The Housing Bubble

The California realtors report on May sales. “Home sales decreased 25 percent in May in California compared with the same period a year ago, while the median price of an existing home increased 4.8 percent, the California Association of Realtors reported today. ‘The decline in sales continues to be driven by both tighter underwriting standards since the start of the year and the adverse psychological impact of news regarding foreclosures and the subprime situation,’ said C.A.R. Chief Economist Leslie Appleton-Young.”

“‘In particular, the lower end of the market, which is the part of the market that is most affected by the subprime situation, has seen greater declines in sales and weaker prices than the higher end of the market. This will likely be a recurring theme in the coming months,’ Appleton-Young said.”

“C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in May 2007 was 10.7 months, compared with 6 months (revised) for the same period a year ago.”

“In a separate report covering more localized statistics generated by C.A.R. and DataQuick, 36.7 percent, or 136 out of 371 cities and communities, showed an increase in their respective median home prices from a year ago.”

“‘With prices holding steady or showing marginal declines in many parts of the state, affordability will continue to be a problem even with mortgage rates that remain near historic lows. In a competitive market with a wide range of properties for sale compared with a year ago, those homes that are in top shape and are well priced are in the best position to attract buyers in today’s market,’ said C.A.R. President Colleen Badagliacco.”

The San Francisco Chronicle. “If real estate is a religion, this was an old-fashioned revival meeting, with the frenzied energy of a game show. Tuxedo-clad ‘ringmen’ raced up and down the aisles, urging on the crowd and pointing to bidders. One particularly gung-ho ringman did a chicken dance whenever he saw someone bid.”

“A half-dozen female ‘runners,’ also clad in black and white, clapped and cheered every outcome, then approached the winning bidder, clipboards in hand, to get started on paperwork.”

“‘Folks, take advantage of the market today,’ a fast-talking auctioneer exhorted a packed room of real-estate bargain hunters on Sunday. ‘I have (a bid for) $300,000 now on this condo; do I hear $310? I’ll take $305 if that’ll help you. Who else wants in? Raise those bidder cards.’”

“The bidding got fast and furious, and the three-bedroom condo in South San Francisco sold for $425,000. It was among 88 foreclosed properties, mostly in Alameda, Contra Costa and Solano counties, auctioned at the San Mateo County Event Center.”

“The auction was visible proof that the slumping housing market and subprime loan fiasco have had an impact on the Bay Area. It was the first large-scale foreclosure auction in the region in a decade.”

“‘It’s an adrenaline rush,’ said Omar Felder of Hayward. ‘I feel I’m getting a chance to increase my future riches.’”

“Many properties sold in two minutes. Most had only about four bidders. Some lingered on the block for several minutes while the auctioneer wheedled for higher offers.”

“Each property had a published minimum bid and a higher secret ‘reserve price,’ the actual minimum the banks were willing to accept. A phalanx of bank representatives flanked the auctioneers and told them when to accept lower reserves.”

“It appeared that almost every property on the block received a winning bid, but bids below the reserve were subject to possible denial within seven days, according to the auction catalog.”

“Marjie DeWilde of Mountain View and her husband…weren’t bidding but had inspected and researched some of the properties on the block. Based on her study of comparable sales, DeWilde said she thought most properties were going for about 80 to 85 percent of their current market value. That’s a decent savings for someone who wants to live in a house, but not enough of a discount for an investor, she said.”

“For example, a four-bedroom, two-bathroom Concord house had a minimum bid of $329,000. According to the catalog, it was ‘previously valued’ at $651,000, meaning it had been listed, appraised or received a broker price opinion at that price. It sold for $500,000.”

“Many bidders said they thought the ‘previously valued’ prices seemed high. ‘Most of the homes we looked at were distressed in some way or another,’ DeWilde said. ‘Unless the magical mansion came up, I don’t think we would do it.’”

“Everyone has their own definition of the ‘magical mansion.’ For Whitney and Alexander Hoerman, it was a two-bedroom Menlo Park house that they won with a bid of $590,000 in a nail-biter of a contest with another determined bidder.”

“The couple, who have three children, want a bigger home. While the 890-square-foot home they’re buying is cramped, it’s on a quarter-acre lot, so they plan to expand it. They had been eyeing the house since four months ago, when it was listed at $740,000. ‘We will tear most of it down,’ said Alexander Hoerman.”

