The Housing Bubble

Bloomberg reports on California. “California mortgage defaults rose to the highest level in a decade in the second quarter as falling home sales and higher interest rates battered the housing market. Homeowners received 53,943 default notices, more than double the 20,909 filed a year ago, DataQuick said today. Last quarter’s default level was the highest since the fourth quarter of 1996, when 54,045 notices were recorded in California.”

“Most of the loans that went into default in the second quarter were originated between July 2005 and August 2006. Loan originations peaked in August 2005. ‘We’re going through a lot of that activity,’ DataQuick analyst John Karevoll said in an interview. ‘There’s more to come.’”

“The number of defaults resulting in foreclosures is the highest since DataQuick began keeping records. The previous high was in early 1994, when about 30 percent of defaults resulted in foreclosures, Karevoll said.”

“Only 55 percent of homeowners are able to avoid foreclosure because a greater number now have multiple loans on their properties.”

“In the past, when a homeowner had just one mortgage, the lender would often allow the borrower to sell the home for less than the amount owed on it and take the loss, known as a short sale, Karevoll said.”

“‘They can’t do it that way anymore because the primary lender can’t tell the secondary lender, ‘We’ll take all of the sales price here and you get nothing,’ Karevoll said.”

The Union Tribune. “DataQuick reported on Tuesday that during the first half of 2007 San Diego County had 2,896 foreclosures compared to 445 during the first half of 2006, a 551 percent increase. Notices of default, the first step in the foreclosure process, totaled 8,314 for the first six months of 2007, compared to 3,311 in the same period last year, a 151 percent increase.”

“DataQuick attributed the spike to ‘flat or falling prices, anemic sales and a market struggling with the excesses of the 2004-2005 home buying frenzy.’”

“‘There is no sign that they are on the verge of turning around,’ said University of San Diego economist Alan Gin. ‘It could take a while for this thing to shake out.’”

The LA Times. “Foreclosures in the state during the second quarter totaled 17,408, up 799% from the same period last year. The current rate handily eclipsed the previous foreclosure peak set in 1996, when the state was in the final throes of six-year slump.”

“‘We’re clearly in for a worse third quarter and an even worse fourth quarter,’ said John Karevoll, chief analyst at DataQuick.”

“Ron Barnard, owner of Home Center Realty, which has several offices in the Inland Empire, predicted that the shake-out would continue for two more years. He said there was a year’s supply of houses on the market now in San Bernardino and Riverside counties, up from a three-week supply at the height of the boom.”

“Perhaps, he speculated, it was so easy to get into houses during the boom, many lenders didn’t even require down payments, that it’s easy to give them up too. ‘You walk in with nothing in your pocket, it’s easier to walk away from it,’ Barnard said.”

The Press Democrat. “Mortgage defaults, the first step in the foreclosure process, are the highest in Sonoma County since at least 1992, according to DataQuick. Lenders sent default notices to 462 homeowners in Sonoma County during the second quarter, up 129 percent from the same period a year ago.”

“Meanwhile, 163 Sonoma County homeowners lost their homes in foreclosure proceedings during the second quarter. A year ago, lenders seized 18 homes in foreclosure proceedings during the same period.”

The Santa Cruz Sentinel. “Nearly 7,000 homes were sold at foreclosure auctions in May, about 15 percent of all real estate in California, according to Foreclosure Radar.”

“The number of homeowners having trouble making mortgage payments stands at 397 so far this year, about double last year’s numbers, according to the Santa Cruz Record. About half are in foreclosure, and 117 have lost homes in foreclosure sales.”

“The problems are worse in neighboring Monterey County, where 1,156 have received default notices, quadruple last year’s numbers. As in Santa Cruz, about half of the Monterey properties are in foreclosure.”

“In the tri-county area, which includes San Benito, a whopping 531 homeowners have lost their homes in a foreclosure sale, 10 times the number compared to a year ago.”

“Watsonville is buzzing with foreclosure activity, with 81 properties taken back by lenders, according to RealtyTrac.”

“‘It’s only going to get worse,’ predicted Vern Johnson, who presides over sales of foreclosed properties outside the Santa Cruz County Government Center. ‘They are more strict with new loans, and there are fewer no-money down loans, although I just saw a sign saying ‘loans with no money down.’”

