The Housing Bubble

A report from the Bakersfield Californian. “Wednesday marked the first time in five years that Hudson & Marshall held an auction in Bakersfield. National lenders hire the company to market and move large volumes of bank-owned properties that have been foreclosed upon. When foreclosures were few, Hudson & Marshall had no reason to come to town.”

“As the market fizzles, buyers have more auctions to choose from. Hudson & Marshall might return to Bakersfield twice before year’s end. ‘Our phone doesn’t stop ringing now,’ said Mike Grigg, an agent and auctioneer with a franchise of Pacific Auction Exchange.”

“In Kern County this year, four times as many default notices, auction sale notices and bank repossessions were filed by the end of May than were filed over the same time period last year, according to RealtyTrac.”

“High-end, custom homes are popping up on auction blocks as well. A 2,680-square-foot, four bedroom Shilo Estates home with a pool comes up for auction June 30, Grigg said. ‘The luxury homes are just not moving at all right now,’ Grigg said.”

“Conrad Nizynski, an investor from Los Angeles, arrived at the Bakersfield Sheraton on the heels of a Hawaii vacation. ‘It was a last-minute thing,’ he said.”

“He left the auction, his first, having placed winning bids on two homes and looking just a bit shell-shocked. ‘That’s what I wanted to do, I wanted to invest,’ Nizynski said. ‘I hope it’s a good investment.’”

The Fresno Bee. “Real estate agents and representatives of the federal Housing and Urban Development Department lamented the skyrocketing number of foreclosures in the central San Joaquin Valley.”

“A soaring foreclosure rate is the fallout of a five-year real estate boom that tripled home values and sparked the creation of new subprime loan programs that helped families buy those more expensive houses.”

“When prices stopped accelerating so rapidly, many of those home buyers couldn’t refinance to a more friendly loan, and defaulted. Since 2006 the situation has gotten worse and many houses have even lost value.”

“In 2006, 1.4% of all houses were in foreclosure, according to RealtyTrac. A recent study calculated that in Fresno a foreclosure lowers the value of homes within one city block an average of $2,259, according to the Sheltering Neighborhoods report.”

“In addition, the foreclosure crisis has caused lenders to tighten standards, making it even more difficult for families facing foreclosure to refinance or buy another house if they’ve already lost theirs.”

The Orange County Register. “It was January, maybe February, when it sunk in. A lull in the car-selling business turned into a noteworthy slump.”

“To Mark Parkinson, who runs a family business that sells five brands of vehicles at the Tustin Auto Mall, it became clear that everything from luxury cars to trucks to fuel-efficient models weren’t selling like they had been. And not just at his lots, at most of his competitors, too.”

“Parkinson has got a good hunch that a troubled local real estate market is one culprit.”

“‘I’m not an economist, I’m a car guy,’ says Parkinson, a 37-year veteran of auto-buying cycles. ‘But in my opinion, when people have all this equity (in their homes) they feel good. They’ll spend. When that equity becomes at risk, they tighten their belts a bit. They’re afraid, ‘I’m losing my savings.’”

“The Big O’s property index has fallen in each quarter for a year now, as dramatically falling home sales and a depressed lending business take their toll. This slice of the Big O index is falling at the steepest annual rate of decline since 1996.”

“The banker index, heavily tied to real estate, is also troubled. It suffers from rising counts of missed mortgage payments and an increase in local bankruptcies. This spring, this measure of local debt collections hit its lowest mark since 2003.”

“Orange County payrolls are growing this year at a 1 percent rate, according to state job stats. That’s not bad, but it’s still half what we’ve seen in recent years.”

“A bulk of the slowdown is linked to real estate woes, as lenders in particular retrench their staffing along with dramatic drops in mortgage-making volumes. In Orange County, for example, lenders made $85 billion worth of loans on local homes and land in the last 12 months, down 22 percent in two years.”

The North County Times. “As lenders begin to seize houses that were purchased in an unusual series of transactions two years ago, investors are attempting to arrange complicated sales and several are beginning to struggle with difficult decisions on whether to file for bankruptcy.”

“Nurses and other middle-class investors bought more than 100 Murrieta-area houses in 2004 and 2005 through a Murrieta mortgage brokerage. The first of those houses fell into the foreclosure process last fall, and the owners began filing lawsuits in January.”

“Stonewood clients often paid far more for their houses than did buyers of comparable houses nearby and, according to numerous neighbors and real estate agents who followed the purchases, $50,000 to $120,000 more than the original asking prices, a pattern that raised eyebrows in the slackening market.”

