The Housing Bubble

The North County Times reports from California. “Illustrating the area’s topsy-turvy real estate market, the median price of single-family homes sold last month hit a record high of $667,000, even as industry experts bemoaned what they saw as a declining market. The 807 North County single-family detached homes sold in June was off 32 percent from June 2005, according to the report.”

“‘It’s a buyer-seller standoff,’ said Michele Williams, a real estate broker, as she sought to reconcile higher prices with lower sales numbers. ‘Nothing’s really selling.’”

“Williams said that buyers are waiting for prices to fall, while sellers are convinced that they won’t. ‘If sellers would drop their price a bit more, we’d see a lot more activity,’ she said.”

“Her analysis of aggressive pricing seems to explain one of the trends in the report. The median price per square foot, another way of measuring price, was $305 in June, down from $330 in June 2006. So those homes that do sell are selling for less than they might have a year ago.”

“Another way to explain the disconnect between higher prices and slower sales is that higher-priced homes are moving more briskly than lower-priced homes.”

The Selma Enterprise. “The recent real estate bubble has burst, but with lower home prices, there’s opportunity for the discriminating buyer.”

“‘Inventory is pretty heavy now,’ said Larry Lungren, owner of Kingsburg Realty and Selma Properties. ‘I think we’re in a buyer’s market now. There’s no competition for buyers, it seems like they can probably negotiate a pretty good deal.’”

“One trend has been increasing foreclosures due to loan officers making it easy for just about anyone to get a home loan during the housing boom.”

“‘The loan officers got very creative,’ said Lungren. ‘Very little down, adjustable mortgages, interest only payments. There’s going to be some short sales going up, and there’s going to be some foreclosures.’”

“‘The problem with existing homes is that they’re competing with brand-new homes that are in even lower price ranges,’ said real estate broker George Uribe. ‘So when you’re a new home buyer and you’re looking to buy a house, the choice is very obvious. A lot of people would want to buy a new house.’”

From MSNBC. “How do you deal with excessive supply? Add more supply! Sounds like a head scratcher, but that’s exactly what home builders are doing.”

“California’s Central Valley is once the hottest housing pocket of the country, counting for one in every 25 homes built nationwide. Now it’s going through a painful contraction after the tremendous growth busted. Yet Standard Pacific Homes is piling up Spec homes in the town of Manteca.”

“In the Standard Pacific development here in Manteca, we only found one ’sold’ sign.”

“You might wonder why home builders would dig larger holes for themselves. Standard Pacific won’t comment for the story, saying the company is in the quiet period before posting earnings.”

“But Ara Hovnanian, CEO of home builder Hovnanian Enterprise said recently that building Spec homes is about the only way to liquidate land these days. ‘It’s easier to sell land by popping a house on it than it is to just sell land because there are just not many buyers out there,’ he said.”

“When no one buys the homes, home builders slash prices. Joe Anfuso, president of a private smaller rival in Manteca’s local market, says the build-and-slash cycle has happened three times since October.”

“‘At some point, some executive has got to stand up in the boardroom say, maybe we should just stop prostituting our best asset, and wait for the market to come back to us,’ Anfuso said. ‘We know California land always pays off, and by giving it away, we’re not doing the market or ourselves any good.’”

“Anfuso said intensified local competition has also forced him to slash prices several times. And that’s about the outcome of this spec home buildup: The big guys squeeze out the little guys in a price war.”

From ABC 30. “The real estate slump has led Merced County to give thousands of homeowners tax breaks this year. About 6,500 Merced County homeowners have received letters letting them know they will receive tax breaks this year. But, the bad news is it’s because their property values have fallen.”

“California showed a jump of 30% in May and an amazing 350% jump in foreclosures compared to last year, according to the most recent ‘Realty-Trac’ survey.”

“Amelia Peterson was surprised to receive a letter from the county assessor over the weekend, but she wasn’t surprised by what it said. Peterson says, ‘My house has taken a drop approximately $50K.’”

