The Housing Bubble

It’s Friday desk clearing time for this blogger. “The real estate slowdown, continuing nationwide according to the latest figures from the National Association of Realtors, is also having an impact on home sales and construction in Southeast Missouri. ‘It is a lot slower than it was last year,’ said Sheila King of Realty Executives, president of the Cape Girardeau Board of Realtors. ‘But the media blows it out of proportion here. What happens in California isn’t what is going on here, but it is a buyer’s market.’”

“‘There are still homes being built, and there are still spec homes being built, but they are not turning as fast as they were in the last three to five years,’ said Ann Brookman, president of the Southeast Missouri Homebuilders Association.”

“The difference now, said Brookman, is that interest rates have risen and priced some people out of the market. ‘Three to five years ago, everything was selling and selling quickly,’ she said. ‘The question was, how low can the interest rates go? People would get in and sell quickly.’”

“The fallout nationally from the collapse of the subprime mortgage loan market is being felt in Mississippi and the Pine Belt, officials say. In a market that averages 200 home sales per month, said real estate agent Chip Grenn, 45 foreclosed homes on the market is significant but not cause for alarm.”

“Grenn doubts that the high rate of foreclosures will slow any time soon. ‘I gather that we’ve not even scratched the surface,’ he said. ‘I don’t see the foreclosure rate dropping for several years.’”

“Foreclosures have hit the condominium market at the Gulf. Foreclosures are on the rise in Mobile and Baldwin counties, and no price range is untouched, according to Realtors. From a manufactured home in Wilmer to an upscale condo unit in The Beach Club on Fort Morgan, owners are calling it quits and letting the property go back to the bank.”

“With more than 3,000 condo units on the market in Gulf Shores and Orange Beach, some lenders aren’t listing the condo units with Realtors but are turning instead to auction companies for a quick sale.”

“‘This is the beginning of the flood,’ said Jason Haynes of Coastal Auction Co. ‘The banks theory is ‘get it off our backs.’ As soon as the auction method takes hold, you’ll actually find the bottom of the market and the market will come back up. The buying community can name their price.’”

“There is less speculative froth in Greater Vancouver’s housing markets, according to one market researcher. Projects are pre-selling about 75-per-cent of their units at launch instead of selling out, Jennifer Podmore said.”

“‘We’ve really been in a ‘build it and they will come’ market for the last couple of years,’ Podmore, said. In the last six months, however, after a period of rapid price escalation, ‘we have reached a saturation point [and] a lot of investors just don’t have the ability to to be taking on units the way they were.’”

“MPC Intelligence counted 4,508 pre-sale units in projects that were available for sale as of June 30, with another 15,583 units in development to be pre-sold. With buyers in Greater Vancouver taking up about 1,400 units per month, Podmore said that’s between 15 to 19-months supply.”

“‘We don’t see any evidence of oversupply so far,’ said Robyn Adamache, senior analyst with Canada Mortgage and Housing Corp.”

“The price of houses in the €1m bracket are set to fall by a further €100,000, or 10 per cent, in the coming weeks, according to estate agents and market experts. One house in Rathdrum, Co Wicklow went on the market at an asking price of €3.75m but had dropped by €1m at the time of sale.”

“Another house on Kill Lane, Foxrock was put on the market at €1.3 but sold for little more than €900,000, a drop of over 25 per cent. And another house in Sandycove which was guiding at €4.25m just months ago now has a price tag of €3.75m.”

“Officially, estate agents are reluctant to talk down the situation, but many confirm that the market is ‘very tricky’ and buyers are being ‘a lot more cautious’ than they were 12 months ago.”

“The real estate business is having a party in Panama. As of last week, 380 tower projects were under way or announced, representing more than 40,000 condos and apartments. A year ago, it was 11,000 units.”

“The builders say Americans looking for the urban high life in retirement will snap up these buildings in a new Miami that’s half the price of the real Miami.”

“‘The BABY BOOMERS, simply put,’” wrote Roger Khafif, builder of the Trump Ocean Club in the Punta Pacifica shoreline neighborhood, in an e-mail about his target buyers. ‘Without them, Panama’s real estate boom would bust.’”

“Two years ago, when the housing market was roaring along, I called a mortgage broker on the West Coast and…told him that I wanted to interview some recent home buyers who had taken out an adjustable-rate mortgage, one of the big drivers of the boom, and he was nice enough to pass along a short list of names.”