“At the time the investors bought the houses, prices in surrounding neighborhoods were still rising, a fact that buyers said led them to conclude they were making solid investments. But market prices leveled off without catching up to the investors’ loan balances, leaving them ‘upside down,’ in real estate parlance.”

“Vicky Reiss, the Temecula resident who filed the first lawsuit Jan. 5, bought five houses through Stonewood, according to a local real estate database. She still owed more than $600,000 on her house on East View Way in Murrieta’s Copper Canyon area. A seller offered about $500,000, she said, but the lender didn’t bite. It seized the house earlier this month.”

“‘One down, four to go,’ Reiss said, ruefully.”

“Rising numbers of foreclosure properties coming onto local real estate markets threaten to weigh on home prices at a time when they’ve slipped from record highs.”

“As of June 4, nearly 1,050 lender-owned properties were listed for sale in Riverside County, up from less than a half-dozen in June 2006, according to ZipRealty. Such properties account for about 3.5 percent of the properties for sale in the area, according to the company’s data.”

“Several plaintiffs in the lawsuits allege that they refinanced their primary residences to fund investments. These plaintiffs say they now find themselves struggling with monthly mortgage payments as much as double what they were paying before.”

“‘That’s where I live,’ said Temecula resident Mercy Ferido, who is watching her three investment properties slide into foreclosure. ‘I took another job just to keep up with my payments.’”

The Record.net. “What do you get when you combine a huge number of interest-only and subprime mortgages with a skidding real estate market? Foreclosures, that’s what.”

“And in the case of San Joaquin County, you get the highest metropolitan foreclosure rate in the nation. No. 1. That ranking comes from data out last week from RealtyTrac.”

“How bad it is it here? This bad: In the last year there has been a 49 percent increase in foreclosure activity in San Joaquin County. In two years filings in the county are up by a factor of 18, from 120 to 2,157.”

“Foreclosure notices have been filed on one of every 88 household properties in Stockton. Our foreclosure activity rate is now 7.5 times the national average.”

“Foreclosure notices require publication of a legal advertisement, the agate type notices that fill two or three pages of this newspaper each day. We receive about a dozen new notices each day. Each day.”

“When Sean Snaith headed the UOP’s Business Forecasting Center he liked to predict the housing market here, at a time when the bubble was about as big as it seemed possible to get, would not burst. In fact, he likened the housing market to a soufflé that would slowly sink as it cooled.”

“He was wrong (though hardly alone in that category). The market didn’t just cool. It turned cold even as the weather turned hot. Early spring optimism about the market spooling back up could charitably be described as, well, optimistic.”

“Earlier this month, the California Association of Realtors predicted that statewide sales would drop 14 percent this year. Utterly beyond rational explanation is CAR’s corollary forecast of a 1.8 percent increase in home prices.”

“What’s wrong with that picture? What’s wrong is that home sellers are still stuck in 2005, still believing their house can defy the sucking sound of prices being pulled south by a market that’s stepped off a cliff.”

“When the lines on the graph are headed upward, everyone looks like a genius even when you’ve acted like a dummy by, say, buying more house than you really can afford.”

“No more. Now, homeowners are actually losing their homes. Lenders aren’t just filing notices of foreclosure, they are foreclosing. Keys, please (and sometimes they don’t even say please).”

“Markets boom and markets bust. This is part of a cycle. San Joaquin County may be No. 1 in the nation for foreclosures now. A couple of years ago we were near the top in home price appreciation. That’s the ying and yang of the housing market, any market.”

The Courier Journal reports from Indiana. “Southern Indiana home builders have scaled back their annual expo due to slower sales. Last year, the Expo was in Floyds Knobs and featured eight homes priced from $750,000 to $1 million. Some are still unsold. ‘Houses in those price ranges have more days on-market than typical,’ said builder and Realtor Bill Burns. ‘By the time they have it days on-market that long, if they’re carrying it, financing it, the carrying costs, the interest cuts into your profit quite quickly.’”

“This year, five builders have put up just six houses for the show, but they’re three- to five-bedroom, multigabled brick homes strung out along Zoeller’s Champions Pointe course. Asking prices range from $419,500 to $479,000.”

“‘That range may be (selling) a little slow, depending on the location,’ said Donna Gibson, executive officer for the home builders association. ‘We wouldn’t dare build homes like we did last year…but that price range, in that location, on that golf course, we feel they’re going to move.’”