“Peterson…bought her house just as the real estate boom began about two years ago. At that time, people were lining up to buy homes. Peterson says, ‘It was interesting because then, every month homes were going up $5 to $10K, so if you wanted to get a house, you had to get in there and get it.’”

“More than 300 Merced County homeowners have foreclosed so far this year, and property values are still slipping.”

“Real estate agent Gail McCullough says, ‘It’s a wonderful time for buyer’s because the rates have come down, the interest rates are excellent, and of course the market values have come down.’”

The Orange County Register. “Home shoppers in Orange County and other parts of Southern California will no longer know how long a residence has been on the market unless they ask. The Southern California MLS has stopped providing ‘days-on-market’ data in client reports.”

“The Anaheim-based MLS, the nation’s second-largest listing cooperative, maintains that the days-on-market data has been inaccurate and abused. The information can’t be understood without some explanation, MLS leaders said.”

“Agents still will have access to that information and can provide it to consumers if they wish. ‘The listing history record is complex and requires some interpretation,’ said Russ Bergeron, CEO of SoCal MLS.”

“‘There has been much discussion, contention and even litigation over days-on-market and cumulative days-on-market figures,’ the MLS said in a statement recently posted on its Web site and e-mailed to members. ‘One view is that it hurts sellers, another is that it helps buyers.’”

The Fresno Bee. “Rotten leaves and insect corpses float on pea-soup colored water in a Mickey Mouse-shaped pool at an abandoned house in west-central Fresno.”

“It’s just one of 827 swimming pools in Fresno and Clovis that district workers have treated this year, far more than in any recent year, officials say. District officials are monitoring 1,000 more pools, and they say there are hundreds more they don’t even know about.”

“‘It’s a nice neighborhood. You would never guess a pool like this would be here,’ said Roy Benavides, an area supervisor with the Fresno Mosquito and Vector Control District.”

“Foreclosures appear to be a huge factor in the proliferation of neglected pools, said Steve Mulligan, manager of the Consolidated Mosquito Abatement District, whose district covers Clovis and north and east Fresno.”

“‘People who can’t afford to pay for their homes will neglect their pools, they’re the first thing to go,’ said Mulligan. ‘Then they move out, and there’s really no one to maintain them.’”

“Home foreclosures have been on the rise in the Fresno and Clovis area. The number of foreclosure notices sent to homeowners in Fresno County has more than doubled between the first quarter of 2006 and this year’s first quarter, from 540 to 1,116, according to DataQuick.”

“Real-estate agents estimate that 4,000 to 6,000 unsold Fresno and Clovis homes are on the market.”

The Review Journal reports from Nevada. “The inventory of single-family homes available for sale in Las Vegas climbed to a record 23,642 in June, topping the previous peak of 23,474 in October, the Greater Las Vegas Association of Realtors reported Monday. The number rose 18.1 percent from the same month a year ago.”

“‘We see this as another sign that sellers should be more realistic about the time their home can spend on the market,’ said Devin Reiss, president of the Realtors association.”

“The median price rose 1.2 percent from the previous month to $305,000 although it’s still down $10,000, or 3.2 percent, from last year.”

“The number of condos and townhomes for sale was 6,263, an increase of 35.3 percent from a year ago. The median price of $194,250 is down 5.2 percent from June 2006. There were 1,476 single-family home sales in June, down 41.6 percent from a year ago.”

From Las Vegas Now in Nevada. “A zip code-by-zip code analysis found that an area of North Las Vegas has one of the nation’s 10 worst rates of home foreclosure. Our area has 8 in the top 100, and according to Realty Trac, we also have 24 zip codes in the top 500.”

“Eric Banks moved to Las Vegas from California a few years ago. Work was steady, it was a buyer’s market, so he bought a home in Summerlin. Today, he is close to losing his home to foreclosure, because he can’t make the mortgage payments.”

“‘The only option is to sell or foreclose,’ said Banks. ‘I’m unable to make the payments. I’m watching the value of my house drop,’ he said.”

