The Housing Bubble

The Record.net reports from California. “Lackluster sales of existing homes in San Joaquin County rose slightly in May, but the median sales price slid for the third consecutive month, this time to the lowest level since the spring of 2005. The median sales price has steadily fallen from $395,000 in February to $370,000 last month. That compares with a high of $425,000 last July.”

“Meanwhile, the number of listings, fed by rising foreclosure numbers, broke the 5,000 mark for the first time since the downturn began in the fall of 2005.”

“‘The prices are coming down,’ said Jerry Abbott, president of Coldwell Banker Grupe, Stockton. ‘When people are reducing the sales price of their home, they’re not reducing it by $3,000 to $5,000, they’re reducing it by $10,000 or $15,000 - or more. In the last 30 to 60 days, we’ve seen more of a willingness to do that. It’s either that or go into foreclosure for some people.’”

“The number of homes for sales countywide jumped from 4,962 in April to 5,291 last month. At the current anemic sales pace, it would take 17 months to sell those homes if no other houses went on the market in that period.”

“‘It is a painful transition, no doubt about it,’ said Sean Snaith, consultant to University of the Pacific’s Business Forecasting Center. ‘With all the inventory, it’s difficult to sell a house, and there’s downward pressure on prices.’”

The Record Searchlight. “Shasta County had its worst May for home sales in nine years, while foreclosures rose dramatically. The median sales price paid for a home in May was $275,000, down from $290,000 in May 2006, DataQuick reported.”

“‘Investors and out-of-town buyers are not coming in to buy those homes like they were two years ago,’ said Glen Jones, associate broker in Redding.”

“‘More homes are going back to the banks that financed them because they don’t sell at auction. That has added to the glut of listings, which Mike Van Bockern, a Shasta County foreclosure specialist, says has the potential of driving down prices.”

“The Shasta Association of Realtors reported this week that more than 2,000 homes in Shasta County were on the market — some 500 more than in January.”

“‘Those (bank-owned homes) are probably going to be sold at 80 percent of what a comparable home sold for. So that becomes the new comp and drives down prices even more,’ Van Bockern said.”

“‘If you need to sell, you want to price your home competitively and not chase the market down,’ said William Parsons of Parsons Realty in Redding.”

“That means if a seller needs to get $300,000, the home shouldn’t be listed at $340,000 in hopes the buyer will haggle, Parsons said, adding that there’s too much competition for sellers ‘to be playing games.’”

“Homes in some stage of foreclosure in Shasta County in May jumped 55 percent from a year ago. ‘We haven’t got close to the bottom,’ Redding commercial real estate agent Tom Shuck said Wednesday. ‘Others may disagree…but the numbers speak for themselves.’”

“‘The problem is we got people who are just giving properties back to the bank; they are not fighting to keep them because they owe more than the house is worth,’ Van Bockern said.”

“Wednesday morning, Van Bockern tried to auction a home that had a $200,000 first mortgage and $50,000 second mortgage attached to it. ‘The property wasn’t worth what they owed on the first,’ Van Bockern said.”

The Daily Press. “With the number of home loans entering the foreclosure process reaching record levels in the United States, California is leading the nation in new foreclosures, analysts said.”

“‘The market has leveled off and is moving downhill,’ said Gary Stater, president of Gary Stater Realty Inc., who has more than three decades of experience in residential real estate in Apple Valley.”

“Stater cites relatively low interest rates and the rapid growth in the housing market that peaked early last year among the dynamics leading to the decline in the housing market. ‘Homes sold at the drop of a hat in 2005 and many buyers purchased with 100 percent financing or more,’ Stater said.”

“‘Now that the market is saturated in homes, we have a huge oversupply of homes,’ he said.”

The Union Tribune. “The continuing slowdown in residential construction dragged down San Diego’s economic outlook in April, according to an index released yesterday by the San Diego Institute for Policy Research.”

“Economist Kelly Cunningham, who compiled the index, said the decline in residential building is likely to continue well into 2008. ‘Developers have been scared out of the market because of the slump in housing prices,’ he said. ‘And it looks like it will be at least a year before that improves.’”

“In a further sign of the tightening real estate market, one of San Diego County’s largest real estate firms has acquired one of its rivals, a move that could be a harbinger of things to come in a sharply contracting industry.”