The Sacramento Bee. “It’s hardly on the scale of two years ago, but across the Sacramento region it’s still easy to see entire neighborhoods of new houses rising.”

“Selling them now has become the challenge for an estimated 84 home builders who work the capital region. The five-year housing boom that crested in July 2005 has given way to some of the slowest sales since the late 1990s.”

“Locally, as nationally, home builders are cutting costs, production and, in some cases, staff. Through May they closed escrow on 3,564 homes in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties, according to DataQuick. That’s 1,245 fewer than the same time last year, which was then considered a poor performance.”

“Executives of three suburban Sacramento home builders met with The Bee recently for a round-table discussion about the area market.”

“Sacramento division presidents for Pulte Homes, Christopher Cady: ‘I think there’s a certain sense of people saying, ‘Are you at the bottom or are you not at the bottom?’ People are still looking for the values.’”

“Cady: ‘People have gotten so much into that day-trader mentality with houses. If they just get back to the fundamentals and think about why they’re making a home purchase decision. If they think they’re going to try and flip it in six months or a year or two years, again it’s the same problem you have when you’re trading stocks. You’re not that good. You’re not going to be able to time it right.’”

“A second-generation owner of a local home building firm, Sid Dunmore of Granite Bay-based Dunmore Homes: ‘You have to understand most of the overhang was created by ourselves. And I hate to say it, but it was mostly the public builders, which couldn’t seem to stop building. In light of no sales they just kept on building, and they created this huge overhang. And so now they’re eating through it.’”

The Fresno Bee. “With sales slumping, more developers are building smaller houses, cutting frills, renegotiating labor rates and taking smaller profits in an effort to cut prices and appeal to more buyers.”

“Fresno builder Mitch Covington of R.M. Covington Homes is building smaller houses, negotiating with subcontractors and accepting a lower profit. In Madera, his Villa Granada tract has houses starting at $219,950. Previously, he didn’t sell anything for less than $300,000.”

“‘I’m cutting profits significantly,’ he acknowledged. ‘But it will still be profitable.’”

“The homes range from 1,200 square feet to 1,609 square feet, have great rooms, dining nooks, open kitchens, covered patios, two-car garages and 11-foot ceilings in the main rooms.”

“Smaller houses are a departure for many builders who capitalized on a seemingly insatiable demand for housing during a five-year run that ended in early 2006. ‘We couldn’t build fast enough,’ Covington said. ‘There was no reason to go smaller.’”

“Also thinking small is Walter Diamond, general manager of Beazer Homes in Fresno. First-time home buyers and young professionals are among his target audience at Ashlan Village, where Beazer has a new 1,007-square-foot home priced at $219,990.”

“‘We’ve always had a strong market for entry-level buyers, but it is accentuated now with the current status of the market,’ he said. ‘We have a good backlog of entry-level product. We have enough lots for the next two or three years.’”

“Leo Wilson, a builder for 45 years, acknowledged the slowing market, but he said he survived worse periods, including one in the early 1980s when interest rates were triple what they are today.”

“‘Interest rates went to 21%, and no one wanted to buy a house. If a customer came by in the middle of the week, you would jump up and down and bake him a cake,’ Wilson said.”

The Press Telegram. “Folks like Phil Schaefer don’t seem too concerned about the dangers of a real estate market fallout. Schaefer, who has been a Realtor for 20 years, believes the industry can handle the recent flood of agents. He also believes that home prices will not plummet.”

“‘Prices have held,’ he said. ‘It’s an amazing time to buy. It’s really a great time to buy.’”

“There are now more than 534,266 licensed Realtors in the state, according to the California Department of Real Estate. That means one out of about every 52 adult Californians has a real estate license.”

“Schaefer is past president of the board of Pacific West Association of Realtors, a regional organization with 14,000 members. The organization is the state’s largest regional real estate association, and it ranks among the nation’s top five in membership.”

“And Schaefer says that if the bottom is near, he hasn’t seen it. ‘We have about 200 people joining a month at PWR,’ the Santa Ana resident said.”

“Still, he knows there are changes on the horizon. Until last year, PWR has been focused mainly on teaching its members how to deal with multiple offers on their listings and coping with other minor issues in the best housing market in history.”

“But nowadays, PWR is busy arranging seminars on how to conduct short sales or how to take advantage of foreclosures.”

