The Housing Bubble

The California realtors have the June sales numbers. “Home sales decreased 24.7 percent in June in California compared with the same period a year ago, while the median price of an existing home increased 3.2 percent, CAR reported today. ‘The focus on foreclosures and subprime lending is ongoing and, coupled with higher inventories of homes for sale, is prompting many would-be buyers to play a ‘wait-and-see’ role,’ said C.A.R. President Colleen Badagliacco.”

“‘With just over a 10-month supply of homes for sale on the market, we expect further softness in prices in the coming months,’ said CAR Chief Economist Leslie Appleton-Young.”

The LA Times. “Southern California…saw the number of foreclosures in the three-month period ended June 30 rise to 9,504. Although that’s up 725% from a year earlier, it’s still well below the previous peak of 11,494 in the third quarter of 1996.”

“‘In the beginning, we were thinking the foreclosures were going to be limited to low-income, high-minority neighborhoods targeted by predatory lenders,’ said Ester Cadavid of Los Angeles Neighborhood Housing Services. ‘Now we’re seeing a shift to the middle class.’”

“Among the hardest-hit areas are Riverside and San Bernardino counties. Their low prices drew first-time buyers who used adjustable loans. More than 1 out of 5 foreclosures in the state take place there.”

“‘These are unprecedented circumstances,’ said John Husing, an economist at Economics & Politics. ‘Anyone who says they’re not guessing is a liar.’”

The San Francisco Chronicle. “The number of Bay Area homes lost to foreclosure during the second quarter hit the highest level in almost two decades, and the region’s homeowners also received a record-high number of mortgage default notices, according to a report to be released today.”

“California also set a record in the April-to-June quarter for the number of foreclosures, according to DataQuick. ‘Folks borrowed beyond their means in larger numbers because of how common creative financing became,’ said Andrew LePage, an analyst with DataQuick.”

“Contra Costa County, with 2,316 such notices, and Solano County, with 1,065, both set records, LePage said. The Contra Costa cities of Pittsburg, Antioch and Richmond are cropping up as hot spots for foreclosures and defaults, he said.”

“One ominous change is that notices of default increasingly are leading to foreclosure. This year almost half - 45.4 percent - of notices of default resulted in homes being lost to foreclosure. A year ago, only 12 percent of notices of default resulted in foreclosure.”

The Orange County Register. “Orange County…recorded 2,984 notices of default in the second quarter, the highest since 3,116 filed in the first quarter of 1998. The record was 6,422 filed in the first quarter of 1996.”

“Marshall Prentice, DataQuick’s president, said many of the loans going bad were made at the housing market’s peak or soon after, between the summers of 2005 and 2006.”

“‘Appreciation rates for most of that period were in the double digits and lenders let many households stretch their finances to the max, and beyond,’ Prentice said in a statement. ‘It’s that pool of ‘beyond’ mortgages that the market is working its way through.’”

The Union Tribune. “Home foreclosures in San Diego County continued a troublesome climb into record territory in June. DataQuick reported that during the first half of 2007, San Diego County had 2,896 foreclosures compared with 445 during the first half of 2006, a 551 percent increase.”

“That sets a record dating to 1988, when DataQuick began tracking foreclosures, researcher John Karevoll said. ‘A steadily increasing portion of those who get notices of default now are being foreclosed on.’”

“From May to June, county foreclosures increased from 532 to 657, a 24 percent increase and a record for any month since 1988.”

“‘It still is not a major factor in the real estate market, but if there is a recession, it could become a huge factor,’ he said.”

“Ryan Grothe thought he was making the right decision when he moved his family into a two-bedroom condo he purchased in Rancho Peñasquitos in late 2005. Their one-bedroom apartment had become cramped, and he wanted a roomier place for their daughter.”

“A year and a half after moving into their new home, the Grothes are renting again, unable to make the nearly $3,000 monthly payment on their $370,000 loan and are facing foreclosure.”

“‘The lenders told us if we didn’t do something, our place would go into foreclosure,’ said Grothe, who is hoping to sell the condo, but for far less than the purchase price. ‘We had called both lenders trying to refinance and they said, ‘No, the property values are going down and you’d have to fork over money in advance to refinance.’”

