The Housing Bubble

It’s Friday desk clearing time for this blogger. “If there was ever anything real estate agents could agree on, it’s that Sawyer County, (Wisconsin) is a buyers’ market. ‘One of the questions is: Has the bubble burst? Yes, it burst last summer. We saw a turnaround from a sellers’ market to a buyers’ market,’ said Tom Berlage with Area North Realty in Hayward added. ‘Now, easily, the inventory has doubled. It’s like, where are the buyers?’”

“Berlage and other agents receive ‘hotsheets’ regularly, where they are ’seeing prices drop significantly everyday.’ He said that with the higher-end homes, sellers are dropping their prices sometimes by as much as $150,000.”

“Call it a wave of price cuts or a market adjustment, but there is no way to mask the fact that people selling residential real estate locally have been dropping their asking prices in droves. Deal Estate combed through data from the MLS of Northern Illinois and found that one out of three single-family homes sold in the Chicago area so far this month were bought only after the initial asking price dropped at least once.”

“‘What’s happening is that people who priced their homes in early spring are coming down now anywhere from 5 to 10 percent,’ says Mary Duncan, the sales manager at Prudential Elite Realtors in Naperville. Last week, the sale closed on a Naperville house that Duncan had initially listed in early spring for $470,000, then cut to $450,000 and again to $445,000, before selling it for $432,000.”

“Plunging home sales on the mainland have many waiting to see if Hawaii will follow suit. Sam Chang is moving into a rental property because he believes it’s the wrong time to buy real estate. Chang said, ‘right now the math works out that it’s significantly cheaper to rent than to buy the same property.’ He’s not alone.”

“The Pierce County, (Washingotn) Assessor-Treasurer’s Office mailed new property valuations Friday to the owners of more than 248,000 residential properties. Home values overall have been tamed by a flagging real estate market, according to Assessor-Treasurer Ken Madsen.”

“‘The whole market has gone down,’ Madsen said.”

“Home foreclosures in the Northland have followed the national trend. In Clay County, (Kansas) the number rose to 695 in 2006 from 436 in 2005, an increase of 62 percent, according to the Clay County Recorder of Deeds.”

“‘I’m sure many factors play into the increase,’ said Platte County Recorder Gloria Boyer. ‘Including adjustable rate loans, which have now had an increase in interest rates; higher cost of homes; some lending institutions lending more than the value of homes; and people overextending themselves.’”

“If institutional investors rush for the exits, hedge funds will feel pressure to get out of CDOs, perhaps prompting a downward spiral. The broader housing market also presents a potential threat.”

“In Maricopa County, Ariz., which includes Phoenix, houses are entering foreclosure at a rate of more than 50 a day, according to Foreclosure.com, up 60% from last year, as recent buyers are hit by high payments and falling equity.”

“Home prices in the Baltimore metro area? Up 5 percent. In the Washington area? Barely budging. In San Diego, Tampa, Las Vegas and several dozen other metros areas? Down, down, down. But in this corner of Appalachia, home prices have just shot up 17 percent.”

“‘Anytime there is a large price differential between…neighboring regions, then the low-price region eventually catches up,’ said Lawrence Yun, senior economist with the Realtors group. ‘Cumberland is catching a little wave.’”

“Premier Lorne Calvert and Mayor Pat Fiacco love to go on tours to Alberta to recruit people to come to Saskatchewan to work and live. The only problem is that there is no work.”

“I know the real estate market is booming here, but do you know why that is? Is it because of new industry, more jobs, people moving here from other provinces? No, it’s because real estate investors and speculators from other provinces know this is the only affordable place to buy.”

“So, yes, in the short term, prices will go up. But in time, the market will drop because nobody earns enough money to afford these new prices.”

“KB Home has tried to weather the dreary housing market by building smaller, less expensive houses. The most recent loss came in spite of KB Home’s efforts to reduce the size, and, therefore, the price, of most of its homes.”

“Yet buyers have been staying out of the market, in large part because lenders have made it more difficult to qualify for mortgages and because of expectations that home prices will continue to decline.”

