capacity, - etc.”

Another reader added, “The time’s becoming ripe for a change in the propaganda re. housing. For the past several years the ‘common wisdom’ has been that inflating housing prices is ‘good’ for the average American. Unbelievably, nearly everyone bought into the concept.”

“Now, with all the foreclosures coming about, it’s starting to dawn on some that high home prices may actually a BAD thing! Today there was a whole hour show on CNN about how rampant foreclosures were trashing whole neighborhoods.”

“Right now, the pols are tending to blame the foreclosures on bad loans. But everyone knows the REAL problem is the high home prices. That’s what the flashlightlight really needs to shine on. The high cost of homes and how it’s destroyed people’s finances.”

“This idea could really pick up some traction in the next few months. Perhaps it’s time for bubble bloggers to pitch in here with ideas to get the ball rolling. Coming up with politicaly acceptable ways for politicians to re-frame this is a really good idea.”

And another said, “Amen! We do need to spread the word that ‘affordable housing’ comes in the form of lower prices, NOT higher debt that is cloaked in artificially low monthly payments!”

The Star Telegram reports from Texas. “Buying a home? Even in some of Tarrant County’s most-popular neighborhoods, the ball is in your court these days. After years of steady increases, sales of existing homes in North Texas decreased in the first quarter this year. The same trend is happening in these neighborhoods.”

“Woodland West, (a) middle-class Arlington neighborhood of more than 600 homes follows the overall North Texas trend of a rise in sales, then a drop in 2007. Sellers had similar asking prices in the first quarters of 2005 and 2007. But the selling price was a different story. The average homeowner dropped the price $4,000 to make the sale this year. Two years ago, the average seller cut $2,315 off the price.”

“‘There aren’t too many [houses] that go for full price,’ agent Penny Bradshaw said of the North Texas market.”

“Park Glen, near one of the Metroplex’s most-active home-building areas, has faced stiff competition from builders, homes resold after foreclosure, and homes sold to avoid foreclosure, said agent Jo Ann Anderson.”

“Fort Worth: Fairmount. There has been heavier discounting in the first quarter of 2007, the most significant on Lipscomb Street with a $20,500 discount on a $70,000 listing and a $19,500 discount on a $140,000 Adams Street listing.”

“During the same quarter of 2006, it was more likely the exact opposite happened. A $245,000 listing on Adams Street fetched $18,130 more than the asking price after just more than three months on the market, and a $119,000 listing on Sixth Avenue sold for $135,000 in five days.”

“In the first quarter of 2005, six of 11 homes were discounted off their asking price and none sold for more.”

“It’s rare for a home to be so popular that sellers are bidding the price up, real estate agents said. It is not unusual these days for buyers to ask sellers to pay their closing costs as a condition of the sale, said Steve Young, chairman-elect of the Arlington Board of Realtors.”

“A Star-Telegram examination of sales data from several popular Tarrant County neighborhoods shows that a large percentage of homes sell with some kind of seller concession. In more than half or more of the closed listings in most of the areas, the buyer bought the house for less than the list price, the MLS data show.”

“Area real estate agents say buyers have a lot to choose from as the peak home-selling season approaches. For sellers to catch the eye of summer buyers, local real estate agents offer the following tips: Don’t get too aggressive with your price. Not only are homeowners competing against their neighbors for buyers, home builders are trying to unload their inventory.”

“Many neighborhoods also have foreclosures that are back on the market, which are priced for the lender to unload quickly.”

The El Paso Times. “El Paso’s hot real estate market has cooled a bit in the past couple of months, in part due to tighter mortgage financing requirements caused by the growing number of foreclosures nationwide, some in El Paso’s real estate industry reported.”

“‘The inventory (of homes on the market) is increasing significantly across the city,’ said Charles DeWetter, president of one of El Paso’s largest real estate firms. ‘The pace of the last two or three years, you list a home and sell it in a few days, those days are gone.’”

