The Housing Bubble

It’s desk clearing time for this blogger. “Linda Moore has noticed a sense of apathy settling into the Manatee County real estate market, and she is determined to shake things up one neighborhood at a time. ‘Things have quieted down everywhere,’ said Moore, an agent on Anna Maria Island.”

“Moore, who has one listing on Palmetto Point, called the Realtors who are selling 30 more houses in the neighborhood and urged them to have open houses this weekend. Their solution: a mega open house. Twenty of the 31 houses for sale in Palmetto Point will be open to the public from 2 to 4 p.m. Sunday.”

“‘We’ll have refreshments, and we’re putting out balloons and signs,’ Moore said.”

“The monthly business confidence index released today by Associated Industries of Massachusetts showed confidence among employers statewide slipping three points in June. One of the factors causing uncertainty is the condition of the housing market in Massachusetts, said Andre Mayer, senior VP for communications and research at Associated Industries.”

“‘Housing prices are certainly down. There have been repeated signs that people will say ‘oh, the worst is over,’ but then it’s not,’ he said.”

“Home foreclosures are on the rise in Coweta County, and the highest reported cases in the metro region are on the south side of Atlanta, according to the Atlanta Regional Commission.”

“‘I think the most important, salient feature of the issue is that it is a national issue, and when we examined foreclosure rates in the state of Georgia, rates were highest on the south side,’ said Mike Alexander, chief of the ARC research division. ‘Across the board, the number of foreclosures has increased,’ he said.”

“Panama City is in the midst of an unprecedented real estate boom. More than 30,000 units worth about $5.7 billion have come on the market since last July, according to Prima Panama.”

“‘Panama looked like a good investment and a place to have a good time,’ says Jim Buckley, while admiring the view. ‘You don’t need a lot of sense to see that it will increase in property value.’”

“As a housing crunch escalates in Yellowknife, questions are being raised about some government-owned houses that are sitting empty on prime real estate.”

“‘You’d probably put it on the market, and probably that day or that evening…you’d probably have six, seven people putting in offers,’ real estate agent James Clarke told CBC News.”

“A for sale sign went up on a big two-storey home you pass daily on the way to work. A sold sign was stuck up the next day. The smart bungalow down the street was put up for sale and sold two days later.”

“Some call it a real estate boom. Merv Rayner, president of the Moose Jaw Real Estate Board, cautiously refrains from using that term. ‘Moose Jaw prices have been depressed for a long time,’ he says. ‘Finally Moose Jaw is catching up.’”

“I am the writer of the letter (June 15) headlined as, ‘Only realtors gaining.’ Apparently, this title has led to some misconceptions about the entire point of my letter, which was to merely point out that rising house prices are not necessarily beneficial to Regina residents.”

“The entire point of my letter was to just bring about the fact that there is an obviously downside to housing price increases: a higher cost of living. More money spent on homes means less money for other things. Exactly how does that benefit Regina residents or businesses?”

“Bangkok is undergoing a condominium-building boom that brings to mind the go-getting expansion in the 1990s - and memories of the bubble that followed.”

“In the past six months, inquiries from prospective buyers have fallen by 40 percent, said Ian Soo, managing director of a high-end real estate agency in Bangkok. ‘We’re probably one of the most aggressive agencies in central Bangkok and, if we’re experiencing quiet times, other agencies are probably experiencing something similar or worse,’ the British transplant said. ‘It’s a buyers’ market out there.’”

“Chennai real estate is now on a downward slide. Prices of land, apartments and even commercial rentals, particularly that of IT buildings, have come down by about 15 per cent. Builders and promoters confirm this.”

“Land in Sriperumbudur, which was selling at Rs.7 lakh to 8 lakh per ground, has come down to Rs.5 lakh to 5.5 lakh. Layouts promoted at Vadkapattu, which were selling thick and fast, are stagnating. About 25 per cent of the plots in many layouts, priced at Rs. 650 per sq.ft., remains unsold even after months.”

“The stagnation is visible. Not that the big builders are finding it easy. One of the upmarket builders near Navalur has about 50 per cent of his apartments unsold. Last year’s euphoria has died down.”