“‘There’s a feeling that consumers are not comfortable that home prices are going to stabilize,’ said Steve Johnson, a Riverside-based building industry consultant who focuses on the California market. ‘Consumers are looking for further discounts and further deals.’”

“My Dad was a repo man for GMAC, the lending arm of General Motors. At 3, I couldn’t tie my shoes but knew that if you didn’t pay your auto loan on time, Dad would come to your house at 2 a.m. and steal your car.”

“But what really stuck with me was his disdain for the people from whom he had ‘liberated’ the vehicles, people who had taken out massive loans to pay for cars they knew they could not afford, but who were surprised when he showed up.”

“‘How, exactly, did they think this was going to end?’ he asked.”

“Thanks to my early fiscal training, when my husband and I bought our South End condo in January 2004, we ignored the loan officer who wanted to sell us an interest-only loan for twice the amount we needed and instead got a smaller adjustable-rate mortgage.”

“Boxborough, Topsfield, and West Newbury, three of the wealthier communities in the state, showed the top three largest percent increases in foreclosures in Massachusetts in the past 12 months ending April 30.”

“So how do we fix the foreclosure problem? We don’t. Time does. We help the people we can and punish anyone who preyed on those incapable of making sound financial decisions. And the rest, sadly, will lose homes they probably couldn’t afford in the first place.”

“It’s called common sense, and if you abdicate it, guys like my Dad show up at your house at 2 a.m. Who, exactly, is surprised when this is how it ends?”

The Press Enterprise reports from California. “A Murrieta-based real estate investment company and a broker that sparked a rash of lawsuits and a criminal investigation have agreed to forefeit their real estate licenses, according to a document filed with the California Department of Real Estate. Stonewood Consulting took as commissions the difference between the contract sales price that was reported to the lenders and the price paid to the sellers, according to the complaint.”

“The department said an audit of 10 properties…showed that Stonewood Consulting collected commissions ranging from $75,000 to $115,000 per house, for a total of $969,158.”

“In civil and federal lawsuits, Stonewood Consulting investors claim they were induced to buy multiple houses with inflated mortgages with the aim of raising funds they thought would be invested for them with a guarantee of big returns.”

“Anna Richter, a Rialto resident and Stonewood Consulting investor, said, ‘I am happy their license will be revoked. However, I am extremely disappointed in the bureaucratic slowness of justice. Someone should be arrested by now.’”

The Bakersfield Californian. “The former Crisp & Cole Real Estate firm is being investigated by state regulators, two former employees say. Both staffers say they have given investigators files related to their work at the Bakersfield company.”

“Jayson Costa, a former employee of Crisp’s defunct lending arm, Tower Lending, also said last week he gave files to an investigator in the last month.”

“‘I think they were looking at transactions that were flips, transactions that were done and then sold right afterwards,’ Costa said. The deals were all legitimate, he added.”

The Fresno Bee. “After a month of freewheeling and fractious negotiations, Donald Trump said Wednesday that he would buy the bankrupt Running Horse golf course and residential community in Fresno for $40 million.”

“For the hundreds of investors now owed money by Running Horse and the civic leaders who backed Trump’s bid, Wednesday’s announcement was an encouraging sign of life for the stalled project, where promises of a Jack Nicklaus-designed golf course and 780 high-priced homes had collapsed.”

“Bankruptcy documents show the property is valued at $20 million to $40 million but burdened with up to $70 million in debt, making it unlikely that many of about 300 creditors will be paid back.”

“Kent Northcross, the head of a seven-member unsecured creditors committee, said he was worried the deal wouldn’t make whole many creditors who have lost money they gave to the project’s original developer.”

“‘The thing that is rather discouraging is, nobody is talking about the poor people who sacrificed their life savings, everything they had’ to invest in Running Horse, he said.”

From ABC 30. “The Atwater Fire Department typically gets triple its average number of calls on the Fourth of July, and this year officials have a new concern. Abandoned houses pose a serious fire danger with dry grass and dead shrubs.”