“He’s missed his mortgage payment twice and says there is nothing he can do about it.”

“‘I am one of those people who got into a house when I was making a good deal of money and over the last year I’ve seen my income drop by 60- 70%,’ said Banks.”

The Arizona Republic. “Less than a month after lawmakers approved a $10.6 billion state budget, revenues are already falling short of projections, a state budget report says. In fact, the state may wind up with a deficit for the just-concluded fiscal year, raising the prospect of a bumpy financial path in the coming year.”

“Figures from the Joint Legislative Budget Committee show that the most recent tax collections are $139 million below that forecast.”

“One of the major factors leading to the decline in tax revenue is the slowdown in the housing market, the report states. The state showed a drop of 900 construction jobs in May, compared with a 10-year average gain of 2,200 construction jobs in May.”

“The budget committee report strikes a wait-and-see attitude about what the decline in tax collections could mean. It’s hard to project what may happen in coming months, as uncertainty continues about the housing market and the national economy moves at a slower pace.”

“The budget report notes that individual income-tax collections this May fell 27 percent from May 2006, a drop of $114 million from what was forecast. Money from the corporate income tax dropped 10 percent. And sales-tax collections are at their lowest point in four years, falling $35 million below the predictions on which the current budget is based.”

“The report says the stunning 20 percent boost in tax collections that the state saw in 2005-’06 was a one-time event and can’t be counted on to bail the state out in leaner times.”

The Denver Post from Colorado. “Some mortgage lenders in Colorado are scaling back the type of loans they provide to consumers through mortgage brokers, prompted by a regulatory change aimed at reining in unscrupulous mortgage brokers.”

“Some lenders operating in Colorado are no longer offering through brokers so-called ‘no-documentation’ loans, which allow consumers to take on mortgages without having to provide extensive documentation proving their income levels.”

“The move by the lenders is partly in response to Senate Bill 216, which made mortgage brokers potentially liable for selling loans to people who might not be able to afford them. The law, which took effect July 1, requires brokers to ‘make a reasonable inquiry concerning the borrower’s current and prospective income’ and to act with ‘good faith and fair dealing’ when selling mortgages.”

“While the law at issue suggests that brokers, not the lenders, are liable if the loans violate that good-faith standard, some lenders have decided to pull back anyway on the use of no-documentation loans, industry officials said.”

“‘The result of (SB 216) is that there is uncertainty on whether lenders can make these loans,’ said Chris Holbert, president of the Colorado Mortgage Lenders Association. ‘We hope we can find a remedy next legislative session.’”

“Some lenders remain concerned that they could become snarled in a lawsuit if they provide lending to brokers who sell no-documentation mortgages but neglect to verify the borrower’s income, said Jim Lewis, president of Clarion Mortgage Capital Inc. in Denver.”

“‘Confusion causes paralysis,’ said Lewis, whose mortgage-lending company has scaled back the use of no-documentation loans. ‘There are still concerns for lenders, and that could impact the availability of credit and exclude certain borrowers.’”

The Rocky Mountain News from Colorado. “Denver should create an ombudsman to deal with the record foreclosures rocking the city, a task force is recommending. ‘I would describe it as a foreclosure czar or a housing czar,’ said Michael Hancock, City Council president.”

“Since 2002, the city has experienced an estimated 400 percent increase in the number of foreclosures. In 2006, a total of 5,162 foreclosures were reported, a 14 percent increase from the prior year, the report said.”

“Montbello, in particular, will need help from the public sector, said Hancock, who represents the northeast Denver area. Last year, there were more than 900 foreclosures in Montbello, and Hancock said he expects at least that many this year.”

“‘The market will take care of Green Valley Ranch,’ where there also are a large number of foreclosures, he said.”

From CBS 4 Denver in Colorado. “The latest reports show the number of unsold homes on the market was down 5.2 percent at the end of June compared to last year. The record number of foreclosures during the past year is still affecting the re-sale market. Analysts suggest many potential sellers are holding back for fear of competition from low priced homes in foreclosure.”