“Helping them move will be a ‘Buy Now, Build Now’ campaign, similar to the one Louisville had this spring. The Southern Indiana Realtors Association and One Southern Indiana, formerly the Chamber of Commerce, will be delivering a message.”

“‘Interest rates are good; they’re rising a little bit, but there’s a lot of housing on the market right now,’ Burns said. ‘Hesitate now and it may be your loss, because rates have been rising.’”

The South Bend Tribune from Indiana. “Four Seasons Housing Inc. will close one of its plants, laying off 20 people and moving 18 others to different buildings.”

“A little more than a year ago, the company was expanding. In September 2005, Four Seasons built a 170,500-square-foot plant that opened in early 2006. The $4 million plant included 80 new jobs. In 2004, the company had about $45 million in sales, and was hoping to hit $60 million in 2006, said Brent Bardo, general manager of Four Seasons, during an interview in 2005.”

“It didn’t make that goal, said Bob Dumm, company president, who declined to name a 2006 sales figure for the privately held company. ‘That’s part of the reason (for closing a plant),’ he said. ‘The industry as a whole is pretty flat.’”

“The other part of the reason is this: Four Seasons saw 59.2 percent growth from 2005 to 2006, Dumm said. ‘We expected it to continue through 2007,’ he said. ‘It did not.’”

“The entire industry is feeling that, said Dennis Harney, executive director of the Indiana Manufactured Housing Association. ‘The economy has been a challenge for us,’ he said. ‘Indiana and Michigan are leading the nation in foreclosures and bankruptcies.’”

The Detroit Free Press from Michigan. “With the glut of empty houses, both for sale and foreclosed, unkempt properties are increasing in nearly every community in metro Detroit.”

“Job transfers, sellers who already have purchased another house and moved, and those who have lost their homes to foreclosure have contributed to the increase in vacant properties in southeast Michigan. Coupled with an overall sluggish market and plunging home values, serious buyers are having a heyday. They expect more for less and can demand it or take their dollars elsewhere.”

“Agents can, and will, only do so much. ‘When people look at a street and they find foreclosures and uncared-for vacant properties, it decreases the value of surrounding homes; that is a statistical fact,’ said Keith Weber, an agent who markets homes in southern Oakland County.”

The Journal Sentinel from Wisconsin. “Bad home loans continue to dog Wisconsin and the nation, with rising default and foreclosure rates in this year’s first quarter, the Mortgage Bankers Association reported.”

“Blame for the deepening mortgage woes has been cast at borrowers and lenders for their allegedly profligate ways, but economist Duncan portrayed a more complex stew of life’s reversals: an uneven job market, speculators who helped fuel the nation’s 2001-’05 housing boom and dumped the unwanted leftovers, and fraud.”

“More trouble is brewing. As of March 31, 4.33% of U.S. borrowers and 3.28% of Wisconsin borrowers were at least 30 days behind on mortgage payments.”

“That’s bad, he said, but not disastrous, Duncan said. ‘Look at the big picture. This is not going to cause a national recession. It’s a housing recession, which I think will pass in the fourth quarter,’ said Doug Duncan, chief economist for the Mortgage Bankers Association. ‘The peak on foreclosures will be early ‘08.’”

“Badger State mortgage problems have shocked even industry veterans like Bill Malkasian, president of the Wisconsin Realtors Association.”

“‘You take our three recent scenarios; higher foreclosures, tighter lending standards and higher interest rates, and the boat gets a little tippy,’ Malkasian said. ‘All three factors are pulling at our housing market. You just can’t take hit after hit after hit.’”

The Daily Journal from Minnesota. “The national slump in the housing market has affected Minnesota, according to data from the state Department of Revenue.”

“‘There’s no question the market has softened in Fergus Falls, but people are still buying houses,’ Realtor Jim Worner said. ‘You always have to remember, things that happen nationally, like in Los Angeles or San Francisco are driven by the economic situations in those towns.’”

“Location continues to drive housing prices, according to a new report from the Minnesota State Demographic Center. Some areas of Minnesota continue to demonstrate strong price growth, close to 50 percent, despite the overall sluggish real estate market.”

“Prices shot up 48 percent in Lake of the Woods County, 47 percent in Red Lake County and 33 percent in Clearwater County from 2003-04 to 2005-06, according to the report. Median prices fell in Kittson, Lake, Murray and Traverse counties over the same period.”

“Median sales prices have risen in Otter Tail, Grant and Wilkin counties substantially since 2000. Prices in Otter Tail County are up 43.1 percent since 2000 and 18.6 percent since 2003. In the same time frames, prices rose 37.3 percent since 2000 and 24.1 since 2003 percent in Grant County and 22 and 5 percent in Wilkin County.”