The Sacramento Bee. “New foreclosure data released Tuesday shows the financial fallout from the sizzling five-year housing boom is still growing in the Sacramento region.”

“Lenders foreclosed on another 2,251 households during April, May and June in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties, according to DataQuick. That’s up 33 percent from the first three months of 2007.”

“Conditions are also ripe for still more foreclosures and bank reposessions ahead. DataQuick reported that another 5,201 households fell behind on their mortgage payments during the second quarter in El Dorado, Placer, Sacramento, Sutter, Yuba and Yolo counties. That’s 15 percent above the first quarter numbers.”

“Sacramento County, with 1,662 foreclosures and 3,840 notices of default, had the region’s greatest share of foreclosure related activity. ‘It’s like that book, ‘The Perfect Storm,’ said Sacramento real estate agent Carey Covey, a specialist in marketing homes repossessed by banks. ‘All the factors have come together to create this situation.’”

“Covey has so much business he can’t handle anymore.”

From CBS 13. “Hundreds of empty buildings are crowding Sacramento and some of them are attracting crime. The number of vacant building has more than doubled in Sacramento in the last three years. Many of them are deteriorated and some have become a magnet for criminal activity.”

“The sharp rise in vacant homes is tied to the growing number of foreclosures. Homeowners who can’t afford their homes simply walk away.”

“The city is proposing some pretty hefts fine for people who neglect their homes. A huge percent of vacant homes are owned by banks and this rise in fines could start racking up some pretty big leans against vacant properties, which may motivate the banks not to just let property sit.”

The Orange County Register. “O.C. real-estate and lending job counts are off 4,900 in the year ended in May, the biggest year-over-year drop since January ‘95. And the state’s count does not track the self-employed or the off-the-books workers.”

“It’s worth noting that one year ago, O.C. real estate/lending was adding workers at a 10,700-jobs-per-year pace.”

The North County Times. “Residential construction in the area continues to languish and is no longer offset by stronger commercial building activity, according to an industry report.”

“Local governments in Riverside County issued building permits for 1,201 housing units in June, a decline of 65 percent from June 2006, according to the Construction Industry Research Board.”

“The permitted houses, apartments and condominiums totaled $271 million in value, a decline of about 61 percent from $686 million in June 2006.”

“The retrenchment is a response to the number of unsold homes in new tracts and, ultimately, to weaker demand from buyers, industry analysts have said. Builders have also sought to get rid of empty houses by offering steep discounts and whopping incentives.”

The Tracy Press. “A record number of ‘for sale’ signs line the streets in Mountain House and Tracy.”

“Eighty homes in Mountain House and 971 homes in Tracy are elbowing to stand out in the crowded market. And sellers and real estate agents who compete with housing developers and banks for buyers have cut prices and turned to unique methods to sell.”

“Dipping prices and plenty of homes to choose from have done little to attract buyers during the past year. About five homes sell in Tracy each month.”

“‘With this market and record number of homes, sellers are getting a little desperate and trying different strategies,’ said Annabelle Ramirez, a real estate agent in Tracy. ‘The strategy is about pricing now.’”

“The few homes that sell each month have either low price tags set by housing developers or homeowners who can afford to drop their price. Or they’re houses that have been foreclosed.”

“The market has pushed many local real estate agents out of the business and into other jobs, according to Neil Metal with Metal and Brooks Preferred Real Estate Group.’

“‘As a whole, most of your agents are dying out here,’ he said.”

“Metal advises potential buyers to wise up and take advantage of the market. ‘You can find the same home in the same neighborhood for a significantly different price,’ he said. ‘Look around.’”

“Christine Lynch with Preferred Real Estate Group, blames the spike in the number of homes for sale not on the stagnant market, but on too many eager buyers. A lot of people who bought homes three or five years ago signed on to loans that offered low interest rates for just two years, Lynch said. Once the interest rates rose, as according to the terms of the loans, owners saw their monthly payments soar.”

“As of Monday, Fannie Mae Foundation requires potential home buyers to qualify for a principal payment plan and an interest payment plan even though the buyer might only sign on to an interest payment plan.”

