July 31, 2007

Paying The Price For A Housing Bubble In California

Reuters reports on California. “‘The golden dream by the sea’ is how Gov. Arnold Schwarzenegger has fancifully described California. Yet for thousands who bought homes during the Golden State’s latest housing boom, foreclosures have turned recent months into a nightmare. Dorothy Hicks, a retired federal employee in Oakland, California, is seeing her American dream of owning a home teetering on the edge of collapse.”

“After refinancing into an adjustable-rate mortgage last year, she faces possible foreclosure on her home of nearly 40 years.”

“Hicks says she was told the mortgage was a fixed-rate loan, but was soon overwhelmed by soaring payments when its interest rates rose. ‘By the time you pay (utility) PG&E, the telephone and the mortgage, you don’t have any money,’ she said.”

“‘We have a lot more of these shady mortgages out here, so that doesn’t bode well,’ said Christopher Thornberg of Beacon Economics in Los Angeles. ‘We’re due for a very traditional consumer-led downturn.’”

“‘Business is picking up and I think it’s going to continue,’ said Patrick McGilvray, president of a Sacramento firm that matches distressed homeowners with investors and home buyers.”

“‘In the early 1990s we were losing a major industry and losing it for good. Now we’re paying the price for a housing bubble, but housing will come back,’ said Howard Roth, chief economist for the state Department of Finance. ‘We really haven’t lost jobs yet. That may happen. But in the early 1990s we lost over 500,000 jobs.’”

From NBC San Diego. “Local homebuyers looking for bargains will have dozens of prospects to choose from at a major foreclosure auction next month.

“More than 125 single-family homes and condominium units are being listed for sale by the Real Estate Disposition Corporation August 18 at the San Diego Convention Center.”

“The property with the highest ‘previous value,’ $670,000 - is a four-bedroom, two-and-a half bathroom house on Vista San Guadalupe in Otay Mesa’s Vista Pacific neighborhood. It was owned by a couple who, according to neighbors, also bought, rented out, and defaulted on two other houses in the area.”

“The starting bid price: $289,000. But real estate observers point out that the sellers have a higher, undisclosed ‘reserve price,’ or minimum - below which bids will not be accepted.”

“The auction-list property with the second highest previous value, $619,000, is a three-bedroom, two-and-a-half bathroom house on Fieldbrook Street near Chula Vista’s Heritage Park. Starting bid price: $309,000.”

“Next-door neighbor Andy MacNeill tells NBC 7/39 that the couple who defaulted on the house ‘got in about two years ago and actually did a lot of upgrades and stuff. But I think they got into the wrong type of mortgage and couldn’t handle it. It kept goin’ up every other month.’”

The San Diego Union Tribune. “For some home sellers, putting up a for-sale sign is getting to be a costly exercise. In its latest price report, DataQuick Information Systems found nearly 17 percent of homes sold in the county last month closed escrow at a price less than the previous sale.”

“That’s way up from 2.7 percent a year ago. The median difference in price was $61,000.”

The LA Times. “Possible household foreclosures in Riverside County are up 281% in the second quarter compared with the same period last year, according the real estate tracking firm RealtyTrac.”

“The firm reported 12,759 filings of mortgage default notices, auction sale notices and bank repossessions during the quarter. Los Angeles County led the state with 24,054 foreclosure-related filings, the firm said.”

The Daily Bulletin. “Foreclosures are continuing to climb locally, and it’s a trend that should continue for at least the rest of the year.”

“The two Inland Empire counties were among the hardest hit in California during the first half of 2007, with Riverside up 207 percent from the same period in 2006 and San Bernardino up 186 percent, according to RealtyTrac.”

“‘We haven’t seen the end of this,’ said Redlands-based regional economist John Husing. ‘The situation will get worse before it gets better. We are moving into a period when more homes will be at risk.’”

“Statewide, the number of homes in foreclosure was up 170 percent from a year ago, as California is being hit much harder than the nation as a whole.”

“Every one of the six Southland counties was up at least 125 percent from a year ago.”

“Husing said to really understand the numbers, it’s important to know where are the at-risk properties. ‘I’m not at all surprised to see more foreclosures out here than in Los Angeles,’ he said. ‘If you look at home sales in 2004, 2005 and 2006, you’ll see that there were more homes sold in the Inland Empire than in L.A.’”

“Bill Velto, manager of Tarbell Realtors in Upland, said many of the people in foreclosure now clearly fell prey to unscrupulous lenders. ‘Some of them put people into loans (when) they knew there was no way that they could make the payments,’ he said.”

From KGET.com in Bakersfield. “As the housing market fizzles, the number of foreclosures is on the rise, and scams and real estate frauds that went unnoticed amid a flurry of mortgage applications are now coming to light.”

“Local attorney Kathryn Fox said her phone has been ringing with local people claiming they were the victims of real estate fraud. ‘I have a lot of people that are not in the financial position for this type of home, something really out of their price range,’ said Fox.”

“But what if the homebuyer is in on the scheme? Here’s a typical property flipping scenario: The flipper buys a property for a specific price, $300,000, for example, and then artificially inflates it’s value by obtaining a false appraisal.”

“Now the overvalue of the home is repurchased at the higher price by associates of the flipper. The flipper pockets a profit, and usually offers kickbacks to the appraiser and associate who helped buy the home. But the associate never pays the mortgage, and the home goes into foreclosure by the lender, who is left holding the bag.”

“‘When you qualify people on facts that are not true, or embellish the facts or leave out bad facts, or you assist them in buying and know they are not going to be able to service the debt, or service the loan, you’ve got a problem,’ said Fox.”

“‘You can do anything with the property as long as it keeps going up in value,’ said Attorney Cal Stead from Borton, Petrini & Conron. ‘It’s when the increase in value tapers off is when you start having these foreclosures.’”

The East Bay Business Times. “Home building permits in the Oakland metropolitan area were down more than 50 percent in June compared to the same period a year earlier, according to the California Building Industry Association.”

“Permits were down nearly 30 percent year-over-year last month in the Vallejo-Fairfield metro area.”

“Overall, California’s total housing starts fell more than 50 percent year-over-year: 9,536 permits in June compared with 19,637 in June 2006. The total last month dipped 14 percent from May, when 11,064 permits were pulled.”

The Fresno Bee. “For the first time in years, sales-tax revenues are dipping in many central San Joaquin Valley communities — raising the possibility that some cities might have to cut services.”

“Valley cities have based their spending plans on the assumption that those revenues would keep going up, as they have for years.”

“Local officials said they suspect the decline here is tied to the Valley’s worsening housing market. Consumers worried about decreasing home values or their ability to make home payments may spend less in stores, they fear.”

“Riverside and San Bernardino counties received less sales-tax revenue in the holiday 2006 season than they did in the same period the year before. Sales-tax revenue dropped in Sacramento County the past two quarters in which figures are available, compared with the year before.”

“Clovis had a 3% decline in sales-tax collections during the first three months of this year, the city’s first quarterly decline in at least four years, city figures show. ‘I’ve never seen two quarters in a row that were flat or down since I’ve been with the city,’ said Rob Woolley, a city employee for 20 years.”

“In a market where prices for new homes have skyrocketed over the past 10 years and forced some buyers out, there’s actually a positive side to high-priced housing.”

“That’s the conclusion the California Homebuilding Foundation recently came to in a study published this month on the fiscal impact new housing has on local governments.”

“With higher-priced new homes, more money is being made off of property taxes, one-time taxes, and home-building fees, said John Frith, VP of public affairs for the California Building Industry Association, which works with CHF.”

“A surge in housing prices over the past five years is fuel for CHF’s argument that new housing pays for itself and then some, Newman said. Besides more revenue from property taxes, one-time taxes and home-building fees, new housing attracts wealthy middle-income residents which in turn attracts commercial development that’s vital to the existence of several cities.”

“However, new housing’s positive economic impact on local governments only came about in the past three years, according to Redlands-based economist John Husing.”

“Husing said Inland Empire cities have consistently argued over the years that new housing doesn’t pay for itself, and they’ve been correct in doing so. New housing has only been paying for itself since 2004, Husing said, a time when prices were peaking or still climbing in some areas.”

“‘It really had a lot to do with assessed valuation,’ Husing said, noting that CHF’s report might not hold up if home prices continue declining. ‘Going forward, it probably will fall into a different dynamic.’”

The Record Searchlight. “Pulte Homes may have dropped its option to buy the Nine Mile Ranch property, some 3,100 acres near Cottonwood it had pegged for the ‘active-adult’ Del Webb community Sun City Tehama. But neither the mega-homebuilder nor the land owner is talking.”

“Former Del Webb spokeswoman Judy Bennett said Monday that she heard Pulte has walked away from the project. Bennett and former project manager Brendan Leonard were among 45 people let go in June.”

“Bennett said it was at a June 29 party with former Del Webb employees at her house that she was told Pulte wasn’t pursuing the land deal in Tehama County.”

“Leonard said he couldn’t speak for Pulte or Nine Mile Ranch. But he did say, ‘If they’re (Pulte) not out of the picture, they’re not spending money on it (Sun City Tehama).’”

“With foreclosure notices up in Shasta County, the opportunity for mortgage fraud has jumped. The FBI reported in May that California is a hot spot for lending predators.” “In Shasta County, the number of homes in some stage of foreclosure in the first half of 2007 is up 118 percent from a year ago.”

“‘I have talked to several different agents who have come across clients who have fallen victim; it is getting prevalent,’ said Nicole Dutell, branch manager of The Prime Financial Group in Redding.”

“The distressed property owner gets a call from someone who wants to help. They offer to lend the homeowner money, but in doing so the homeowner will have to transfer title.”

“Dutell says, use common sense. Who’s going to lend $100,000 to a homeowner who can’t make a mortgage payment on a house with zero equity?”

“There are some areas in the north state where home sales are actually up in 2007, bucking a countywide trend that has seen a 10 percent dip in sales. Take, for example, Lake California…near Cottonwood where prices have dropped about 12 percent from a year.”

“Homes are selling for about $279,000, down from $320,000 a year ago, added Bob Neher, co-owner of Vintage Realty.”

“And the typical-sized home selling in Lake California is about 1,600 square feet, a floor plan dwarfed by some of the 2,000-plus-square-foot monsters being built in Redding. ‘It doesn’t seem that many people are looking for homes that big right now,’ Neher said.”