“Fire Chief Ed Banks and Mayor Joan Faul are especially concerned this year because of the number of abandoned homes with dead, dry lawns. Like many Valley cities, foreclosures in Atwater are on the rise. The people who moved out left bone dry lawns behind, creating a major fire hazard.”

“Mayor Faul made another suggestion at a city council meeting this week. She recommended neighbors mow or water the abandoned lawns and keep hoses ready just in case.”

The Santa Monica Mirror. “It happens every year about the same time: For sale signs pop up all around California like toadstools after a heavy rain.”

“The intense boom of the 1995-2005 decade has plainly petered out. Anyone who buys a California home and expects to make a 20 percent profit in less than one year, the same kind of expectation fostered by the dot-com stock balloon of the late 1990s, is in for a serious disappointment.”

“Yes, there have been small declines in some relatively overbuilt parts of this state. It’s also a familiar part of the California real estate cycle. Booms in California generally last eight to 10 years, followed by leveling-off periods of about four or five years.”

“The bottom line: California is not in a real estate crisis and doesn’t figure to be in one very soon.”

“Realtors in the 1970s and ’80s often told their clients that ‘No one ever lost money on California real estate.’ After the bust of the ’90s, this statement is not longer completely correct. But it’s a truism that’s still at least close to being true.”

The Sacramento Bee. “The dust is just settling from that huge home foreclosure auction last Saturday at Cal Expo, and here comes a bigger one. Dallas auction giant Hudson & Marshall will sell 175 bank-repossessed houses July 22 at Sacramento’s Radisson Hotel. Only six days ago Real Estate Disposition Corp. of Irvine auctioned 107 houses from eight area counties.”

“The Dallas auctioneer will unload 410 bank-owned homes on a five-day July swing that includes Concord, Modesto, Fresno and Monterey County’s Seaside. Many belonged to owners who bought at the height of the housing boom with little money down and fell behind on payments as housing values fell.”

The Union Tribune. “San Diego’s index of leading economic indicators dropped sharply in May, mostly because of a weak job growth and sluggish residential building.”

“Four of the six categories that make up the index, a snapshot of the local economy, fell significantly last month, said Alan Gin, an economist with the University of San Diego who compiles the data.”

“‘The slump in housing has begun to affect other parts of the economy,’ Gin said. ‘You’ve got big problems in the labor market.’”

“In May, real estate job losses accelerated, and the labor market weakness has begun to spread to other sectors, including professional and technical services, as well as leisure and hospitality. USD’s economic index has now fallen in 13 of the last 14 months.”

The North County Times. “There is now a slim but real chance of the local economy going into recession, Gin said in the interview, describing his more gloomy outlook as a recent development.”

“Gin pointed to the most recent state unemployment report, which found a year-over-year loss of 6,900 jobs in construction in San Diego County.”

“A number of factors have sent the housing market into reverse. Local residential real estate prices roughly doubled in the first half of the decade. But in the last year or so that trend has ground to a halt.”

“The number of existing homes for sale has risen, sating the once apparently insatiable demand. In turn, that has caused new home construction to fall. And turmoil in the subprime market has caused companies such as Accredited Home Lenders of Carmel Mountain Ranch to lay off employees.”

“The index is a composite of six indicators. Two rose in May. Four fell. ‘The four negative components in the month overwhelmed the two positive ones to produce the largest monthly drop in the Index since August of last year,’ Gin wrote.”

The San Bernadino County Sun. “Estimates listed Fontana as the 21st fastest-growing city in 2006 among cities with populations over 100,000.”

“‘That was before the housing downturn and we were seeing lots of home sales going forward,’ said Mayor Mark Nuaimi.”

“Other California cities joining Fontana on that top 25 list include Lancaster, Bakersfield, Visalia, Irvine, Elk Grove and Palmdale.”

“They’re in our way, big time, on the roads and in our neighborhoods. They’ve driven up our real estate prices, too. Frankly, they’re a bit too fond of suburban McMansions that look like they’re on steroids. And what’s with their attitudes?”

“Yep, that’s the prevailing stereotype of Bay Area transplants to the Sacramento area, including the 150,000 who arrived in the first half of the decade. But what do they think about us?”