“‘People are waiting for the bottom to drop out before they buy,’ said Lynch. ‘The prices will rise soon. It’s a fantastic time to buy right now.’”

USA Today reports on Arizona. “Some sellers on Scottsdale’s tony north side who have homes priced over $1 million are having to shave several hundred thousand dollars off their asking prices…says agent Karina Magana. There’s a record 45,175 single-family homes for sale in this bedroom community of Phoenix. When sales peaked in Scottsdale in March 2005, there were only about 2,900 homes on the market.”

“‘We’ve gone from an all-time low to an all-time high in supply,’ says Matt Deuitch, president of the Scottsdale Area Association of Realtors.”

“Compared with May of last year, single-family-home sales in Scottsdale overall are down nearly 23%.”

The Arizona Daily Sun from Flagstaff. “Townhouse and condo sales are dominating the summer real estate season. Second quarter sales figures show a sharp spike in the number of condos and townhomes sold, up 90 percent over last year’s figures during the same quarter.”

“Three large condo conversions projects helped drive down the median price for the townhouse/condo market. Median sale price was $197,000 for the second quarter of 2007, according to figures from Northern Arizona Association of Realtors’ MLS.”

“This represents a 26 percent drop in sale prices for the second quarter of 2007 when compared to the same time period last year.”

“The single-family detached house market also saw a 2 percent decrease in median sales price compared to last year’s second-quarter figures.”

“The number of single-family homes sold slowed over last year’s figures, down 22 percent for the second quarter compared to last year. Median sale price for single family home is currently about $377,000.”

The Business Journal from Colorado. “In a slow market, the pressure is on to arrive at residential values high enough to meet real estate broker, homeowner and lender expectations. Some appraisers have been threatened with the loss of future referrals if they can’t ‘make the numbers work,’ and others have been offered $100 or $200 to meet a lender’s ‘target.’”

“Alan Hummel, Forsythe’s chief appraiser, said that the pressure on certified appraisers has always been there, but the increased intensity of demand to meet stated or implied ‘loan targets’ has mushroomed, largely because 70 percent of residential loans are originated by third party companies, not lenders.”

“‘Some of these brokers are used to doing 10 loans a week, but with the slowdown in home sales, they’re looking instead at two to three deals a week,’ he said. ‘If I kill one transaction, I’m cutting their production by 33 percent — and they’re hungry.’”

“‘There’s so much liability if you don’t follow the letter of the law, and at the same time, there are mortgage brokers challenging your ethics to make a deal work,’ said Colorado Springs commercial and rural real estate appraiser Cheri Santi.”

“Locally she has seen appraisers asked to come in with the higher value or even to the exact penny called for in a contract.”

“Claudia Klein, a certified residential appraiser and president of the Colorado chapter of the Appraisal Institute agreed. “Most (residential appraisers) have been reluctant to talk about the subject because they fear retaliation from mortgage brokers and Realtors,’ she said.”

“October Research surveyed 500 appraisers in 2003. Almost 60 percent of respondents said they had experienced some form of inappropriate pressure by mortgage brokers and 47 percent said they had been pressured by real estate brokers to come up with ‘the right’ number for a seller or buyer.”

“Three years later, in 2006, those numbers had risen to 71 percent and 56 percent, respectively.”

“‘It’s not the lenders who are the culprits,’ Hummel said, adding that independent mortgage brokers who ’shop’ rates and conditions offered by a range of mortgage lenders are the biggest source of inappropriate pressure.”

“Another example cited by the AI’s chief appraiser was an aggressive home builder who advertised ‘We will provide you with a new Cadillac in the garage of every house we sell.’”

“‘That means the home loan will be based on a $500,000 rather than a $450,000 sales price,’ he said, adding that an appraisal slated to come in at 80 percent of the higher value does not truly reflect the value of the real estate.”

“Klein has seen the entire range of pressures exerted by anxious brokers and homeowners to meet predetermined expectations in the Pikes Peak region. She also is well aware of techniques used by unethical appraisers.”