“In what traditionally has been a strong home-selling season, the metro Denver real estate market has remained flat. ‘We’re just kind of bouncing along,’ said Larry McGee of the Berkshire Group. ‘It’s not terrible. It is almost exactly even with a year ago.’”

“While it may be flat, Colorado’s housing market is faring better than that of much of the nation, said Jeff Thredgold, an economist with Vectra Bank Colorado.”

“‘The national media would have people believe that the housing market is getting absolutely trashed,’ he said. ‘It’s really tied to the fact that prices went too far too fast over the last five or six years.’”

The News Tribune reports from Washington. “It’s been years since Pierce County’s housing market has looked this bleak. The median sales price in June barely inched upward compared to June 2006 and a decline from May 2007, according to figures released Thursday by the Northwest MLS. And sales were down from the same time last year, with 24 percent fewer stand-alone houses and condominiums sold. The slowdown comes at the height of the summer selling season.”

“Countywide, the supply of homes for sale has grown to about 6.8 months, pushing the market to one that favors buyers rather than sellers, according to Dick Beeson, a Windermere broker and a MLS director.”

“Beeson attributed Pierce County’s lagging price appreciation, in part, to its abundance of new homes and the discounts builders are using to sell them. The year-to-year supply increased 53 percent with more than 8,400 homes on the market. ‘We’ve just got too many properties for sale for our county to handle right now,’ Beeson said.”

“Listing a property today means educating sellers on the competition and price pressures they face, said Tacoma agent Patti Dains DeYoung. Because the market has changed so much so quickly, Dains DeYoung said she now looks only at the previous two months.”

“‘If you’re in an area with a lot of listings, you’ve got to be one of the very best priced to sell,’ she said. ‘You almost have to price it a little under average in order to get offers on it.’”

The Olympian from Washington. “Sales of Thurston County houses dropped 17 percent in June, which prompted one real estate agent to say the real estate market has cooled down to compensate from its torrid pace of a few years ago.”

“Inventory also climbed to more than 2,300 units, up 37 percent from the same period last year.”

“Because current house sales are measured against the boom in housing that started in 2004 and ended in 2006, house sales are bound to be lower, real estate agent Eric Hjelm of Olympia said.”

“‘We are in a transition,’ he said. ‘Everyone still wants to sell, it just takes people a little bit longer.’”

“Another factor affecting the county’s housing market is the meltdown of the subprime mortgage market, said Randy Luke, Horizon Mortgage branch manager and senior loan officer.”

“‘The so-called no downpayment loans for people with credit issues have totally gone away,’ he said, estimating that money is no longer available to 15 percent to 20 percent of the home-buying market.”

“Luke’s Olympia office now has five loan officers, down from seven, he said. Company-wide Horizon Mortgage has lost 10 percent to 15 percent of its loan officers, Luke said.”

“‘It’s kind of grim,’ Luke said. ‘Every now and then you have to make a correction.’”

The Bellingham Herald. “In Whatcom County…the total number of residential homes sold for the first half of the year was down 5.4 percent compared to a year ago. The average time it takes to sell a home, however, has jumped significantly when compared to the previous year.”

“Sales were significantly slower in Sudden Valley (down 13 percent) and Birch Bay (down 19.8 percent).” “In studying the numbers, Johnson believes it is still a balanced market between sellers and buyers, despite the continued rise in home prices.”

“‘These numbers can be deceiving because the average home in Whatcom County hasn’t increased in price over the past year,’ said Lylene Johnson in Fairhaven, who has been analyzing data from local MLS groups for the past three years. ‘It’s simply that more expensive homes are selling and that raises both the average and median (the midpoint of all sales) prices.’”

“‘People want the best value for their money,’ Johnson said. ‘We’ve noticed a trend where buyers are likely to jump at the right price, but because there is no sense of urgency right now, buyers won’t make a counteroffer when it’s overpriced. They tend to wait and see what happens.’”

“Overall listings of residential homes and condominiums in Whatcom County at the end of June were 2,415, up 12.6 percent compared to the previous year. The inventory for the entire area served by NWMLS, nearly every county in the state, is up 51.5 percent compared to 2006.”