“One of the buyers…told me about her charming new house and the fact that she expected it to be a good investment, even if it had cost a bit more than she wanted to spend. Then I asked about her adjustable-rate mortgage.”

“‘I don’t have an adjustable rate,’ she said.”

“Confused, I called the broker again to see what was going on. A little while later, I got a sheepish e-mail message from him explaining that her loan did, in fact, have an adjustable rate. She just hadn’t realized it.”

“Federal Reserve policymakers have said housing is the biggest risk to the six-year economic expansion. The link with the property market is inextricable as housing and related industries account for almost 25 percent of gross domestic product, according to the Joint Center for Housing Studies at Harvard University in Cambridge, Mass.”

“‘Clearly it’s having an impact,’ said Nicolas Retsinas, director of the Harvard center, referring to housing. ‘How much of an impact, at this point, is easier to understate than overstate.’”

“Observers in the Matanuska-Susitna Borough and in Anchorage report scores of home foreclosures that began late last year and aren’t expected to taper off soon. Before last winter, Realtor Uli Johnson was handling one or two foreclosures a year as broker at Wasilla’s Double Eagle Real Estate. Right now, she’s dealing with 14.”

“‘As of 10 days ago, we had 600 foreclosures in the state; another 300 are in the pipeline,’ Johnson said. ‘And we expect another 300 before the end of the year.’”

“Appraisals coming in below the purchase price is ‘not an epidemic, but it’s just something that’s started to pop up a little,’ said Rod Jackson, Alaska area manager for Wells Fargo Home Mortgage in Anchorage. ‘We’ve had a very, very aggressive market over the last few years… I don’t think it’s anything glaring anyone needs to worry about.’”

“Bottom line, the agents said: Don’t let yourself be talked into more house than you can afford. ‘It’s just as bad to put somebody in a property they can’t handle as to never get them there,’ said Amanda Salmon, a Realtor in Wasilla. ‘I’d rather be a renter than have a foreclosure under my belt.’”

“Residential real estate prices are falling, and the selection of homes to choose from has never been better. There seem to be good deals out there, so should you buy now or wait for the market to get even better? In other words, when is the best time to buy real estate?”

“The sellers and most Realtors I talked to were more focused on the present. They stated that ‘today is the best time to buy.’ They defended their position by stating that prices are way down from their peak (some even felt they had bottomed) and interest rates are still attractive. The Baby Boomers are coming, so get while the getting is good.”

“But is there a better answer, one that does not matter which side of the real estate fence you are on? Try this. The best time to buy is when sellers’ fear that tomorrow will be worse than today. Real estate agents should memorize this answer because it is not self-serving and its 100 percent true.”

“When fear motivates, sellers will entertain offers, conditions and contingencies that they wouldn’t under normal circumstances. This ‘fear of tomorrow’ is a buyer’s friend. As long as they have that ally, they have bargaining power.”

The Gazette reports from Colorado. “Another month, another record number of single-family homes for sale in the Colorado Springs area. The number of homes on the market jumped to 7,065 in July, the third straight monthly record and an 18 percent increase over the same time last year, according to figures released this week by the Pikes Peak Association of Realtors.”

“For the first seven months of the year, foreclosures totaled 2,006 in El Paso County, according to a report Thursday by the county Public Trustee’s office. Last year, foreclosures totaled 1,483 during the same period.”

“Stuart Scott, a longtime Colorado Springs real estate agent, said the Springs’ housing malaise mirrors that of other cities: Too much money was loaned to buyers who weren’t necessarily qualified, while builders constructed too many homes.”

“But Scott said he’s confident the housing market will rebound. ‘We’re coming back,’ Scott said. ‘I don’t know if it’s tomorrow or a week from Friday or two years from now, but we’re coming back.’”

The Rocky Mountain News from Colorado. “About 300 Colorado homes will be going on the auction block, an attempt by lenders to cull the growing stockpile of foreclosed homes in the state and metro area. ‘I’ve been to auctions before, but not of this magnitude,’ said real estate broker Tom Reed.”

“Colorado was one of the first states in the country to experience runaway foreclosures during this real estate cycle and is on pace to have a record 37,000 foreclosures this year.”