“‘I’m upset; I’m really disgusted with everyone involved in selling us this place,’ he said. ‘We told them that we couldn’t afford this, that we would need to refinance, we’re starting to fall behind, and it just amazes me that they help you get into these places and when you need help, they run the other way.’”

The Fresno Bee. “Fresno County saw foreclosures jump a whopping 134% in the second quarter, compared with the same period last year, as the once high-flying real estate market continued to plummet.”

“‘This is unquestionably the worst I’ve seen,’ said Bill Pfeif, a 30-year veteran agent in Fresno who sells lender-owned real estate. ‘Every week, the pace increases. You just wonder where it is going to end.’”

“Pfeif, who is trying to sell nearly 200 lender-owned homes and estimates one of every 10 houses on the market is a troubled property, thinks 2008 will be even worse.”

“The vast number of foreclosed properties contributes to a glut of properties on the market. Nearly 6,000 single-family homes are for sale in Fresno County, which Pfeif said is nearly a record. Add new homes offered by builders, and the likelihood of a recovery soon seems distant.”

“Real estate analyst Robin Kane of Fresno said home values skyrocketed beyond the ability of families to pay and are now falling back to earth.”

“‘The pendulum swung pretty far to one side, and now we are seeing balance being brought back to the market,’ he said. ‘There is a demand [for housing]. But it got out of reach and kept going because of the crazy debt [that] people were willing to take on.’”

The Appeal Democrat. “Foreclosure activity is picking up the pace with Yuba County leading the state in its percentage increase in default notices, according to a report issued Tuesday.”

“Second-quarter 2007 notices of default nearly quadrupled in Yuba County over the same quarter a year ago, according to DataQuick.”

“Yuba County’s median home price decreased by 10.4 percent in June 2007 compared with a year ago as the once-hot Sacramento housing market chilled, while Sutter County’s home prices were down 8.5 percent, said LePage.”

“‘Sacramento is the weakest large market in the state,’ said LePage.”

“Homeowners with two-year, adjustable subprime mortgages comprise some, but not all, of the three foreclosure-related calls per week that Bimal Mann, president of Trinity West Mortgage Inc, has been getting lately.”

“People whose incomes fell or who lost jobs can also face problems, as do homeowners whose ‘teaser rate’ mortgage allowed them to get into a bigger home then they could afford, as well as those who borrowed against the home’s value to get equity.”

“‘Some consumers just did it to themselves,’ said Mann.”

“Falling home values also present a problem, particularly in pocket areas like Plumas Lake that have seen home values fall as much as $100,000 to $150,000, said Mann.”

“‘The value dropping as fast as it’s been has not helped the situation,’ she said.”

From KSBY 6. “Compared to last year, default notices are up by more than 195 percent in Santa Barbara County. In San Luis Obispo County, it is by more than 163 percent. Pages of local foreclosed homes can be easily found on the internet.”

“‘If the market price of the house falls, then you wake up one morning and you owe more than what it’s worth,’ said San Luis Obispo resident Jim Stahl.”

“Real estate broker Gretchen Ricker said she has not only seen clients, but friends fall victim to a lack of financial planning. ‘They go through the whole grief process, denial, and anger and ultimately acceptance,’ Ricker said. ‘But unfortunately, the acceptance part hits a little bit too closely to the end.’”

“Joyce Maloney, credit counselor with Consumer Credit Counseling Service, said high interest, risk loans, and creative financing are now catching up with homeowners as the housing market slows down. ‘It’s a sad situation, but it’s the sub prime lenders that created that situation, so they lowered the bar and let anybody buy a house,’ said San Luis Obispo resident Ron Hatch.”

“But Ricker has a different opinion. ‘If you wanted to put fault into the conversation, the fault might lie in not planning ahead,’ Ricker said.”

MarketWatch reports on Texas. “Executives at (Texas-based) Centex Corp. on Wednesday didn’t provide a profit outlook for the rest of the year as the industry continues to struggle with an uncertain housing market. ‘We know that challenges will persist for awhile,’ CEO Tim Eller said. ‘Most markets continue to be hampered by oversupply, and we expect widespread affordability issues to be a problem for some time to come.”

“The company’s Texas market is being hit by declines in mortgage liquidity, Eller said, adding that in Houston the company’s sales were down about 30% while a year ago they were ‘fairly robust.’”