“Larry Kinser moved to Citrus Heights in 1988 from Stockton…and thinks people from elsewhere in general are gradually changing Sacramento for the better.”

“‘Sacramento isn’t a cow town anymore,’ he says. ‘I know that. But it’s a slow, slow process. I credit the transplants who’ve driven Sacramento’s ultra-cheap mentality down.’”

“Oh, snap. That’s right. He thinks we’re cheap.”

“The reason for the clogged highways, if you ask lots of Bay Area transplants, is our own darned fault: The housing market lured the transplants here, but now they can’t find work. So they commute.”

“‘Developers have built a lot of homes here,’ says Colin Cooper who works in radio and moved to Roseville from San Carlos in 2002, ‘but you need to have the industry to go along with that.’”

“‘People buy homes here and commute to the Bay Area. My brother commuted to Cupertino. I know people who commute to San Mateo, because that’s where the jobs are. The job market isn’t here for them,’ Cooper said.”

Some housing bubble news from Wall Street and Washington. Bloomberg, “U.S. banking regulators told mortgage lenders to tighten standards for subprime home loans in a belated effort to end abuses that led to a surge in defaults and the highest foreclosure rate in five years. Lenders, in most cases, should verify income levels instead of relying on borrowers’ statements, the Federal Reserve and other banking regulators said in guidelines issued today.”

“They also said banks should account for potential interest-rate increases in scrutinizing whether homebuyers can pay off loans.”

“‘This guidance on adjustable-rate mortgages underscores that the Federal Reserve and other banking regulators expect lenders to make sure subprime borrowers not only can afford their monthly payments while the introductory rate is in effect, but also after the interest rate resets,’ Fed Governor Randall Kroszner said in an e-mailed statement. ‘It is the right thing to do for the borrowers’ sake.’”

“Fraud increased and lending standards fell as Americans borrowed $2.8 trillion for home loans from 2004 to 2006, the largest mortgage boom of any three-year period on record.”

“Banking regulators issued their guidelines even as the market for subprime mortgages is contracting. Subprime loans fell 10.3 percent to $722 billion in 2006 from a record $805 billion in 2005, according to JPMorgan Chase & Co. Credit Suisse Group predicts loans will fall as much as 60 percent this year.”

From Reuters. “Subprime borrowers should not be penalized for refinancing out of a mortgage before the interest rate resets to a higher level, according to a statement of principles issued by the regulators. The guidelines also call for lenders to warn borrowers when a reset is coming and grant them at least 60 days to refinance.”

From MarketWatch. “The new rules do not include a ’suitability standard.’ That is, borrowers will continue to be responsible for making sure that they choose appropriate loans for their needs and circumstances.”

“The regulators noted that they will take action against institutions that exhibit predatory lending practices, violate consumer protection laws or fair lending laws, engage in unfair or deceptive acts or practices, or otherwise engage in unsafe or unsound lending practices.”

“The Fed has been criticized by consumer advocacy groups and some lawmakers for not taking action sooner.”

“American Home Mortgage Investment Corp. forecast a second-quarter loss late Thursday because of rising delinquencies on some of its mortgages.”

“The company, which offers fixed-rate and adjustable-rate mortgages and so-called Alt-A loans, also withdrew its full-year guidance and said it obtained an investment from $9 billion hedge fund firm Marathon Asset Management LLC.”

“Charges related to delinquencies on mortgage loans will be ’substantial’ during the second quarter, American Home explained.”

“American Home shares have been hit hard by a jump in mortgage delinquencies, falling 40% so far this year. The company…has specialized in adjustable-rate mortgages and Alt-A loans, which often require less or no documentation of a home buyer’s income. See story on first-quarter results.”

“American Home said late Thursday that credit problems have mainly been caused by its strategy of offering three-month ‘timely payment’ warranties to investors who bought stated-income loans with high loan-to-value ratios from the company.”

“As more borrowers fell behind on payments quickly, American Home has had to buy back those loans from investors.”