Rising Number Of Foreclosures Signals Return To Normalcy

A report from the Arizona Republic. “The fallout from the country’s real-estate slump continues to reverberate in Arizona and across the nation as more homeowners and lenders turn to foreclosure to solve their financial woes. New data released Monday show that foreclosure-related filings in Arizona jumped during the first half of 2007, compared with the same period a year ago.”

“Experts say it will likely take time before things get better. ‘By any calculation, things are going to look bad compared to 2004 and 2005,’ local economist Elliott Pollack said. ‘There will be a transition period over the next couple of years as those people who took loans that maybe they shouldn’t have taken have to deal with the issue.’”

“Numbers released b RealtyTrac show that foreclosure-related filings in Arizona increased by 128 percent in the first half of 2007, over the same period a year ago. In Maricopa County, for example, there were 19,394 properties in some stage of foreclosure in the first half of the year, up from 7,671 during the year-ago period, the company said.”

“Data from Glendale-based Information Market are different but reflect the same upward trend. That firm shows that 2,952 homes were foreclosed on in Maricopa County from January through June, up from 208 during the first half of 2006.”

“‘They are at an all-time high, but it’s also following a period of very high sales back in 2005,’ said Tom Ruff, a principal with Information Market. ‘I just look at it as a market correction, myself.’”

“While most experts agree the rising number of foreclosures signals a return to normalcy both locally and nationally, it still can have a very negative impact on neighborhoods.”

“‘If you go into a neighborhood and there’s a lot of foreclosed properties, they’re empty, you don’t know who’s going to buy them, they’re probably not being maintained at the moment,’ said Jay Butler, director of realty studies at Arizona State University.”

“Home building in metropolitan Phoenix continues to stumble, with permits dropping 23 percent from last year. But it’s not all bad news. We remain among the nation’s leading housing markets.”

“Valley housing analyst RL Brown said the traditionally strong Phoenix market retains potential even though builders have suffered some damage. ‘If you’re a home builder, you want to be where the action is,’ he said.”

The Review Journal from Nevada. “Apartment landlords are not able to raise rents in Las Vegas as much as they have in the past, partly because of increased competition from single-family homes, a multifamily broker said Monday.”

“Concessions such as one month of free rent and move-in discounts are going up and overall rents are staying flat, Spence Ballif of CB Richard Ellis said. He estimated 11,000 homes in Las Vegas that are not owner-occupied. Many of them are being offered for rent because they’re not selling.”

“‘What we’re experiencing is the amount of single-family homes being rented is giving us short-term supply,’ Ballif said.”

“Previous annual rent growth leaders such as Phoenix, Las Vegas and Riverside-San Bernardino, Calif., continued to slide, Chris Bates of RealFacts said. With a quarterly increase of 0.3 percent, Las Vegas will see an annual rent growth increase of 1.2 percent, dramatically lower than last year’s 5.4 percent annual growth rate, he noted.”

“‘I think it’s going to slow even more, particularly with decreasing occupancy,’ Bates said. ‘The other thing I’ve heard in pockets of California is all of these single-family homes are built and not sold, but they’re being rented.’”

“‘With Nevada having the highest foreclosure rate in the country for single-family homes and condos, we have seen the vacancy rate increase. This is surprising, but it seems the people being foreclosed on are moving into rental homes or upper-end apartments,’ said Carl Sims of Hendricks & Partners.”

“Also, with home prices on the decline, some renters are now starting to buy foreclosed homes, he added.”

No Signs Of A Slowdown Or Turnaround

Some housing bubble news from Wall Street and Washington. “IndyMac Bancorp Inc., a big Southern California mortgage specialist, said Tuesday second-quarter profit fell 57 percent as the deepening U.S. housing slump hurt margins and loan volume, and more customers fell behind on payments.”

“Lenders forced the company to buy back $219 million of loans because borrowers missed early payments, up from $48 million a year earlier. IndyMac specializes in ‘Alt-A,’ or ‘Alternative-A,’ mortgages, which fall between prime and subprime in quality.”

The Street.com. “IndyMac’s non-performing assets rose 342% to $516 million, while mortgage loan production fell 12% from first-quarter levels to $22.5 billion.”

“‘We anticipate that the second half of 2007 and 2008 will continue to be challenging for the mortgage and housing markets and for IndyMac,’ IndyMac CEO Michael Perry said. ‘We expect competitive pricing pressures on our [mortgage banking] margins to continue.’”

“‘In addition, we expect that the current, temporary volatility and reduced liquidity in the secondary markets will adversely impact secondary market execution, putting further pressure on MBR margins.’”

The Boston Globe. “Sowood Capital Management, a $3 billion Boston hedge fund launched just three years ago by former Harvard endowment manager Jeffrey Larson, sold most of its holdings in troubled debt markets yesterday after telling investors that it had losses of more than 50 percent this month.”

“Sowood told Bloomberg News last week that it did not hold any subprime mortgage debt in its portfolio. Nonetheless, it said its devalued bond holdings thrust it into a liquidity crisis and it was forced to sell securities to meet margin calls.”

“Last night an investor said Sowood had told clients it had lost 57 percent of its value and was being ‘completely liquidated.’”

“‘A loss of this magnitude in such a short period is as devastating to us as it is to you,’ Larson, said in a letter to investors. ‘We are very sorry this has happened.’”

From Bloomberg. “Shares of MGIC Investment Corp. and Radian Group Inc. tumbled the most since 2002 after the two home- loan insurers said their combined stakes of more than $1 billion in a subprime mortgage company may now be worthless.”

“MGIC and Radian said yesterday ‘unprecedented’ disruptions in mortgage markets this month may have destroyed their stakes, each valued at more than $500 million on June 30. The joint venture has received ‘an unprecedented amount of margin calls from our lenders,’ said today’s statement.”

“‘I’m surprised. It’s a very quick time frame to have that change in valuation,’ Mark Patterson, a managing director at Los Angeles-based NWQ Investment Management, said before C-Bass’s announcement. NWQ was one of the three biggest investors in both MGIC and Radian as of March 31. ‘There’s been incrementally bad mortgage news every day, but the magnitude of this is quite severe.’”

“Climbing monthly payments for borrowers with adjustable-rate mortgages ‘forced many homeowners to default without the ability to refinance their mortgages,’ Radian CEO S.A. Ibrahim said in a conference call July 25.”

From CNBC. “GMAC posted a 63% decline in second-quarter profit Monday, hurt by subprime mortgage losses at its home lending unit. Results included a $254 million loss at Residential Capital LLC, or ResCap, compared with a year-earlier $548 million profit, amid what GMAC called ’severe illiquidity’ in subprime mortgages, or home loans to people with weaker credit.”

“ResCap slashed second-quarter U.S. nonprime mortgage production to $700 million from $6 billion a year earlier. It also kept fewer riskier loans on its balance sheet. GMAC CEO Eric Feldstein nevertheless projected that ‘widespread weakness’ in housing and mortgages will persist this year.”

The Associated Press. “Trading in American Home Mortgage Investment Corp.’s stock remained halted Tuesday. If things grow more dire, Citigroup analyst Donald Fandetti said bankruptcy is possible. In some cases, a company in this situation would sell itself at a big discount to the value of its assets.”

From Smartmoney. “The warehouse debt dealers to whom AHM used to sell its loans, the likes of Deutsche Bank, Wells Fargo and Countrywide Financial, have fewer buyers for their ’structured’ products these days, and none at all interested in anything but the choicest cuts except at 50 cents on the dollar.”

“Such dealers had extended $4 billion in credit to AHM, and with the securities stuck on the originator’s books depreciating by the day, the warehouse crew demanded more collateral. Hence no dividends for AHM shareholders.”

“‘I think this could drag out into the fall,’ says Paul J. Miller of Friedman Billings Ramsey. ‘The issue is that the market is frozen. I don’t know when it’s going to get unfrozen. I think people will get comfortable with credit at some point, but we don’t know how bad it’s going to get. Liquidity crunches like these tend to work themselves out, but we’ve never seen one like this. What’s going to happen is that there will be better mortgages originated, because that’s the only stuff that’s trading.’”

The Daily Telegraph. “Sales of bonds that finance the $US1.2 trillion ($1.42 trillion) US subprime home loan market have ground to a halt, as delinquencies by borrowers continue to rise and credit rating agencies downgrade the securities.”

“‘Moody’s and Standard & Poor’s finally got it into gear, downgrading hundreds of subprime issues and threatening more to come,’ Bill Gross, manager of the world’s biggest bond mutual fund.”

“‘When these loans reset, IO periods are over, what makes you think things are going to go favourably?’ said Darcy Morrison, an analyst at Evergreen Investments. ‘So the (new issue) market is kind of frozen.’”

“‘Rating actions caught the attention of investors who thought that if you bought a ‘AAA’ rated bond that it would stay ‘AAA,’ said Morrison. ‘Who knew it could get dinged as bad as it was.’”

“The market for new subprime bonds ‘has practically ceased activity’ because of the ABX sell-off and wider spreads on the underlying bonds, said Christopher Flanagan, head of ABS research at JPMorgan Securities in New York.”

“Big lenders including Countrywide Financial Corp and Wells Fargo & Co have stopped offering some subprime ARMs that customers with low credit scores may rely on to save their homes. Some 40 per cent of borrowers may no longer be able to refinance before their ARMs reset to higher interest rates, Mr Flanagan wrote in a note.”

The San Francisco Chronicle. “New data seem to confirm fears that Countrywide Financial is not the only lender facing problems with prime home-equity loans. Industrywide, the percentage of prime home-equity loans at least 60 days delinquent has more than doubled to 1.14 percent in May from 0.51 percent in May 2006, according to new data from First American LoanPerformance.”

“Until last week, most analysts weren’t focusing on the home-equity market. Countrywide’s announcement was the first clear evidence that mortgage problems could spread to prime.”

“‘I don’t think (Countrywide’s announcement) should have been a surprise, but up until a month and a half ago, the majority of people were saying this was just a subprime problem,’ says Joshua Rosner, managing director of research firm Graham Fisher & Co.”

“Joseph Mason, an associate finance professor at Drexel University, expects to see more problems with mortgages that were disguised as prime.”