“‘I’ve spent 17 years in this field, but it’s getting harder every day,’ she said. ‘Fortunately the lenders are really beginning to question appraisals that come in suspiciously high or low. After all, they’re the ones who will end up with the property if it goes into foreclosure.’”

The Rocky Mountain News from Colorado. “Downtown has scored a hat trick of high-end hotels with last week’s announcement of a W Hotel on the 16th Street Mall.”

“The projects also call for 238 luxury condominiums at the top of the hotels, creating a new market downtown: condo hotels, as they are known in the industry.”

“‘Downtown Denver is really evolving into much more of a cosmopolitan city,’ said Robert Benton (of) Robert S. Benton & Associates. ‘But in a recession, the first things to get impacted are travel and hotel rooms, with luxury hotel rooms impacted particularly hard. The real key is can they sell these expensive condos?’”

“Brian Phetteplace, housing program manager for the Downtown Denver Partnership, said the ‘condo hotel is something not seen in this market before.’”

“He said people familiar with W Residences will consider Denver a bargain when compared with similar units in California and New York, even though the condos at the W in Denver will likely top $500 per square foot.”

“But longtime real estate agent Sonja Leonard Leonard said sales of expensive downtown condos this year have been sluggish.”

“There have been only seven sales of downtown condos priced over $1 million so far this year, while 41 are listed in that price range, with 10 under contract, according to Metrolist data, she said. ‘One sale of a condo over $1 million each month is not a hot market,’ she said.”

The Las Vegas Sun from Nevada. “When Jerry Wayne looks out from the balcony of his luxury condominium at Turnberry Place, he sees Strip hotels and, behind them, the big Nevada sky.”

“But he also sees cranes, ominous signs that soon, Wayne will see little except for the wall of a 22-story garage and convention center being built less than 100 feet from his spacious balcony.”

“It’s part of the $2.9 billion Fontainebleau Las Vegas going up at the corner of Las Vegas and Riviera boulevards. ‘We won’t be able to see the sky,’ said Wayne, who paid $649,000 for his eighth-floor unit in 2003.”

“Wayne and the owners of about 175 units at Turnberry Place were among the first to get in on the valley’s high-rise condominium boom. Now they are becoming some of the first to learn a tough lesson about living the high life near the Strip. There are few safe bets. A nice view is certainly not one of them.”

“‘You can spit on it,’ says Turnberry resident Ann Stager, disgusted enough to make it seem that she might actually try.”

“She and her sister, Julie Stapleton, both are widows. They put ‘everything they had’ into the condo, Stapleton said. ‘All of us are going to have the values of our property cut in half,’ she said.”

“In Nevada, views are not protected by law. Turnberry residents were told when they purchased their condos that a hotel and casino project was planned next door. Still, they say they were told few details about the project and are only now realizing that they won’t be looking down on a hotel’s pool or lavish landscaping. They’ll be looking at the wall of a parking garage topped with a convention center.”

“‘They didn’t tell us they were going to put the butt of it in our face,’ complained Turnberry resident Rick Coleman.”

“What really peeves many Turnberry residents is that Fontainebleau is being developed by former Mandalay Resort Group President Glenn Schaeffer and, get this, Turnberry Associates principal Jeffrey Soffer, the same man who developed Turnberry Place.”

“Initially, residents say, the fact that the developer of their condo complex also was involved in the project next door provided some comfort. ‘We always expected something would be built there,’ Wayne said. ‘But we expected it would be integrated. Never would I have expected a wall obscuring every view I have.’”

“‘Clark County is always getting low marks for smart growth and sustainable development,’ said Paul Murad, a real estate agent and developer whose $1.2 million unit on the fifth floor will lose all but a sliver of its view.”

“Turnberry residents say they plan to appeal the decision in District Court and seek a temporary halt to the Fontainebleau project. ‘This is probably the first time there are residents this close to the Strip. There is no precedent,’ said Jerry Wendel, another Turnberry resident, himself a developer. ‘We are going to go all the way with this.’”

Some housing bubble news from Wall Street and Washington. MarketWatch, “Countrywide Financial Corp. reported a 33% drop in second-quarter net income on Tuesday and signaled that problems in the subprime mortgage market have spread to the highest-quality home loans. ‘The company incurred increased credit-related costs in the quarter, primarily related to its investments in prime home-equity loans,’ CEO Anthony Mozillo said in a press release.”