“‘Usually, (there are) no great deals to be had,’ said broker Bev Meade. ‘They’ve generally been available through the MLS for a while now and you could have been bidding on them all along.’”

The Arizona Republic. “Sales of existing homes in Maricopa and Pinal counties has tumbled from 51,256 in the first half of 2006 to 35,267 this year, a decline of 31 percent, the Market Letter reported.”

“The resale market will start to recover as soon as the homebuilders sell their surplus inventory, said Karl Stauffer, an associate broker. ‘Yes, it’s bad medicine but it’s medicine we have to take in order for the patient to get healthy in the long term,’ Stauffer said.”

“There are close to 50,000 listings of existing homes now but Stauffer wonders how many of those homes are truly on the market at a realistic sales prices, or if sellers are holding out for a higher price because they owe more than the house is worth.”

“‘Maybe they’re waiting for the market to catch up with their price,’ he said. ‘But what if it continues to decline?’”

“How far will the market fall before it comes back up? ‘That is the million dollar question,’ Stauffer said.”

The Review Journal from Nevada. “Nearly 100 Las Vegas homes will be sold at auction Sunday, but don’t expect to get some kind of unreal deal just because banks are anxious to rid their balance sheets of carrying costs.”

“Nevada had 3,173 preforeclosure filings in July, up from 2,867 in June, bringing the year-to-date total to 19,044, according to Foreclosures.com. With 746,973 households, that’s a per capita rate of 2.55 percent. Florida is second at 1.76 percent and Colorado is third at 1.49 percent.”

“Frank Nason, president and broker of Residential Resources in Las Vegas, said MLS listings are up nearly 2 percent in July to 29,325. Current listings represent 489 days of inventory, or about a year and four months.”

“Vacant listings make up 44 percent of single-family dwellings, 56 percent of condos and 48 percent of townhomes, Nason said.”

“Listings categorized as ‘repo’ totaled 1,107, an 18 percent increase from the end of June. The category is not a ‘required’ field in the listings, Nason said.”

“‘I receive some lender lists of preforeclosure and foreclosure units and the MLS seemingly understates the number of units that are distressed,’ he said.”

The Salt Lake Tribune from Utah. “Construction of new houses along the Wasatch Front has plummeted this year ‘almost entirely’ because of a decline in affordability, according to a new report from Wells Fargo & Co.”

“In 2007, builders have taken out permits to build 6,875 houses, down 29 percent from 9,707 permits during the same time period in 2006, according to Construction Monitor.”

“‘It’s not an economy problem or a mortgage rate problem,’ economist Kelly Matthews said at a news conference. ‘It’s a pricing problem. We have seen a tremendous decline in affordability.’”

“As an example, he points out that a family with an annual income of $51,000 in 2003 could have purchased a house valued at Salt Lake County’s average sale price of $187,000 with a 5 percent down payment. The buyers would have had a monthly payment of $1,300, with interest rates at the time in the range of 5.4 percent.”

“In the second quarter of this year, a family would have needed an annual income of nearly $90,000 to purchase a house priced at Salt Lake County’s average of $298,000 with a 5 percent down payment. The monthly payment would be about $2,250, Matthews said, with interest rates of 6.5 percent.”

“The problem is that most families did not nearly double their incomes over the past four years, he said.”

“Matthews said a drop in new-home construction this year is only the first sign that affordability is becoming a big issue for home buyers, particularly those buying their first home.”

“‘At some point, [the decline in home sales] will be accompanied by a decline in prices,’ he said.”

“Sterling Jenson, regional managing director of Wells Capital Management, said tighter lending standards are also contributing to the affordability dilemma. In the wake of the nation’s subprime lending crisis, in which lenders made too many loans to high-risk borrowers, who are going into default in record numbers, borrowing standards have become more strict.”

From KCPW in Utah. “‘The banks and the lenders upped their standards and stopped doing sub-prime mortgages,’ says Wells Fargo investment analyst Sterling Jenson. ‘So there are people who just don’t qualify anymore in today’s realm of realism. Banks realize this risk shouldn’t have been extended in the first place.’”

“Unless housing prices go down in Utah, Matthews says new home building and purchases will continue to decline. Even still, he adds the slow-down in Utah’s housing market is mild compared to areas like San Diego and Phoenix where prices have climbed so high that sales have fallen dramatically.”