“‘Much of prime is not really prime. The Alt-A base (has) been found to be really subprime. And much of the subprime has turned out to be flat-out fraud,’ Mason says.”

“‘Borrowers over-borrowed, brokers over-lent, investment banks oversold performance and rating agencies overrated (mortgage-backed securities). What we thought was quality was not quality,’ he says.”

“The highest level of defaults in 10 years on subprime mortgages and a $US33 billion pile-up of unsold bonds and loans for funding acquisitions are driving investors away from debt of the New York-based securities firms.”

“‘The market is being driven by fear,’ said Mark Kiesel of California-based Pacific Investment Management, manager of the world’s biggest bond fund.”

“‘They’ve got a problem,’ said Daniel Fuss, vice-chairman of Loomis Sayles & Co. ‘It’s pretty bad. They’re going to have to go back to the private equity people’ to renegotiate their lending commitments, he said.”

“Scott MacDonald, director of research at Aladdin Capital Management, said: ‘Fundamental credit research does not mean anything at all in this environment. People are just trying to get out of the way.’”

The BBC News. “The UK housing market is slowing as interest rates begin to bite, the UK’s biggest homebuilder has said. Taylor Wimpey added that short-term conditions in the struggling US housing market ‘remained difficult to predict.’”

“In the US, the firm said that plunging land values in Florida and California had forced it to write down £60.9m from its books, on top of a £25m provision announced in May.”

“M/I Homes Inc. said Tuesday it flipped to a second-quarter loss, including tens of millions of dollars in write-offs, as delivery of new homes fell by nearly a quarter.”

“The homebuilder posted a loss of $42.6 million compared with the same period a year ago. Included in the second quarter figures are pretax charges of $72.1 million. These include $64.2 million in land-related impairment and abandonment charges.”

“The company, which focuses on the Midwest, Mid-Atlantic and Florida markets, said the ongoing housing slump and falling prices make it difficult to predict demand or margins.”

“Brookfield Homes Corporation today announced financial results for the second quarter ended June 30, 2007: Net income for the three months ended June 30, 2007 was $10 million, compared to $43 million in 2006. The decrease is primarily a result of fewer home and lot sales, and a decrease in the gross margin earned on housing to 18% from 27% for the same period in 2006.”

“Housing revenue for the three months ended June 30, 2007 totaled $155 million, compared to $193 million for the same period in 2006. The decrease in housing revenue is primarily due to fewer home closings during the quarter in the Southland/Los Angeles market.”

From MarketWatch. “Home prices in 15 of 20 major U.S. cities were lower in May compared with the previous May, Standard & Poor’s reported Tuesday. The Case-Shiller 20-city index fell 2.8% compared with a year earlier, S&P said. That’s the biggest decline in the seven-year history of the index.”

“In 10 major cities, prices were off 3.4% from the previous year, the largest decline since 1991.”

“‘At a national level, declines in annual home price returns are showing no signs of a slowdown or turnaround,’ said Robert J. Shiller, chief economist at MacroMarkets LLC., and the co-inventor of the price index.”

It’s A Boom Bust World

The Palm Beach Post reports from Florida. “The Briny Breezes sale is off. Ocean Land Developers sent certified documents this morning telling the corporate board the deal to buy the mobile home park for $510 million and convert it to a resort had fallen through, Ocean Land VP Logan Pierson said.”

“Real estate experts suggest Ocean Land’s demand for an extension was just a convenient way to make the deal go away because in today’s real estate market this deal no longer made as much sense.”

“‘Financing has become so incredibly difficult for just about any size developer. Huge developers are in a world of trouble, they are not even looking at new deals,’ said one expert, who didn’t want to be identified.”

“Joseph Good of ComNet Realty has worked with Ocean Land and saidhe believes the decision to walk away was market driven. ‘It’s terrifying; there seems to be an absence of buyers and to do a high-rise multi-unit project, any lender is going to require pre-sale sand right now– it’s hard to get presales,’ Good said. ‘It’s a boom bust world.’”

The Orlando Sentinel from Florida. “Condominium hotels may go down as one of the briefest fads ever to sweep the real-estate industry as the market slumps in Central Florida, only a year after it peaked. Potential buyers are disappearing and financing commitments are falling flat, leaving condo-hotel developers with an uncertain future.”

“Last week, the first such hotel to open in downtown Orlando filed for bankruptcy protection, a failure the developer blamed on a rapidly changing market.”

“‘Our sales were good in the beginning, but it got bad, bad, bad and then even worse,’ said Barry Greer, an owner of The Lexington at Orlando CityPlace. ‘The market was red-hot when we started this, but it folded up before we could close it out.’”

“‘There is essentially no condo-hotel market left this year,’ said Dante Alexander, CEO of the National Association of Condo Hotel Owners. ‘Eighty-five percent of the buyers were relying on second mortgages to buy their units, and that is gone. The mad money is gone from the market.’”

“Mark Lunt, a senior manager with Ernst & Young Hospitality Advisory Services, said condo-hotel units are real estate, and interest in them has fallen with the unraveling of the real-estate market. ‘Condominium hotels are an extremely risky asset class,’ Lunt said. ‘I think the market is falling apart in the condo-hotel sector in much the same way that it is falling apart in the condominium sector in general.’”

The Miami Herald. “In Florida, the number of foreclosures is up 77 percent compared to the same six months last year, RealtyTrac said. In South Florida, foreclosures have tripled in Miami-Dade County and Broward County in the first six months of the year, according to data from the counties.”

“Payment shock recently hit Rene Asor, who lives in Key West. Caught unaware, his monthly payment soared from $2,400 to $3,799. Asor fell behind, then caught up. But he doesn’t think he can hang on much longer.”

“He said his lender, Countrywide Home Loans, has offered little help but to refinance. ‘I’m going to go into foreclosure,’ Asor said. ‘Even to do a refinance it costs more money, the closing and all that.’”

Frtom WTVJ. “Homeowner Robert Dodds is not unlike many others in South Florida. ‘I wanted to get the house on the market at a good price and see if I can be out of here before anything would progress such as foreclosure,’ he said. ‘I need to sell the house.’”

“Ron Sheffield, president of Esslinger-Wooten-Maxwell Realtors, told NBC6, ‘If half your neighborhood is in foreclosure, half your condominium buildings in foreclosure, that will certainly impact your value.’”

“Zip code 33160, Aventura/North Miami Beach, ranked No. 19 in the nation and highest in South Florida. In that area, 480 properties went into foreclosure this year. ‘Not really what you’d expect when you look at the socio-economic picture in the North Miami Beach/Aventura area,’ said Sean Donahue of lender HomeBanc.”

“‘You can look at all the statistics and they are pointing to more and more foreclosures coming and that will drive down prices,’ said realtor Felix Tristani.”

“‘I think we are seeing significant deals in all zip codes now,’ said Sheffield.”

The Sun Sentinel. “Mounting mortgage defaults across South Florida threaten to hurt more than just those homeowners who lose their properties to lenders.”

“In the Tree Tops development in Wellington, one property near the entrance is in foreclosure and has been on the market for months. The vacant house has a rickety wooden fence, missing roof tiles and, until recently, a front yard full of weeds.”

“A buyer just walked away from a $190,000 contract on the home, where comparable homes go for as much has $240,000. As a result, neighbors trying to sell their wood-frame homes built in the early 1980s could have a hard time getting their asking prices, said Deanne Lee, a real estate agent who lives one street from the house in foreclosure.”

“‘It’s a scary thought,’ Lee said. ‘I see this as just the beginning.’”

“The number of Palm Beach County homeowners behind on their mortgage payments topped 1,000 in June, almost a fourfold increase from 259 a year ago.”

“In Floral Park, a foreclosed house went on the market down the street from Joe Rodriguez. It sold recently for just more than $263,000. As a result, Rodriguez is worried that he could have a hard time getting his $369,900 asking price, even though his four-bedroom corner property is bigger and includes a pool table as an incentive.”

“‘It’s a bad sign,’ Rodriguez said of foreclosures. ‘If the banks turn around and sell them for less, sure, it’s going to hurt [other sellers nearby.]‘”

“Because lenders don’t want to be in the real estate business, they’ll likely sell those properties quickly and at a loss that will reduce home values. ‘They’ll be bought by investors who will try to rent them out at a profit,’ said said Alan Hunter, a senior market analyst with Metrostudy.”

“Regardless, the downward pressure on prices actually will be good in the long run for overpriced markets, including South Florida, said Mark Vitner, senior economist for Wachovia Securities.”

“‘It’s going to help speed up the adjustment process,’ Vitner said. ‘More homes will get into the hands of more willing sellers, the banks or whomever. It’s a necessary thing.’”

From Florida Trend. “As Florida’s housing boom rolled along, Michael Wood read investment books and went to weekend real estate seminars to learn how to cash in. At the seminars, he was approached frequently by mortgage brokers offering loans to help him build a home and flip it.”

“Wood saw little risk. ‘It was strongly suggested that it was going to be 20% to 30% profit and that people were putting homes on the market and selling before construction was even complete,’ he said.”

“In early 2005, Wood signed up to build not one, but two homes, both in North Port. He had so much confidence in his friend that he let him handle everything from choosing the lots to the building plans. He took on more than $400,000 in debt and even started convincing his friends and family to sign up. ‘I’ve got seven or eight family members in this deal,’ Wood says.”

“But toward the end of 2005, Wood’s heavily mortgaged friends and family members began to harangue him with phone messages. They’d seen little or no construction activity on their lots, yet interest was piling up monthly on their loans.”

“In 2006, Construction Compliance finally broke ground on Wood’s first home. By August, it was nearly finished. But then ‘everything just stopped.’”

“Liens started pouring in on the house that was nearly complete, filed by subcontractors and suppliers who had never been paid. Then, Wood discovered that (the) firm had drawn $80,000 of his Coast Bank loan for work on his other home but had never started construction.”

“‘The bank allowed the builder to draw $80,000 without ever touching the lot,’ Wood says. ‘I am now out close to $90,000 for a lot that was never cleared — I don’t think anyone ever even walked on it.’”

The Independent Mail from South Carolina. “You’ve found the house you want but can’t seem to sell the one you have. It’s become an all-too-familiar problem for many people. As residential building and new home sales slow across the Upstate, housing is a buyer’s market, said Debbie Dorn, a Realtor in Anderson.”