“Results were hurt by impairment charges totaling $417 million and a loan-loss provision of $292.9 million.”

“Countrywide said payments were at least 30 days late at the end of second quarter on 4.56% of prime home-equity loans serviced by the company, up from 1.77% a year earlier. ‘The impairment charges on these residuals were attributable to accelerated increases in delinquency levels and increases in the estimates of future defaults and loss severities on the underlying loans,’ the company said.”

The Street.com. “‘During the quarter, softening home prices continued to affect many areas of the country and delinquencies and defaults continued to rise across all mortgage product categories as a result,’ said Mozilo.”

“‘Looking to the second half of 2007, we expect difficult housing and mortgage market conditions to persist,’ Mozilo added.”

From Dow Jones Newswires. “Countrywide said a sharp jump in past-due home-equity loans forced it to write down the value of its ‘residual’ holdings by $388 million. The lender also noted increased volatility in prices paid by investors who buy mortgages in the secondary market as well as plunging investor demand for bonds backed by risky mortgages.”

From Bloomberg. “Mozilo has tightened standards for approving loans to the company’s riskiest borrowers as part of a plan to cut subprime lending to as little as 4 percent of total mortgages, half the level at the end of last year.”

“Now he must address an increase in missed payments in prime loans, or those granted to borrowers with good credit histories. ‘Credit performance has surfaced as a bigger risk factor than we expected,’ Morgan Stanley analyst Kenneth Posner wrote.”

“‘What really surprised people was the guidance,’ said Paul Miller, an analyst at Friedman Billings Ramsey Group. ‘I don’t think any investor is going to be that confident with mortgage banking earnings until ‘09.’”

The Globe & Mail. “Canadian Imperial Bank of Commerce could be forced to take a hit of about $100-million this quarter because of its exposure to securities related to the U.S. subprime mortgage market, analysts say.”

“‘The continued weakness in securities related to U.S. subprime housing will likely force CIBC to mark down its exposure to the space, as most of its securities are held in its mark-to-market trading book,’ RBC Dominion Securities Inc. analyst André-Philippe Hardy wrote. ‘We believe that a $50-million to $100-million markdown is possible.’”

“Corus Bankshares Inc’ 2007 second quarter earnings were $42.4 million, down 11% from the second quarter of 2006. ‘As has been widely reported, the United States’ residential housing market continues to see significant weakness throughout many parts of the market. With a loan portfolio consisting, almost exclusively, of condominium construction and conversion loans, this nationwide slowdown has clearly impacted Corus and its lending business,’ said CEO Robert J. Glickman.”

“‘Evidence of this slowdown can be seen in recent trends in loan originations and loan balances outstanding, as well as credit quality trends. The current quarter’s earnings declined as a result of these adversities, and it would not surprise us to see an even greater impact on earnings over the next several quarters, or even years, depending on when the market improves,’ said Glickman.”

“The slowdown, the company said, is apparent not only in loan originations and loan balances outstanding but also in ‘credit quality trends,’ or problem loans.”

From Reuters. “Building materials maker USG Corp said on Tuesday it expected a ‘multiyear downturn’ in the U.S. housing market and posted sharply lower earnings as it cut more jobs to trim its wallboard output.”

“‘The housing recession is entering the second year of what is likely to be a multiyear downturn,’ CEO William Foote said in a statement.”

“The company, the world’s top producer of gypsum wallboard, said its sales and earnings suffered during the most recent quarter by an excess supply of both new and existing homes on the market.”

“‘The unusually large inventory of unsold homes will depress new construction and put continued pressure on volumes and prices of building materials until the excess inventory is absorbed,’ Foote said.”

The Chicago Tribune. “In the latest quarter ‘the housing market continued to deteriorate,’ noted Foote.”

“During the latest quarter, Foote said, USG eliminated about 500 salaried positions; combined with earlier cutbacks in hourly staffing, the compahy has cut more than 1,100 jobs over the past twelve months. It has cut back its output, and will shut down an additional 350 million sqare feet of wallboard capacity at its Detroit facilities in the third quarter.”