“The top executives at Coldwell Banker and Seaman portrayed the acquisition as a marriage of two strong firms and denied that the weakness in the real estate market had an impact on their decision to merge.”

“Rick Hoffman, who heads Coldwell Banker’s regional operations, said that declining real estate sales will prompt more mergers. Hoffman noted that between May 2005 and May 2007, residential real estate sales have fallen 41 percent in the county, which means much less work for the county’s 28,900 real estate brokers and agents.”

“‘It’s a sobering number when you realize that sales are down 41 percent,’ Hoffman said. ‘There are going to be small independent brokers as well as large players that are going to have to face the realities of the market.’”

“Over the past year, 2,100 real estate brokers and 700 ‘“credit intermediation’ workers, mostly mortgage brokers, have lost their jobs in San Diego County, according to data from the California Employment Development Department.”

“‘There’s just not enough work now,’ said Nathan Moeder, who tracks the local real estate market at London Group Realty Advisors. ‘We’re starting to see shops close up and mortgage brokers closing their doors, looking for jobs elsewhere.’”

“Those figures don’t tell the full story. A large number of workers in the real estate industry are self-employed and do not show up in the state’s figures, which are based on company payrolls.”

“Workers from Champion Signs in San Diego were busy pulling down ‘For Sale’ signs from One Source and replacing them with signs from Coldwell Banker. Greg Speaks, who oversees business development at Champion, said the assignment to replace 369 One Source signs came at a good time for his company.”

“‘Normally, this is our busiest season,’ Speaks said. ‘We’re usually spending a lot of time during this season putting (home sale) signs up and taking them down. These days, we’re still putting signs up, but we’re not taking very many down.’”

“‘Unless they’re in the upper end or dealing with luxury properties, brokers are hurting,’ said longtime San Diego real estate broker Bob Schwartz. ‘In the middle range, $500,000 to $750,000, or anything below, there’s a huge amount of inventory and not a lot of buyers.’”

“Schwartz, who has been selling homes for 30 years, recently turned down four prospective clients because they owed more money on their houses than he thought could bring in on a sale. He said a house in San Carlos that he is familiar with has been on the market for 18 months.”

“At first it didn’t sell because it was overpriced, but even after the price was substantially lowered it hasn’t sold because there is less demand. ‘Back in November and December, people were saying that in spring the market would turn around, but that hasn’t happened,’ Schwartz said. ‘I’ve seen absolutely no pickup and maybe a slight decline.’”

“‘The slowness that we’re going through now makes me wonder what’s going to happen in fall and winter, which are the traditional slow times,’ he said.”

The Rocky Mountain News reports from Colorado.”The number of new and previously owned homes sold in the six-county Denver area fell by 10.6 percent in the first quarter, compared with the first three months of 2006. The report shows that the median, or middle, price of all homes dropped 1.3 percent to $235,000 from $238,000 in the first quarter of 2006 in Adams, Arapahoe, Boulder, Denver, Douglas and Jefferson counties.”

“‘There is no evidence of a rising market, no matter how you slice it,’ said Andrew LePage of DataQuick.”

“And the Denver area is in a different part of the cycle from other previously hot markets, such as Las Vegas and Phoenix, he said. ‘You have been weaker longer than other markets and did not have the run-up in prices in 2004 and 2005,’ LePage said. ‘Your market stands out because it has been the flattest the longest. But at what point Denver might level off is hard to predict.’”

The Denver Post from Colorado. “‘The national media would have you believe that the housing market in this country is getting trashed,’ said Vectra Bank Colorado economist Jeff Thred gold. ‘The reality is that new- (and existing-) home sales…posted their third-best year ever (in 2006). It just wasn’t as good as 2004 and 2005.’”

“Thredgold points to data from the Office of Federal Housing Enterprise Oversight showing that from the first quarter of 2006 through the first quarter of 2007, Colorado homes appreciated 3.3 percent.”

“The numbers don’t lie. These data are based on sales and refinancings. So why aren’t they reflected in my neighborhood? Less than a block away from my Arapahoe County abode stands a house that may have fetched $550,000 or more when it was built a few years ago. Bank-owned after a foreclosure, it has stood vacant for months, its lawn replaced with weeds.”