“One of her clients, who wanted to move from Florida to Anderson, dropped the asking price on a home from $450,000 to $375,000 after 120 days on the market.”

“Ms. Dorn often hears similar stories, and local Realtors say the increasing number of people tied to their old houses is one of several reasons that a slowdown in the housing market nationally finally is reaching the Upstate.”

“‘There’s not too many people who can afford to buy a new house before their old house sells,’ said Tom Carr, a Realtor in Anderson.”

“The drop in sales could be…a sign that the baby boomers who have been driving the marketplace for lake homes, second homes and resort properties have reached the tipping point as buyers, said Dave Chamblee, owner of Anderson Area Properties.”

“At some point, baby boomers’ buying will slow. Then they’ll become sellers, Mr. Chamblee said.”

From WPDE in South Carolina. “The number of those who lose their homes to foreclosure is on the rise in South Carolina, up more than 50% since last year. The Homeownership Resource Center reports that there have been 224 active foreclosures in Horry County this year alone.”

“Realtors said the housing market went up in 2005 and has since adjusted, but not all investors are adjusting well.”

“Joni Burleson with Century 21 said, ‘A lot of investors come in buying at high peak, and now they’re selling for 10’s of thousands of dollars less, and they’re having a hard time making payments.’”

Bits Bucket And Craigslist Finds For July 31, 2007

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

July 30, 2007

No Area Is Immune In California

The Voice of San Diego reports from California. “About a year into his career as a Realtor, Denny Oh was itching to buy a home. With just a year under his belt in a commission-based business like real estate, Oh knew his income made it impossible to buy alone. So, two years ago, he and two college friends went in together on a three-bedroom, two-bath condo in Pacific Beach.”

“‘I mean, most of my clients are older and buying million-dollar homes and I’m renting a $500 room somewhere?’ he said. ‘It’s kind of like a car salesman who doesn’t own a car.’”

“His friends were dating each other, had been for several years. Oh moved into the second bedroom, and they rented out the third. They wrote up a contract and each has one-third ownership of the condo. But then, a few months ago, the couple broke up.”

“‘We don’t really know what we’re going to do,’ he said. ‘Obviously, it wasn’t planned and we’ll have to figure it out.’”

“And market conditions are far from the golden days from several years ago. The market could dip further, and the home-buying partners could lose some of their investment if they decide to sell.”

“Indeed, despite the breakup, Oh’s biggest regret about his situation is that they bought in 2005, at the peak of a sizzling housing boom.”

“‘I probably shouldn’t have bought; I should have waited and rented,’ he said. The condo ‘is probably worth exactly what we bought it for. We would not make any money at this point. Maybe in a couple of years.’”

“Oh said his living costs quadrupled when he bought his share of the condo unit, but it was worth it to live where he wanted to live and work toward some equity.”

“‘You just have to really make sure everyone’s on the same page,’ Oh said. ‘What if you lose your job? What if you get married? It sounds bizarre, but stuff happens.’”

The Orange County Register. “Real Estate Economics from Irvine has published its take on SoCal’s new-home market in the second quarter: Average net base price for new homes has fallen by 8.9% in a year.”

“Advertised concessions increased 121% in a year to $10,442. ‘It should be noted that, in many areas of Southern California, the level of undisclosed concessions may be more than double the disclosed amounts.’”

“The rate of total monthly sales has fallen dramatically by 84.9% since 2nd quarter 2006.”

“The overall level of inventory has increased by 15.6% during the past twelve months. Total months of inventory (which accounts for slower sales rates) is now 12.”

The San Francisco Chronicle. “To many people in the affluent Bay Area, losing a home to foreclosure sounds like a Depression-era relic or a Rust Belt phenomenon. But in recent months, the Bay Area has proven to be home to numerous victims of the subprime loan debacle.”

“Just like elsewhere in the country, people here with tarnished credit or limited funds bought houses that proved to be beyond their means.”

“Jeff Hahn bought the house, a nicely laid-out decade-old four-bedroom Colonial in a neighborhood of classic two-story homes, three years ago for $495,000. Later that year, he met Vanessa, they fell in love and started a family.”

“‘When I first bought the house, everything was too good to be true,’ Jeff recalled. ‘No money down, instantly gaining $10,000 in equity. Written in very small print was that the loan will adjust in two years. Everybody I talked to said it would only be a (minimal) increase.’”

“Instead his two loans, initially totaling $2,200 a month, hit $3,700 last September. Several loans fell through for various technicalities. By the time a new loan finally came through in March, not only had the subprime mess caused banks to tighten their lending standards, but the home’s value had dipped.”

“Jeff had borrowed against the home’s equity to pay off some bills…start his business (and) to cover closing costs for the new $570,000 loan. The 40-year fixed-rate loan, at an interest rate of 10.5 percent, carries monthly payments of $5,000.”

“Why did Hahn accept a loan with higher monthly payments? ‘I was using credit cards to subsidize the payments’ on the existing mortgage, he said. ‘I was about to miss a payment. My lender said, ‘Take the loan, because it will save your credit, that’s the first issue. Then you can sell the house.’”

“The Hahns have not made any payments on the loan since it was funded in March. ‘Honestly, I gave up once (monthly payments) hit $5,000,’ Jeff Hahn said.”

“The Hahns put their house on the market, only to discover that real estate prices were spiraling downward in their area. Their house, which had been appraised for $630,000 in January, was now worth less. They started out listing it at $575,000, and now have dropped the price to $555,000.”

“So far, the Hahns haven’t received any offers. ‘My neighbor is selling his house for $505,000,’ Hahn said. ‘My Realtor wants me to drop my price another 100 grand.’”

“Jeff Hahn said he is bitter about his experience with home ownership.”

“‘I’ve probably wasted $90,000 over the past three years and have nothing to show for it,’ he said. ‘I lost my house, have to relocate my family and ruined my credit. Now my family will probably never own a house again because we will be considered even more of a risk in the future.’”

The Contra Costa Times. “Thinking about refinancing a mortgage or getting a no-money-down loan to buy a home? Something that was relatively easy to do several months ago may be a lot harder in today’s stricter lending environment.”

“‘In many cases, down payment requirements are higher than they were before,’ said John Holmgren, president of the East Bay chapter of the California Association of Mortgage Brokers.”

“Those who are getting hit hardest by the tightening loan standards are those with low credit scores, subprime borrowers and people who are unable or unwilling to document their income, mortgage experts say.”

“‘If you have marginal (credit) and try to do a stated-income (loan), that’s where the loans have become much more constrained,’ Holmgren said.”

“Many lenders are requiring borrowers with less-than-perfect credit scores to put a 3 percent to 5 percent down payment, said Janet Parker, senior VP of national underwriting operations at Walnut Creek-based PMI Mortgage Insurance Co.”

“‘If they buy a new home, they may have to save a little more for a down payment, which is not a bad thing,’ she said. ‘That way, they have some equity in the home right away.’”

The Sacramento Bee. “The onslaught of foreclosures in Sacramento’s housing market has left a grim, telltale mark: hundreds of vacant and boarded homes throughout the city. No area of the city is immune, but city leaders say the hardest-hit areas seem to be Oak Park and North Sacramento.”

“Fueled by riskier adjustable-rate mortgages and falling property values, foreclosures have escalated at an astonishing pace in Sacramento: 73 in 2005, 667 in 2006 and 1,066 through the first five months of 2007, according to DataQuick.”

“‘Go down any street and it seems like you find them,’ said City Councilwoman Sandy Sheedy in a recent tour of the Del Paso Boulevard area.”

The Times Herald. “The real estate picture in Vallejo and the rest of Solano County may be slightly worse than statewide, but by no means is it in free fall, a local real estate expert said. The picture was worse on both counts in Vallejo, Benicia and Solano County generally, said Solano Association of Realtors president Jeff Dennis.”

“In the first five months of 2007, the number of transactions plunged more than 43 percent in Vallejo and about 20 percent in Benicia, Dennis said. The numbers for May 2006 over May 2007 were even worse, he added.”

“‘There were 202 transactions in Vallejo in May, 2006 and only 93 this May,’ Dennis said. ‘That’s down more than 60 percent.’”

“In Benicia there was a drop of about half that, from 41 transactions in 2006 to 27 this year, he added.”

“‘It’s the lower-end homes that aren’t selling because of the subprime borrowers being locked out of the market by the tightening standards,’ he said. ‘But a lot of the more expensive homes are selling, which drives up the average price of homes sold.’”

“People who are holding off buying a home, waiting for a dramatic bubble burst, don’t have to, Dennis said.”

“‘People are afraid to buy because they’re hearing that prices are going to drop, but if you look back over the past 50 years, that’s not going to happen,’ he said. ‘Real estate is still a good long-term investment and always will be.’”

“The Record.net. “Wells Fargo Bank has become the latest of the big name banks to join the ranks of born-again mortgage lenders, folks who’ve seen the light, embraced the truth and vowed to go forth and sin no more.”

“The sin, of course, is the wink and a nod lending that put people in homes who should have stayed in apartments or who put people in too much home for the income of the family.”

“DataQuick reported last week that San Joaquin County default notices more than tripled in the second quarter from the same period in 2006. Home values are falling, off 12 percent countywide in the last year to a median price of $390,000,and the inventory of homes for sale high is considerably higher than the pool of eager buyers.”

“Gotta unload your house quickly? Death in the family? Divorce? Transfer? Good luck. Been getting calls from your mortgage lender? Got fired? Your adjustable mortgage adjusted upward about 30 percent? You’ve got really bad luck.”

“What happens next is that we’ve just got to work through it. The excess inventory has to be absorbed. Mortgage lenders have to take on the sober banker image of an earlier time. And borrowers have got to stop believing that just because they want something, they deserve it. Oh, and they might actually read the fine print.”

“An interest-only loan, more than 40 percent of the new paper being written in this county at one point, really means you’re only renting the money, not buying the house. Take one of those loans today and it means you’re really stupid.”

The Mad Dash To Buy Houses Is Over

The Statesman reports from Oregon. “In a year’s time, the mad dash to buy houses is over. The Mid-Willamette Valley’s residential real estate market has cooled. The numbers show the area is not immune from the national housing slump. Sales have dropped 12 percent this year, according to June statistics from the Willamette Valley MLS. ‘The market has been so hot over the last few years, at some point it had to cool off,’ said Mike Erdman, executive VP of the Home Builders Association of Marion and Polk Counties.”