The Deseret News from Utah. “With average prices nearing $300,000, Utahns are finding it harder to afford the houses they want. ‘Utah’s housing sector is facing a serious disequilibrium,’ said Kelly K. Matthews, economist for Wells Fargo.”

“Utah’s hourly wage remains above the national average, Matthews said, but that isn’t necessarily good news for homebuyers. ‘In no way have (wages) kept up with the housing price situation,’ he said.”

“However, Utah isn’t alone. Decreasing house affordability can be seen throughout the West, especially in Phoenix, San Diego, Las Vegas and Boise.”

“Utah’s housing…sales are slowing and inventory across the Wasatch Front is growing, according to a new report. With 2,585 new vacant houses from which buyers can choose, inventory is still at a healthy level, said Eric Allen, director of Metrostudy’s Utah/Idaho region.”

“‘It is a great time for a homebuyer right now because they do have more options out there,’ he said. ‘They have choices now; they don’t just buy the first thing they see.’”

“Still, the number represents a 112 percent increase in the number of finished vacant homes compared to this time last year. That should be watched closely to make sure Utah doesn’t follow the pattern of troubled housing markets across the nation with too many empty homes and not enough buyers, he said.”

“The price of new houses continues to grow, according to the report. Houses priced below $200,000 accounted for just 17 percent of new home production in June. Two years ago, 48 percent of new homes were in that price range.”

“At the same time, production of new houses costing $300,000 or more grew from 23 percent to 49 percent of the market.”

“High inventory in St. George has become a significant concern, however. A second Metrostudy report released this week noted a 50 percent decline in new house closings in the area and a 5 percent increase in total inventory in the past 12 months.”

“‘I think the bottom line is, there were too many homes built in that market, so now we’re going through the process of slowing production,’ Allen said. As a result, he said, house prices in and around St. George and Mesquite, Nev., have dropped notably. ‘It’s become very competitive down there.’”

Some housing bubble news from Wall Street and Washington. Reuters, “Standard & Poor’s on Friday changed its rating outlook on Bear Stearns Cos. to negative from stable, indicating a greater chance of a downgrade over the next two years, as it warned of problems that could hurt the firm’s performance ‘for an extended period.’ ‘Bear Stearns has material exposure to holdings of mortgages and mortgage-backed securities, the valuations of which remain under severe pressure,’ S&P said in a statement.”

“The cost to insure Bear’s debt with credit default swaps rose to around 163 basis points, or $163,000 per year for five years to insure $10 million in debt, from about 115 basis points at Thursday’s close.”

“‘We believe Bear Stearns’ reputation has suffered from the widely publicized problems of its managed hedge funds, leaving the company a potential target of litigation from investors who have suffered substantial losses,’ S&P said.”

From CNBC. “Bear Stearns and several members of its senior management repeatedly misled investors in two sub-prime hedge funds to keep them from withdrawing money even as the funds were losing much of their value, according to an arbitration claim obtained exclusively by CNBC.”

“The investor, whose named is being withheld, allegedly lost $500,000 in the high-grade structured fund after listening to the advice of Cioffi, and his other Bear Stearns employees, during a series of conference calls that began in late 2006 through approximately June 2007, the claim says.”

“American Home Mortgage Investment Corp plans to close most operations on Friday and said nearly 7,000 employees will lose their jobs as the lender becomes one of the biggest casualties of the U.S. housing downturn.”

“American Home originated $59 billion in loans last year, and mostly to people with better credit than risky subprime borrowers. About half of those mortgages were adjustable-rate loans.”

“American Home this week said that its own lenders cut it off, it faced escalating margin calls, and might liquidate assets. It also said it stopped taking loan applications. American Home’s collapse shows how problems in the U.S. mortgage market are broadening.”

From Bloomberg. “Union Investment Asset Management Holding AG, Germany’s third-largest mutual fund manager, halted redemptions from a fund holding subprime mortgages after clients withdrew about 10 percent of the assets in the past month.”

“‘A lot of the subprime debt lies with European managers,” said Iain Beattie, a consultant at Watson Wyatt Worldwide Inc. in London who advises pension funds. ‘There could be more news to drip out on this.’”

“Union Investment has taken the steps ‘because of illiquidity in the market,’ spokesman Markus Temme said in a telephone interview today.”