“Analysts believe the market in the Denver area has stabilized. Local real estate broker Gary Bauer predicts the state will end the year with the same number of transactions as last year.”

“‘We’re not like Las Vegas,’ he said. ‘We’re not going to see a 40 percent drop in value overnight. Yes, we’re going to see some ups and downs and we’re going to end up the year probably fairly flat.’”

Some housing bubble news from Wall Street and Washington. “Ryland Group Inc. said late Tuesday it expects to report a second-quarter loss of $1.25 to $1.35 a share. The Calabasas, Calif.-based homebuilder said that due to ‘continued deterioration in the housing market,’ it expects to incur $145 million to $155 million in pre-tax charges related to inventory impairments and write-offs in the quarter.”

“The impairments are associated with assets in Arizona, California, Florida and Nevada.”

“Preliminary sales for the second quarter were 2,521 units, down 16.6 percent from the second quarter of 2006. Cancellations were approximately 34 percent of gross orders for the quarter. Preliminary closings totaled 2,461 units in the period, compared to 3,803 units in the second quarter of 2006, a decline of 35.3 percent.”

“With headquarters in Southern California, Ryland is one of the nation’s largest homebuilders and a leading mortgage-finance company.’

From MarketWatch. “‘It is becoming clear that there has been a significant uptick in the cancellation rates among home builders during the June quarter as a result of potential buyers’ jitters over the subprime problem and falling home prices,’ said analyst Lili Zhang.”

From CNN Money. “The slump in home sales and prices will be deeper and last longer than previously expected, according to the latest forecast Wednesday by the National Association of Realtors.”

“The trade group is now looking for flat prices for existing homes in the first quarter of 2008 compared to the first quarter of 2007, and a more year-over-year declines for new home.”

“The group now sees second-quarter existing home sales falling below the 6 million annual sales pace to a 5.96 million rate. If it is correct, it would be the first time in four years that quarterly sales were below the 6 million home annual sales pace.”

“A month ago, the group was forecasting the pace of sales would end the second quarter at a 6.03 million annual rate, and stay above that 6 million threshold through the rest of this year and into 2008.”

“‘Buyers now have an overwhelming advantage given the wide selection of homes available in many markets,’ said Lawrence Yun, NAR senior economist, in the group’s forecast statement. ‘Local conditions vary considerably, but with historically low mortgage interest rates this summer and sustained job gains, it could be a good time for first-time buyers with a long-term view to test the housing waters.’”

“Paul Kasriel, chief economist with Northern Trust in Chicago, questioned the Realtors’ assessment that this is a good time to enter the market, saying weak sales and prices suggest that potential buyers are smart to be sitting on the sidelines right now.”

“‘No one is buying into their Kool-Aid; that’s why prices are falling,’ he said. ‘It could be that they’re going to fall a lot more. The Realtors tend to be overly optimistic. Eventually they’ll be right about prices turning around. I don’t know when prices are going to stabilize but I suspect they’ll fall more than they think this year. It may be a much better time to buy six months or a year from now.’”

“The realtor’s press release was headlined ‘Home prices expected to recover in 2008 as inventories decline’ — even though the forecast median price for existing homes in 2008 was unchanged from last month’s at $222,700.”

“The median sales price of an existing home is expected to fall 1.4% this year and rise 1.8% next year. The median sales price of a new home is expected to fall 2.6% this year and rise 2.2% next year.”

The Associated Press. “Hours after Standard & Poor’s warned that it may cut the credit rating of more than $12 billion in bonds backed by risky home loans, another agency downgraded its rating on hundreds of similar securities.”

“S&P and Moody’s Investors Service said they made the moves because borrowers are missing mortgage payments at levels much higher than anticipated.”

“Lower ratings for mortgage-backed bonds could cause a domino effect that might ultimately strangle what until this year was a major propellent of home prices: easy access to money.”