“Currently, housing sales are slowing to a pace where there’s nearly one sale per licensed agent per year. And it may get worse before it gets better, according to the Department of Real Estate.”

“‘Our licensee numbers are still going up,’ said DRE spokesman Tom Pool. ‘It’s gone up every single month for the last seven years. He added, ‘In the long term, it’s gotta come down.’”

The Florida realtors have the May numbers out. “Statewide sales of existing single-family homes in Florida totaled 12,607 in May and were more in line with activity in May 2002, prior to the housing boom years, than the May 2006 figures of 19,072 homes sold for a 34 percent decrease in the year-to-year comparison, according to the Florida Association of Realtors.”

“Florida’s median sales price for existing single-family homes last month was $237,000; a year ago, it was $250,100 for a 5 percent decrease. Sales of existing condominiums in Florida also decreased last month, with a total of 4,090 condos sold statewide compared to 5,671 in May 2006 for a 28 percent decline, according to FAR.”

The Sun Sentinel. “The spring home-selling season came to a dismal end in South Florida last month.”

“Sales of existing homes plummeted 33 percent in Broward County from a year ago, while Palm Beach County saw sales slide 25 percent, the Florida Association of Realtors said Monday.”

“The market for existing condominiums in Broward also was down in May. Sales fell 29 percent from a year ago and the median price declined 5 percent to $202,600.”

The Naples News. “May housing sales figures released Monday paint an unsettling picture of the market both locally and around the state. The local statistics were punctuated by a 42 percent drop in the number of single-family home sales in May in Lee County as compared to May 2006, and a 29 percent decrease in the median price of a condominum in Lee County during the same timeframe.”

“The median price of a single-family home in Lee County was down 2 percent from May 2006, dropping from $286,500 to $281,500. The number of condo sales in Lee County was also way down from a year earlier, dipping 22 percent from the 250 that were sold in May 2006.”

The Naples News. “In Charlotte County, prices were down 12 percent from $213,400 to $186,900 and sales were off 39 percent from 387 to 235.”

“Complete information for Collier County was not available because the Naples Area Board of Realtors no longer reports its statistics to the state association.”

The Palm Beach Post. “Existing single-family homes sales for May fell 25 percent in Palm Beach County, to 741 from 982 in May 2006, the Florida Association of Realtors said today. The median price fell 1 percent, to $387,800 from $391,000 in May 2006, FAR said.”

“In The Treasure Coast, existing single-family home sales fell 39 percent, to 315 from 519 in May 2006, FAR said. The median price fell 9 percent, to $228,500 from $252,300 in May 2006, FAR said.”

“‘The wave of speculative investors seeking a quick profit appears to be gone, and now we have a more normal market, with buyers interested in investing in a personal dream and finding a home,’ said Norma Mirsky, president of the Palm Beach Board of Realtors.”"

A sonic boom waiting to happen, Gov. Charlie Crist calls it. A racehorse that’s been reined in. An engine that cannot run on all of its cylinders. His subject: Florida’s economy. The culprit: high property taxes.”

“So with a new, two-piece package through the legislature, Crist abandoned all restraint with his metaphorical flourishes last week.”

“‘I think it will fire up our economy. Florida is like a thoroughbred and…she’s been held back,’ he said moments after signing two new laws on the matter. ‘We’ll have an opportunity to get this engine going again, fire this baby up and make sure that this economy will not just boom, but have a sonic boom.’”

“Economists and real estate agents generally agree that the new constitutional amendment would, if adopted, spur considerable home-buying activity.”

“‘It’ll be an absolute boon to first-time home buyers,’ said Patricia Fitzgerald, a Jupiter real estate agent and secretary of the Florida Association of Realtors.’”

“A Palm Beach Post analysis of the proposal shows that buyers of a $150,000 home would save about $141, or 13 percent, off their total monthly mortgage and escrow payment under the new plan. The buyers of a $250,000 home would save $219 per month, with the amounts and percentages dwindling as the purchase price increases.”

“The rapid increases in prices have made the typical house unaffordable for the typical family in Florida, according to the report by the Shimberg Center for Affordable Housing at the University of Florida. The median household in Palm Beach County earned only 51 percent of the income needed to buy a median home there, according to the study.”

“So the main problem for many would-be home buyers, particularly in South Florida, where prices escalated the most, is a $350,000 or $400,000 house, not the taxes and insurance on that house, FSU’s Holcombe said.”