“A real-estate agent who works the neighborhood told me the bank would gladly take $450,000 at this point.”

“In the first quarter of this year, 72 percent of the foreclosures occurred in homes with a loan amount of less than $200,000, according to a report by the Genesis Group. Not surprisingly, these homes missed out on the average price appreciation OFHEO tallies for all Colorado homes.”

“Homes that sold at between $170,000 and $300,000 have seen zero appreciation over the past year, the Genesis Group reports. And homes for less than $170,000 have seen a 15 percent decline.”

“As a whole, the Denver metro area has also missed out. For 2006, the seven-county area posted a 4.2 percent price decline, according to the Genesis Group.” “‘I would expect to see stronger Colorado home-price appreciation in 2007 and 2008,’ said Thredgold.”

“Jeff Englestad, a professor at the Franklin L. Burns School of Real Estate and Construction Management at the University of Denver, isn’t so bullish: ‘I would not shy away from buying one house right now but wouldn’t be buying a bunch of rental houses, either.’”

The Arizona Daily Star. “The Tucson housing market downturn hasn’t bottomed out yet, but the end is near. The low point on the fever chart will be logged sometime in the next nine months, said John Strobeck, housing analyst and owner of Bright Future Business Consultants.”

“Right now, a home buyer could have his or her pick of nearly 10,000 homes for sale.”

“‘We’ve been saying this is a good time to buy because there’s a breather in the market,’ said Rick Hodges, CEO of the Tucson Association of Realtors. ‘There’s inventory out there and rates are still low, but that’s not going to last very long.’”

“Around 7,000 homes will be sold this year, and that’s around the same as in 2003, before things really heated up, Strobeck said.”

“But the downturn will have broad effects on jobs and the local economy. The sale of new homes contributed $2.3 billion to the local economy last year, and that might not reach $2 billion this year.”

“‘A half a billion dollars taken out of the Tucson economy is a good chunk of money,’ Strobeck said. ‘That would be like closing Davis-Monthan (Air Force Base).’”

The Review Journal from Nevada. “Local housing starts slipped in May, data show, reflecting a national trend. Home Builders Research reported that there were 1,724 new-home permits in the Las Vegas Valley in May. The 2007 tally is at 7,934, a year-to-year decrease of 4,154, or 34.4 percent, the company said.”

“‘I think we’re going to see permits staying flat, at best, until late 2008 or early 2009,’ Home Builders Research President Dennis Smith said. ‘We’d like to see things turn around faster, but unless we see resales start to move some inventory, I don’t we’ll see it change.’”

In Business Las Vegas. “Las Vegas is surrounded by desert and open space, but the limits of available land, its high price and the need for affordable homes will continue to drive density increases in the valley, a panel of experts said.”

“The need for density is driven by affordability, said John Ritter, chief executive of Focus Property Group. A boom in the housing market pushed prices to the point where they are no longer affordable, and that led to the slowdown in the industry, he said.”

“‘Land values are not going to come down,’ Ritter said. ‘So how do you build more affordable homes or attached products and still be able to deliver to the marketplace great products and affordable products. It is clearly through density.’”

“‘When you look at the housing market in 15 years, if you want to buy new, it will be attached,’ said Tim Sullivan, president of the Sullivan Group Real Estate Advisors.”

The Ely Times from Nevada. “Development of the master-planned Coyote Springs community 50 miles from Las Vegas is coming along on schedule, with the first production model village set to open in less than a year, an executive for the primary home builder said.”

“There have been no delays or scaling back of plans for the 43,000-acre bedroom community, said Klif Andrews, division president of Pardee Homes.”

“‘Not at all. I don’t know where that comes from,’ Andrews said in response to reports that Coyote Springs has become a victim of the slowing housing market.”

“Pardee entered an agreement with Coyote Springs developer Harvey Whittemore in 2004 to build about 7,000 homes on the first 2,000 acres. The homes were originally scheduled to be finished this spring. The community has been approved for 159,000 homes.”

“‘That’s really a function of our delays with the general improvement district and delays associated with the water treatment and sewer facility,’ Whittemore said. ‘It doesn’t have anything to do with the market at all.’”