“The number of out-of-town investors coming into the market to buy homes has also slowed, DeWetter and others said.”

“Realtor Elizabeth Leal, said, ‘Last year, I closed on over $10 million (in home sales). It was just crazy. This year, I’ve got houses, but not enough buyers.’ Leal said she’s seen prices dropping this year on home listings as the number of homes on the market increases.”

“‘All the underwriting rules have changed. It’s harder to get a 100 percent loan now,’ said Elena Mata, president of an El Paso mortgage brokerage firm.”

“Last week, 3,264 homes were listed for sale on the El Paso Multiple Listing Service, which includes most existing homes on the El Paso market, and some new homes. DeWetter said probably half that number of homes were on the market a year ago.”

“Yvonne and Owen Corkran expected to have their home sold by now. Instead, they’ve had to drop the price of their four-bedroom, 2,350-square-foot East Side home from $212,000 when they put it on the market in August to $179,900 today. They plan to move to a newly constructed home in May.”

“‘I think if we had done it (put house on the market) sooner, I think it would have gone,’ Yvonne Corkran said. ‘Now, there’s more to choose from. ‘Two new homes just popped up for sale’ near their house, and many new homes are being built on the far East Side, she said. ‘It’s been kind of a nightmare.’”

“‘We buried (a statue of) St. Joseph in the backyard, and blessed the house with holy water,’ she said. ‘We’ve done everything we could think of.’”

The News Press reports from Florida. “Scott Ayers is about to become a landlord, whether he wants to or not. Wryly referring to an ‘unintended consequence of the current real estate market,’ Ayers has decided to rent his Gateway home after trying to sell it for about six months.”

“‘If you don’t have to sell your house right now, then don’t sell it, and try to rent it while you wait for the market to correct itself,’ says broker Larry Simons. ‘Over time the rental money you get should help you keep it going until you can sell it. If you aren’t in a hurry to sell or aren’t in a hurry to buy is when you get the best bargain.’”

“‘It really is a renter’s market,’ says Betsy Morgan, director of property management for Prudential Tropical Realtors in Trinity. ‘Some owners have determined it’s better to rent and wait out the market. Other people bought property as an investment to begin with, but that was before the market softened and they found it was hard to sell these houses.’”

“Barbara Ford, who has a new home in the San Marino section of Miromar Lakes, will try to rent it out for a year. ‘The builder put lots of extras in there and it’s really a nice place. We were very surprised when the market slowed. We just didn’t see it coming. That’s when we decided to keep it off the market for a while,’ she says.”

“Many Realtors are still selling homes, albeit at prices lower than a year or two ago. Would-be landlords have to make those same adjustments.”

“‘The first thing we tell somebody is that they have to be realistic about what they can get for the house if they lease it,’ says Simons. ‘You aren’t going to make your mortgage on a half-million-dollar house with what you get for leasing it. Just as you have to price the house reasonably to sell it, you have to do the same then with a lease.’”

The Orlando Sentinel. “Twanda Thompson doesn’t want to lose her home. Like many would-be homeowners with below-average or poor credit, the Orlando woman took out a ’subprime’ mortgage during the housing boom to buy a place she really couldn’t afford.” Now her adjustable-rate mortgage is three months away from a boost in interest that will increase her monthly payment 30 percent. More increases lie ahead, and she already is delinquent on her loan.”

“‘I’ve been on an emotional roller coaster,” said Thompson. ‘I’ve worked so hard to get this far, to have a home and raise my children. To lose ground now is not acceptable to me.’”

“In Florida, nearly 93,000 subprime-loan homeowners were in the lurch as of February, according to First American. And during the previous year, the state’s subprime-foreclosure rate tripled, while its delinquency rate shot up 72 percent.”

“Local experts say turnover in homes financed with subprime loans may already be contributing to the region’s housing slowdown. The inventory of homes for sale through the Orlando Regional Realtor Association, for example, has nearly doubled since January 2006.”