The Houston Chronicle from Texas. “Houston-area home sales continued their downward slide in June, falling for the second month in a row and the third this year. Single-family home sales fell 6.9 percent last month from June 2006, as tighter restrictions in the subprime lending industry continued to drag down the local market, according to the Houston Association of Realtors.”

“Over the past year, the number of homes listed for sale has been mounting, and some properties are taking a long time to sell, particularly in the suburbs where new houses compete with older ones for buyers.”

“Jennifer and Kyle Hawes put their five-bedroom Pearland home on the market May 1 and are now considering dropping the $209,000 asking price on the 10-year-old property.”

“‘We’ve seen eight families come through, but no offers,’ said Jennifer Hawes. Close to where they live, ‘you can get a new house for probably not much more than ours,’ she said.”

“Home builders are also feeling the pinch. Sales of new homes fell 19 percent in June from the same month last year, according to Metrostudy.”

“And more homes are on the market now than last year at this time. At the end of June, 37,236 single-family properties were listed for sale, an increase of 18.6 percent from last June and the 12th month with a year-over-year increase.”

The American Statesman from Texas. “Sales of existing homes in June in Central Texas fell 6 percent from a year earlier, the first decline for the month since 2002, the Austin Board of Realtors said Friday.”

“‘It’s a natural correction of the market based on tightening credit standards’ that lenders are imposing on potential buyers, said Mark Sprague, a partner in marketing firm Residential Strategies Inc.”

“After the record sales of 2006, a decline in sales for 2007 would not be a surprise, Sprague said.”

“‘Austin has experienced record-breaking growth in home sales for the past four years,’ Charles Porter, chairman of the Realtors board, said in a statement. ‘Overall, the Central Texas housing market has been resilient and continues to be one of the best investments money can buy.’”

“A total of 9,159 homes were on the market last month, 8 percent more than in June 2006 and the biggest number in several years.”

From KHOU.com in Texas. “A charred, gutted home on a small street of foreclosed homes in Spring is more than just an empty dwelling, it’s a sign of a disturbing new pattern in mortgage fraud.”

“Explosions rocked the 7,000 square foot building Sunday afternoon when the owner was in the Bahamas. The Fire Marshal said there were 25 five-gallon containers of gasoline stashed all over the home that were ignited simultaneously.”

“The blaze came less than three weeks before $30,000 in property taxes were due. The owner of the home, Michael Macomber, posted $90,000 bond and was released from custody Monday.”

“Investigators said he confessed to everything, for he was the one left holding the bag when a $500,000 mortgage fraud ring unraveled around him.” “The previous owner, Arthur Monroe, was charged with falsely doubling the home’s value, selling it to Macomber and then paying him a kickback.”

“So far, seven people are facing charges for the complex scheme involving multiple homes, mortgage fraud, insurance fraud and fire, something arson investigators said they’re coming across more often than ever.”

“Federal investigators are getting involved too, because they believe the title company linked to the scheme may have been in on it as well.”

USA Today reports from Louisiana. “In working-class areas here, homes for sale have begun to move briskly. But in the ritzy Uptown district and other well-to-do neighborhoods, the picture is bleaker. ‘New Price’ and ‘Reduced’ signs adjoin grand Victorian homes — symbols of a struggling upscale housing market.”

“In New Orleans, sellers have begun dangling unusual sweeteners, in some cases, a year’s worth of home insurance premiums and state grant money, to draw buyers. Insurance rates, which have as much as tripled since Katrina, are deflating sales and forcing some to downsize to smaller homes.”

“In a healthy real estate environment here, an average supply of homes for sale might be five months’ worth, says Arthur Sterbcow, president of a major real estate agency on the Gulf Coast. Now, the New Orleans metro area contains nearly twice that supply of homes for sale.”

“The costlier the homes, the thicker the glut. The area includes a 10-month inventory of homes priced from $300,000 to $325,000. That compares with a 23-month supply of homes priced from $750,000 to $1 million.”

“‘There are more homes on the market now than when there was an oil bust,’ Sterbcow says.”

“Rodney Montz, an advertising executive, is among those thinking of leaving. One nagging concern that has kept Montz here, at least for now, is fear that he won’t be able to fetch a decent price for his 2,700-square-foot house, which he spent four years renovating himself.”