“Despite the glut of homes on the market for sale, Andrews said, he’s confident Pardee will deliver its first housing units at Coyote Springs by the end of 2008.”

“Lincoln County Sheriff Kerry Lee, who meets with the developer at least once a month, said he’d heard the Clark County side wasn’t going to be as big as originally planned. He said developers had lightened up the density and increased open space.”

“‘We heard it was going to be coming in two years, then we heard it would be five years and then 10 years,’ Lee said.”

“‘It looks like one of those things that’s too big not to happen,’ said Larry Murphy, president of Las Vegas-based SalesTraq. ‘When you’ve got that many dollars and that many players, they’ve got too much in it not to go through with it.’”

“‘Coyote Springs is creating a new destination in the Las Vegas sphere of influence,’ housing consultant Tim Sullivan said. ‘With the golf orientation, a dying breed in the west because of the lack of land, multiple home types and village core, they’re establishing a new destination.’”

Some housing bubble news from Wall Street and Washington. The Financial Times. “H&R Block on Thursday became the latest large financial institution to be hit by the turmoil in subprime mortgages this quarter, as it served up a loss during what is normally its strongest reporting period. The company said it made a quarterly loss of $677 million on discontinued operations, which included Option One as well as writedowns, loss provisions on mortgage loans and the lower prices available for mortgages in the secondary market for mortgages.”

From Bloomberg. “Option One, based in Irvine, California, was the eighth- biggest purveyor in the U.S. last year of subprime mortgages. Such loans typically default about six times more often than conventional mortgages. H&R Block had already written down about $250 million linked to bad home loans before the sale to Cerberus was announced as U.S. defaults hit four-year highs.”

From Reuters. “H&R Block Inc. said on Thursday the unit’s net asset value fell to $1.1 billion as of April 30. That means the takeover value of the business dropped by $300 million, or 21 percent, since Block announced a deal on April 20 to sell the unit to Cerberus.”

“‘This was a really rough quarter for the subprime industry overall,’ H&R Block CEO Mark Ernst said. Ernst noted the unit’s value was written down to reflect the continued deterioration of the subprime mortgages market, where defaults among riskier home buyers have risen.”

“The fate of two troubled hedge funds managed by Bear Stearns Cos. Inc. was left in question after Merrill Lynch & Co. Inc sold off assets seized from the funds and three other banks closed out their positions with them.”

“The Bear Stearns funds once had over $20 billion of assets, but lost billions of dollars from bad bets on securities backed by subprime mortgages. Bear Stearns earlier this week proposed adding $1.5 billion of its capital to the funds as part of a broader restructuring plan, but many Wall Street firms have already headed for the exits.”

“‘The implications of that extend well outside the market into the real economy, as it would reduce liquidity for mortgages,’ said Josh Rosner, managing director of Graham Fisher & Co.”

“Merrill Lynch sold securities from the two funds in the broader markets. On Thursday, it plans to sell derivatives, a source said. Merrill Lynch did not sell all of the roughly $850 million of securities it put up for sale, a source said, but it is believed to have sold enough assets to cover its exposure to Bear Stearns.”

“Goldman Sachs Group Inc., JPMorgan Chase & Co. and Bank of America Corp. closed out their positions with the funds, which amounts to selling their positions back to the Bear funds.”

“Among the assets for sale by lenders Merrill Lynch and Deutsche Bank were investments in so-called collateralised debt obligations, or CDOs, which pool securities that can include mortgage-backed bonds.”

“One mortgage investor said that while the CDO assets for sale carried high credit ratings, they were backed by such risky mortgages as to be ‘junk in investment-grade clothing.’”

“‘The success of these auctions depends on whether there are hedge funds out there with dry powder and willing to step in,’ said one portfolio manager. ‘But the fundamentals for this market don’t look good, so either way there’s going to be some blood-letting.’”

The New York Times. “One industry executive, who asked not to be named because of the delicacy of the subject, said the banks involved in the Bear funds could collectively lose $1 billion on their lendings to the Bear funds. While the amount is not itself significant given the size of these banks, it suggests the potential for bigger losses down the road.”