From MarketWatch. “Accredited Home Lenders Holding Co. lost almost half its market value at one point on Thursday after the company warned that turmoil in the mortgage market could put it out of business.”

“A big chunk of Accredited’s revenue used to come from gains it made when it sold mortgages at a premium in whole loan transactions. However, there are fewer of those buyers now. HSBC bought 30% of Accredited’s mortgages in 2006, while CIT Group purchased more than 12%. But in April, HSBC stopped buying subprime loans and CIT stopped in July, Accredited said on Thursday.”

“‘We cannot assure you that we will continue to have any purchasers for our mortgage loans on terms and conditions that will be profitable,’ Accredited warned.”

“IndyMac Bancorp Inc. is joining rival lenders in making ‘very major changes’ to home-loan standards and charging higher rates because of a slump in mortgage securities, the company’s CEO said.”

“The market for mortgage bonds has become ‘very panicked and illiquid,’ CEO Michael Perry wrote in e-mail to employees. National City Corp. this week stopped buying second mortgages from other lenders and making some stated-income loans. Wachovia Corp., the fourth-biggest U.S. bank, decided to stop making Alt A mortgages through brokers.”

“‘Unlike past private secondary mortgage market disruptions, which have lasted a few weeks or so, our industry and IndyMac have to be prudent and assume that this present disruption, which appears broader and more serious, might take longer to correct itself,’ Perry wrote.”

“The credit tightening by Pasadena, California-based IndyMac, the ninth largest U.S. mortgage lender, and competitors on loans considered less risky than so-called subprime, comes when it’s ‘difficult’ to trade even AAA-rated mortgage bonds that aren’t guaranteed by government-chartered Fannie Mae and Freddie Mac, or federal agency Ginnie Mae, Perry wrote.”

The Palm Beach Post. “First NLC Financial Services is laying off nearly half of its 1,340 employees nationwide, including more than a third of the headquarters staff of 323, in what company officials say is an attempt to turn around the money-losing business. Employees of the subprime lender were notified of the layoffs Wednesday.”

“‘The market conditions required we restructure and downsize,” said Bernard Beckerlegge, chief legal officer of First NLC Financial, referring to the upheaval in the sub-prime mortgage industry. ‘We all understand the conditions of the mortgage market,’ he said. ‘I can’t believe anyone was completely surprised.’”

“Friedman, Billings put First NLC Financial up for sale in March after the company incurred a net loss of $124.2 million in the first quarter of this year as the subprime market collapsed.”

The LA Times. “Giant title insurer First American Corp. posted a second-quarter loss Thursday because surging mortgage foreclosures indirectly increased the number of claims filed on policies sold by the company.”

“First American said its title claims jumped 62% in the first half of this year from the same period in 2006. Frank McMahon, the company’s chief financial officer, said he expected claims to climb even more in the second half of 2007.”

“‘Many of these claims are arising in connection with sub-prime loans, and it appears many of these claims involve fraud, forgery and other factors often seen where loans are made to borrowers in financial distress,’ CEO S. Parker Kennedy told investors and analysts.”

“Like lenders, title insurers were so busy during the boom that they weren’t as diligent as they should have been in examining records, said Gerald B. Glombicki, an analyst at Fitch Ratings, which rates insurers and corporate borrowers.”

“‘Those years in particular, First American and many others in the title industry weren’t doing their homework,’ he said.”

From MarketPlace. “Tom LaMalfa is an economist who advises mortgage companies.”

“LaMalfa: ‘I almost fell out of my chair when I was going through Countywide financial statements last week. Countrywide is one of the largest mortgage companies in America. Right now, almost one-quarter of its subprime loans are delinquent, and subprime lending represents almost half of Countrywide’s total business. To me, that’s shocking, we have never seen numbers like that.’”

“Countrywide’s credit default swap spreads widened by almost 100 basis points, reaching more than 300 basis points, or $300,000 per year for five years to insure $10 million in debt, from 215 basis points at Thursday’s close.”

The Wall Street Journal. “Jittery home-mortgage lenders are cutting off credit or raising interest rates for a growing portion of Americans, extending well beyond the market for subprime loans for people with the weakest credit records.”