“The disparity in credit behavior between U.S. REITs and homebuilders continued unabated during the second quarter, and will likely persist into the foreseeable future, according to a recent report published by Standard & Poor’s Ratings Services.”

“U.S. homebuilder prospects darkened, however, as the sector strives to find a trough in the market’s current downturn. ‘Most rated builders, however, still face very challenging operating conditions, which meant that rating activity in this sector was high and decidedly negative for the fourth consecutive quarter,’ said credit analyst Elizabeth Campbell.”

“‘Our builder rating bias remains emphatically negative,] noted Ms. Campbell. ‘Given the sector’s ongoing inventory correction and as-yet indeterminate recovery, we expect builders to remain pressured well into 2008, and possibly into 2009.’”

“Home builders had hoped the spring would provide some relief to a troubled housing market, but that key selling season has been a bust and demand has weakened even further so far this summer, Wall Street analysts said.”

“‘Our recent conversations with builders around the country find that housing demand has continued to wilt in the summer heat, with conditions sequentially worsening in the past four to six weeks,’ wrote Deutsche Bank analysts Nishu Sood, Lou Taylor and Rob Hansen in a research note.”

“‘Pricing pressure persists, with many markets in list-price reduction mode, as builders struggle to find demand that continues to slow as a result of mortgage-market contraction,’ they added.”

“‘Many of the public builders appear headed for break-even and even negative operating margins excluding charges,’ said the analysts. The high number of existing homes for sale on the resale market is giving competition to new-home builders, they added.”

“‘The impact of mortgage market contraction appears to have accelerated in recent months, with builders reporting greater rates of sales loss due to the inability of buyers to qualify for mortgage products currently available,’ the Deutsche analysts wrote.”

The LA Times. “In its letter to clients, Bear Stearns reminded the rest of Wall Street what was happening with investors’ perceptions of mortgage-backed bonds, even those purported to be of high quality.”

“Its funds were obliterated, the brokerage said, in part because of ‘the unprecedented declines in valuations of a number of highly rated — AA and AAA — securities.’”

“For a AAA-rated bond, a serious decline is a drop in the market price from $1,000 to $950 in a matter of days. It may not look like much, but for a security that had the highest possible credit rating, that’s a disaster.”

“The Wall Street money-machine known as collateralized debt obligations is grinding to a halt. Sales of the securities dwindled to $9.1 billion in the U.S. this month from $42 billion in June, analysts at JPMorgan Chase & Co. said in a report yesterday.”

“‘We’re walking on thin ice,’ said Alexander Baskov, a fund manager who helps oversee $25 billion of high-yield debt in Geneva. ‘People are trying to find value and the right price and right now nobody knows what it is. Pretty much everyone is in the dark.’”

“The 10-year U.S. interest rate swap spread widened to a five-year high on Tuesday as concerns about shaky credit markets prompted investors to flee riskier securities for government bonds, analysts said.”

“‘We are having a flight to quality,’ in which investors favor Treasuries over riskier assets including swaps, said Eric Liverance, head of U.S. rate derivatives strategy with UBS. ‘Credit in general is blowing out,’ he said.”

“Soaring defaults in the subprime mortgage market are spreading into the U.S. credit markets, producing a ’sudden liquidity crisis’ in the high-yield bond sector, according to widely followed bond manager Bill Gross.”

“A lack of confidence has ‘frozen’ the markets for lending and backed up new junk-bond offerings, and the tide appears to be going out for leveraged equity investors, Gross, manager of the world’s largest bond fund at PIMCO, said in an August investment outlook letter.”

“‘Stuffed!’ he said of the current state of the credit markets.”

From Broker Universe. “At the SourceMedia Nonprime Symposium in Las Vegas, our roundtable participants said all bets are off when it comes to subprime.”

“Moderator Brad Finkelstein: ‘During a panel at the conference, Blaise Dietz, CEO of Creative Mortgage Lending, said something that I found interesting. He said wholesalers need to educate their brokers to the new reality out there. Has it been hard for originators to understand that subprime today is not the same as it was on Nov. 1, 2006?’”