“Moody’s lowered its rating on 399 of the bonds, known as residential mortgage-backed securities and said it may downgrade 32 more. All of the bonds were issued in 2006.”

The New York Post. “Wall Street is bracing for a nearly $2 trillion washout over the collapse of hollow and shaky mortgage bonds, triggering fears of a recession worse than the dot-com bubble bursting.”

“S&P slammed only a chunk of the half-trillion in mortgage bonds it monitors - about 2.1 percent or $12 billion, but said housing prices could crash by 8 percent this year to make matters worse. Moody’s downgraded $5.2 billion of mortgage securities.”

“Some economists are alarmed that shaky mortgage paper - which could be exposed to be worth barely 60 percent of current purported values - are parked throughout the investment world in mutual funds, hedge funds, financial institutions and other investment pools around the world.”

“Analysts say that there could be a wholesale stampede to unload any newly tainted securities, causing a scramble for capital and forcing hedge funds to give back billions to rich investors.”

“Meanwhile, the market for the new securities and their recycled derivatives, called collateralized debt obligations, is quickly collapsing, closing the window for underwriters to earn back their money.”

“But when the credit rating agencies formally downgrade their mortgage securities later this week, it will force many of CDOs in limbo to be reevaluated for realistic prices that could be as much as 40 percent lower than on the books.”

The Street.com. “Bear Stearns is set to offload about $450 million of securities tied to one of its failing hedge funds. The offering consists of securities from a cash collateralized debt obligation tied to a credit from debt backed by subprime mortgages.”

“The CDO debt list is peppered with fixed- and floating-rate junk debt but includes primarily securities that carry higher-credit quality as rated by Standard & Poor’s and Moody’s Investors Service.”

“Observers had expected that Bear might call off the offering, given Tuesday’s firestorm wrought by Moody’s and S&P’s threatening to downgrade of billions of dollars’ worth of bonds backed by subprime mortgages. Despite the worries, Bear appears set to follow through with the sale. A spokesman didn’t return calls Wednesday seeking comment.”

From Reuters. “Housing jitters intensified when Standard & Poor’s said it may downgrade $12 billion worth of bonds backed by subprime loans, signaling the rating agency’s conviction that the future holds more subprime defaults.”

“Defaulters will return housing stock to the market, driving home prices down and pinching builders’ profits still further, said analyst John Tomlinson of Majestic Research in New York.”

“‘How much more inventory is going to be put back into the market, when there’s already too much inventory already?’ Tomlinson said.”

“The wave of defaults has caused lenders to tighten credit standards, which in turn reduces the potential pool of first-time buyers, Tomlinson said.”

“The reduction in those numbers, combined with a surplus of more affordable inventory, could have a negative effect even on more-upscale builders by leaving real bargains available at the market’s lower end and lowering prices generally, said Tim Ghriskey, chief investment officer with Solaris Asset Management.”

“‘You don’t have motivated buyers out there, because pricing was at bubble levels and it’s coming down. So they think, ‘I can wait a little bit longer, and get lower prices,’ Ghriskey said.”

“Housing is soft despite favorable interest and employment rates, Tomlinson pointed out. ‘If any of those pillars were to fall, the housing market could experience further decline especially because inventories on the new and existing side remain way too high,’ he said.”

From Bloomberg. “Corporate bond risk soared in Europe by the most in at least three years as debt rating downgrades on U.S. subprime securities triggered a worldwide selloff, according to traders of credit-default swaps.”

“Europe’s iTraxx Crossover Index jumped as much as 41,500 euros to 308,000 euros, the biggest daily move since the index was created three years ago, according to JPMorgan Chase & Co. The CDX North America Investment-Grade Index of credit-default swaps on 125 companies increased $2,500 to $50,750, the highest in 19 months, Deutsche Bank AG prices show.”

“The Crossover index may rise as high as 400,000 euros because of ’subprimemania,’ as well as concern about falling corporate earnings and rising oil prices, Jochen Felsenheimer, head of credit strategy at Italy’s biggest bank Unicredit Group, said in a note to investors today.”