“Lenders are tightening standards and ‘raising rates like crazy,’ said Melissa Cohn, chief executive of Manhattan Mortgage, a New York mortgage broker. She said Wells Fargo & Co. is charging 8% for a prime jumbo 30-year fixed-rate loan that carried a 6 7/8% rate late last week.”

“Tom Lamalfa, managing director of Wholesale Access, a mortgage-research firm in Columbia, Md., expects that half or more of the market for no- and low-documentation loans will disappear.”

“National City Corp., another large lender, said yesterday that it is suspending originations of stated-income loans. Wachovia Corp. said it had stopped making Alt-A loans through brokers. Wells Fargo told brokers this week that it was making ‘day-to-day’ decisions on the pricing and availability of Alt-A loans amid reduced investor demand.”

“This credit squeeze ‘will further crimp the effective demand for housing, and will make the late summer home-sales season even worse than the dismal spring season,’ said Thomas Lawler, a housing economist in Vienna, Va.”

“Lawler said he expects the credit squeeze will make ‘the late summer home-sales season even worse than the dismal spring season.’”

“The U.S. subprime-market rout that wiped out $2.1 trillion from global share values last week has ‘got a long way to go,’ said Jim Rogers.”

“‘This was one of the biggest bubbles we’ve ever had in credit,’ Rogers, chairman of New York-based Beeland Interests Inc., said.”

“‘This is the only time in world history when people were able to buy houses with no money down and in fact, in some cases, the builders gave them money for a down payment,’ Rogers said. ‘So this bubble is the worst we’ve had in housing and it’s going to be the worst before its over cleaning it out.’”

The Times Union reports from New York. “If demand for a product drops, then prices being paid for it fall, too. That’s Economics 101. Yet in the Capital Region, the number of homes sold in the last six months has declined significantly, but the median price being paid for those homes has not decreased, at least in most areas.”

“Salvatore Prividera, spokesman for the New York State Association of Realtors, pointed out that lenders, spooked by problems in the subprime mortgage market, have become less willing to offer loans to potential borrowers with shaky credit or low incomes.”

“The effect of that, he said, is that fewer really cheap homes are being sold, which has an effect on the overall median price. It keeps prices higher.”

“It’s also possible people are using the declining market as a way to buy slightly larger homes than they previously would have been able to afford. That, too, would keep the median price from dropping.”

“To be sure, prices have fallen in some areas of the Capital Region: Saratoga County, home to the area’s most expensive housing, on average, saw a 5 percent drop in the median sale price in the first half, to $250,000. At the same time, the number of homes sold dropped 15 percent.”

“‘There’s price adjustment in the Saratoga market much more so than in the Albany market,’ aid Douglas Engels, GCAR president. ‘That’s the free market bringing things back in line.’”

“An increase sometimes can be a decrease. The 1 percent year-to-year median price increase in Rensselaer County, for example, is below the rate of inflation. That means, in real dollars, home prices in Rensselaer County have fallen.”

“And they may continue to fall. Many observers don’t expect the Capital Region’s trend of slackening home sales to end soon. ‘I think the market will continue to slow for the rest of the year,’ Engels said. ‘Not by any means are we going to turn this around in August and September.’”

The New York Daily News. “America’s mortgage meltdown is a national scandal, with dozens of mortgage companies going belly up and millions of families now at high risk of losing their homes to foreclosure.”

“Edward Jordan…was talked into refinancing his home to cover a money shortfall - only to discover that the initial 1% rate changed to 8% after just two months, increasing his monthly payments from $1,347 to more than $2,600.”

“In New York City, there were just under 7,000 notices of foreclosure filed in 2005, a number that jumped to 9,000 last year. This year, the number is well on its way to surpassing 14,000, according to Sarah Ludwig, executive director of the Neighborhood Economic Development Advocacy Project.”

“‘It’s going to get a lot worse before it gets better. In the last quarter of 2007, all hell is going to break loose,’ says Ludwig, noting that a lot of risky loans are set to be repriced upward starting in October.”

The Queens Courier from New York. “Queens residents, especially those in the southeast portion of the borough, continue to suffer from a record-high number of foreclosures, primarily because of subprime mortgages.”

“City Comptroller William Thompson established a Foreclosure Prevention Hotline in April of this year, and already the number has received more than 1,200 calls from throughout the city, state and even some from other parts of the country.”