The Seattle PI. “Condominium sales buoyed Seattle’s housing statistics in June while showing perhaps the clearest sign of a slowing market. Pending sales, which can be a better indicator of the most recent activity, declined 0.9 percent for all Seattle homes and by larger amounts elsewhere.”

“June’s median for condos decreased from the previous month for the fourth month in a row, adding up to a 5.5 percent drop since February. ‘Four months in a row, it’s an interesting thing,’ said Matthew Gardner, a Seattle land-use economist. ‘Is this kind of indicating a slowdown in the marketplace? Yeah.’”

“Gardner also noted that most new condos are not in the listing service’s numbers and said month-to-month variations do not mean as much as the yearly price changes, which he does not expect to go negative.’That is a rational market. We haven’t seen one of those for quite some time and we’re heading back toward it.’”

“Condos also had an outsized contribution to the other significant news in June’s housing numbers, the continued ballooning of inventory. Seattle’s inventory shot up 59.2 percent in June from a year earlier, noticeably more than the still-significant increases in King County and Western Washington.”

“In a news release accompanying the numbers, the listing service noted that inventory was at an all-time high.”

“Last Sunday, some potential buyers looking at homes noticed the changes. ‘It seems like the market has not gone down, but flattened,’ said Jason Shay, of Seattle, who has looked at homes on and off for three years. ‘Before there were a lot of homes that just were on the market for like two days. Now it seems like they’re sitting a little bit longer.’”

“Agent Mark Petrak hosted an open house Sunday at a Capitol Hill home he’s been trying to sell since September 2006. ‘People are definitely pickier than they were a year ago,’ he said.”

“Agent Steve Jones said activity really slowed after interest rates rose in recent weeks. ‘There’s a ton of homes for sale and not that many buyers right now,’ Jones said.”

“The market has changed, Mike Larson, a listing-service director and designated broker in Lakewood, said in the release. ‘Sellers still don’t quite understand that buyers have much more to choose from,- and often a back-up property to act on,’ he said.”

The Seattle Times. “‘Twenty-four months ago, you could put the sign up, put out a price and you’d still get offers even if you were a little bit robust on your price,’ said Steve Knoblaugh, an agent for RE/MAX Eastside brokers. ‘What we’re seeing now is homes are selling, but pricing is of greater importance. That’s really key.’”

“Knoblaugh said some homeowners he has talked to have decided to sell this year rather than next because they think the market is going to weaken more, making it harder to get their price later on.”

“Marketing consultant Denise Lones said buyers and sellers often make decisions based on what they read in the media. Negative news stories about local events, national disasters or real-estate downturns elsewhere can all spook buyers, she said. And that can make sales decline.”

“But the fundamentals behind Seattle’s market…mean ‘our area is going to thrive and grow,’ Lones predicted. ‘If it’s going to be any kind of a slowdown, I think it’s going to be false slow,’ she said. ‘We’re in a very desirable place to live.’”

“Loan officers who work for a Tacoma mortgage company that told state officials in May it was closing say they continue to go without pay.”

“Loan officers waiting on months-delayed checks say they can’t pay their bills and are facing ruined credit and foreclosure. California couple Lindy Pine and Devin Rusk, who’ve sold All Fund loans for more than three years, filed a $27,000 wage claim in June.”

“Pine and Rusk used their credit cards to make recent mortgage payments and have incurred late fees on cards they couldn’t pay on time. ‘I was really hoping they would be honorable and pay us what’s due. I kind of in the back of my mind am still hoping that,’ Pine said.”

“Bill Wood, a broker based in Hawaii, said…said one of the owners told him that he had underestimated the cost of running All Fund. ‘It’s a great system. It’s just that I think All Fund overextended themselves,’ he said.”

Some housing bubble news from Wall Street and Washington. “Meritage Homes Corp. said on Friday it expects second-quarter revenue to be down about 37 percent from a year ago and to record more than $100 million in charges as it struggles in a weak U.S. housing market. The home builder said it has been particularly hard hit in the area of Fort Myers and Naples, along Florida’s Gulf coast.”