“‘The Goldilocks scenario for credit markets is definitely over,’ Munich-based Felsenheimer said. ‘These rating actions, the biggest ever in the subprime market, have the potential to trigger an even more substantial move in credit markets.’”

“The credit quality of subprime mortgage bonds fell to a record yesterday in New York. The ABX-HE-BBB- 07-1 index that tracks securities rated BBB- fell 7.4 percent to 51.42, according to the index administrator. The index has declined by almost half since January, reflecting the increased likelihood of default on the underlying securities, which have the lowest investment-grade ratings.”

“‘People are very nervous,’ said Alex Moss, who helps manage $94 billion of fixed-income assets at Insight Investment Management in London. ‘There’s a lot of concern the selloff in subprime will feed through to the wider market. Until the market finds a floor, it’s difficult to see where the buys are going to come from.’”

“The U.S. economy and financial system are in fine shape despite the ongoing troubles in the housing market and subprime lending sector, said Charles Plosser, president of the Federal Reserve Bank of Philadelphia in a speech in London.”

“Plosser said the unwinding of the housing boom has led to a slower economy, but not to the bust many had been forecasting. ‘It seems unlikely that we will see significant spillover effects on aggregate consumption from the housing sector,’ he said. The paper losses that many homeowners have experienced on their home equity ‘are likely to have only a modest effect on their consumption patterns.’”

“Plosser spent much of his speech defending the Fed’s inaction when the housing bubble was inflating. He, like every other Fed official before him, said the Fed has no business trying to identify and deflate asset price bubbles.”

“He worried that any move by the central bank to deflate bubbles would be ineffective or counterproductive. In addition, he said, trying to prick asset bubbles could hurt the central bank’s credibility by creating a ‘ceiling on rates of return on certain assets.’”

“In fact, the Fed may have the opposite problem, with many critics saying the Fed has created a ‘floor on rates of return,’ quickly bailing out investors when markets fall by lowering interest rates, a phenomenon widely known as the ‘Greenspan put.’”

Providence Business News reports from Rhode Island. “John Sinnott, managing director of Providence operations for Struever Bros., said in an interview that the company has decided to drop plans for 78 condominiums in the $80 million project, opting to market all of the development’s 249 units as rentals. Sales of the units never took off. ‘There’s just been a turn in the market,’ Sinnott said. ‘We’ve been talking about it for years, and it finally came.’”

“Struever is not the only developer to drop or scale down condo plans. Blue Chip Properties and Granoff Associates, developers of the One Ten Luxury Residences, announced in January that they would scrap 60 of the planned 130 condos in the Westminster Street project, and add a hotel to the building instead.”

“Colin Kane, principal of East Providence-based The Peregrine Group, said there ’seems to be a glut’ of condos, and many lenders are shying away from new developments.”

“‘What I’ve been telling my real estate agents is make sure you have all of your condominiums aggressively priced,’ broker Meredyth Church said.”

The Concord Monitor from New Hampshire. “Drive down some Concord streets, and it seems like an exodus is underway. The ‘For Sale’ signs seem to be everywhere. Since some owners sell their homes themselves or use internet services, it’s impossible to say exactly how many are on the market.”

“In May, 4.7 percent more people put their houses on the market than in May of 2006. The average Merrimack County home took 25 days longer to sell. That kept signs on lawns much longer, so people saw them more often.”

“More homes for sale, plus higher interest rates and property tax bills, caused prices in Merrimack County to fall an average of 2.9 percent, from January to May. But prices still are far from affordable for the young workers the state’s economy needs to prosper.”

The News Times from Connecticut. “William Gonzalez of Bridgeport said he started with a dream to buy his first home. He told the brokers and lenders he used he could afford a monthly payment of $1,200 to $1,800. What he ended up with was a $2,400-a-month mortgage for a house he’s going to lose in a month.”