The Journal Sentinel. “Allco Credit Union posted a loss of more than $5.2 million in the first quarter of this year and is facing a wave of delinquent loans, a report by regulators shows.”

“Many of the soured loans are related to mortgage loans. Allco board Chairman Eric Hofhine said in a written statement that ‘Allco has not been immune from the effects of subprime lending.’”

“Allco, which has about 6,600 members and assets of $75 million, was listed in the quarterly report by the National Credit Union Administration, or NCUA, as ’significantly undercapitalized.’”

From Business Week. “It’s white-knuckle time on Wall Street as firms try to prevent the subprime mess from spreading. The hedge fund blowup has suddenly thrown the world’s biggest financial institutions into a game of brinkmanship.”

“A shotgun sale of poorly performing securities would provide Wall Street with a true price for valuing the slumping assets. ‘Nobody wants to officially acknowledge the worthless nature of these products,’ says Peter Schiff, president of Euro Pacific Capital.”

“If Bear’s holdings were auctioned off at, say, 60 cents on the dollar and other firms marked down their so-called collateralized debt obligations (CDOs): complex bonds often backed by subprime loans accordingly, losses would spread. Firms would start dumping their CDOs to get what they could for them. Thus would begin a quick, brutal crash.”

“There’s another force bearing down on CDO holders: credit rating agencies such as Moody’s Investors Service and Standard & Poor’s. If the ratings agencies were to downgrade the CDOs, it would force holders to mark down their values accordingly, potentially igniting the same sort of disaster scenario.”

“Standard & Poor’s, Moody’s Investors Service and Fitch Ratings are masking burgeoning losses in the market for subprime mortgage bonds by failing to cut the credit ratings on about $200 billion of securities backed by home loans.”

“Almost 65 percent of the bonds in indexes that track subprime mortgage debt don’t meet the ratings criteria in place when they were sold, according to data compiled by Bloomberg.”

“Downgrades of CDOs ‘could finally force the hand of ratings-sensitive holders,’ Morgan Stanley analysts led by Vishwanath Tirupattur in New York wrote in a reported dated June 28. ‘Our worry is that this selling would be very unbalanced, with no established taker of risk on the other side, even at current market levels.’”

“More than 15 percent of the mortgages in the securities are at least 60 days delinquent and another 8 percent are in foreclosure, according to the bond trustee.”

“Ratings downgrades in CDOs containing asset-backed securities ‘are inevitable and material,’ the Morgan Stanley analysts said in the report. ‘The shoe is still waiting to drop.’”

“A total of 11 percent of the loan collateral for all subprime mortgage bonds had payments at least 90 days late, were in foreclosure or had the underlying property seized, according to a June 1 report by Friedman, Billings, Ramsey Group Inca. In May 2005, that amount was 5.4 percent.”

“CDOs aren’t required to disclose the contents of their holdings to the U.S. Securities and Exchange Commission and most can change them after the bonds are sold.”

“‘A lot of these should be downgraded sooner rather than later,’ said Jeff Given at John Hancock Advisors, who oversees $3.5 billion of mortgage bonds. The ratings companies may be embarrassed to downgrade the bonds, he said. ‘It’s easier to say two years from now that you were wrong on a rating than it is to say you were wrong five months after you rated it.’”

“‘We remain nervous about the end of the week, when many leveraged investors in the CDO markets will have to mark down their positions,’ debt strategists at Barclays Capital in New York said in a June 28 report. ‘The worry is that this will be large enough to trigger margin calls which, in turn, will cause other liquidations and so on.’”

“Some investors say the ratings companies are waiting too long before downgrading the mortgage bonds and the CDOs that contain them. They noted that S&P and Moody’s maintained their investment-grade ranking on Enron Corp. until days before the Houston-based energy trader filed for bankruptcy.”

The Financial Times. “Dealers and investors who trade US subprime mortgage derivatives have rejected a proposed change to the terms of derivatives contracts from a hedge fund group concerned about possible manipulation of their value by investment banks.”