“‘We have heard that lenders have already reduced the amount that they are willing to lend against C.D.O.’s,’ said Timothy Rowe, a portfolio manager at Smith Breeden Associates.”

“The two Bear Stearns funds together controlled more than $20 billion a few weeks ago and had about $9 billion in loans as of early yesterday evening in New York, the Wall Street Journal reported today, citing unnamed sources. They’d encountered resistance to a bailout plan, the newspaper reported.”

“As defaults rise, bondholders stand to lose as much as $75 billion of subprime-mortgage securities, according to an April estimate from Pacific Investment Management Co., manager of the world’s largest bond fund. Investors in all mortgage bonds will probably take about $100 billion in losses, according to a March report from Citigroup Inc. bond analysts.”

The Washington Post. “Hugh Moore, a former executive at a subprime mortgage lending company, described the situation as a ’slow train wreck.’”

“‘I wouldn’t be at all surprised if we hear about more [hedge funds] blowing up in the coming months, as the subprime market meltdown continues,’ he said. “You’ve got $250 billion of subprime [adjustable-rate mortgages] that are going to reset this year.’”

“The perceived risk of owning corporate debt rose worldwide on concern that the paralysis of two hedge funds run by Bear Stearns Cos. may cause a chain reaction that sparks losses for other hedge funds and the banks that finance them.”

“Credit-default swaps based on $10 million of debt in the CDX North America Crossover Index of 35 companies surged as much as $10,000 to a nine-month high of $179,000, according to Deutsche Bank AG.”

“MGIC Investment Corp., the largest U.S. mortgage insurer, jumped to the highest in more than two months, rising $4,500 to $84,500, according to CMA Datavision. Contracts tied to Irvine, California-based homebuilder Standard Pacific Corp. reached an 11-week high of $423,000, according to CMA Datavision. They closed at $405,000 yesterday.”

“‘While markets ignored the subprime-mania time bomb since the market shake out in March, it seems to be a longer lasting phenomenon,’ said Jochen Felsenheimer, head of credit derivatives strategy at UniCredit Group in Munich. ‘In this highly leveraged environment, when the playing field is dominated with hedge funds, the risk is you could get a domino effect. There’s the potential for more negative news.’”

“Credit-default swaps are used to bet on a company’s ability to repay debt and an increase in the cost indicates worsening perceptions of credit quality.”

“Bids for the most recent index of subprime mortgage bonds dropped to a record low for a third time this week on Thursday amid concern that losses at a Bear Stearns hedge fund indicate more widespread turmoil.”

From CNN Money. “Besides the prospect of losses piling up, there are also concerns that investors could reduce their appetite for risky bonds and loans. ‘In an environment where there are already concerns about credit and liquidity, more risky debt could be undermined,’ said Charles Diebel, an analyst at Nomura International.”

“While delinquencies on subprime mortgages are on the rise, the losses haven’t really hit full force yet on the bonds backed by those mortgages, according to Jeff Schwartz at Payden & Rygel.”

“‘Rating agencies are downgrading bonds in anticipation of the losses and hedge funds are having to look at these securities and put a value on where the market would price them right now,’ he said.”

“Last week, credit-rating agency Moody’s cut its ratings on 131 bonds backed by subprime mortgage loans because defaults on those loans were rising faster than expected.”

From CNBC. “According to Josh Rosner, Managing Director at Graham Fisher & Company, people looking to make investments leveraged to the mortgage or housing market now could find themselves catching a falling knife. He says one of the most important takeaways here could be the culpability of the ratings agencies in all this.”

“Janet Tavakoli, President of Tavakoli Structured Finance, also calls the ratings agencies to task, dubbing their recent statements to the public ‘borderline irresponsible.’ She says telling investors higher rated securities will not likely suffer loss of principal only gives them half the story.”

“The consulting firm president points out that investors in all tranches could suffer mark-to-market losses as defaults rise, even if the pools backing their own bonds don’t experience rising defaults.”

From Fitch Ratings. “Covenant protection in the U.S. leveraged loan market has declined significantly in 2007, according to a new Fitch Ratings study. This trend is occurring against a backdrop of strong and aggressive overall loan issuance in which the rating mix of new deals coming to market continues to shift toward the riskier end of the credit spectrum.”