“‘Weak demand and high inventory levels have increased competition among home builders, pressuring margins,’ said Steven Hilton, CEO of the Scottsdale, Arizona-based company, in a statement.”

“Cancellations rose to about 37 percent of gross orders, up from 32 percent a year ago.”

“Meritage expects pretax charges of $75 million to $80 million for inventory impairments and to write off land options, plus another $28 million in pretax charges related to goodwill impairment for its Fort Myers and Naples operations.”

From CNN Money. “Management expects the homebuilding market in southwest Florida will continue to be severely depressed for the foreseeable future.”

“‘Southwest Florida has been experiencing some of the most difficult housing market conditions in the country. While our 2006 home closings there represented only approximately 2% of our Company-wide closings, our year-to-date 2007 home closings in Ft. Myers/Naples are down more than 70% from the level a year ago,’ said Mr. Hilton. ‘We have been unable to renegotiate acceptable terms for existing lot options, which led us to terminate all of our existing option contracts, and we have been unable to acquire new lots at prices that reflect today’s market values.’”

From CNBC. “Today Meritage Homes reported preliminary sales, closings and backlog for the second quarter, and honey, it ain’t pretty. Sales down 37%, closings down 28% and backlog down 39% from a year ago.”

“The trouble for Meritage in particular is their exposure to Florida, which Hilton admits will ‘continue to be depressed for the foreseeable future.’”

“It’s Florida, it’s Arizona, it’s Nevada, it’s California; frankly it’s wherever the homebuilders went nuts with their nuts and bolts.”

“Daryl in Tucson writes that a friend of his purchased a home from a builder there, and the builder lowered the price after the contract was signed. And Jeff writes from Central Valley, CA: ‘KB Homes has been building the same 8 houses for months now to make them look active and they also put ’sold’ signs in a few homes, problem is nobody ever moves in!’”

“I remember the clamor of demand, demand, demand. I reported on the new trend to the ‘ex-urbs’…that were supposedly the wave of the future. And I drove out to all the ‘adult active communities’ under construction, where all those baby boomers, desperate not to end up in the nursing home, would ‘age-in-place.’ I drank the ‘Kool-Aid;’ I’ll give you that.”

“But how could the builders–who’ve seen far more housing cycles in their company histories than I have in my reporting history– how did they not see this coming?”

From Reuters. “Heavy redemptions from investors concerned about their holdings of subprime mortgage securities claimed Braddock Financial Corp.’s Galena Street Fund as the latest hedge fund victim.”

“Braddock, a top-performing bond hedge fund manager, on Thursday said it will liquidate the $300 million fund after redemptions slashed its assets by a quarter since 2006, CEO Harvey Allon said.”

“Reports that losses in subprime mortgages were wreaking havoc with hedge funds, especially last month, ‘just made investors nervous about being invested in the subprime market at all,’ Allon said.”

“Galena investors will receive 20 percent of their balances by early next week, and then probably ‘more frequently than quarterly,’ he said.”

From Bloomberg. “UBS AG, buffeted by three quarters of declining earnings and losses at one of its hedge funds, replaced Peter Wuffli as CEO of the world’s biggest money manager.”

“‘Boards and CEOs normally don’t split in this way, it’s extraordinarily rare,’ said Richard Bove, an analyst who covers U.S. financial companies for Punk Ziegel & Co. ‘There was an issue with earnings.’”

“UBS said in May it was shutting the Dillon Read unit that had been championed by Wuffli after the hedge fund lost 150 million francs in the first quarter because of wrong-way bets on U.S. The losses from Dillon Read echoed the damage caused by Long-Term Capital Management LP, whose 1998 collapse cost UBS $700 million.”

The Associated Press. “Analysts, surprised by Wuffli’s sudden departure, voiced new concerns over expected losses from failed in-house hedge fund Dillon Read Capital Management, which is being shut down.”

“‘It remains to be seen whether all of the subprime hit was kitchen-sinked last quarter, or if there is more marked-to-market in second quarter,’ said Kinner Lakhani, London-based analyst with ABN Amro.”

The Financial Times. “Investment banks are demanding more capital to back loans to hedge funds investing in US subprime mortgage-linked debt, as they try to head off a repeat of the near-collapse of two Bear Stearns hedge funds.”