“Tess Weil, partner at law firm Purrington Moody, said: ‘The fear of a lot of participants is that [Paulson’s] approach goes well beyond securities laws protections and would have the effect of chilling the market just when it needs transparency and efficiency.’”

“Michael Waldorf, a senior VP at Paulson, told the Financial Times that manipulation of mortgage derivatives could occur when banks purchase bad loans out of mortgage-backed bonds.”

“‘Mortgage-backed securities are supposed to be passive vehicles, so injecting cash into them in this way is nothing less than fixing the outcome,’ said Mr Waldorf.”

From Realtor Magazine. “Consumers are hearing a lot in the media about the correction in housing, and they’re understandably concerned about whether now is a good time to get into the housing market. To a great extent, we can thank steady media coverage of the real estate market ‘correction’ for unfounded consumer concerns.”

“But there’s no real correction where consumers are concerned. The media aren’t making the distinction between what’s happening to you, fewer home sales, fewer homes coming online, and what’s happening to consumers, more buying opportunities. But you can make that distinction for your customers.”

Newsday reports from New York. “Sales at Pulte Homes’ nine developments on Long Island are brisk, but the national builder’s local office has shifted its focus from land acquisition and approvals to reaping the proceeds of the projects that are ready to build, consultant Don Eversoll said yesterday.”

“Pulte is not alone. Across the Island, residential developers said, land prices are artificially high. and most are waiting for them to drop. ‘Land prices have been way above what the market should be for the last two years at least,’ said long-time developer Ronald Parr. ‘Up until this point, builders could get away with anything and everything. Now, things are much tighter.’”

“But Parr is convinced it will take ‘another year, maybe more’ for landowners to adjust their expectations. ‘This is not the time for a developer to be out there buying,’ Parr said.”

“The rental market is so ‘vastly undersupplied,’ said AvalonBay VP Matthew Whalen, that inflated land prices have merely led to ‘less bidding wars for sites and some of the competition [for sites] slowing down,’ he said.”

“Parr said more than half of Long Island’s residential developers might have trouble remaining profitable as the market continues to adjust.”

“John Giamarino no longer believes in incentives, at least not when it comes to selling his West Gilgo Beach summer house. His offer to make a year’s worth of mortgage payments for the buyer fell on deaf ears last year, even after he was featured in a Newsday story on incentives being offered in the slowing housing market.”

“After taking the four-bedroom property off the market in November, he put it up for sale again last month with a lower price tag, from $645,000 to $599,000, but no incentive.”

“‘If anything’s going to motivate, it’s going to be price,’ said Giamarino of Seaford.”

“The businessman said he got lots of attention about his house, mostly from locals commiserating with him because they can’t sell their homes either.”

The Boston Globe from Massachusetts. “Housing prices north of Boston continue to head south. The slide started a year ago, when Bay State house sales and prices cooled after peaking in 2005. The spring market didn’t produce a thaw this year, with house sales and prices rapidly declining across Essex County for the first five months of this year, according to the Warren Group.”

“‘The numbers don’t lie,’ said Terry Egan, editor in chief of the Warren Group’s real estate publications. ‘The Massachusetts real estate market as a whole is slumping.’”

“A glut of houses for sale, longer selling times, and rising interest rates have combined to put downward pressure on the market. In the January-May period, the median price plunged 32 percent compared with the same period last year in West Newbury, to $448,500, and fell 25.5 percent in Essex, to $384,275, the Warren Group reported.”

“The old shipbuilder’s house hit the market in November with a $719,000 price tag. Todd and Kristen Walker could not even think of bidding, even when the price dropped to $679,000.”

“But in a soft housing market, they had buyer’s clout. After negotiating with the sellers, the Walkers bought the house for $630,000 in March.”

“‘I think we got a deal,’ said Kristen,. ‘We wanted to be in a top school district. We figure it is worth it for us to be house-poor.’”

“‘It’s a challenging time,’ said Kim Sandler, president of the North Shore Association of Realtors. ‘We’ve had a lot inventory, and some of that old inventory is moving…but a lot of that is due to price reductions.’”