“Blaise: ‘With the products going away, they are either learning to market better or they’re educating their borrowers to what other options they have or they are committing fraud to get that loan placed. It is not just the originators, but the wholesale account executives, they are salesmen also and a lot of them don’t understand the changing landscape….It is the new unfolding landscape, and you are either going to educate yourself and your customers, or you’re not going to be in this business.’”

“David Matthews, chief information officer, Federal Home Loan Bank of Chicago: ‘I suspect a lot of them are leaving the business, just as you saw people leave the business when the prime market fell out. Those that shifted from prime to subprime are now realizing they are not going to make it in subprime and they’ll go back to being mailmen or auto mechanics or school teachers or whatever they were before they got into the mortgage business.’”

Newsday reports from New York. “Housing sales for spring, usually the busiest buying season, didn’t bloom quite as well this year for Long Island and Queens market, according to a report from Miller Samuel. The biggest drop in prices came from North Shore’s luxury market, an 11.3 percent fall over a year ago in the top fifth of sales prices.”

“‘There’s this underlying weakness in the market, as evidence by rising inventory and slipping sales,’ said company president Jonathan J. Miller. ‘The second quarter, that’s the spring market, the most active of the year, and we saw a fall off. You put those two elements together, and it basically says we probably have more weakness to go.’”

The New York Post. “Residential real-estate sales…in Queens appear to be mirroring the rest of the nation’s housing slump. Weakening prices, rising inventory and declining sales were prevalent during the previous 12 months, with only a few pockets of categories posting positive growth, according to Prudential Douglas Elliman.”

“The median sales price of a Queens residential property this quarter was $469,000, down 4.3 percent from a year earlier.”

“Overall, the number of sales in Long Island fell 5.6 percent in the past quarter to 8,694 residential units, compared to 9,210 units sold a year earlier.”

“Meanwhile listing inventory increased over 10 percent to 36,610 units from the prior year quarter total of 33,141 units, up 91.5 percent compared to the same period 2 years ago. Price levels were down slightly this quarter, compared to the same period last year.”

The Boston Globe from Massachusetts. “The spring real estate market was a washout. Home sales in Massachusetts tumbled as much as 8 percent in June, and prices also dropped during that key month in the real estate cycle, according to two reports yesterday, virtually ensuring that 2007 is going to be another down year in the industry.”

“‘We’re going to be on a continued decline at least through the end of the year,’ said Alan Pasnik, the real estate analyst for Warren Group. ‘I don’t see what’s going to change that,’ given June’s poor results, he added.”

“June is a key month because deals struck in the spring are usually closed then.”

The Boston Herald from Massachusetts. “Jeff Wilson has done some $40,000 of work on his Dedham two-family and knocked $20,000 off the asking price, but still can’t find a buyer. ‘We thought we listed it at a cheap price - but then the market fell further,’ said Wilson, whose property has been up for sale for some five months.”

“The Warren Group reported yesterday that Massachusetts two- and three-family house sales recorded their worst second quarter in 16 years.”

“‘It’s bad,’ said Alan Pasnik, head of Warren’s data analysis. ‘A few years ago, you’d buy one of these places, turn it into a three-unit condo and make a 50 percent profit or more. But now, the market is falling.’”

“The slowdown has particularly hit Boston neighborhoods hurt by the subprime-mortgage market’s collapse. Warren said two- and three-family home sales fell 55.2 percent in Mattapan, 48.6 percent in Roxbury and 37.5 percent in Dorchester.”

“Experts add that it’s often no longer profitable to buy two- or three-families and turn them into condos or rentals. ‘Twenty-five years ago, people would say, ‘I can buy a two-family and pay hardly anything each month because I’ll rent half of it out,’ said Hyde Park broker Pat Tierney. ‘That isn’t happening right now.’”

The Daily News Transcript from Massachusetts. “Sales of homes and condominiums in Dedham and Norwood have continued to slump this year, mirroring the weak housing market statewide. The Warren Group said sales from January to June in Dedham and Norwood were the lowest during that period - as well as for the month of June itself, since 2003.”

“Sales in Dedham were down 15 percent during the first half of 2007 and in Norwood they were down 4 percent, the report said. Dedham also saw a 40 percent drop in condo sales.”