The Pioneer Press. “The number of Minnesota homeowners seriously late on payments or in foreclosure on subprime adjustable-rate mortgages jumped to all-time highs in the first three months of this year.”

“The Mortgage Bankers Association said that 14 percent of some 56,900 subprime adjustable-rate mortgages in Minnesota were 90 days or more past due or in some stage of foreclosure in the first quarter. That’s up from 12.43 percent in the final months of 2006, and up from 8 percent a year earlier.”

“Julie Gugin, executive director of the Minnesota Home Ownership Center, called Minnesota’s high subprime-delinquency rates ‘extremely worrisome.’ ‘We’re continuing to look at ways to address the crisis,’ Gugin said. ‘We’re estimating another three years of these kinds of patterns before we see a real leveling out.’”

“The state’s economy isn’t missing enough beats to explain the trouble, said state economist Tom Stinson. He suggested the late payments were more a reflection of loose mortgage lending standards such as not requiring borrowers to verify their income.”

“An estimated 18 percent of homeowners holding subprime mortgages in Minnesota were 60 days or more late on their payments as of April, up from 11 percent a year ago, according to First American Loan Performance. That’s higher than the national subprime delinquency rate of 13.4 percent.”

“In the greater Minneapolis-St. Paul metro area, almost 19 percent of homeowners with subprime loans were 60 days or more late, putting it in the Top 25 for worst performing metro areas.”

“Stinson said he expects the state’s mortgage woes will deepen over the next year and a half as the interest rates on adjustable-rate mortgages continue to reset. ‘There are still people out there who are on subprime ARMS that have a year or year and a half to go before they reset. They aren’t feeling the pressure yet,’ Stinson said.”

The Pensacola News Journal reports from Florida. “Greg Chapman put his East Hill home on the market in November 2005 at a time when residential prices were approaching post-Hurricane Ivan highs. But it also was a time when the inventory of unsold homes was starting to climb rapidly. Over the next three months Chapman got only three half-hearted inquiries about his three-bedroom brick home, listed originally at $193,600.”

“He pulled his home off the market, deciding to bide his time and wait for the market to strengthen. But this past spring Chapman had a change of heart after Realtor-associate Keith Harrod convinced (him) to price the house at what he considered a fair market rate for that section of East Hill. The result: the house sold the first day on the market at a price, $165,000, Chapman said made him ‘extremely happy.’”

“Chapman’s quick success offers a broader lesson for the overall Pensacola housing market: Price the property right and it will sell. ‘I’ve had a number of clients who have priced their homes too high and have been sliding down with the market,’ said Harrod. ‘And, in the end, they’ve probably lost money.’”

“But flying in the face of that simple strategy is the growing glut of overpriced, unsold homes, which hit a record high in May of more than 7,100. And that number doesn’t include homes for sale by owner, and the many hundreds of new spec homes offered by builders.”

“‘Right now I can’t even give away a condo on Perdido Key,’ said agent Glenda Jones. ‘There are 438 units on the market on Perdido Key, and I can’t get any buyers. Association fees and taxes are making a lot of buyers hold back.’”

“Jones says part of the problem with the condo market is ‘people want to make too much money’ selling their units. Realtor Bill Chavis’ take on the condo market is even more grim. ‘It’s brutal times in the condo market,’ he said.”

“Robert Hogan, of Innerarity Realty, says prices are coming down on the Key, and that’s a good sign. ‘Prices have come way down,’ said Hogan. ‘But we’re in a kind of Catch-22: People know we’re getting down to the bottom, but it’s hurricane season, and that, and taxes and insurance, are keeping buyers away.’”

“On Pensacola Beach, the condo picture is far from robust, but is holding its own, largely because prices have dropped by up to 25 percent, said veteran Realtor John Pinzino.”

“‘Seems to me the market has gone back to the way it was in 2004,’ he noted. ‘I’ve been in the real estate business for 40 years and from what I can tell I really think we’ve hit bottom.’”

“To the east, the housing/condo market in the Navarre area is more mixed, says Carol Brown with Prudential Holley Properties. There are some 950 homes and condos on the market, Brown said. And sales are slowing considerably from May 2006 levels when 112 single family homes sold, compared to 77 last month.”

“‘I think prices are coming down…and buyers do move to properly priced homes,’ Brown said. ‘But there is an abundance of property in market and buyers are not making a move until they see a property priced correctly, and unless it is absolutely showcased it won’t sell.’”