“‘A lot of people rushed into the market and bought, and that’s an extraordinary event,’ said Peter Rogers, the president of Coldwell Banker Mountain West Real Estate, of 2005 and 2006. Conditions today are similar to 2004, Rogers said, and it’s a return to a ‘good old-fashioned market.’”

“Booming sales had become almost routine for real estate agents and home builders. The area’s real estate industry hasn’t experienced a down year since 2000.”

“Real estate industry observers say it’s shifted from a seller’s to a buyer’s market. For June, about 6,325 houses were for sale in the Mid-Willamette Valley, or about 1,960 more than in June 2006.”

“‘The buyer has a big choice, and it’s taking a bit longer to get sales,’ said Gladys Blum, a real estate agent in Salem. ‘Last year, they could toss out a sign and it would sell.’”

“Dave Glocar, a Salem-area builder with three decades in the business, doesn’t think the market has hit bottom. His Dave Glocar Custom Homes began scaling-back its projects a couple years ago. ‘Most people thought I was a little premature, and maybe I was, but Oregon tends to go into things later and come out later,’ Glocar said.”

“The Portland metropolitan area is seeing a similar softening of the real estate market. Closed sales for June were down by more than 18 percent from a year ago, according to the RMLS.”

“Fewer speculators buying houses for investments, and lenders requiring more stringent standards for ’subprime’ borrowers, often are blamed for the real estate slump.”

The Oregonian. “The downturn in the housing market that roiled Wall Street this week is beginning to take a toll on the Oregon economy. The state’s construction business and its timber industry, still a major supplier of lumber for homes nationwide, are starting to suffer.”

“Across the state, construction of new subdivisions and condos has dropped sharply. Oregon, late to the national runup in housing prices, can plan on continued fallout from the national real estate bust.”

“‘At this point, the housing slump continues, and it seems there’s no end in sight,’ said Dae Baek, acting state economist.”

“The slowdown has builders idling their back hoes until demand increases. New housing construction in 2006 dropped 11 percent in Oregon from the previous year. Lumber production in mills across the West is down 16 percent this year for softwoods, which include 2-by-4s used in new homes. And in June, the state’s wood-products industry lost 2,900 jobs compared with a year earlier.”

“Weyerhaeuser’s first-quarter sales declined 14 percent from the same quarter the prior year and softwood lumber sales slumped 27 percent. In response, Weyerhaeuser has cut back operations at 70 percent of its operations in the Northwest and virtually all of its wood-products plants, which include mills in Lebanon, Warrenton and Dallas. Other mills are temporarily shutting down.”

“‘Our anticipation is housing will remain weak throughout the year,’ said Butch Bernhardt, director of information services for Western Wood Products Association, an industry group.”

“The number of brokers and bankers registered with Oregon’s Department of Consumer and Business Services peaked at more than 14,000 in 2005. That figure fell to about 11,000 by June, but most of those who left were out-of-state brokers who were registered to do business in Oregon.”

“Realtors report a recent shift to a buyers market. Billy Grippo, a real estate broker who specializes in Northeast Portland, said buyers now win more concessions from sellers. Homes tend to stay on the market longer, but Grippo says buyers still get close to their asking prices.”

“Baek, the state economist, says the housing market will fall further before it rises again. He expects housing to bottom out in late 2007 before making a rebound in mid-2008. ‘All things combined, it’s a terrible mess in housing,’ Baek said.”

“But he added: ‘We’re in a better position to get out of this housing slump than the nation as a whole.’”

The Seattle Times from Washington. “Shirley Rhodes prepared for the worst in April when she began her search for a three-bedroom home. But less than one month into her search Rhodes found a perfect match in Buckley, Pierce County, for $525,000 and she found half-a-dozen King County properties in her price range that fit her criteria.”

“In Southeast King County, stories like Rhodes’ are becoming more common. As in much of the county, slower home sales have given buyers like Rhodes an edge.”

“Pending sales…were down 24 percent in June compared with the same month last year, the Northwest MLS reported earlier this month. Active listings of single-family homes increased, too, from 960 last year to 1,005 this year.”

“Rhodes compared her experience to being a kid in a candy store. ‘You think, there’s got to be something better around the corner,’ she said.”

“Here’s where Rhodes experiences the downside of such a housing market: Five buyers have viewed the four-bedroom rambler she put on the market in April. She’s asking $449,000, for a 2,500-square-foot rambler on 5.5 acres in the Orting Valley in Pierce County.”

“Although she’s found several homes she’d like to buy, she needs to sell hers. ‘I’ve seen homes I’d like to take a leap on, but mine isn’t moving,’ Rhodes said.”

“If her property doesn’t sell before the holiday season, Rhodes said she’ll begin her search again next spring. ‘I’m in no great hurry,’ Rhodes said. ‘Being a buyer is really nice, but it’s the selling end that’s tough.’”

The Seattle PI from Washington. “When Seattle debated allowing taller downtown skyscrapers last year, some warned new costs that the city imposed for affordable housing could kill the building boom. So far, given the area’s strong real estate market, those dire predictions haven’t proved true.”

“Some planned high-rises may be scrapped if construction costs continue to soar and the market softens. But city officials and several downtown observers say the new requirements don’t appear to have undermined projects so far.”

“‘If it doesn’t make sense, people won’t build, and people are building downtown,’ said Ryan Bosa, president of Embassy Development Washington Inc., which is developing Insignia, which includes two 40-story condominium towers on Sixth Avenue.”

“‘If people are actually going for it, they see a market there. That’s what we’re banking on. Of course, in three years, I could be calling you from a cardboard box and singing a different tune,’ Bosa said.”

“‘We use market research as much as possible, but at some point one is making a prediction for where the market will be,’ said Adrienne Quinn, director of the Seattle Office of Housing. ‘In Seattle, we’ve been fortunate that the market is strong. Had the market turned the same way as it has in Miami or other parts of the country, it may have proved to be a disadvantage.’”

It’s Clear Now We’re In A Liquidity Crisis

Some housing bubble news from Wall Street and Washington. Bloomberg, “IKB Deutsche Industriebank AG replaced its CEO and said profit will be ’significantly’ lower than forecast, hit by the U.S. subprime mortgage rout that it said 10 days ago would not affect it. The bank said in a statement it had to scrap its 280 million-euro ($382 million) earnings forecast as ‘massive uncertainty’ in the markets threatens access to funding.”

“State-owned KfW Group, which holds a 38 percent stake in IKB, said it will cover the company against potential losses. ‘One can only gawp at what happened,’ said Konrad Becker, an analyst at Merck Finck in Munich. ‘I’m asking myself whether KfW will be keeping its stake in the longer term.’”

“The bond market experienced ‘violent fluctuations’ last week and IKB’s creditworthiness was being questioned because of its exposure to subprime, the company said today. The ABX-HE-BBB- 06-1 index, tied to mortgage-backed bonds with the lowest investment-grade ratings, fell 17 percent last week, increasing this year’s drop to more than 60 percent, according to (the) administrator of the indexes.”

“Default swaps on Dusseldorf-based IKB Deutsche Industriebank AG IKB bonds jumped, trading at six times the prices of a month ago.”

“Investors are fleeing corporate credit at the fastest pace in seven years, Barclays Capital said in a report. More than 40 companies have abandoned or reworked loan and bond sales as yield premiums on corporate bonds rose to the highest relative to U.S. Treasuries since 2003.”

“‘It’s pure fear,’ said Gary Jenkins, a partner at London- based hedge fund Synapse Investment Management, which manages $650 million of debt assets. ‘It’s fear of the unknown, fear of hedge funds unwinding, fear of knock-on effects of the subprime meltdown.’”

“Hedge funds and insurers have reported declines in their subprime investments after adjusting their value to reflect the falls, a process known as marking to market. ‘The winds and rain have not fully subsided,’ Lehman Brothers Holdings Inc. fixed-income analysts led by Jack Malvey said in a research note dated today. ‘The storm may not fully abate until the end-of-month marks on July 31 and a day or two of final damage reassessment.’”

“‘Subprimemania is spilling into the real economy,’ said Jochen Felsenheimer, head of credit derivatives strategy at UniCredit SpA in Munich. ‘IKB’s statement was an end for those who believed this is a derivatives linked problem only.’”

“Default swaps linked to D.R Horton Inc., the second-biggest U.S. homebuilder, are quadruple their level of June 1. D.R. Horton, which last week posted an $823.8 million net loss, jumped $22,000 to $410,000.”

“Credit swaps on Fannie Mae and Freddie Mac, the U.S. government-chartered companies that are the largest providers of money for U.S. home loans, have almost tripled this month, with both contracts trading at $29,000 today, according to CMA.”

From Reuters. “American Home Mortgage Investment Corp. shares sank on Monday after the home loan provider announced ‘major’ writedowns, delayed a dividend and said lenders were demanding it put up more cash.”

“The announcement late Friday evening reflects how liquidity and credit issues affecting subprime lenders are extending to companies that make home loans to borrowers considered to be good credit risks.”

“American Home specializes in prime and near-prime loans. It has, however, made many loans that allow borrowers to produce little documentation. The company recently commanded a roughly 2.5 percent share of the U.S. mortgage market.”

“‘Bankruptcy is not out of the question,’ said Matt Howlett, an analyst at Fox-Pitt Kelton Inc.. ‘It needs to find a partner with alternative funding and hope the market turns around. It’s going to be tough.’”

“He added, ‘It’s clear now we’re in a liquidity crisis. Any loans that aren’t pure prime are falling in value.’”

“‘The disruption in the credit markets in the past few weeks has been unprecedented in the company’s experience and has caused major writedowns of its loan and security portfolios and consequently has caused significant margin calls with respect to its credit facilities,’ the company said.”

The Street.com. “American Home Mortgage…delayed paying its quarterly dividends, citing margin calls and writedowns.”

“The Melville, N.Y., lender said it delayed the payments ‘in order to preserve liquidity until it obtains a better understanding of the impact that current market conditions in the mortgage industry and the broader credit market will have on the company’s balance sheet and overall liquidity.’”