“‘You have to look at the two different sides of the coin,’ said William Weaver, a real-estate professor at the University of Central Florida. ‘The problem is a lot worse now than in the past, and it is likely to get even worse.’”

“Many subprime lenders have collapsed this year, making it harder for financially strapped subprime borrowers to find someone willing to refinance burdensome loans with adjustable rates. ‘That part of the market has come to a screeching halt,’ Weaver said. ‘And when these mortgages adjust, they are going to adjust with a vengeance.’”

The News Journal. “It’s a question Terry Daniell hears a lot these days. As an office manager of a nonprofit credit counseling service in Pensacola, Daniell helps people repair their credit and avoid mortgage foreclosure.”

“‘Primarily, more and more people are coming in, and the first thing out of their mouths is, ‘How do I save my home?’ Daniell said.”

“In Escambia County, during the first three months of 2006, for example, there were eight residential single-family foreclosures with an owed-loan value totaling $437,500. By comparison, there were 23 residential forecloses in Escambia the first quarter of 2007. The owed-loan value was $2.95 million.”

“‘Both the increased number of foreclosures and the increased dollar volume are significant,’ said Al Muller, president of Pensacola-based Metro Market Trends. ‘In my opinion, we are at the very beginning of this surge in foreclosure activity.’”

“Muller said Metro Market Trends, which tracks housing market data throughout the state, is seeing foreclosure numbers in other Florida and Alabama counties that are more alarming than Escambia’s.”

“Flagler County, for example, went from one foreclosure in the first quarter of 2006 to 31 in the first quarter of this year. And neighboring Baldwin County, Ala., has seen an increase from 23 in the first three months of last year to 102 for the same period in 2007.”

“At the heart of the problem is falling home prices, exacerbated by insurance and property tax issues, and a worrisome rise in the number of defaults in the ’sub-prime’ lending market.”

“If their property’s value has declined significantly, as many have in Pensacola recently, their equity is essentially nil. ‘As this housing decline continues, there are just more and more permutations that fall out of it,’ Muller said.”

“‘What’s really different here, what’s being lost in all this, is that people being foreclosed on today are not in the same kind of financial crisis as 10 or 15 years ago,’ he said. The combination of easy mortgage money and falling homes prices makes it much easier and less costly for someone to consider foreclosure.”

“‘Today, if a home is worthless, people will just walk away from it,’ Muller said.”

The Palm Beach Post. “It’s no paradise at the Eden condo in Boca Raton. During the recent condo-conversion craze, the Eden was among the first projects to promise buyers a hip lifestyle in a downtown setting.”

“But four years after sales first started, the project remains a hulking eyesore, partly gutted and nowhere near done. Work on the conversion has started, stopped, started and now stopped again.”

“Now comes word that two of the complex’s four buildings won’t be finished anytime soon. Meanwhile, residents who have moved into the first building won’t be enjoying their clubhouse in coming days. Work on the 8,000-square-foot facility has ceased, and several subcontractors have filed liens in Palm Beach County over unpaid bills.”

“‘It’s ludicrous,’ said Rick Salzman, an Eden condo-unit owner. ‘What are these guys doing?’”

“Antsy buyers don’t know what to do. Reports are some buyers are getting their deposits back, while others are being sued for trying to get out of closing on their units.”

“Faced with a meltdown in the housing market, Lake builders have launched an aggressive campaign aimed at persuading county commissioners to say ‘no’ to dramatic increases in impact fees.”

“Builders say they’ve never been so alarmed. ‘Lake County used to be an affordable-housing location for families,’ said Jim Bible, president of the Lake County Home Builders Association. ‘Now people are being priced out of the market.’”

“The fear is that raising impact fees could further dampen a housing industry that is already in a ‘depression,’ according to Don Magruder, general manager of Leesburg-based Ro-Mac Lumber & Supply Inc.”