“The ‘haircut,’ or margin requirement, on financing provided to buy collateralised debt obligations (CDOs) backed by subprime mortgage bonds has been increasing sharply, in many cases doubling, according to hedge funds, bank executives and prime brokers.”

“One New York structured product specialist and hedge fund manager said margin requirements had rise by about 5-10 percentage points for single-A and AA-rated CDO securities investing in mortgage-backed securities.”

“Matt King, analyst at Citi, estimated in a note this week that margins for BBB-rated bonds from such CDOs went from 10-20 per cent to 50 per cent, with smaller increases for higher-rated bonds.”

“The world’s biggest bondholders have had their fill of leveraged buyouts, convinced that increasing mortgage delinquencies will drag down the U.S. economy and drive debt-laden companies into default.”

“‘There are some very scary analogies between high yield and the mortgage market,’ said Kevin Lorenz, a managing director who oversees $2.5 billion of high-yield assets at TIAA- CREF in New York. ‘You cannot do fundamental analysis and believe that those are creditworthy companies.’”

“The combination of the worst slump in home prices since the Great Depression and the slowest U.S. economic growth in four years during the first quarter is driving investors away from riskier debt.”

“‘Demand has spiraled out of control,’ said bond fund analyst Sukrita Sethi, who helps oversee $2 billion at an affiliate of Fidelity Investments. ‘We think the market is overpriced. There’s a little bit more scope for spreads to tighten, but a lot more scope for widening.’”

“Goldman Sachs has put two German property portfolios valued at up to €3bn ($4bn) up for sale in the latest sign of international investors exiting the market.”

“News of the two deals is likely to raise questions over whether other foreign investors in German property are heading for the door.”

“New Century Financial Corp., a collapsed subprime lender that is liquidating in bankruptcy, said on Thursday the U.S. Securities and Exchange Commission has elevated its investigation of the company to formal status. A formal probe gives the SEC subpoena power.”

“Irvine, California-based New Century was the largest independent U.S. provider of home loans to people with poor credit before filing for Chapter 11 protection on April 2 amid mounting customer defaults.”

“It shut down its lending business, is selling other major assets and has replaced most top executives.”

The LA Times. “The SEC began looking into New Century after Wall Street cut off the lender’s funding, several states revoked its licenses and it disclosed a federal criminal investigation of its accounting, which had failed to acknowledge a rising tide of loan defaults.”

“In April, New Century sought bankruptcy protection from creditors, chiefly the Wall Street firms that had provided the money that New Century lent to its mortgage customers. The Wall Street firms also purchased the company’s loans and pooled them to create bonds backed by mortgage payments.”

A report from the Arizona Republic. “A growing number of homeowners behind on their mortgage and facing foreclosure are finding a way to sell despite the glut of Valley homes for sale. They are turning to ’short sales.’ ‘Short sales are the buzz in the market now,’ said Tom Ruff of a research data firm based in Glendale. ‘With foreclosures climbing and homes prices falling, short sales are bound to climb.’”

“A brother and sister from California recently approached Phoenix real estate agent Brett Barry about their house here in the Valley. The pair paid $597,000 for the investment home in Tatum Ranch at the height of the housing market in 2005. Now, they can no longer afford to keep it. And with a record number of Valley homes for sale, their chances of selling the home for what they paid are slim.”

“‘I ran the numbers, and the house won’t sell for more than $495,000 now,’ said Barry. ‘They didn’t put any money into it. They have an interest-only loan. They could only rent it for about $1,800 and month, but their payment is $3,500.’”

“He told them they could do one of two things: Work out a short sale or call the lender and hand over their keys.”

“At a recent foreclosure-prevention town hall meeting in Phoenix, the director of National Initiatives for mortgage giant Freddie Mac encouraged housing advocacy groups and lenders to steer people toward short sales if their only other option is foreclosure.”

“‘We have an investment to protect as well as a moral responsibility to help people avoid foreclosure,’ Christina Diaz-Malones said.”