“A real estate agent has suggested that he put it on the market for $675,000, about 20% less than what he was told his house was worth a year ago.”

“But the earlier, higher price quote came soon after Katrina, when those whose homes had been damaged were hustling to find other housing. ‘There was a sort of urgency to buy anything that was standing and livable,’ says Lawrence Yun, a senior economist with the National Association of Realtors.”

“In the fourth quarter of 2005, displaced residents bid up median prices by 27% in the New Orleans area, the NAR says. But as sellers have increasingly outnumbered buyers, prices have been depressed for months. In the first quarter of 2007, the median plunged 10.9% from the same period last year, to $155,900.”

“Real estate prices have…started to fall in places such as Pass Christian, Miss., amid a swollen inventory.”

“In Mississippi, agents blame a drop in vacation-home sales, in part, for the glut of upscale homes in the Gulfport-Biloxi area. ‘In addition to fewer people living and working here, we’re seeing less snowbirds’ buying second homes, says Jim Atchison of the Gulf Coast Association of Realtors.”

“A weak real estate market benefits buyers such as Melissa Carpenter, who can wait as long as they need to find a suitable home. She and her husband want to pay no more than $300,000 for a four-bedroom house, have been pleasantly surprised by what they’ve seen in their price range.”

“‘There are houses everywhere you look,’ Carpenter notes.”

Some housing bubble news from Wall Street and Washington. Bloomberg, “Sales of existing homes in the U.S. fell more than forecast last month, a sign that residential real estate remains mired in its worst recession in 16 years. Purchases declined 3.8 percent to an annual rate of 5.75 million, the slowest pace since November 2002, from a revised 5.98 million in May, the National Association of Realtors said today in Washington.”

“Regionally, existing-home sales in the South are 11.4 percent below a year ago. Existing-home sales in the Midwest are 8.1 percent below June 2006. Existing-home sales in the West are 19.1 percent below a year ago. Existing-home sales in the Northeast are 7.3 percent lower than June 2006.”

“Lawrence Yun, NAR senior economist, said some consumers are uncertain. ‘Home buyers have been getting mixed signals about the housing market, which is causing some of them to hesitate,’ he said.”

“NAR President Pat V. Combs said that local market conditions vary widely. ‘Consumers should avoid making decisions based on what they hear about the national market because all real estate is local,’ she said.”

The Associated Press. “‘It appears that some buyers are looking for more signs of stability before they have enough confidence to make an offer,’ Yun said.”

“Yun said that if the price decline turns out to be greater than he is forecasting that would raise concerns that consumers could cut back on their spending by enough to raise worries about a possible recession for the overall economy.”

“The Realtors are forecasting that sales of existing homes will fall by 5.6 percent this year with prices dropping by 1.4 percent. That would mark the first annual price decline on record.”

“Private economists…noted that existing home sales were falling at an annual rate of 28 percent in the second quarter, the steepest plunge so far in the downturn.”

“‘Housing is contracting at an accelerating pace, taking out with a vengeance the brief stabilization at the turn of the year,’ said Ian Shepherdson, chief economist at a private forecasting firm.”

From CNBC. “The median price of a new home edged up slightly to $230,300 in June, a small 0.1% increase from the sales price a year ago. That was the first year-over-year price increase in 11 months, but analysts cautioned that it would take more months to determine whether the downward trend in prices has finally stabilized.”

“‘The net increase in prices is very misleading,’ said Mark Zandi, chief economist at Moody’s Economy.com, in a CNBC interview.”

“‘[The increase] is related to the mix of homes that are transacting. The low end of the market is getting pummelled by the implosion in subprime, but it’s being biased upward because the share of homes in the high end is greater now,’ Zandi said.”

From Reuters. “Centex Corp., the fourth-largest U.S. home builder, posted a fiscal first-quarter loss on Tuesday, as the U.S. housing market continued to decline. For the quarter ended June 30, the company posted a net loss of $128.0 million.”

“The results included a $193 million, or 98 cents per share, pretax charge related to the declining value of building lots.”