“Magruder said the county has seen a downturn in the housing market since last year. But the bottom has fallen out of the housing market. There has been a nearly 50 percent drop in residential building permits in unincorporated Lake since 2004. The decline prompted the county this month to lay off 12 employees and two paid interns in its building department.”

“Ro-Mac also has been hard hit. Magruder said the company was forced during the past year to lay off more than 200 of 505 employees.”

“County Commissioner Jennifer Hill said affordable housing has long been an issue for Lake County. She questioned why home builders are so concerned about it now.”

“‘Where were they when property values were skyrocketing?’ Hill asked. ‘Property was being flipped all over the place. Homes were being sold and resold as much as three times a year.’”

What do you see in your housing market this weekend? Falling prices? “Ann Smith in Danbury (Connecticut), said sales have been falling since last fall. Home prices have dropped about 10 percent in the region since last fall, she said. Robert Budnik, with Century 21 in Bethel, said houses in the Danbury area typically stay on the market two to three times longer than in the boom time of two or three years ago.”

“‘If sellers think they have the upper hand, they don’t,’ he said.”

“The median sale price in Fairfield County dropped from $494,700 during the last three months of 2005 to $461,700 for the last three months of 2006.”

“JoAnne DiCarlo, like many real estate agents, said some sellers haven’t come to grips with the fact that it is now a buyer’s market. ‘They are still under the impression they can put it at a higher price of a year ago,’ she said.”

Or polling results? “This week, we asked in our weekly poll: Should the government intervene to prevent a predicted wave of mortgage defaults? A majority of respondents, 60 percent, said no, because the deals are private contracts and borrowers need to be accountable.”

“Several respondents left comments on the matter. Here are some of those comments: ‘If they bail out the mortgage holders, how about bailing us all out on our bad investment decisions?’ ‘The lenders KNEW they were lending to Sub-Prime customers. They made their own bed. Let them lie in it.’”

Failed developments? “The West Side Flats condo project was supposed to showcase a new era of riverfront development. For now, though, developers have halted the project and are returning down payments, all seven of them.”

“It’s no secret that the condo market is soft, and real estate experts say it is especially difficult to sell buyers on a speculative idea such as the West Side Flats when so many completed condos are flooding the market.”

“‘I think the biggest problem is the condo market is oversold,’ said Ralph Peterson of Coldwell Banker Burnet. ‘They way overbuilt, way too fast.’”

“Peterson added that another barrier to sales is price.”

An insiders opinion? “The sharp decline of the subprime housing market offering high-cost mortgages hasn’t yet hit bottom, the head of home mortgage buyer Freddie Mac said yesterday.”

“‘I don’t think it’s troughed yet, because of the class of 2006,’ CEO Richard F. Syron said. ‘The mortgages written in 2006 in the subprime market are probably the most troublesome. They haven’t hit the reset point yet on interest rates.’”

“‘To some extent, people in the past thought, ‘Well, I’ll be bailed out by the rise in housing prices, no matter what happens,’ Syron said.”

International headlines? “In the heyday of Spain’s real estate boom a few years ago, homes were going up so fast brick-makers literally could not bake the things fast enough, and had to import.”

“But this week stocks in Spanish construction companies, banks and other firms heavily exposed to the property market plunged, the most vivid evidence yet of a widely expected slowdown. The big question now is whether the meltdown signaled a bubble bursting or a jet coming in for a soft landing.”

“‘Spanish housing is about to implode,’ economist Charles Dumas wrote this week.”

“‘Spain saw Goldilocks at her most beneficent,’ Dumas wrote. ‘Sadly it will now see the bears.’”

Pleaswe post off-topic ideas, links and Craigslist finds here.

The Mercury News reports from California. “It wasn’t until a bank rejected his application for a credit card that Kulwinder Singh checked his credit report and found out he owed $579,000 on a San Jose condominium that he’d never seen. Worse, the condo was facing foreclosure and his credit was in ruins.”

“Singh, who admits he agreed to sign as the condo’s buyer in exchange for $2,500, is one of several people who have told the Mercury News that they wound up with mortgages and property in foreclosure after allowing their credit to be used to help someone else buy a home.”

