The Housing Bubble

The Contra Costa Times reports from California. “The East Bay’s housing ailments are nowhere near over and are likely to afflict the region’s economy for about another year and a half. That assessment came Tuesday from a quarterly outlook about the East Bay economy produced by the UCLA Anderson Forecast. The current sluggishness in the region’s job market will persist through the end of 2008, it said.”

“‘Housing has become a source of weakness,’ said Ryan Ratcliff, an economist with the Anderson Forecast. ‘You’re going to see (residential) real estate act as a drag on the economy.’”

“Job growth in these housing-tied industries peaked in September 2005 at 58,900 employees. Since then, the East Bay has shed 4,200 of these jobs, a decline of 7 percent in fewer than two years. The big worry is whether the economic problems will ripple beyond the housing market.”

“Even worse, industry watchers believe the housing market faces more obstacles before it can escape the current doldrums.”

“‘We have not hit bottom,’ said Alan Nevin, chief economist with the California Building Industry Association. ‘It is still trending down.’”

“‘We could hit 150,000 units statewide if we’re really lucky,’ Nevin said. ‘It could dip as low as 130,000. The first six months of permits are not very encouraging.’”

“In 2005, developers constructed 209,000 residential units in California. In 2006, they built 163,000. ‘We are having a big, big decline,’ Nevin said.”

“‘The consensus of the local builders is they are looking to the second half of 2008 before things start turning around,’ said Joseph Perkins, president of the San Ramon-based Home Builders Association of Northern California. ‘We don’t believe things will decline precipitously. But we won’t see that rebound we’re all waiting for until then.’”

The Santa Cruz Sentinel. “American Home Mortgage has closed its Santa Cruz office, which employed 18 people. ‘It’s a bummer,’ said Dirk Allman, the Santa Cruz branch manager. ‘We’ve got a lot on our plate. We’re trying to take care of our clients.’”

“‘AHM’s lending focus wasn’t on borrowers with troubled credit served by the subprime sector; their loans were to people with good jobs, good credit and good properties,’ said Peter Ogilvie, president of the California Association of Mortgage Brokers.”

“The problem, he said, is that Wall Street investors ’seem to have lost all confidence in mortgage-backed securities, whether those securities are derived from risky subprime loans or from grade-A jumbo loans.’”

“When American Home Mortgage couldn’t sell the loans it had funded, it ‘didn’t have funds to lend on new loans,’ Ogilvie said, adding that ‘hundreds of lenders across the country’ are just as vulnerable.”

“In Santa Cruz County, 452 homeowners have missed mortgage payments this year, 239 homes are in foreclosure and 125 homes have been lost in foreclosure sales.”

“In the tri-county area, which includes Santa Cruz, Monterey and San Benito, 583 homes have been lost to foreclosure, 10 times the number last year at this time.”

“‘This is unprecedented,’ said Liese Varenkamp, publisher of the Santa Cruz Record, which tracks the numbers weekly. ‘Banks are coming down on their minimum bids, but investors are still waiting. We’re losing Realtors right and left because it’s such a difficult market.’”

“Sean O’Brien, a mortgage planning specialist in Scotts Valley, called the current situation a ‘liquidity crisis,’ adding, ‘Changes are literally happening overnight without warning.’”

“Interest rates are going up on loans of more than $417,000, he said, because investors require a higher rate of return. The median home price in Santa Cruz County has been hovering in the $700,000 range.”

The LA Times. “The sub-prime mortgage crisis is wreaking havoc on the normally predictable home lending market, with rates for even the most credit-worthy borrowers swinging wildly from one day, and one lender, to the next.”

“Late last week, the cost of ‘jumbo,’ loans was soaring. And individual lenders were quoting rates all over the map.”

“Some lenders that scale back or fold may still fund loans that are already in the pipeline, but others won’t, leaving borrowers scrambling, said Greg Nierenberg, branch manager at Approved Capital Mortgage in Woodland Hills. ‘For borrowers, it’s a white-knuckle ride,’ he said.”

“The average California borrower took out a $436,749 mortgage during the first half of 2007, according to DataQuick, just $19,749 over the conforming loan limit.”

“When investors in (the) secondary market get nervous about borrowers’ ability to repay their loans, they demand a higher return.”