“Through the first five months of 2007, the share of loans containing a coverage covenant of any type dropped to 44.3% from 68.1% in 2006 and below the 1996-2006 average of 78.1%, while the percentage of loans containing a leverage covenant of any type fell to 51.1%, down from 69.6% in 2006 and below the 1996-2006 average of 72.8%.”

“As covenant protections decline, the torrid pace of overall leveraged loan issuance continues. After topping $600 billion in 2006, leveraged loan issuance totaled $217 billion in Q1 2007, a 65% increase over Q1 2006.”

“Along with the general demise of covenant packages, the growth of specific ‘covenant-lite’ loan issuance has accelerated. Through May, $47 billion of covenant-lite transactions, those typically containing no financial covenants, have come to market; more than twice the level of covenant-lite issuance in all of 2006.”

“‘Demand for these loans is being driven by collateralized loan obligations (CLOs), hedge funds and other non-bank investors who continue to pump liquidity into the market,’ said William May, Senior Director, Fitch Credit Market Research. ‘These investors appear willing to absorb increasingly protection-lite deals.’”

The Roanoke Times reports from Virginia. “Foreclosures are up an estimated 35 percent to 45 percent in the Roanoke Valley, according to Kathy Nunnally, president of the Roanoke Valley Association of Realtors. Virginia recorded 1,455 foreclosures in April, according to RealtyTrac. That’s a 400 percent increase over the same period last year.”

“Wesley Stroop, an agent in Roanoke, said he has seen more foreclosures this year than in the 20 years he has been in the business. In February alone, Stroop had 40 real estate listings for homes that had been previously foreclosed upon. Five years ago he would have dealt with that number in the entire year.”

“‘A lot of it I blame on the loan officers because loan officers are paid on a commission basis and they are pushing to get that loan through,’ said Bonnie Hall, an agent in Roanoke.”

“Borrowers have the option of getting out of default by catching up on late payments, but often the debt is insurmountable. ‘Ninety-nine percent of people can’t do it,’ Hall said. ‘If they can’t pay their payment on time, how are they going to pay three times that amount all at once?’”

“Stephanie Hicks and her husband took out a $204,000 construction loan to build their house. They said their lender had promised to roll that loan into a subprime mortgage that would cost them $1,000 a month. Their combined income was $34,000 last year.”

“But two months after they moved in, the lender withdrew its loan offer as troubles mounted in the industry. The Hickses said the lender instead offered new terms with a payment of $1,172 per month. But the couple decided they couldn’t afford that. Soon they will be looking for another home.”

“‘I blame it all on the subprime market,’ Stephanie Hicks said. ‘It’s not good for anyone.’”

“But some in the mortgage industry believe the increase in foreclosures is only temporary and that long-term effects will be minimal. ‘The economy in the state is good,’ said Steve Baugher, executive director of the Virginia Association of Mortgage Brokers. ‘Real estate is still holding its value.’”

“Subprime lending is not solely to blame for recent foreclosures, Baugher added. ‘I think a lot of the new homeowners may have stretched and got in on a shoestring,’ he said. ‘They don’t have much margin for error.’”

“After several years of rapid home price appreciation in the industry, a phenomenon that caused many to jump into risky investments, increases in real estate values have leveled off, causing investors to lose money. Appreciation has gone from 10 percent to 12 percent earlier in the decade, and back to 1 percent to 2 percent now, according to Baugher.”

“‘I think we just have to give it time,’ he said.”

The Times Dispatch from Virginia. “More people in Virginia are having trouble paying their mortgages. Virginia foreclosures nearly doubled in the first three months of the year from the same period a year ago, according to the Mortgage Bankers Association.”

“Nationally, the percentage of subprime ARMs at least 30 days late was 13.87 percent in the first three months of the year, up from 10.58 percent in the same period a year ago. Subprime mortgages serve people with poor credit.”

“Virginia saw a similar rise with 12.93 percent of all subprime ARMS past due, up from 8.6 percent a year ago.”

The Times Democrat from Virginia. “In Fauquier County, property values are declining. Presently, properties are remaining on the market an average of 90 to 110 days. Only one out of five listings goes under contract, and we currently have a year and a half of inventory on the market, making it even more likely that the borrower who is caught up in a bridge loan will find themselves not being able to afford both payments.”