“‘If you are a home seller or a mortgage lender, this has to be disappointing,’ said Terry Egan, editor in chief of publications for the Warren Group. ‘I think early on in the year there had been predictions in some quarters that things would be getting better, but then interest rates picked up in May. It’s a general malaise and we have seen prices working their way downward for over a year now.’”

“‘It’s really statewide now,’ Egan said. ‘There are a few pockets doing well, but now even the western part of the state is starting to feel it.’”

“In Dedham and Norwood, housing prices, along with the number of properties sold, dropped to their lowest levels since 2003.”

“The median price of a single-family home in Dedham dropped from $380,000 in the first half of 2006, to $345,000 in the first half of 2007. In Norwood, median single-family home prices dropped from $375,000 in the first half of 2006 to $353,500 in the first half of 2007.”

“Westwood and Walpole both saw median single-family house prices drop. In Westwood, the median price dropped from $550,000 in the first half of 2006 to $524,000 in 2007. During the same period in Walpole, sale prices dropped from $409,950 in 2006 to $401,500 in 2007.”

“‘Because of the housing stall, prices have dropped, but buyers know sellers are not going to give things away and interest rates might go up soon,’ said Hope McDermott, a real estate agent in Dedham.”

“‘Prices have come down because they were overpriced to start with, but now brokers are coming in with a more precise number to start with,’ said Jerry Armstrong, of RE/MAX in Norwood.”

The Telegram from Massachusetts. “The Massachusetts Association of Realtors reported second-quarter sales of single-family homes was down statewide…from a year ago. That is a letdown from the first quarter this year, which saw sales of homes and condominiums up more than 2 percent from the previous year, MAR said, when real estate agents were optimistic of a strong spring buying season.”

“‘While it was not as strong as we would have liked, it was the fourth-strongest second quarter on record in Massachusetts,’ said Doug C. Azarian, MAR president . ‘The decline in sales and prices started late in the second quarter last year. Until then, we were seeing peak highs. Now, we’re seeing a solid year of declining sales compared to the peak.’”

“The median (single-family home) selling price for the second quarter was $355,000 in the state, down 1.4 percent from $360,000 a year ago. According to MAR data, the peak median price of a single-family home was $370,500, in the third quarter of 2005.”

“‘Even though we’re looking at price decreases, they’re slight. I think people five years from now will look back and say they should have bought in 2007. There’s still a fair amount of inventory, but not too much….Sellers will see that the market is slow and that they’re not going to get the appreciation they had hoped for. They’re lowering their prices, and should be ready to take what the market will give,’ said Mr. Azarian.”

“Mr. Azarian said that interest rates are still low, and said the high foreclosure rate, though adding to the inventory, has not had a significant drag on prices.”

“‘It appears that lenders are working with Realtors with experience in those kinds of properties,’ he said.”

The Associated Press. “Massachusetts would offer extra protection for homeowners close to losing their houses under legislation endorsed yesterday by Senate leaders, in the latest move to help people after a sharp rise in foreclosures in the state.”

“Mortgage brokers would have to obtain a license to work in Massachusetts and mortgage fraud would become a felony. The measure would crack down on deceptive advertising, give homeowners a last-minute opportunity to avoid a foreclosure auction and require borrowers to educate themselves to risks.”

“‘This is going to make the brokers think twice before they try to fudge numbers,’ said Sen. Stephen Buoniconti, chairman of the Financial Services Committee. ‘Right now, there’s such an urge to try to get people to close loans.’”

“Foreclosure petitions jumped nearly 70 percent last year to nearly 19,000 in Massachusetts, bringing the state’s historically low foreclosure rate in line with national figures. On the Cape, foreclosures have reached the highest level in more than a decade.”

“The Senate bill also proposes the creation of a state subsidy for businesses that pay portions of employees’ housing costs. But the measure does not include an appropriation of funds to support the program.”

“Senate President Therese Murray described the bill as a complement to Gov. Deval Patrick’s plan to curb foreclosures by raising cash through bond sales.”

“‘There is no bailout in this bill, which is telling,’ Murray said when asked to compare the measure with Patrick’s plan.”

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