“American Home is not the only Alt-A lender feeling pain. Alliance Bancorp, an Alt-A lender in Brisbane, Calif., shut its doors this month. According to a letter posted on its Web site on July 13, CEO Lisa Duehring said Alliance had ‘exhausted our resources’ and ‘do not have the means to move forward.’”

“The U.S. credit markets opened with an ‘extremely negative tone’ on Monday, with credit default swaps sharply wider amid fears that fallout from subprime mortgage losses is spreading, according to Barclays.”

“‘The subprime losses, which most investors had assumed would be absorbed by otherwise profitable banking operations, now appear to be spilling over into the markets at large,’ Barclays said in a report.”

The Baltimore Sun. “Black & Decker is having trouble selling lock sets for doors. Most lock sets are installed in new homes. And new homes aren’t selling.”

“‘The fact is, the housing market has everyone spooked,’ said Bob Goldsborough, VP of research at Ariel Capital Management, Black & Decker’s second-largest shareholder. ‘The results that you see in Black & Decker today are not all that surprising. You’re seeing this play out in any area that housing touches. Demand is really, really weak, and it’s going to be weak for a while.’”

“‘Black & Decker is not alone,’ said R. Bentley Offutt, a securities analyst. ‘Companies that are related to the homebuilding industry are all having a rough day of it.’”

The St Petersburg Times. “It’s no secret that the housing malaise is infecting other industries. But the variety of those affected keeps growing.”

“Car retailing giant AutoNation, parent of the AutoWay dealerships in the Tampa Bay area: ‘Results for the first three and six months of 2007 were adversely impacted by a decline in new vehicle sales especially in California and Florida, driven in part by continued weakness in the housing market. To the extent that we continue to see weakness in the housing market, we anticipate that our sales trends will be adversely impacted.’”

“Boat manufacturer Brunswick Corp.: ‘Higher interest rates, weak housing markets and higher prices for fuel, food and other essentials have continued to erode consumers’ disposable income. Further, the depressed housing situation is most pronounced in Florida and California, which are two of the nation’s largest boating markets,’ said CEO Dustan E. McCoy.”

“Media General, parent of the Tampa Tribune: ‘Our second-quarter results mostly reflected a decrease in publishing division operating profit, driven primarily by a significant decline at the Tampa Tribune.’ said CEO Marshall N. Morton. ‘Florida’s economy…has dramatically reversed, driven by an adjustment in the housing market following several record-breaking years.’”

“U.S. foreclosures rose 58 percent in the first half of 2007 from a year earlier, led by California and Florida, as more homeowners fell behind on their monthly mortgage payments, RealtyTrac Inc. said.”

“The company for the first time reported on what it calls ‘unique addresses,’ or properties that have had at least one foreclosure- related legal filing. In previous reports, RealtyTrac had only reported the number of legal filings, which could have resulted in properties being double and triple counted.”

The Star Telegram. “The national housing slump brought a crashing end to D.R. Horton’s 29-year streak of profits. CEO Donald Tomnitz said there is no relief in sight.”

“Tomnitz cited several reasons for Horton’s continued troubles: Larger incentives to buyers are cutting into profits. Higher prices and higher interest rates are reducing buyers’ ability to afford new homes. Tighter mortgage financing is affecting the buyer pool.”

“‘In some instances across the country, we’re trying to qualify the same buyer two and three times, based upon the changing conditions in the marketplace,’ Tomnitz said.”

From CNN Money. “A hedge fund manager whose fund ran into trouble from the sell-off in securities backed by subprime mortgages is having to put his huge yacht up for sale.”

“John Devaney, the CEO of United Capital Markets, a fund that specializes in buying and selling bonds that are backed by the mortgage payments, particularly adjustable rate subprime mortgages, has put his 142-foot yacht up for sale, according to a yacht broker’s Web site.”

“Devaney told Money magazine this spring that despite problems that the loans cause for borrowers, the assets backed by them provided a good return for his fund.”

“‘The consumer has to be an idiot to take on those loans,’ he said. ‘But it has been one of our best-performing investments.’”

The Achilles Heel Of The Housing Market Is Volume

A report from the Washington Post. “Shauntise Harris expected competition when she put her one-bedroom condominium on the market in April. But she didn’t know how intense that competition would get. Not only was she up against some of her neighbors at a 246-unit luxury building in the District’s Mount Vernon Triangle neighborhood, but she also was competing with the project’s developer, the JBG Cos.”

“Nineteen months after starting sales, JBG still had units to unload and was offering a year of no condo fees on one-bedroom units, an incentive Harris could not match. ‘I’m like, you guys are still here?’ she said.”

“There are 20,217 new condos on the market in the Washington metro area, by Delta’s count. Marketing on another 18,867 units is expected to begin in the next three years, said Gregory H. Leisch, CEO of Delta Associates, citing his firm’s midyear analysis of the condo market.”

“What’s hurting new projects the most are contract cancellations, when buyers back out of deals. ‘A lot of times these projects were sold out. But people would put down deposits and wouldn’t go through with the closing,’ said William Rich, VP of Delta.”

“For buyers, the competition can be a blessing. Thomas K. Meyer, president of real estate brokerage Condo 1 in Falls Church, said potential buyers should not be afraid to offer less than asking price, especially when they’re dealing with the developer.”

“‘It’s a much more competitive world for the builders now,’ he said, ‘and the farther away you get from Washington, the more competitive it is.’”

The Baltimore Sun from Maryland. “Real estate investors, leaping to buy Baltimore homes during the boom, helped fuel the frenzy and drive up prices in neighborhoods from Canton to Reservoir Hill. Now they’re part of the fallout.”

“Properties belonging to ‘nonowner occupiers,’ usually investors, accounted for nearly 30 percent of the city homes that lenders were trying to foreclose on during the first three months of the year, according to a Sun analysis.”

“In popular Canton, for instance, investor-owned real estate added up to more than half the 25 homes on the court foreclosure-filing rolls.”

“‘Some people just got left holding the bag,’ said T. Guy Cook… whose niche is lending to Baltimore real estate investors. ‘It was inevitable. You knew it was going to happen - it’s like musical chairs.’”

“The rising tide of foreclosures has swept up investors both novice and experienced, though it appears that the newcomers are far more numerous. They were ‘the most giddy of all,’ jumping in too late and paying too much, Cook said.”

“‘It’s been a nightmare,’ said Ndabezinhle Moyo, a Baltimore resident who began investing last year in several city neighborhoods. After a series of setbacks, he’s fighting to save four of his rentals - plus his own home - from foreclosure. ‘I was OK up until December. From December, I basically couldn’t make a single payment for anything till about April.’”

“Investors who descended on certain areas to buy, buy, buy during the housing boom helped drive prices up even further at the time, said Mark Fleming, chief economist with a firm that helps the mortgage-lending industry manage risk and fraud.”

“‘They artificially inflated values, in essence, because of their interest in bidding it up to get it away from the other investor,’ he said. ‘If you have concentrated investors in certain areas and then house prices start to move south or sideways, the ramification is their greater willingness to walk.’”

“A California mortgage fraud detection company, said just over 30 percent of the Baltimore loan applications it looked at in the first five months of the year had possible ‘property valuation’ problems, often inflated values. That compares with 8 percent nationwide.”

“‘A lot of people [who] got in, put a lot of money into fixing up houses and have loans, can’t sell them, they can’t rent them for enough to cover mortgages, and they’re stuck,’ said Alan Chantker, president of the Mid-Atlantic Real Estate Investors Association. ‘They may have thought they were going to be in and out of the home in six months, nine months - and then it turns into a year, a year and a half.’”

“Nobody expected the collapse of two New York hedge funds investing in subprime mortgages to kick up dust in Baltimore. Nobody expected a bunch of First Mariner’s mortgages in Northern Virginia to go bad less than three months after they were issued.”

“‘I’ve never had anything like this happen to me,’ First Mariner CEO Edwin F. Hale Sr. said last week.”

“Until very recently, economic optimists had comforted themselves with the notion that housing problems were ‘contained.’ Things would pick up in the spring home-buying season, people figured. But there was no season, it is now apparent.”

“The salve of federal money that has protected the Baltimore-Washington region from economic pain is losing its effectiveness. Half of First Mariner’s problem loans were in Northern Virginia, home of a defense-spending spree since 2001.”

“Hale thinks some of the mortgages may have been issued to ‘flippers’ seeking a quick buck, violating contract terms requiring the money to be applied to a primary residence. Even so, the delinquencies don’t speak well of the Northern Virginia economy or, by implication, Maryland’s, which has been operating in the same federal bubble.”

The Post Gazette from Pennsylvania. “David and Jerri Bauman, a mentally challenged couple who have scraped through life, wanted a home. It was supposed to be 22 Fairview Ave. in West View, a place sold to them amid a flurry of confusing paperwork they couldn’t read, a pair of unexplained bank transactions and at least three sales documents that contradict reality.”

“The lawyer who handled the transaction, according to Mrs. Bauman, told her it would take too long if they read everything. ‘We didn’t understand them. We just signed,’ Mrs. Bauman said.”

“Arnold Kogan, a veteran real estate attorney in Harrisburg, finds the deal a symptom of a reckless market. ‘It goes beyond that these people couldn’t pay. If this is systemic, it could be a much more problematic situation for the economy,’ Mr. Kogan said.”

The Philadelphia Inquirer from Pennsylvania. “Linda Reid-Williams is in trouble. Her mortgage payment is increasing about $200 next month, and she’s worried she can’t afford it.”

“Reid-Williams tried for months to refinance the house she bought in Yeadon eight years ago, but recently decided against it, to avoid a $4,000 penalty for paying off her existing loan early, she said.”

“This is quite a contrast from two years ago. When Reid-Williams refinanced in 2005, it seemed like the lender was coming to her rescue with money she needed to pay off her car and other bills. When it was too late, she read the fine print.”

“‘What did I just do?’ she recalled asking herself.”

“The result, according to Mark Zandi, chief economist at Moody’s Economy.com in West Chester, will be a surge in defaults this year and next. The impact already has been seen in Willingboro, where 436 houses were for sale last week, said Martha Lee Boyer, owner of Imani Realty & Associates, citing MLS data.”