“‘Demographically, Florida is likely to become more like San Francisco,’ said Randall Holcombe, a Florida State University economics professor, describing how that city is closing schools because families with children cannot afford to live there. ‘Eventually, no one would be able to afford anything.’”

The Miami Herald. “Allan Bense, chairman of the Taxation and Budget Reform Commission, which is empowered once every 20 years to place tax and budget amendments on the November ballot, said that when the group meets again on Tuesday he will suggest they discuss Plan B: What to do if voters reject the amendment lawmakers have put on the Jan. 29 ballot.”

“The Florida Constitution requires the Taxation and Budget Reform Commission to convene in 2007 for the second time in Florida history, only 17 years after the first one met in 1990. But the coincidence of the panel meeting in a year when tax issues dominate the agenda is not lost on its members.”

“‘You cannot blame communists or the Trilateral Commission,’ said Carlos Lacasa, a commission member and former Miami state legislator. ‘The fact that the real estate bubble coincided with the timing of the commission was pure coincidence.’”

“Lacasa also believes that because the Legislature’s two-part property tax plan won’t solve the problem, the issue will ‘overshadow everything until it’s resolved.’”

The Herald Tribune. “The thousands of new homes in the works for the land east of Interstate 75 in Southwest Florida are providing ample opportunities for home builders. Even with the precipitous drop in new home construction around the region, a growing list of construction firms are moving into the region.”

“‘They follow the rooftops,’ said Jay Brady, executive director of the Gulf Coast Builders Exchange, a Sarasota-Manatee group of commercial builders, architects and engineers with 350 members.”

“‘We see enough opportunity to be a profitable organization, without a doubt,’ said Gregory F. Galmin, the Tower Group’s executive VP. ‘We are not here to put anyone out of business, but we will be aggressive and we will be knocking on our competitors’ doors.’”

Some housing bubble news from Wall Street and Washington. “Reflecting further housing troubles, sales of existing homes fell in May to the lowest level in four years while the median home price dropped for a record 10th consecutive month. The National Association of Realtors reported Monday that sales of existing single-family homes and condominiums dropped to 5.99 million units in May, the slowest sales pace since June of 2003.”

“The median price of a home sold last month dropped to $223,700, down 2.1 percent from a year ago. It marked the 10th straight price decline compared with a year ago, the longest stretch of weakness on record.”

“In a troubling sign for the future, the inventory of unsold homes rose by 5 percent to 4.43 million units in May, a level that would take 8.9 months to clear out at the May sales pace. That is the highest inventory level since the last deep slump in housing in 1992.”

“The current slump in housing is the worst since the 1989-92 downturn. It is occurring after a prolonged boom that saw sales of new and existing homes set new records for five consecutive years.”

From CNN Money. “Even the Realtors’ statement conceded the weakness in the current housing market.”

“‘The market is underperforming when you consider positive fundamentals such as the strength in job creation, economic growth, favorable mortgage interest rates and flat home prices,’ said Lawrence Yun, the Realtors’ senior economist, in the report. ‘It appears some buyers are simply waiting for more signs of stability before they get serious about getting into the market.’”

“The glut of homes for sale on the market rose 5 percent from April to 4.4 million homes. The number of homes for sale is now 23 percent above year-ago levels, and the inventory, is nearly 40 percent above a year year earlier.”

From MarketWatch. “The inventory figure compared with 8.4 months in April and 7.4 months in March. Inventories of homes on the market rose to a record 4.43 million. That’s the biggest overhang of inventory since June 1992, at the tail end of the last housing bust.”

“‘Psychological factors are currently the biggest drag on the housing market, in addition to a disruption from tighter credit for subprime borrowers,’ said Lawrence Yun, senior economist for the realtors group.”

From USA Today. “The Realtors are predicting that the median home price will decline 1.3% this year while sales are forecast to drop 4.6%. It would be the first annual price decline in four decades of record-keeping.”

“‘Household formation has slowed dramatically since late 2006, implying that many people are doubling-up,’ adding roommates or moving in with parents, said Yun.”

“Regionally, existing-home sales in the Northeast are 3.5 percent lower than May 2006. Existing-home sales in the Midwest are 6.6 percent below a year ago. Existing-home sales in the West are 16.3 percent below May 2006. Existing-home sales in the South are 11.9 percent below a year ago.”