The Miami Herald. “Within an hour after the Florida Legislature passed its tax bill Thursday evening, Mark Zilbert went to work. The South Beach real estate broker sent an e-mail blast to 50,000 potential buyers with the tax changes, and condominiums for sale.”

“Like most in the housing industry, Zilbert had been eagerly waiting for something, anything, to inject new life into a frozen real estate market.”

“But even if voters say yes in January, it’s unclear how far the changes to the market will go. Peter Zalewski, a real estate advisor in Bal Harbour, said the super-sized exemption may bring a burst of activity, but not for long.”

“‘Ultimately, there are too many units and not enough buyers, and not even a tax break will change that,’ he said.”

“The broader market still faces a host of problems. There’s an affordability gap. Banks are tightening lending standards after giving out mortgages too freely. Insurance rates remain high for many homeowners.”

“And there is still a mountain of homes on the market looking for a buyer. In the past year, the number of homes listed for sale in Miami-Dade and Broward counties increased from 50,000 to more than 75,000.”

“Meanwhile, the vacation- and second-home sector, a big part of South Florida’s housing market, were largely left out of the tax breaks passed by the Legislature. Florida is the largest vacation home market in the country, according to the U.S. Census.”

“Some say the reform package, even if the January vote passes, doesn’t go far enough. ‘It’s not enough to impact our housing market,’ said Silvio Cardoso, president of the Builders Association of South Florida, who favored a rollback in property taxes to 2001 levels. ‘I think the market will continue to be very dead for a while.’”

The Bradenton Herald. “Maris Bluestein, who lives in an ocean-front Pompano Beach apartment with her husband, said she’ll likely vote for the amendment to cut their $8,800 homestead tax bill. But Bluestein said she’s disappointed with the plan. It doesn’t do enough, she said.”

“The super-exemptions don’t apply to non-homesteaded properties, so the Bluesteins will get no relief from the $8,000 they pay in taxes for another condo they own.”

The Sun Sentinel. “A day after Florida lawmakers hailed their landmark property-tax cut, analysts and real estate agents sounded off, insisting the savings won’t be enough to stimulate the hamstrung housing market.”

“Legislators say the average homeowner’s tax bill is expected to drop by $174 this year. While that’s something, it’s not the panacea people were hoping for.”

“‘I think we’re going to be addressing this tax issue again down the road,’ said Richard Barkett, CEO of the Realtor Association of Greater Fort Lauderdale. ‘The idea was to loosen up the buyers,’ added Jeff Levine of Illustrated Properties in Wellington. ‘But I’m not sure this does that. We need a longer-term solution.’”

“‘Most of the buyers I’m working with were hoping for some type of portability,’ said Debbie Anderson, an agent in northwest Broward County. “This is definitely a huge disappointment for Realtors and buyers who were waiting to make their move.’”

“The housing downturn is hurting other businesses such as home furnishings, which depend on robust home sales. ‘We’ve never seen a downturn like this since our history in Florida,’ said Ira Baer, chief financial officer for Baer’s Furniture, a Pompano Beach-based chain with 16 stores statewide.”

“Tax cuts alone won’t give the South Florida housing market a major boost, Baer said. ‘You still have to tackle some of the other issues,’ he said, noting that homeowners need more relief from rising insurance rates.”

The Orlando Sentinel. “People whose incomes depend on the housing market are trying to keep up with the changes to the property-insurance market, and hoping for improvements.”

“‘It’s already slowed things down,’ said Steve Schneider, past president of the Florida Association of Mortgage Brokers. ‘I’m aware of people that are moving out of the state because they say they don’t see’ enough relief on the horizon.”

“‘I’ve had several instances in the last year where the deal fell though because the buyer couldn’t get insurance on the home, or the insurance was too expensive,’ said Rob Owen of Rob Owen Insurance in Winter Park.”

From NBC 2. “With a slow housing market, more property owners have to rent out homes rather than sell them and that’s leading to an increasing number of squatters which is costing property owners hundreds of dollars and dozens of headaches.”

“Empty boxes of food, dishes, toys and trash was left all over the front yard for the homeowner, Erich Brady to clean up. ‘This was, this was just a nightmare,’ said Brady.”

“Other Cape Coral residents say they’re also seeing more and more of this, all because of the housing market. Homeowners are starting to rent their places to just about anyone and sometimes, they turn out to be squatters.”

“Other homeowners are also being affected by the trashy messes left by squatters. People that live near some of the messy homes say that trying to sell their home has become even harder.”