“‘The prices couldn’t continue as they had,’ said Pam Cote, an agent in Beverly. ‘They were going up, up, up for so long, things had to start to come down. We’re seeing that now.’”

The Republican from Massachusetts. “The decline in single-family home sales in the Pioneer Valley last month was sharper than the drop in sales statewide.”

“Two groups both showed sales dropping more steeply in Franklin and Hampshire counties than statewide. Terence F. Egan, for The Warren Group, said the steeper decline in the region ‘almost leads me to wonder whether the market correction, the downturn, is just a step behind in Western Massachusetts.’”

“He said, ‘We saw these kinds of numbers for a lot of the eastern Massachusetts regions throughout 2006.’”

“In Franklin County, sales dropped 20.3 percent to 51 homes sold in the month; in Hampshire County, sales dropped 12.8 percent to 116 homes sold, and in Berkshire County, home sales dropped 20.5 percent in May, to 124 homes sold.”

“‘It would almost seem that the correction has radiated outward from the hub, and Western Massachusetts wasn’t immune from the downturn,’ Egan said. ‘It just hit home a little bit later.’”

“If you’re about to do that last-minute scramble to find a house to rent this summer on Cape Cod, there’s no rush.”

“With home sales in decline, owners of Cape Cod vacation properties are more anxious than ever to rent them for income to cover big mortgage payments or home equity loans. There is so much availability that rental agents and homeowners are jockeying to attract latecomers looking for rentals in July and even into August, the most popular month for vacationers.”

“‘There are too many homes on the rental market,’ said Mary Fritz, a rental agent in Orleans. ‘You can get a deal. People are negotiating.’”

“Even now a three-bedroom in Eastham, minutes from Nauset Light Beach, is unrented for five weeks in July and August, at $1,400 a week, the same price as last year.”

“Property owners are wrestling with several phenomena these days. Investors who snatched up vacation homes at record prices during the recent housing boom are now finding their properties are worth less, making it impossible to sell for a profit. That’s left many owners desperate to rent to meet the mortgage.”

The Philadelphia Inquirer from Pennsylvania. “In the past, both the Philadelphia and South Jersey areas have seen strong housing appreciation, house prices climbed 70 to 80 percent over the last five years.”

“This has been a boon to subprime homeowners who fell behind on their loans because they were able to tap into this increased home equity to refinance their loans or sell their homes at a profit. But double-digit house price growth is a thing of the past, and foreclosures in these markets are climbing.”

“We expect almost 17 percent of Philadelphia area borrowers with recent subprime loans to lose their homes through foreclosure. We expect similar results in the Camden area (which includes Burlington, Camden and Gloucester Counties), where yearly housing appreciation has dropped from 16 percent to 6 percent.”

The Record from New Jersey. “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.”

“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.’”

The Times from New Jersey. “Perhaps no one illustrates the meteoric rise and stunning fall of the real estate market better than Zuhdi Karagjozi.”

“In just a few short years, Karagjozi built his company, Kara Homes, up to be one of the state’s largest home builders. At the height of the housing boom, Karagjozi predicted Kara Homes would hit $1billion in revenue by 2006.”

“Instead, 2006 marked the year the housing market fell into decline, taking Kara’s fortunes along with it. The company, which filed for Chapter 11 bankruptcy protection last fall and left dozens of homeowners in limbo, now plans to emerge without its founder, and without the Kara name.”

“And unsecured creditors, including contractors, vendors and some homeowners, will be reimbursed pennies for every dollar owed.”

“The proposal needs the approval of creditors and the bankruptcy court judge. But Kara lawyer David Bruck said if all goes well, the plan could be confirmed by August, meaning Kara would emerge from Chapter 11 within a year of its filing.”

“Bruck said the plan reflected the harsh realities of the housing market, which has been in a steep downturn for more than a year. Even larger, more diversified public home builders have not been immune. PRed Bank- based Hovnanian Enterprises, the sixth-largest U.S. home builder, said earlier this week it did not expect a recovery even next year.”

“‘The reality is, the market fell away,’ Bruck said. ‘This is the best we can do.’”

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