“In a written complaint to the San Jose Police Department, Singh reported that he agreed with two agents to accept $2,500 for ’signing a house under my name’ last May while working at Century 21 Su Casa’s Fremont branch office. He told police he was promised that his name would be removed from the property a month or two later, that the home would be transferred to the real estate company and that they would be ‘responsible for everything.’”

“Public records show that Singh bought a condo in San Jose in May 2006, borrowing the full purchase amount of $579,000 from a subprime lender. His initial payments were to be $4,780 a month. He paid $30,000 over the asking price, according to the listing agent’s Web site and real estate records.”

“Singh’s loan application, prepared by Mariposa Mortgage, claims he is 20 years older than he is, earns $12,500 a month as ‘co-owner/manager’ in Newark, a job he supposedly held for 2 1/2 years, has $24,000 in a savings account, $8,500 worth of jewelry and $19,000 in other assets and drives a Toyota Tundra truck worth $37,000.”

“Singh said that after asking Fremont Investment & Loan for the documents, he was surprised to see those claims on the loan application, though he signed it at the time.”

“‘I’m like, God, I don’t have any of this. And $24,000 in my account? That’s completely insane,’ Singh said in an interview.”

“When Singh learned in December that he still owned the property, he investigated. He sneaked in, went upstairs and knocked on the door of the unit his credit report said he owned. There was no answer. ‘There was mail under the door, addressed to me, from Fremont Investment bank saying you haven’t paid your money,’ Singh said. ‘I was like, ‘Whoa.’”

“Foreclosed on in March, Singh’s condo is for sale again for $509,500, nearly $70,000 less than he paid.”

The Record Searchlight. “Mirroring the rest of California, Shasta County home sales dipped deeply in March compared with the same period a year ago, DataQuick reported.”

“In Shasta County, the shift that started last year from a sellers’ to buyers’ market has taken root, Redding real estate agent Brad Garbutt said. ‘It takes time for things to show up in the stats,’ Garbutt said. ‘There’s a slowdown in sales activity due to the subprime market implosion.’”

The LA Times. “It’s hard to imagine a metropolis here. Not far from 13 pristine model homes, some with bathrooms the size of studio apartments, cows munch hay near a potholed two-lane road. There’s a stench of manure in the air.”

“When the model homes open to the public for the first time today, Adrian Foley, the president of Brookfield Homes Corp.’s Southland operations will have his expectations in check. ‘I’m a realist,’ Foley said. ‘I acknowledge that the pool of buyers today doesn’t appear to be as big as it was a couple of years ago.’”

“In March, sales of existing homes in the city were down 59% from the same month last year, according to DataQuick. The median sale price fell to $408,000 from $425,000.”

“On the other side of Riverside Drive from the New Model Colony, ‘For Sale’ signs sprout from a lot of lawns. The value of undeveloped land, much of it still home to cows, has fallen by as much as $100,000 an acre in this part of San Bernardino County in the last six months, land brokers estimate, settling way below the peak of $550,000 in 2005.”

“‘Before, if a dairyman even hinted he wanted to sell his land, he would be inundated with offers,’ said David Beno, a partner with Ontario brokerage firm Beno, Van Dyk & Owens. ‘Now it’s pretty hard to find someone who would close a deal.’”

“The unemployment rate last year was 4.6%, the lowesteconomist John Husing has seen since he began studying the area 42 years ago.”

“But many of the new jobs won’t pay the sorts of wages necessary to buy a house in the New Model Colony. ‘Prices have been pushed way too high for incomes in that area,’ said economist Christopher Thornberg. In 2005, the last year for which he has statistics, only about 25% of the households in the Inland Empire had incomes that could support a $500,000 home.”

“Ike Bootsma, whose dairy farm fetched more than $525,000 an acre when it went on the market in 2004, wants to sell 20 acres that his family has owned since 1938. Bootsma sealed a deal with a developer in 2005 for $515,000 an acre.”