“Thompson’s office said that nearly 45 percent of the calls to the hotline have come from Queens residents, and many foreclosure incidents involve subprime loans.”

The Cape Cod Times from Massachusetts. “Foreclosures on the Cape spiked to a 13-year high last month, with 35 such transactions filed at the Barnstable County Registry of Deeds.”

“‘There was a bad foreclosure period about 15 years ago and I don’t think it was as bad as this one,’ said Rick Presbrey, chief executive of the Hyannis-based Housing Assistance Corp.”

“This year, 138 foreclosures were completed in the first seven months, an increase of more than 260 percent when compared with the same period of 2006.”

“Through the first six months of 2007, the number of auction announcements in the state has increased more quickly than the number of petitions, a phenomenon that could mean fewer homeowners are escaping foreclosure once the process has begun, according to Timothy Warren, CEO of The Warren Group.”

“‘If this trend continues unabated, it will certainly have an increasing effect on the housing market at large,’ Warren said.”

“The number of petitions to foreclose filed on the Cape between January and June this year increased by 76 percent when compared with the same period of 2006, according to numbers released this week by The Warren Group. However, the number of auction announcements went up nearly 190 percent in the same span.”

“The high number of low-priced foreclosure sales has contributed to a drop in real estate prices, said Aaron Gornstein, executive director of a community development group in Boston.”

“However, rising interest rates mean that housing is still unaffordable for many prospective buyers. ‘Prices have dropped, but not enough to make it affordable for many working families,’ Gornstein said. ‘But it has allowed some people to buy a home where they wouldn’t be able to do so two years ago.’”

The Boston Globe from Massachusetts. “Advertisements for foreclosure auctions continued to rise in June. There were 1,322 such announcements of sales of foreclosed homes in newspapers across Massachusetts in June, up from 719 in June 2006.”

“For the year through June, foreclosures are nearly three times higher than last year: 7,539 so far this year, up from 2,797 in the first six months of 2006, according to The Warren Group.”

“‘Petitions to foreclose and auction announcements are still rising at staggering rates,’ said Timothy Warren Jr., chief executive. ‘Nearly every county in the state is being hit hard by this trend,’ he said.”

“After spending nearly a year shopping for a larger home to replace their Brookline condo, Nicole and Kevin Forrest came to a surprising conclusion about where they should consider living next: a rental unit.”

“‘Given the current housing market, it’s not that crazy of an idea to rent as opposed to buy,’ Kevin Forrest said.”

“Real estate analysts said the tepid housing market is responsible. Two reports released last week showed that home sales in Massachusetts dropped as much as 8 percent in June, with prices also falling.”

“The housing market’s uncertainty, particularly the many forecasts that predict sales will weaken for possibly another year, has kept many would-be buyers on the sidelines: They don’t want to buy a house today that will be worth less in a year.”

“‘No one’s giving away automobiles to rent their apartments,’ cracked Robert Imperato, president of Boston Realty Associates, which manages 500 units in the Boston area.”

“These days, newcomers to town are doing something practically unheard of in recent years, renting in neighborhoods where they hope to eventually own, in order to keep an eye on the market for a year or two.”

“‘When the sales market was hot, they tended to buy right then and there,’ said Nancy McCreary, manager of the Hammond Residential GMAC Real Estate headquarters in Brookline. ‘They felt confident they could turn right around and sell it if it didn’t work out.’”

“But now those folks are not sure where the bottom of the housing market is and they don’t want to stretch to pay a mortgage on a property that might not appreciate, said Sam Chandan, chief economist for the New York-based real estate research firm Reis Inc.”

“A few years ago, ‘people might have said to themselves, I really do need to buy right now,’ Chandan said. ‘The urgency has dissipated significantly.’”

“Newton landlords Cathy and Lenny Nyren realized that they needed to renovate the kitchen of their brick duplex when the previous tenant left a couple months ago. They spent $8,500 gutting the kitchen, putting in new cabinets, countertops and composite floors.”

“Even so, they didn’t think they could justify raising the $1,580 rent on the two-bedroom, one-bath apartment. ‘We wanted to keep it competitive and get it rented,’ Lenny said.”

“Looking online at craigslist, the couple noticed apartments were taking a while to rent. ‘Places weren’t going as quickly as they were five years ago,’ Cathy said. ‘I think people expect more than they did before.’”

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