“A few years ago, most Valley homes to go to the foreclosure auction block enticed multiple bids from investors. But now, lenders are taking back 80 percent of the homes they are foreclosing on. Investors have stopped bidding on many houses because they can’t make money on a resale.”

“‘Almost everyone we are seeing now for default counseling owe more than their house is worth,’ said Joann Hauger of Community Housing Resources of Arizona.”

The Rocky Mountain News from Colorado. “The Denver-area resale housing market in June had its strongest performance this year, as expensive homes drove up the average sales price of all those that sold and closed to a record $304,055. The median, or middle, price of a single-family home was $263,008, also a record.”

“The records were set because of the mix of homes being sold, not because most houses are appreciating, said independent broker Gary Bauer said.”

“He said many prospective sellers are unwilling to put their homes on the market because they would have to compete against a record number of foreclosures, which is putting a lid on the supply.”

“Karen Easton, Metro Brokers’ board president, agreed. ‘I see the higher end selling and the lower end sitting longer,’ she said. ‘There’s a glut of foreclosures (at the lower end) and from what I am seeing, they are not priced well.’”

“She said one client sold a home for $340,000, which would have fetched $350,000 to $359,000 18 months ago. But the seller turned around and bought a home out of foreclosure for $530,000 ‘that is probably worth $100,000 more than that. … So if you lose $10,000 on your sale, who cares, if you’re making $70,000 or $80,000 or more when you buy? People are getting great deals at the upper end. It’s a great time to be a buyer.’”

“Sales of new homes in the Denver area were down 36 percent in the first five months of the year, compared with the same period in 2006, according to DataQuick. ‘I think we shouldn’t be building very many houses in the state right now, given some of the foreclosure issues and the current supply of homes for sale on the market,’ said University of Colorado economist Richard Wobbekind.”

“The FBI took Colorado off its nationwide list of top mortgage fraud states. Instead, the FBI lists Colorado as one of nine states that are ’significantly affected by mortgage fraud,’ according to the bureau’s 2006 Mortgage Fraud Report.”

“Experts said they were encouraged that Colorado moved off the list, but they have not seen any drop in foreclosure filings or in apparent fraud. ‘I guess that is good news, but I’m not sure it has all gone away,’ said Carol Snyder, public trustee for Adams County.”

“‘Unfortunately, we’re still seeing a lot of problems,’ she said. Foreclosures are up 48 percent in Adams County in the first six months of the year, compared with the same period in 2006, she said.”

“Earlier this year, Colorado legislators adopted laws that they hope will stem the tide of record foreclosures. Colorado is expected to have at least 37,000 foreclosures filed this year.”

“‘It is way too early for the laws to have any impact’ on foreclosures, said mortgage lender and consultant Jim Spray.”

“Spray said he doesn’t think the flurry of new laws will slow the ‘tide of fraud,’ though he said licensing brokers will make them more accountable.”

“‘However, this will not remotely impact the out-of-state rip-off artists,’ Spray said. ‘This is something our legislators do not understand. For the bad actors, it is still full speed ahead, and there is not enough money to prosecute them.’”

From KOAA in Colorado. “Real estate appraisers in Pueblo are under the microscope. The Colorado Division of Real Estate says it’s gotten a number of complaints claiming that dishonest appraisers have overvalued the price of homes, which they say is contributing to a high number of foreclosures.”

“However, one appraiser in Pueblo say predatory lenders deserve some of the blame. ‘They want us and pressure us to get the value as high as possible and they’ll go somewhere else for appraising if they don’t get that value,’ said Randy Hartman, an appraiser in Pueblo.”

The Dallas Morning News from Texas. “Mario Ramirez’s mother had never met his two sons. But in 2005, the 84-year-old woman lay dying in Colombia, and Mr. Ramirez knew he had to take his 7- and 11-year-old sons to see her. He just didn’t know how to pay for the trip.”

“A local lender from Ameriquest Mortgage Co. suggested an answer. The value of Mr. Ramirez’s two-bedroom home near Garland Road in East Dallas had risen perhaps $30,000 since he bought it for $48,000 in the late 1990s. He could refinance his mortgage and pocket thousands.”