The New York Times. “The American housing market, as measured by home-building activity, is falling at the most rapid rate in decades, underscoring the pain felt by builders who were far too optimistic about the state of the market.”

“Even with the plunge, however, starts have been very high relative to the number of homes that builders are trying to sell, a fact that could indicate the weakness will last while builders seek to sell homes they have already built.”

“The rapid fall clearly caught builders by surprise, in part because many of them had never seen anything like it. During the period covered by the charts, going back to 1990, the fastest fall had been in 1991, when the pace fell 18 percent during a recession.”

“There have been such rapid declines before, but not in the memory of most current builders. In 1975, amid the most severe recession since the Great Depression, the decline was 37 percent, the highest recorded since the government started collecting the statistics in 1963. There was also a large drop in 1982, during a recession that came when interest rates were extraordinarily high.”

“The inventory of new homes for sale rose to the highest level ever last summer, at 573,000 homes in July, and has since begun to fall, going down to 538,000 in April.”

“But that figure was equal to 40 percent of the home starts in the previous year, the highest level ever.”

The Wall Street Journal. “Bond investors will keep one eye on the Federal Reserve and the other on the mortgage market this week, as they wait for the next installment of the drama surrounding two troubled Bear Stearns Cos. hedge funds that bet heavily on the subprime-mortgage market.”

“‘The crisis will continue to loom large,’ said T.J. Marta, fixed-income strategist at RBC Capital Markets. While the situation seems to be under control for now, ‘that could turn on a dime.’”

“Michael Cheah, portfolio manager at AIG SunAmerica Asset Management, said the Bear funds were most probably not alone in the bets they made on the subprime-mortgage market. ‘A lot of people have got that trade on,’ he said. ‘I would be shocked if they were the only one…and the story ends here. It’s not over.’”

“Late Friday the riskiest, triple-B-minus, tranche of the benchmark derivative index based on subprime mortgages hit a new low of 58 cents on the dollar, according to Alex Pritchartt, a trader at UBS.”

“The latest version of the ABX, which is renewed every six months, references loans originated in the second half of 2006, a year noteworthy for its loose lending standards.”

From Bloomberg. “Bear Stearns’s enhanced fund and the Bear Stearns High- Grade Structured Credit Fund, a similar pool that wasn’t as highly leveraged, speculated mostly in collateralized debt obligations, securities that hold pieces of junk-rated corporate bonds, mortgage bonds, high-interest loans, derivatives or even other CDOs.”

“Sales of CDOs skyrocketed to $503 billion in 2006, according to estimates from Morgan Stanley. Ralph Cioffi, the funds’ manager at Bear Stearns, was among the biggest buyers of CDOs backed by subprime mortgages.”

“While some layers of CDOs are designed to earn higher credit ratings than their underlying investments, the securities are hard to value and can decline precipitously. That’s what happened earlier this year as defaults on subprime loans accelerated.”

“Then an additional bet Cioffi had made to protect his investors, using derivative contracts on ABX indexes to hedge against a decline in the subprime market, also went bad. By the end of April, the enhanced Bear Stearns fund was down more than 20 percent for the year.”

“‘They looked at these high yields, this growing market, and they forgot the basic concept of risk and return,’ Sanders said. ‘They got caught drinking their own Kool-Aid.’”

“As creditors began asking the funds to post more collateral to back the loans in mid-June, Cioffi sold about $4 billion of the funds’ holdings to stave off a cash crunch.”

“The gambit failed. Lenders led by New York-based Merrill, the third-largest U.S. securities firm by market value, threatened to declare the funds in default of repo agreements and seize investments.”

“JPMorgan, Goldman Sachs Group Inc. and Bank of America Corp. reached agreements with Bear Stearns Asset Management that involved settling the difference between repo debts and money the funds were owed from hedging contracts, according to people who were briefed on the dealings or heard them described on conference calls.”

“At about 3 p.m. (on June 21), Bear Stearns offered an unconditional bailout for the high-grade fund. The bailout of the Bear Stearns fund is the largest since Long-Term Capital Management, which received more than $3.6 billion in 1998.”

National Mortgage News. “Bear has not filed any type of SEC statement regarding these funds, has it? Bear is a public company. The hedge funds are not. We know this: Merrill Lynch, which does not screw around with deadbeat borrowers, told Bear on Wednesday enough is enough: you either post more collateral or we’re seizing the assets collateralizing our loan. Guess what? Bear said go ahead. Merrill said fine.”