“First-quarter home-building sales fell 32 percent, as home sales declined 27 percent to 6,095. The average selling price of a home fell 5.5 percent to $291,179. Incentives and lower home prices helped sink gross margins to 8.1 percent from 25.6 percent a year earlier.”

“New orders, which are not a factor in this quarter’s earnings, fell 22 percent during the quarter to 6,474, with the Southeast and Central regions showing the greatest decline, Dallas-based Centex said.”

The Daily News wire services. “Countrywide Financial, America’s largest mortgage lender, said that more borrowers with good credit were falling behind on their loans and that the housing market might not begin recovering until 2009 because of a decline in house prices that goes beyond anything experienced in decades.”

“In a lengthy conference call with analysts, Countrywide’s CEO, Angelo R. Mozilo, said home prices were falling ‘almost like never before, with the exception of the Great Depression.’”

“‘This is a huge battleship and it’s headed in the wrong direction,’ Mozilo said.”

The New York Times. “Many of Countrywide’s home equity loans were second mortgages made to people who were financing the full or nearly full cost of their homes. ‘Countrywide is highlighting what is an industry-wide problem,’ said Christopher C. Brendler, an analyst with Stifel Nicolaus. A second mortgage ‘is really an unsecured loan, like a credit card.’”

“Executives at Countrywide for some time had been more skeptical than others, but the bluntness of their comments surprised many on Wall Street.”

“In June, the usually optimistic Robert I. Toll, CEO of luxury home builder Toll Bros., acknowledged that housing might not rebound before April 2008. In early February, Toll had told Wall Street analysts the industry was ‘at the beginning of the comeback trail.’”

The New York Post. “Mozilo told analysts the housing climate is so bad it will force the 10 giant mortgage firms like his to consolidate or perish. ‘I think we’ll get to five,’ Mozilo said while discussing Countrywide’s second-quarter earnings bomb, its third-straight quarterly loss.”

“‘You’ve seen it in terms of Wachovia and World, and Fleet and Bank of America. Nothing is out of the realm of possibility,’ Mozilo said.”

The Union Tribune. “Shares of troubled subprime mortgage firm Accredited Home Lenders skidded 15 percent yesterday, highlighting investor fears that the company’s proposed $400 million sale to a private equity firm could fall apart.”

“Investors have been slow to embrace the proposed takeover. Lone Star originally set a July 17 deadline for shareholders to tender the stock. Only 21 percent did so.”

“‘That’s shockingly low,’ said Bud Leedom, publisher of the California Stock Report. ‘I really don’t know why it hasn’t been more successful. This thing has been trading like a broken deal almost from the start.’”

“The cost to insure the debt of U.S. home builders is trading at its highest level in at least five years. As spreads deteriorate, most builders’ credit default swaps are trading at levels that imply much lower ratings, and many investment grade builders are trading at levels that imply junk ratings, according to the credit strategy group at Moody’s.”

“In high yield, K. Hovnanian Enterprises, Inc. is trading at levels that imply a rating of ‘Caa1,’ seven levels below investment grade, and three levels below its actual rating of ‘B1,’ according to Moody’s.”

“Bear Stearns recently upgraded its recommendation on Hovnanian to ‘outperform,’ saying the current trading levels of more than 600 basis points imply more distress in the name than is the case. ‘I think that 600-plus in CDS is implying a liquidity event … which we absolutely don’t see at this point,’ Bear Stearns analyst Sue Berliner said on Monday in a conference call.”

“Benchmark ABX indexes fell to record lows on Wednesday as July performance data showed further deterioration in loans underlying subprime mortgage securities, traders and analysts said.”

“The ‘”BBB-’ indexes are down by one to two points across the board on the latest remittance reports,’ said one trader. July remittance reports are ‘worse than we expected,’ said another market source. ‘Delinquencies are accelerating still.’”

“Defaults on some so-called Alt A mortgages packaged into bonds last year are now outpacing those from subprime loans, according to Citigroup Inc.”

“The three-month constant default rate for 2006 Alt A hybrid adjustable-rate mortgages is 2.3 percent, compared with 2.2 percent for subprime ARMs, Citigroup analysts led by Rahul Parulekar wrote.”

“The speed at which Alt A hybrid ARMs are being paid off due to home sales or refinancing has also fallen to about the same level as for subprime ARMs, which typically prepay more slowly, the analysts said.”