“They may be forced into having to renegotiate with the bank or do a short sale. In our present mortgage climate people are willing to walk away from the debt they owe the bank, and the bank is willing to take the loss as long as it makes sense.”

“One truth behind foreclosures with a Federal Deposit Insurance Corporation insured bank is that the bank must put aside eight times the amount foreclosed, which means the bank is unable to lend that amount to another client. This is not a good scenario for a bank.’

From WVNS 59 in West Virginia. “The economic bubble that has brought substantial second home and resort home construction to Greenbrier County may be losing a little bit of air, local developers say.”

“‘The bubble didn’t burst, but a little of the air went out of it,’ said Robert Samples, a Charleston businessman who founded Eimors Construction in 1984.”

“A significant amount of Eimors’ work has been focused in Greenbrier County in recent years, thanks in part to the rapid building of luxury homes in gated developments. And the company is betting its future, Samples said, on construction continuing for years to come. But right now, Samples is a little nervous.”

“‘It’s a nice new thing to have resort growth in West Virginia. I’d love to be more excited by it,’ Samples said. ‘It’s kind of frustrating though, but I guess it’s typical West Virginia. When there is a boom, it’s not happening here. When there is a bust, it doesn’t happen here either because there was no boom.’”

“Realtor Mardi McMillan said the market in Greenbrier County is still going strong. ‘We have a very steady and solid real estate market in Greenbrier County,’ she said. ‘We did not experience the same bubble as the rest of the nation.’”

“‘The market of the early 2000s and in the last couple of years couldn’t continue forever. It is going to plateau,’ said Craig Picken, director of sales at The Greenbrier Sporting Club.”

“In fact, in the past month, six properties either have been put up for auction or are about to be auctioned at The Sporting Club. Samples said four homes at the exclusive development were almost auctioned off on May 22, but the sale was canceled when only one potential buyer showed up. Realtors in the county said another two lots are expected to be sold by BB&T bank at a foreclosure auction June 28.”

“Does that mean the bubble isn’t just leaking air, but on the brink of bursting? Not necessarily. ‘(The auctions) don’t worry me at all,’ Picken said. ‘It’s something that could happen at any development.’”

“People see the homes at The Sporting Club as an investment, he said. Owners view the property not only as a place to relax or retire, but as a lasting, stable investment they may leave their children.”

“‘We had one couple purchase a home, and I asked them what made them decide to buy here,’ Picken said. ‘They said, ‘We’ve been coming to The Greenbrier for 25 years.’ Plus they know the home is going to appreciate.’”

“But the plateauing is enough to make Samples and his partners change their focus a bit. Instead of doing a lot of speculative projects, the company is now reaching out to end users.”

“He said his eyes have been opened a little bit. ‘You realize how slow it’s going to happen,’ Samples said. ‘Things like this just take time, and right now we just have to wait for the end-user market to catch up.’”

The News Star from North Carolina. “The Wilmington housing market, but sales continued to track below the past three years. The Wilmington Regional Association of Realtors reported 601 home sales in May, 20 percent lower than May 2006 and 35 percent lower than in 2005, when the area’s housing market was in full churn.”

“‘It’s a little more quiet than what we’re used to,’ said Jonathan Barfield, president of the Wilmington Realtors. ‘I think the market is just trying to level out.’”

“The Brunswick County Association of Realtors saw a bigger drop in sales volume. The number of homes sold dropped to 150 from 230 in May of last year, a 35 percent decline.”

“With fewer properties flying off the shelves and prices staying relatively flat, many investors are content to sit back and wait for the market to make a move, said Pete Chilberg, an officer in the Coastal Carolina Real Estate Investors Association.”

“‘Everybody is waiting for it to go in one direction,’ Chilberg said. ‘Even investors are being really, really cautious these days.’”

“The Wilmington association has 2,200 primary members. But experts expect reductions to escalate eventually, Barfield said. ‘I think in another year or two we’re definitely going to see the number of people declining,’ he said.”

“The current climate, however, is nothing new for agents who have been doing business here for a while, he said. ‘The market we’re in now is the market I came into nine years ago,’ Barfield said.”

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