“That’s happening even though there’s no indication that credit-worthy borrowers with high-balance loans are any less likely to repay than those with conforming loans, said Mike Hegna, regional mortgage executive for Southern California at Bank of America.”

“‘Yes, it will get better,’ Hegna said. ‘Will it be six weeks or six months? I have no idea.’”

“His advice: Know your loan and what you can handle. If you have an adjustable-rate loan that’s likely to re-price in 60 days or less, you probably need to act now. But, if there’s no reason you must refinance or buy a home today, it might make sense to wait.”

“Prospective home buyers are likely to find increasingly anxious sellers, who might be willing to accept less for their house or agree to finance a portion of the purchase price, said Jeff Lazerson, president of Mortgage Grader.”

“‘I think you are going to see increasingly desperate sellers out there,’ he said. ‘If you can manage not to get emotionally attached to a house, I think you can get yourself a screaming deal.’”

The Tribune. “Since the local real estate market started its downturn, more residences are sitting longer on the market. Countywide, the average number of days that homes spent on the market between Jan. 1 and July 30 was 112, compared with 87 days last year and just 67 days in 2005, according to the Central Coast Regional MLS.”

“In June, real estate tracking firm DataQuick reported the fewest county home sales of any June in the past 11 years. The median price in June—the most recent available—was $536,500, down nearly 8 percent from June 2006.”

“The downturn has scared off many speculators, who in past years enjoyed quick profits by reselling property after a rapid climb in prices. But local agents say the frenzied sales pace of 2004 and 2005 was unusual.”

“‘There are fewer buyers, (but) it’s really just more of a normal market,’ said Becky Adams, an agent in Cambria.”

“In San Luis Obispo County…agents throughout the county indicate their sales did not dip significantly. ‘The only thing affecting the price is the extra supply’ in the overall market, said Gary Gracia, a broker associate in Arroyo Grande. ‘The demand has not changed.’”

“Tim Wittman of Blue Heron Realty in Avila Beach, has seen a shift toward less expensive homes in Cambria. As of July 30, 10 homes sold for more than $1 million. During the same period of 2007, 19 homes in that range were sold.”

“Now he sees more clients shopping for properties priced $600,000 and under. ‘In Cambria, there’s been a 180-degree difference,’ said Watkins. ‘Last year, the upper end was doing well, now the lower end is selling better.’”

“Take a walk through any new housing subdivision and start knocking on doors. Construction defects aren’t hard to find.”

“One man has a crack in his foundation that the builder refuses to fix, because the crack isn’t big enough yet. Down the street, a father of seven is packing up and moving out because he says mold is taking over the family’s two-year-old house.”

“In a subdivision two cities away, a woman gave up trying to get her builder to replace a poorly installed granite countertop.”

“‘It’s a big investment, the biggest investment you’re going to make,’ said Gene O’Neil, president of the Better Business Bureau’s Golden Gate division. ‘You can’t be too careful.’”

“Pete Westlund bought his Brentwood tract home a little more than a year ago and said it’s been an uphill battle since to get the builder to fix the construction defects in his house.”

“He paid $270 this summer to get his air conditioner fixed, and he’s had to badger the builder into fixing cracks in his stucco. The builder refuses to do anything about the cracks in Westlund’s downstairs floor because he had the floor remodeled by an outside contractor.”

“‘It’s exasperating to me as a homeowner, always having to apologize to my family and friends and neighbors and clients about my new home that has so many flukes in it,’ Westlund said. ‘They give you lip service and say they’ll fix the problem…but after they leave, it’s a totally different story, unfortunately.’”

“Some homeowners are more proactive, putting signs and banners outside their houses warning buyers to turn around and choose a better builder. Jeff Browne is one such homeowner.”

“The 36-year-old father of seven is moving out of his Brentwood home because he’s convinced water is seeping through his foundation, slowly eating the house from the inside out with toxic mold. He says tests he commissioned indicate his house could have been built over a near-surface water source, such as an abandoned septic tank, agricultural pond or underground spring. Browne’s builder rejects that claim.”