“Boyer, whose business is based in Willingboro, said that in 2004 and 2005, the biggest number of listings at any one time would have been 100. Boyer said that while she continued to see home buyers who were trading up, ‘we’re still seeing more and more distressed sales.’”

“In 2005, more than half, 1,409 of 2,716, of the mortgage loans made in Willingboro were high-cost loans, based on a federal benchmark.”

The Morning Call from Pennsylvania. “The average price of a home in the Lehigh Valley rose 2 percent in the first half of the year. It’s been five years since home appreciation hit such a low level here.”

“The rate of appreciation has slowed as home sales have fallen and new listings have soared. For every one home that has sold this year, 2.5 homes have been listed for sale.”

“The volume of transactions has slowed to a crawl. ‘The Achilles heel of the housing market is volume,’ said Bethlehem economist Kamran Afshar. ‘Volume does drop. We are observing a significant drop right now in volume, and that is serious.’”

“Prospective buyers, on the other hand, felt no sense of urgency in the first half of the year because there were so many homes to choose among. ‘They don’t have a gun to their head so they are taking their time looking at a lot of properties,’ said Jeff Burnatowski, an agent in Allentown. ‘If they can’t strike up a deal to their terms, they just go on to the next home.’”

“In June, pending sales, a measure of future sales activity, were down 17 percent to 622 contracts, compared with the same period last year. Many suburban properties priced at $250,000 or more have idled this year. Burnatowski said those properties compete with newly-built homes, ‘where builders are giving mega discounts to move inventory, which is hurting resales. They have deeper pockets.’”

“In the Valley, a mix of local and national builders construct new homes and subdivisions. National builders have been facing a glut of unsold homes this year, according to the National Association of Home Builders.”

“To reduce inventory, builders have offered a large number of incentives, including premium flooring, decks and closing costs. That’s because builders with unsold houses in new subdivisions typically can’t lower sales prices because the other residents have paid a given price for their homes.”

“Real estate agents say factors such as high gas prices and the lengthy commute are also deterring some prospective buyers.”

“‘There was a great buzz about moving out here. Now the buzz in New York and New Jersey is: ‘It’s not quite as much paradise as they were saying,’ said Gail Hoover, a real estate agent in Center Valley.”

Bits Bucket And Craigslist Finds For July 30, 2007

Please post off-topic ideas, links and Craigslist finds here/

July 29, 2007

A New Trend Is Emerging In California

A report from the Bakersfield Californian. “Home shoppers will likely find a few bargains this summer. Prices have dropped and the selection of available homes has grown, local realty pros said. Those searching in the northeast, where a four-bedroom home (on) Loch Fern Court is selling for $275,000, will find ‘gobs of choices’ in the same price range, said agent Mike Saba.”

“‘Between $225,000 and $300,000 right now, you’d have about 65 choices of a four-bedroom,’ Saba said after doing a search on Bakersfield’s MLD. The Loch Fern Court house might be a tad overpriced, he said.”

“Buyers can also get more house for their money than they could in the past two years, said agent Jeanne Radsick. The homes Radsick has listed at $500,000 or higher start at about 2,700 square feet. And sellers may strike a deal. ‘People who up to this point might not have entertained offers, are now entertaining offers,’ Radsick said.”

“Luxury homes have been discounted as well, said agent Gail Malouf of Coldwell Banker America West. ‘You’re getting a better deal on all houses than you were a year ago,” Malouf said.”

The Ventura County Star. “After months of waiting for someone to purchase her Spanish Hills home, Cheryl Conroy decided she couldn’t hold out any longer. She and her husband have put a deposit down on a lakefront property in Missouri. But they might lose the money if their Camarillo home doesn’t sell soon.”

“Conroy enlisted the help of Dennis Gottlieb, director of a Las firm that provides relocation services for corporate executives. He purchased a share of the home and will reap some of the profit when it sells.”

“Given the time constraint, Gottlieb decided the fastest way to raise interest in the house is to let buyers set the price. Gottlieb placed an advertisement in The Star to announce the home must be sold by Sunday night for the ‘best reasonable offer’ over $594,837.”

“The house hasn’t sold because it was priced too high, said Bob Doughtery, who was Conroy’s Realtor until July, when Gottlieb stepped in. ‘If she had gotten the price below the $800,000 mark, we would have probably been able to sell,’ he said.”

The Orange County Register. “Maria Cordova was thinking about tapping into her home equity to add a fourth bedroom and second bathroom to her Santa Ana home. But that plan evaporated when Cordova watched local home sales slow to a crawl.”

“Brian Glabman owns Glabman Furniture, a 108-year-old, four-store chain based in Costa Mesa that sells high-end pieces. He will soon close his 42,000-square-foot Costa Mesa store, the only Orange County location.”

“He believes that because the slowdown in the high-end housing market (the segment Glabman sells to) happened quickly, his customers turned wary of spending on their homes. ‘The buying habits of consumers are changing,’ Glabman said. ‘What we’re doing here in Orange County no longer makes sense.’”

“Cordova is skittish as she watches home sales and prices fall. ‘We’re spending less,’ she said. ‘We’re buying just want we need.’”

The Recordnet. “Affordable housing, considered an oxymoron during San Joaquin County’s unprecedented real estate boom in recent years, is making a comeback. The playing field is leveling because of the unprecedented number of area defaults, foreclosures and price reductions in the past year, observers say.”

“But just as nonprofit developers begin placing ‘for sale’ signs on newly affordable properties, a new trend is emerging: Many people who can now afford homes are afraid to buy.”

“‘They see their friends and family losing their houses,’ said Larry Johnson of one of the area’s affordable housing builders. ‘They’re scared to death right now.’”

The Union. “Financial woes for the DarkHorse luxury housing project in southern Nevada County deepened Friday, with a lender planning to foreclose on 72 lots and the nationally recognized 18-hole golf course, according to the lender’s agent and a legal notice.”

“Owens Mortgage Investment Fund, based in Walnut Creek, said Friday it would sell the land to the highest bidder on Aug. 17 at the front entrance to the Nevada County courthouse if the owners fail to come current with payments on the loan.”

“In June, DarkHorse sales director Terry Williams said the luxury development on Combie Road had experienced a slowdown in sales that reflected the slump in real estate around the county.”

“Statewide, sales have slowed to the lowest point in more than a decade, DataQuick has reported. ‘It’s a slow market, but it hasn’t stopped,’ Williams said previously.”

The Advance Register. “Michelle and Dennis Kogler moved to Visalia in September 2005 from Colorado. It was the height of the real estate boom and the Koglers bought a new home for $376,000.”

“Six months later, as they noticed that similar homes in the neighborhood were selling for $125,000 less, plus incentives, Dennis Kogler decided to accept another job in northern California.”

“That’s when the Koglers got into trouble. They tried for 18 months to sell the home while Michelle Kogler remained in Visalia. They had two sets of living expenses.”

“‘We bought the home at an inflated price and it dropped to the point where we were immediately losing money,’ Michelle Kogler said. ‘It was a disaster.’”

“The Koglers aren’t alone. As the real estate market in Tulare County keeps tumbling, the number of default notices has skyrocketed, from 623 in 2005 to 1,165 in 2006 and 864 in the first half of this year.” ”

“‘We just came off the biggest market we’ve ever experienced in real estate,’ said Visalia real estate broker Brad Maaske. ‘What’s stupid is we had the lowest interest rates in 40 years and people took a variable rate loan because they thought it would get lower.’”

“If all else fails, the lender ultimately repossesses the property and resells it to recoup the loan. That’s what happened to the Koglers. ‘We couldn’t get rid of that home to save our lives,’ Michelle Kogler said.”

“Finally, she said, she got homesick, left Visalia and rejoined her husband. ‘It financially ruined us,’ Kogler said. ‘It will take us years to recover.’”

“At the steps of Tulare City Hall Monday, the Koglers’ home was put up at public auction. It didn’t sell, and the lender took it, adding to a portfolio that will eventually have to be placed on an already depressed housing market, where, according to DataQuick, home prices have fallen at the rate of 1 percent a month.”

“Carlos Lopez of Visalia had his sights set for months on a defaulted home on West Dorothea Avenue. It had last sold for $130,000 in 2002. He and his mother drove to the neighborhood a few times to see if the home had investment potential. ‘We just thought it was a good time to look for property,’ Lopez said.”

“He and his mother bought the house Monday at the auction, after a bid war with another potential buyer, for $25,000.”

The Press Enterprise. “Mortgage default notices in the Inland region have almost tripled since last year. Home foreclosures have increased almost eightfold. And home sales last month were the worst in a decade.”

“Real-estate experts and economists say today’s housing woes might be just the beginning of trouble.”

“In the past six months, almost 22,000 Inland homeowners received notices of default, the first step a lender takes to foreclose on a property. During those same months, 6,367 homes were taken through foreclosure.”

“Christopher L. Cagan, director of research and analytics for Santa Ana-based First American Corelogic, said he expects at least another 60,000 foreclosures in the Inland region in the next four to six years. He identified about 221,700 adjustable-rate mortgages sold in Riverside and San Bernardino counties from 2004 through the first half of 2006.”

“‘It’s sort of like watching the snake swallow the mouse,’ said John Karevoll, an analyst for DataQuick. ‘We have this huge amount of loans sort of moving through the pipeline.’”

“The median home sales price in Riverside County was $400,000 last month, down from $432,000 in December. In San Bernardino County, the median price dropped to $365,000 from $372,000 in the same time period.”

“The falling home prices largely have been caused by more houses being put on the market, either by builders or homeowners listing a house they can’t afford.”

“‘First they try to refinance, and then they’ll list their property, putting more downward pressure on the prices,’ said Esmael Adibi, an economist at Chapman University in Orange. ‘This is really what is adding to the resale inventory in the marketplace, but demand has dried up. That’s why you are seeing notices of defaults going up.’”

“‘Some of these people were just caught up in the incredible appreciation going on,’ said Steve Johnson, of MetroStudy. ‘They thought it was sort of a fail-safe scenario.’”

“Many bought when prices were their highest, and when prices fell were left trying to sell a house at a loss. ‘People who were investors were very comfortable in the economy, and leveraged the value of their own home to buy other houses and flip them,’ Johnson said. ‘So we have another wave of these coming through, some of them subprime.’”