“Moody’s Investors Service last week said it may downgrade $316 million of Alt A securities created last year, joining Standard & Poor’s in saying it is considering downgrading such bonds. Ratings cuts and warnings by the New York-based services have so far affected more 2006 subprime securities.”

“Alt A mortgages, short for Alternative A, are loans that fall just short of the typical underwriting standards of Fannie Mae and Freddie Mac, the two largest mortgage companies. They’re usually granted to borrowers with good credit records who seek atypical underwriting or loans, such as reduced proof of their pay, lending on an investment property or so-called option ARMs.”

“Average default rates obscure that ‘within things called Alt A, we see a very wide spectrum of credit quality,’ said Andrew Davidson, the head of Andrew Davidson & Co. Inc., which sells consulting service and risk analytics for mortgage and asset-backed bonds.”

“‘That’s the problem with Alt A: It’s a name that doesn’t really have a meaning,’ said Davidson.”

From Marketplace. “Steve Henn: In Slavic Village — a working-class neighborhood in Cleveland — there were almost 400 foreclosures last year. Entire blocks have been blighted.”

“Jim Rokokis is the local county treasurer. He’ll be testifying today and is glad to finally have Congress’ ear. Jim Rokokis: It’s only now that there is blood flowing on the streets of Wall Street that people are paying attention to this problem.”

“This year alone, Rokokis expects 17,000 foreclosures in his county. According to Cayahoga county statistics, just one lender, Argent Mortgage, has seen about 25 percent of its loans in Cleveland go under. Rokokis estimates Argent’s Cleveland-area portfolio is almost one-quarter of a billion dollars in the red.”

“In 2006, Argent’s sister company, Ameriquest, settled a massive abusive lending case for $325 million.”

The Record reports from New Jersey. “Real estate agents overwhelmingly believe house prices will not rise significantly over the next year, according to a new survey by the National Association of Realtors. Beverly Lanterman, a veteran agent with in Saddle River, said the survey matches her own view of the housing market. She said in some towns, sale prices are off 10 percent or more from the peak a couple of years ago.”

“‘There are just not enough buyers to pick up all the inventory,’ Lanterman said. ‘Everywhere you drive, all you see are ‘for-sale’ signs.’”

“Sellers, she added, are reluctant to lower prices. ‘They’ll start at $679,000 and when it doesn’t sell, they’ll go to $650,000, when they should have been at $619,000 to start with,’ Lanterman said.”

“Buyers apparently believe prices may have further to fall. ‘Nobody seems to be in a whole big hurry,’ Lanterman said.”

The Pocono Record from Pennsylvania. “Home sales in Monroe County continued to slide in the first half of 2007, while sales of foreclosures continued to rise. And making matters worse, it took longer to sell a home.”

“Sales in Monroe County were down 29 percent in the first half of 2007 compared to the same period last year, as reported by the Pocono Mountains Association of Realtors. This follows a disturbing trend that began in the second half of 2006.”

“Foreclosures accounted for a greater portion of homes sold, rising to 17 percent from 11 percent last year. Earlier this the month, the Pocono Record reported that home mortgage foreclosure filings in Monroe County were on pace to shatter previous records. The current sales figures show that the trend extends well beyond filings.”

“‘It’s taking longer to sell because there are more homes on the market,’ according to Eileen Chaladoff, VP of the Realtors’ association, citing 4,200 homes for sale in Monroe County.”

“Chaladoff said the market is changing from a seller’s to a buyer’s market. ‘If sellers are going to hold out on their price, they will have to wait a lot longer’ she said.”

The News Post from Maryland. “Twenty-seven foreclosures are listed today in The Frederick News-Post. It reveals that problems continue to simmer in the housing market. ‘There are still quite a few foreclosures out there,’ said Terry Fox, president of the Frederick County Association of Realtors.”

“Both Fox and Stephen Mackintosh, of Mackintosh Inc. Realtors, said…many people are waiting for prices to drop. More than 2,000 homes are listed for sale in Frederick County, about twice the number of other real estate markets in the area.”

“Steve Meszaros, treasurer of the Maryland Association of Realtors, said some people, often driven by media reports of doom and gloom in the realty market, are holding off. ‘They think that since there are more foreclosures, they will simply wait for one and get a house at a lot less price,’ he said.”