“By the way, here’s the first few sentences from our February story on Merrill’s margin calls: Merrill Lynch, which has been stung by three high-profile subprime bankruptcies in six weeks, is conducting margin calls on certain B&C originators that receive financing through the firm’s warehouse group.”

“One secondary market official, requesting anonymity, said Merrill is the ‘main culprit’ in the current buyback plague sweeping the subprime industry. He added, ‘Merrill is making originators pay dearly.’”

“The margin calls, which require that these lenders post additional capital, were confirmed by two mortgage bankers and a spokesman for Merrill.”

“On Thursday, six ’scratch and dent’ deals hit the secondary market, one trader told NMN. He said the offerings of delinquent residential mortgages range from $2.8 million to $34 million. ‘It’s pretty much your standard day,’ he added.”

“Queen’s Walk Investment Ltd., a fund investing in the riskiest portions of bonds backed by mortgages, reported a net loss caused by the slump in the U.S. subprime market and fewer U.K. borrowers paying penalty charges.” “The fund said it lost $91 million in the year ending March 31. Queen’s Walk sold most of its holdings in the U.S. mortgage market in the first three months of the year, it said today in a statement.”

“‘We are disappointed with the performance,’ Stuart Fiertz, a founder of hedge-fund manager Cheyne Capital, said in a phone interview.”

“Queen’s Walk is the second U.K.-listed fund to report losses because of rising delinquencies in the U.S. mortgage market, after London-based Caliber Global Investment Ltd. last month said it lost $8.8 million. Bank of America Corp. last week said hedge fund losses at Bear Stearns Cos. may be the ‘tipping point of a broader fallout’ from the subprime market.”

“The losses were caused by ’significant developments’ in the U.S. and U.K. mortgage markets, the statement today said. Queen’s Walk increased forecasts of losses on its U.S. assets because of ‘weaker housing market fundamentals,’ according to the fund’s statement.”

The Telegraph. “The Bank for International Settlements has warned that years of loose monetary policy has fuelled a dangerous credit bubble, leaving the global economy more vulnerable to another 1930s-style slump than generally understood.”

“‘Virtually nobody foresaw the Great Depression of the 1930s, or the crises which affected Japan and Southeast Asia in the early and late 1990s. In fact, each downturn was preceded by a period of non-inflationary growth exuberant enough to lead many commentators to suggest that a ‘new era’ had arrived,’ said the bank.”

“In a thinly-veiled rebuke to the US Federal Reserve, the BIS said central banks were starting to doubt the wisdom of letting asset bubbles build up on the assumption that they could safely be ‘cleaned up’ afterwards, which was more or less the strategy pursued by former Fed chief Alan Greenspan after the dotcom bust.”

“It said this approach had failed in the US in 1930 and in Japan in 1991 because excess debt and investment build up in the boom years had suffocating effects. While cutting interest rates in such a crisis may help, it has the effect of transferring wealth from creditors to debtors and ’sowing the seeds for more serious problems further ahead.’”

“The BIS said last year’s record issuance of $470bn in collateralized debt obligations (CDO), and a further $524bn in ’synthetic’ CDOs had effectively opened the lending taps even further. ‘Mortgage credit has become more available and on easier terms to borrowers almost everywhere. Only in recent months has the downside become more apparent,’ it said.”

“‘Sooner or later the credit cycle will turn and default rates will begin to rise,’ said the bank.”

The News Times Live reports from Connecticut. “In the United States, the housing market is still locked in a slump that began a year ago. In Connecticut, it’s been more of a slowdown than a crash. Area Realtors said they think the market will straighten out this summer, after being overheated for several years, then hitting the wall in 2006.”

“‘There was a hiss in the balloon, not a bursting,’ said (realtor) Betty Hensel in Brookfield. ‘There’s still a good market for sellers who are realistic about it.’”

“Others don’t share Kidder’s optimism, or her good numbers. In Danbury, Sean Hearty, director of the city’s Permit Center, said housing starts are down ’substantially.’ ‘Overall, it’s going down,’ he said of new home construction in the city.”

“Linda Hannah, president of the Ridgefield Board of Realtors, said Realtors are still dealing with a big inventory of homes on the market. ‘We have 317 homes on the market, 24 of those have a bid accepted on them,’ she said. ‘Normally, that number is 200 to 225.’”