“When land values began to tank, the developer, who had already made a few payments, triggered a clause in the deal that allowed for a price adjustment, and asked that it move down to $375,000 an acre.”

“Bootsma decided not to sell and now rents out the land. He figures it will be more than seven years before prices will climb to where he wants them. ‘If the right offer comes in,’ Bootsma said, ‘we’ll sell it anytime.’”

The Orange County Register. “Expect the housing slump to continue at least through 2008, building industry officials said Friday. The year 2008 ‘won’t be so great,’ said Les Thomas, president of Shea Homes Southern California. ‘We hope things will be fine in ‘09.’”

“About 40 high-rise condo projects in the Irvine Business District have ‘ground to a halt,’ said Mac O’Donnell, CEO of the Irvine brokerage O’Donnell/Atkins.”

“Condo tower builder Opus West Corp. will only develop one residential high-rise a year in the next three to five years, said Matt Montgomery, Opus West’s director of real estate development. ‘I don’t see a whole heck of a lot of (construction) in the next five years,’ Montgomery said.”

“‘There still are deals out there,’ said William Shopoff, founder of an Irvine investment firm. But, he added, deals are earning 25 percent to 40 percent less than what they generated 18 months ago.”

The North County Times. “A member of Riverside County’s governing panel wants the county to set up a resource center for homeowners facing foreclosures, which have increased dramatically in the last year.”

“Foreclosure-related filings rose by 94 percent to 6,879 in Riverside County, according to RealtyTrac.”

“‘There is a crisis out here,’ said Rose Mayes, executive director of a nonprofit group. ‘There are people losing their homes at an alarming rate. Some of these people will never again be able to purchase a home.’”

The Press Enterprise. “In yet another sign of a continuing Inland housing market slowdown, the percentage of homes sitting vacant and waiting to be sold rose to 3.9 percent in the first quarter, well above 0.8 percent a year ago, according to newly released government data.”

“Earlier this week, a report by the Multi-Regional MLS, showed there are more than 34,700 Inland homes listed for sale. That’s the highest level in eight years.”

“The length of time those houses stay on the market has almost doubled in the past 12 months, the report showed. It would take 13.2 months to sell the supply of resale homes, up from 6.9 months a year ago.”

The Desert Sun. “Sales volume for all types of homes in the Coachella Valley declined 37 percent in March from a year ago, with new-home sales experiencing a particularly soft month with nearly a 53 percent decline from March 2006, DataQuick reported.”

“In areas of the valley where homeowners compete with new-home builders, eager sellers are increasingly willing to negotiate, real estate agents said.”

“The valley’s sluggish new-home sales market has prompted some new tactics, including auctions. Home-builder Lennar recently turned to (a) Web site to auction off homes and condos in Indio, La Quinta and Rancho Mirage. On Friday, for instance, RealtyBid fielded bids for homes in the Marquesa at Terra Lago community in Indio. Lennar homes there originally priced at $459,990 were getting $296,000 to $318,000 bids in an auction scheduled through May 8.”

“The valley’s home inventory has steadily climbed to nearly 9,200 homes by mid-April, up from 7,467 in April 2006, CDAR reported.”

“A general scarcity of buyers means they’re increasingly in a strong bargaining position and can take their time to sift through the choices. So it took an average of 103 days for a home to sell in the valley between Jan. 1 and March 20, compared to 77 days a year ago, CDAR reported.”

“The increasing number of delinquent mortgage payments and possibility of eventual foreclosures that could result in bank-owned properties becoming a bargain has some prospective buyers holding off, said Realtor Carlo Lombardelli, who has been working with clients for nearly 18 years in the valley and has ridden out many local real estate market cycles.”

“‘I don’t think we’ve seen the foreclosures and short sales fully manifest themselves as of yet,’ Lombardelli said. ‘I think we’re going to see the impact over the next six to 12 months.’”