The News Press. “SunTrust Banks Inc., the seventh-biggest U.S. bank, plans to sell about 473 buildings and eliminate 300 jobs as part of a plan announced in January to lower costs. The company will put 48 office buildings and about 425 retail branches on the market and then lease the space and continuing using it, Atlanta-based SunTrust said in a statement.”

“SunTrust is the third largest bank in Lee County, according to the 2006 market share report by the Federal Deposit Insurance Corp.”

“‘While maybe not earthmoving, these are sensible things that can save the company money,’ said analyst Kevin Fitzsimmons. ‘It leaves you with the impression that Jim Wells is looking under every rock.’”

“Selling in a buyer’s market isn’t for sissies. And if all you are doing is trying to sell, then, unless you are into pain, you should wait for a friendlier market.”

“The difference between a committed seller and one who is just trying to sell is in how they answer one simple question: ‘Are you willing to do what it takes to sell?’ If your answer is no, then do everyone a favor and wait.”

“Pricing is the single most important issue a seller must face. Are you willing to sell at today’s market value, regardless of what that is? Forget about what you paid, what you need, or what the ugly home across the street is on the market for. It may not matter what your recent appraisal or Zillow.com says. It’s a safe bet that today’s market value is well below what you think it is.”

“If you want to keep your sanity throughout the listing and selling process, then set proper expectations. The Field of Dreams method of selling, which is ‘list it and they will come,’ does not apply in this market.”

“If your property is not clearly one of the best values on the market today, it will not be shown. If you expect otherwise, you will be disappointed. Six times more homes were listed last week than were sold, so the odds of your property selling are not in your favor.”

What do you see in your housing market this weekend? Lower prices? “With so many houses on the market right now and prices falling, buyers have more houses to choose from and more bargaining power than in recent years, agents say. ‘Buyers know they are more in the driver’s seat,’ agent Yolanda Muckle said.”

“Last month, houses took an average of 90 days to sell in the 20716 ZIP code, three times longer than a year ago. Prices were also down by nearly 4 percent since May 2006.”

“Agents remain optimistic, but they cautioned that many buyers will expect to get the prices they may have seen during the real estate boom a few years ago. Agent Homer Henry said he is often unwilling to work with owners who insist on overpricing their houses. ‘I won’t waste my time,’ he said.”

New legislation? “The Florida Legislature pushed Adam Lubkin off the fence Thursday. Legislators hope a proposed constitutional amendment is just the stick needed to jump-start a slow real estate market by giving the most benefit to new middle-class homeowners.”

“Lubkin rents an apartment, but he wants to live in Boca Raton. He’s been pre-approved for a loan and plans to look for a house in the $600,000 range. ‘You might say that’s a lot of money,’ Lubkin said, ‘but in the areas I’m looking, you couldn’t get a townhouse for that a couple years ago.’”

“Not so fast, says a local housing analyst. ‘There isn’t likely to be much immediate impact,’ said Mike Larson of Weiss Research in Jupiter. ‘That’s because the tax cut for the 2007-08 tax year is only averaging 7 percent, or about $170,’ he said.”

News from Wall Street? “Concerned that an internal hedge fund at Bear Stearns Cos. wouldn’t be able to meet a margin call, Merrill Lynch & Co., one of the fund’s biggest lenders, seized $400 million of its assets and is preparing to auction them off.”

“The auction, in the coming week, could trigger the fund’s dissolution, the second blowup in recent months of a hedge fund that made dicey bets on the market for risky home loans, known as subprime mortgages.”

“Everquest Financial, a company that filed plans for an initial public offering last month, has ties with a troubled hedge fund run by investment bank Bear Stearns Cos.”

“‘If the stories are correct about the problems at the fund, it sounds like they off-loaded the riskiest positions to Everquest,’ said Josh Rosner, a managing director at research firm Graham Fisher & Co. ‘It is not clear if this was before or after they were aware that those positions were hurting the hedge fund, but the decision seems to have happened before news leaked of the funds’ supposed problems,’ he added.”

Decreasing affordability? “The affordability of most types of housing deteriorated in the Greater Vancouver area in the first three months this year as prices continued to climb, the Royal Bank said Friday.”

“RBC says it takes 70 per cent of pre-tax income to service basic ownership costs (including mortgage payments, utilities and property taxes) for a two-storey home in the region. ‘If you have a job and rates are going up, then you simply cut three days from your vacation,’ said CIBC economist Benjamin Tal. ‘You start to make some tradeoffs.’”

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