“‘There’s an oversupply,’said Realtor Matt Rose Lombardi in Danbury.”

“Hannah said in 2006 an average price for a single-family home in Ridgefield was about $934,000. In 2007, that price has dropped to about $855,000. Hensel also said sellers, who a few years ago could market their homes without worrying about dust or crabgrass, have learned they have to prettify the place.”

“‘You have to put on your best face,’ she said. ‘The house has to look perfect…A couple of years ago, that didn’t matter.’”

The Providence Journal from Rhode Island. “The weekly staff meeting ran long in Coleman Realtors office this recent spring morning. The chief topic was something real-estate agents across the country are grappling with. What to do with sellers who bought at the top of the market but now can’t even get the same price they paid?”

“‘What can we do for them?’ Sue Erkkinen, Coleman’s top seller statewide, says with a sigh after the meeting. ‘It reminds me of the 1980s.’”

“‘A few years ago ‘you’d have an open house and collect five or six offers,’ she recalls. ‘Now we show [homes] over and over and over. Buyers are finding fault with the smallest things.’”

“‘Pricing the listing has become critical,’ Michael Young, a former president of the Rhode Island Association of Realtors, says. ‘With such a large inventory of homes, there is a great deal of competition among sellers. The correct price is the key marketing issue.’”

“In early May, there were 6,085 single-family houses listed for sale on the statewide MLS. For the same period last year and in 2005 the numbers were 5,711 and 3,472 respectively.”

The Telegram from Massachusetts. “Worcester had the third-highest foreclosure numbers in the state, trailing only Boston and Springfield.”

“Worcester had 237 filings for foreclosure in 2003, followed by 308 the following year and 445 in 2005, according to data provided by ForeclosuresMass.com. Last year there were 850 foreclosure proceedings initiated in the city, and the city is on track to pass 1,100 this year.”

“Jeremy B. Shapiro, president of ForeclosureMass.com, said the problem will not get better in the short term, even with government relief efforts. ‘When you look at the increase from last year, it’s astronomically high, and even if it remains flat, it’s still double what we’ve seen in the past year,’ he said.”

“‘I have seen cases where people bought over their heads,’ said Scott M. Hayman, director of housing for the city. mentioning a borrower who should not have been a candidate for a loan, but received one, then took out another to make repairs on the second floor, which was uninhabitable when he bought the property.”

“When higher rates kicked in when the loan reset, the owner didn’t obtain help or work with the lender and was foreclosed upon, he said.”

“Francis D. Paquette, director of the NeighborWorks Home Ownership Center, which provides foreclosure prevention counseling, said he is getting an increasing number of calls. ‘It’s getting to be a rather large problem,’ he said.”

“Mr. Paquette said some lenders were careless in reviewing loan applications, awarding mortgages to clients who would run into trouble when their interest rates adjusted upward. ‘In some cases there were bad lending practices by some lending companies. They probably knew they (borrowers) wouldn’t have been able to make payments down the road, but they got their payment and commissions, and the mortgage has probably been sold a couple of times.’”

“Homeowners trying to dodge foreclosure by selling their property have another problem: A slumping real estate market marked by falling prices and a glut of homes.”

The Record from New Jersey. “The public auction ended as abruptly as the final episode of ‘The Sopranos.’ The developer’s principal admitted the auction was a marketing gimmick, created to kick off a sales campaign for the luxury condo complex on Hoboken’s quickly changing west side.”

“As of a week ago, Remi Cos. planned to put 40 of the 128 units on the auction block Sunday to see what the market would bear. However, by the time proceedings began in a Jersey City hotel ballroom, the list had been cut to 16, and without notice, it was cut to nine after about a half-hour of spirited bidding.”

“The apartments that were sold brought in $3.6 million, about two-thirds of what developers said was their last asking price, but a third higher than minimum prices they had set.”

“About 200 people showed up, and some viewed the sudden end to proceedings as a sign that the condo market is hurting. ‘It’s bad P.R.,’ said Sean Munroe of Ridgewood, who predicted that Sunday’s results would push prices down. ‘There’s a glut of condos here.’”

“Even before the auction was halted, Deedre Miranda, who rents an apartment in Hoboken, had left. Like many of the attendees, she was looking for a bargain, but the bidding was ‘a little past’ her price range.”

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