“Two years later, payments on the adjustable-rate subprime mortgage Mr. Ramirez and his wife unwittingly signed up for have ballooned to more than $1,250, the result of past-due taxes and a hefty 10.25 percent interest rate, vs. the $540 a month he paid under his old loan. The Ramirez family is in danger of losing its home.”

“Just a few years ago, economists might have pointed to people like the Ramirezes with pride. A boom in the national homeownership rate, from just under 65 percent in 1995 to nearly 69 percent by 2006. Interest rates were the lowest in decades. And rapid appreciation in many home markets seemed to practically guarantee that these new buyers would build equity fast.”

“Now, Texas ranks third in the nation in the number of foreclosures, according to RealtyTrac. Homes posted for foreclosure in the Dallas-Fort Worth area rose nearly threefold between 2000 and 2006, according to Addison-based Foreclosure Listing Service Inc.”

The Houston Chronicle from Texas. “Rising foreclosures and the near-collapse of the market for home loans to those with bad credit triggered a flood of proposals from Texas lawmakers during the past legislative session.”

“One bill that passed, HB 716, is designed to thwart mortgage fraud by creating reporting requirements and a task force to fight fraud, and making sure buyers get notices warning them against committing fraud.”

“Lawmakers focused on brokers instead of the banks because the state can’t regulate all banks since some are nationally chartered, state regulators said.”

“Reporter Purva Patel recently spoke with Olga Kucerak, head of the Texas Association of Mortgage Brokers, about recent legislation and the state of the industry.”

“Q: Legislation proposed this past session would have created a fiduciary duty between the broker and buyer. Do you think there should be such a duty?”

“A: The fiduciary duty we have, we have an obligation and contract by our wholesalers on what we have to do. We also have a mortgage broker’s agreement that tells the client exactly what we do and that we are a retail shop. You can shop around. The answer is no, but I’m trying to give you an explanation because we can’t really serve two masters.”

“Q: Are there any kinds of loans that you think shouldn’t be made? A:…There may be some people who shouldn’t have bought homes, who weren’t educated. I think the underwriters are reviewing everything and the ones that are considered high risk, if you will, they’ve tightened it up. Certain credit scores, they won’t do those now.”

“The pace of apartment rental in Dallas-Fort Worth has ground nearly to a halt this year. And the dramatic slowdown in apartment demand in North Texas has left industry analysts scratching their heads.”

“‘It’s pretty ugly,” said apartment consultant Greg Willett. ‘Results for the second quarter fell way below expectations,’ he said, with virtually no increase in apartment rentals.”

“For the first half of 2007, net apartment leasing has added up to only about 300 units. Compare that with the more than 7,000 net apartments leased in the first six months of 2006.”

“Mr. Willett blames a combination of homebuilder giveaways and for-rent homes for stealing the apartment market’s thunder. ‘While there are lots of new jobs in Dallas-Fort Worth, the associated housing demand just isn’t going to the apartment sector,’ he said.”

“Instead, renters are snapping up new-home bargains or renting houses put up for lease by investors. ‘The number of single-family homes available for rent appears to be way up, even though many aren’t getting rental rates that actually cover mortgage costs,’ Mr. Willett said.”

“Unless apartment demand recovers, developers could be headed for a train wreck with almost 13,000 units in the construction pipeline, according to M/PF YieldStar’s latest estimate.”

“‘What’s saving the market’s overall performance from cratering is that Dallas-Fort Worth leads the country in teardowns, mostly to create redevelopment sites,’ Mr. Willett said. ‘Because removals have been so numerous, total inventory actually dropped by about 400 units during 2007’s first half.’”

“More than 3,500 D-FW area apartments were demolished in the last six months. Even with all the demolitions, overall vacancy rates inched up to about 7 percent. And average monthly apartment rents in North Texas at the end of June were $716 – up about 1 percent from a year ago.”

“‘This pattern isn’t seen just in Dallas-Fort Worth,’ Mr. Willett said. ‘Atlanta looks like the most extreme example.’ Tenants moved out of almost 5,000 net rental units in the Atlanta area so far in 2007, he said.”

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

And send your housing bubble photos to:

hbbphotos@gmail.com