“Considering the current interest rates, inventory of homes and the buyer’s market, this is the best time to buy a house in the past 30 years, Meszaros said.”

“As of May, there were 849 foreclosures listed in Frederick County from the last 12 months, according to RealtyTrac.”

The News Observer from North Carolina. “After a strong spring selling season, Triangle home sales rose only slightly in June, the weakest year-over-year performance since December. In addition, the number of homes on the market piled higher, according to the Triangle MLS.”

“Still, experts say the market may have hit bottom, at least in the Triangle. ‘This is probably where it starts to turn around,’ Wachovia senior economist Mark Vitner said.”

“‘There is no question the [Triangle] market cooled off,’ Vitner said. ‘It would be impossible for it not to. The newcomers are renting for longer periods.’”

“The number of homes sold in Durham, Johnston, Orange and Wake counties rose 0.7 percent from a year earlier while the number of listings rose 16 percent to 12,197.”

“Bernard Helm of Market Opportunity Research Enterprises in Rocky Mount thinks the Triangle is leading an early stage recovery and that Charlotte and Greensboro are as much as six months behind.”

“That said, ‘the path upward is going to be slow and torturous’ due to the effects of rising foreclosures and tightening credit markets, Helm said.”

The Roanoke Times from Virginia. “For years the subdivision in Botetourt County where Janet Beasley lives was perhaps the hottest among hottest home buyers there. But now the development, called Ashley Plantation, sports a smattering of for-sale signs, one in her yard.”

“Her 3,000-square-foot house has been on the market for six months, has undergone one price reduction, down to $515,900, and has been featured in a Sunday showing. Meanwhile, Beasley keeps mowing her lawn and picking up stray golf balls. Still, no buyer.”

“‘I feel like it’s going to sell,’ she said. ‘Got to happen eventually.’”

“But for now, the market for such high-end housing in Beasley’s area is as soft as a sand trap on the 18-hole course that winds through her development. Pockets of pricey housing are selling slowly from southern Botetourt County to Smith Mountain Lake. It is an indication of how the nationwide downturn in real estate is hitting home for some who live in the Roanoke Valley.”

“As in most economic events, there are winners and losers. Because of price cutting, elegant, half-million dollar homes at Ashley Plantation are for sale at tens of thousands of dollars less than they would have cost a few months ago.”

“The downside is, the soft market is limiting the financial gains and hampering the plans of luxury homeowners such as Beasley, whose husband must move out of state for his job.”

“Such conditions were unheard of two years ago when builders were selling houses before they could put in the lawn and scrape decals off the windows. When Beasley bought her house, many a prospective buyer was competing with others, and the mantra for some was, ‘We saw it first.’”

“More recently, only two people came to her open house.”

“Many are betting on the downturn to be temporary. Crews have begun construction of Daleville Town Center, with plans for 300 houses, town houses and condominiums. Builder Robert Graybill (has) a $675,000 home that has been on the market for eight months during construction and for which he lowered the price from $699,000 in response to other builders’ doing the same with their new properties.”

“Here’s one reason buyers are few: To buy a $600,000 home, a buyer would need at least $120,000 cash as the down payment. Then, to cover the roughly $3,500 monthly mortgage payment, the buyer would need a pre-tax, household income of about $95,000, said Eric Compton with the mortgage brokerage Salem Financial. The median household income in the Roanoke Valley is about half that.”

“Many buyers are from out of state, and for some of them, the holdup is their inability to sell their home in a depressed market elsewhere. For instance, 215 Stonewall is under contract to an individual who can’t close until he sells his $900,000 Florida residence, real estate agent Anne Huffman said.”

“Huffman, whose husband developed Ashley Plantation, said the downturn is at least partly psychological, fueled by a gloomy picture of the real estate market painted by the news media at a time when conditions in the Roanoke Valley are pretty good.”

“Of the 320 homes at Ashley Plantation, 36 are for sale. Of them, 24 are new and 12 are existing homes to be resold.”

“Ray Sprinkle, a Daleville real estate agent, said it would take 20 months to sell all offered upscale property in the $500,000 to $750,000 price range. ‘There’s just too much supply out there for the demand right now,’ Sprinkle said.”

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