“Anthony Banks, a construction contractor in Riverside, said he received three calls late last week to renovate foreclosed homes. Banks has in the past bought homes himself and rehabilitated them for sale, but now says that business is poor. ‘You can buy them, but you can’t sell them,’ he said.”

“Brossie Cerniglia, who owns and operates The Pool Doctor in Corona, said he sees a lot of possibilities for his business in a foreclosure market. His company whitens plaster and cleans pool tiles. Cerniglia estimates that on about 70 percent of the homes he works on, the owners are preparing for sale. In just the past week, traffic to his Web site has doubled. He also has been trying to contract with banks that hold foreclosed homes. ‘Then I’d be working for a long time out here,’ he said.”

“Home sales last month were the worst in a decade in Riverside County and the worst on record in San Bernardino County, which is sort of a downer because I was going to sell my house, pocket the cash and sleep in an elaborate tree fort.”

“My house lost an estimated $70,000 in equity this year, slightly less than it might have, had it been haunted by poltergeists. I’ve never lost $70,000 before, but I always imagined it would feel more … well … fun.”

“I may live in the Inland Empire but I really don’t see how this real estate slump could possibly be my fault. The real blame here falls on the rest of you.”

“Step it up, Inland Empire, and start beautifying your residences! Get a garden gnome or politically correct lawn jockey. And when you take out the trash, for gosh sakes, put a shirt on.”

“A few decorative patterns in the front yard, say a seahorse or snow leopard, or a seahorse mauling a snow leopard, could really increase your home’s resale value. Even triple it.”

“We’re a team, Inland Empire. And we have to start acting like a team. (Corona, you bring the sliced oranges). And together, we’ll systematically re-inflate the real estate bubble so that this time, we’ll be smart enough to sell our homes, take the profit and buy mansions in Oregon, Colorado or Texas.”

‘It’s Still A Buyer’s Market; We Just Need More Buyers

The Chicago Tribune reports from Illinois. “Need to sell your home in a hurry? Unfortunately, for most homeowners today it’s no longer as simple as putting a ‘for sale’ sign in the yard. Existing-home sales have fallen, and home prices have declined, too, as the number of houses for sale has reached new highs. In other words, it’s not an easy time to be a seller. There is too much supply for the demand.”

“If you overshoot the asking price, it could take longer to sell your home, and you may have to concede significant price reductions later. ‘The buyer thinks the longer a home is on the market, the less he should pay for it,’ said Andrea Geller, a member of the board of directors for the Chicago Association of Realtors.”

“‘There seems to be a disconnect now,’ said Terry Semmens, Chicago district director for ZipRealty Inc. ‘We’re showing lots of homes and our agents are busy, but it hasn’t correlated [with transactions] as it has in the past.’”

“Semmens said the supply of homes for sale in the Chicago region rose 3.6 percent in June, reaching a level 30.6 percent higher than the year before. He also said 37 percent of homes for sale had reduced their price at least once, up from 35.4 percent at the end of May.”

“Andrea Fraley has cut the price on her 3-year-old home in Aurora from $240,000 to about $220,000, below the appraised value, since it went on the market in May, and says she is feeling pressure because her family is moving out of state in August. Recently she began ‘make us an offer’ ads.”

“‘It’s in perfect condition, we’re keeping it really clean, and it’s freshly painted,’ she said. ‘We can’t get rid of it.’”

The Kane County Chronicle from Illinois. “Suzanne Ehardt, planning and development director for McHenry County, said single-family, detached-home building permits were down by about 50 percent in unincorporated McHenry County compared with the same period last year.”

“Greg Wallis, a partner at Cary-based builder Verseman Development, said local sales mirror the national trend. ‘Things are definitely slow,’ Wallis said. ‘We’re following the national average.’”

“‘Everybody was talking about the bubble and how the bubble was going to burst, and it obviously has,’ he said.”"

The Courier News from Illinois. “Earleda and Kevin Parrish were looking for a home for seven or eight months before they found the one they wanted in Carpentersville. By March 2007, not quite two years after they bought their dream home, the family’s belongings were being moved out to the front yard and the Parrishes were being evicted.”

“‘We literally lost everything,’ Earleda Parrish said. It was not just the house, but many of the things inside that they couldn’t fit into the storage container they’d rented. ‘It’s kind of hard to watch people from the neighborhood walking away with your stuff,’ she said.”

“Foreclosures in Elgin and South Elgin for the first half of 2007 are up about 32 percent over the same time period in 2006, according to Record Information Services Inc. In other areas of the county, foreclosure numbers through mid-July 2007 nearly are surpassing what they were in all of 2006.”

“The alarming growth rate begs the question whether prospective home buyers are spreading their finances a bit thin. ‘What we ran into now is what I’d call a perfect storm,’ said Mike Hawley, senior VP at First Community Bank of Elgin.”

“North Aurora-based real estate and tax attorney John Duggan, said these new loans have made it so that equity is no longer a requirement for buying a property, which also can contribute to the increased number of foreclosures. With no equity, there’s nothing to lose by foreclosing, he said.”

“‘They ride the foreclosure into bankruptcy,’ Duggan explained. ‘You just keep your house until they take it away from you.’”

The Press Citizen from Iowa. “Jim Kessler, Coralville building and zoning official, said builders are being more careful about the kinds of homes they build. He said the biggest drop he has seen is in the number of speculation homes, or homes that are built without a specific buyer already choosing the lot.”

“‘There’s a pretty darn good amount of pre-existing spec housing that is unsold,’ Kessler said.”

“Sally Cline, president of the Iowa City Area Association of Realtors, said this is true from her perspective.”

“‘There was this mentality a few years ago that was, ‘If you build it, they will come,’ she said. ‘There’s a big inventory out there. So, I think builders are saying ‘Gosh, I think I’ll wait until this sells.’”

“Bill Frantz, president of Frantz Construction Company in Iowa City, said last year and the year before that there was a boom in speculation housing, a lot of which is in North Liberty.”

“‘We’re just kind of waiting out this slump, if that’s what you want to call it,’ he said. ‘I’ve talked to some other builders, and it appears to us that there is a surplus of inventory out there.’”

The Star Observer from Wisconsin. “Additions have been made in the entryway of the St. Croix County Government Center to accommodate a growing number of sheriff’s foreclosure sale notices.”

“Once, only one bulletin board was needed to handle the announcements, but now three are jammed with foreclosure notices and a fourth may be needed soon.”

“St. Croix County Clerk Cindy Campbell said the additions were made recently. Three bulletin boards on the main entrance wall at the St. Croix County Government Center are literally jammed with foreclosure sale notices with more waiting for space. ‘There are three bulletin boards packed and more (foreclosure sale notices) waiting to go,’ Campbell said.”

“She pointed to a stack of 13 waiting for room on the board and said in two days her office received 23 foreclosure notices to post. ‘We added a third board two weeks ago,’ said Sheriff Dennis Hillstead, who conducts the foreclosure sales. ‘We may need a fourth — there is no slow-down in sight.’”

“According to records provided by the sheriff, 40 foreclosure sales were conducted in 2003. The number took a sharp rise by 110 percent to 84 in 2004, then rose 52 percent to 128 in 2005. Last year’s foreclosure sales totaled 188. The 2006 sales were surpassed by a substantial number, with 251 recorded thus far in 2007 with over five months left until the end of the year.”

“‘When I first started as sheriff in 1999, we had one or two sales a week,’ Hillstead said. ‘Last Tuesday there were 12 sales scheduled. Two were postponed or cancelled and 10 went.’”

“Hillstead recalled a time when the subject of a sheriff’s sale was most often a failed farm. ‘Most are single-family homes now,’ he said. ‘Lately a lot of them have been in the $300,000 to $400,000 range.’”

“The problem down the line, informed observers said, is that when there is an over abundance of foreclosed properties held by mortgage companies, they will be forced to lower prices to make sales, which in turn would lower property values throughout the county.”

The Pioneer Press from Minnesota. “At least 40 houses across the Twin Cities will be up for bid soon in St. Paul at a rare mass property auction complete with paddles, auctioneer and ‘Do I hear $150,000.’”

“The event - a ’short sale’ auction of homes in the early stages of foreclosure - is being organized by National Realty Guild, a small St. Paul company rolling the dice in a housing downturn.”

“It’s the latest sign of distress in the local housing market, and a new tactic in the “move that house” game under way as Twin Cities agents struggle with rising foreclosures, dipping home values and a record crop of for-sale signs.”

“Short sales are on the rise around the Twin Cities, said Keenan Raverty, immediate past president of the Mortgage Association of Minnesota. ‘I think it’s going to get worse before it gets better,’ Raverty said.”

The Mount Vernon News from Ohio. “Condominium sales in Knox County remain strong despite reports of a housing slump throughout most of the country.”

“‘The real estate economy is a local economy, and Knox County is nowhere close to the numbers experienced elsewhere in the Midwest,’ said Al Lindeman, the president of the Knox County Board of Realtors.”

“Mount Vernon resident Dee Reynolds and her husband recently passed on the chance to live in a condo. Dee said she and her husband had nothing against the condos they looked at, and that their decision was based more on the size of the condominiums.”

“‘We’re just used to a big home, and we didn’t want to be closed in,’ she said. The Reynolds, who are retired, did settle in a neighborhood where yard work is provided, like in condominium communities.”

“‘The condo market went crazy for a while,’ said Judy Cordle, Mount Vernon’s development services manager. ‘A whole slew of condos showed up at the same time.’”

“Beyond completing the Maple Wood and Colonial Woods projects, Cordle said there are no plans to build more condos in the near future. ‘There’s nothing new coming in right now,’ she said.”

The Beacon Journal fom Ohio. “With 2007 half over, said Tom Campensa, president of the Akron Area Board of Realtors, Summit County has seen better years for the home sale industry. There were 3,063 homes sold in the six-month period, down 11 percent from the first six months of last year, when 3,437 homes sold.”

“‘We had three record-breaking years — 2004, 2005 and 2006,’ Campensa said. ‘In 2004, there were 3,223 homes sold and 3,605 in 2005 for the same period. We are falling back in line with 2003.’”

“‘One of the challenges is to get home sellers more in tune of what buyers are willing to pay,’ said broker Deborah Loughborough. ‘Price and location are still key factors.’”

“‘It is still a buyer’s market; we just need more buyers,’ said Campensa.”