“Tuesday at the state Capitol, Gonzalez told the Governor’s Task Force on Sub-Prime Mortgage Lending about a baffling process involving real estate agents, brokers, lenders, and even a lawyer, none of whom was representing his interests.”

“He said negotiations started with him saying what he could afford, and brokers showing him a $315,000, three-bedroom house and telling him he could afford it. He qualified for the loan, which they found for him. He agreed, made a down payment, and when all the paperwork was done, he discovered he was buying a $324,000 house.”

“What all this will mean for Connecticut’s economy remains unclear. ‘In Connecticut it’s not worse than the nation, probably,’ Fairfield University economics professor Edward Deak said. ‘But it’s not better.’”

“‘Mortgage lenders saw an opportunity to make a lot of money off of people who are less sophisticated when it comes to loans,’ he said.”

“The clients were told they could handle the loans and refinance later. What they were not told is if the home they bought lost value, it would be nearly impossible to refinance.”

The News Journal from Delaware. “Foreclosure filings in Delaware rocketed to a record high over the past year, up 29.5 percent from the previous year, court records show. Delaware filings for the month of June were higher than any month of the year in all three counties.”

“‘Most of these stories are very sad, whether it’s a medical bill or divorce or just, ‘My God, what did we do? We can’t afford this!’ said Loretta Forsythe-Walsh, chief deputy of the New Castle County Sheriff’s Office.”

“And it may get worse. ‘Most people are expecting foreclosures to peak early next year,’ said Gerry Kelly, Delaware’s deputy bank commissioner for consumer affairs. ‘Next year is not going to look any better.’”

“Homeownership ballooned in the past decade as lenders loosened up on standards, offering mortgages to people with shaky credit and introducing creative financing that allowed people to buy a home that they otherwise couldn’t afford. ‘There were more people in that middle-income class range that were really stretching to buy a home in this last run-up,’ said Ira Goldstein, policy director for a Philadelphia-based firm that has studied Delaware foreclosures.”

“When housing prices were climbing, homeowners could re-finance or sell the property if they were in over their heads. But once the housing bubble fizzled, it became more difficult to sell, refinance or tap into home equity.”

The Baltimore Sun from Maryland. “Metro area home prices advanced nearly 5.5 percent in June, led by Baltimore City where the average price breached the $200,000 mark for the first time, statistics released yesterday showed.”

“But with sales volume dropping at a double-digit rate and listings continuing to mount, economists said that the price gain likely was the result of a shift to more expensive homes rather than a sign that the housing slump was nearing an end.”

“That’s because it’s the pricier homes that are selling, both in the city and suburbs, said economist Anirban Basu, CEO of Baltimore-based Sage Policy Group Inc.”

“‘At the higher end, there continues to be a race for superior properties as [buyers] compete against each other,’ he said. ‘The homes that are selling are disproportionately higher-end homes.’”

“Those looking for an end to the housing slump will have to wait longer, Basu said.”

“‘I think that the down cycle in housing has a bit farther to run, probably through the balance of 2007 and into 2008,’ he said. ‘There is so much active inventory…and with so much product competing for buyers’ attention, buyers are in no rush to purchase a home with reasonably average amenities.’”

“Every jurisdiction posted fewer sales. Carroll had the sharpest drop, nearly 18 percent, while Howard County’s decline was the smallest at 7.29 percent.”

“Listings swelled to a record of nearly 20,000, as only 3,197 sales contracts were signed.”

“‘Buyers are not as pressed to work something out,’ said broker Pat Hiban. ‘It used to be people would find a house they fell in love with first and negotiate second. They were going to work the deal out. Now they’re negotiating first and deciding second.’”

“Real estate agents said they are urging their seller clients to heed the market.”

“‘Our marketplace right now is like a bad weather market for sellers,’ said John Toner, a broker in Columbia. ‘If you make a mistake in this market, you’ll be punished for it more severely than in the last few years. Buyers have a lot more to choose from; they are being a lot pickier, and they have almost no sense of urgency.’”

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