“Outside Browne’s eight-bedroom mansion, he put up a white vinyl banner describing his legal wrangling with the developer over the repairs to his $800,000 house. ‘We just want our dream home repaired,’ he said.”

The Nogales International reports from Arizona. “Nogales Real Estate Broker Gabriel Gastelum said a housing glut in Santa Cruz County is due to the fact that property values soared on an upward spiral that began about three years ago, peaked and is now leveling off to more realistic prices. Gastelum said his firm (has) an inventory of about 100 homes vs. the firm’s average of 15-18 homes for sale.”

“‘In 26 years I have never seen anything like this. Yeah, the phones are ringing,’ he said. ‘But when the phone rings it’s not because the callers are interested in buying a home. Sellers are calling to complain because their homes have not sold.’”

“County Assessor Felipe Fuentes said Santa Cruz County was late in feeling the effects of the housing boom and cheap credit and ‘we’ll probably be among the last ones to level off.’ He said valuations have decreased between 10 percent and 15 percent since January.”

“Many of the Rio Rico Properties’ buyers ‘had to walk away from deals’ because they lost or were unable to secure funding. Others relocating from other states, particularly from California have been unable to sell their houses back home and as such cannot assume another mortgage, said Ruth Walsh, sales director for Rio Rico Properties.”

The East Valley Tribune from Arizona. “As Gilbert’s Agritopia community nears buildout on its first phase, even the niche subdivision is feeling the recent housing-market downturn. The development, known for its features that promote neighborhood interaction, has reduced home prices to compete in the sluggish market.”

“‘I certainly think the pluses are in the buyer’s favor,’ said said Christa Marten, a sales associate (who) is selling the Agritopia home sites.”

“Now, Scott Communities is offering $40,000 discounts on new homes as a buyer incentive. And it was knocking off $45,000 off a handful of existing homes available when their original deals were canceled.”

“The price cuts at Agritopia have dropped the development’s cottage models to the $210,000-$250,000 range. ‘Those types of incentives are not unusual’ said Ben Sage, Arizona director for Metrostudy. ‘The market’s pretty slow right now.’”

The Review Journal from Nevada. “Slow home sales and declining prices haven’t stopped owners from putting their properties up for sale in Las Vegas.”

“More than 5,600 single-family homes were added to the MLS in July, bringing the inventory to a record 24,087, the Greater Las Vegas Association of Realtors reported. That’s up 18.8 percent from a year ago.”

“Sales activity dropped 34 percent from a year ago to 1,318 transactions in July and the median price fell 4.8 percent to $295,000, the first time it’s gone below $300,000 since April 2005.”

“‘Obviously it’s extremely competitive,’ said association President Devin Reiss. ‘Buyers have lots of options. Of course, most important is price. You can price it at the one-year price, the six-month price or the one-day price.’”

“A public auction of 90 bank-owned homes in Las Vegas attracted 2,500 people Sunday, Dave Webb of Dallas-based Hudson & Marshall said. Bidders purchased 87 of the homes at an average of 80 percent to 85 percent of the list price, Webb said.”

“The homes are under contract for sale, but still must be approved by the bank.”

“‘All you’ve really accomplished by being the high bidder is the right to have the bank consider your offer,’ said Andrew Pugh (who) said he attended the auction. ‘So you can go research these homes ahead of time, attend the auction and be the high bidder and the bank can still say, ‘No thanks.’ I don’t see how you’re any better off than just making an offer through an agent.’”

In Business Las Vegas from Nevada. “Investors and house hunters looking for a bargain will converge Sunday in what’s touted as the largest foreclosure auction since Nevada gained its title as the nation’s foreclosure capital.”

“Past auctions have been much smaller and the reserve price “has been closer to the market price, said Michael Krein, president of Nevada Real Estate Services who manages about a dozen properties up for auction.”

“Krein said 90 percent of his properties on the market didn’t sell because the reserve prices were too high. ‘I think they are going to be more aggressive this time,’ Krein said. ‘There might be one for 80 cents on the dollar. You don’t know.’”

“The 25,208 Nevada foreclosure filings through June involved 14,687 properties, (RealtyTrac) reported. That’s more than double the number of foreclosures reported during the second half of 2006 and nearly triple the number reported during the first half of 2006, the firm reported.”

“Hudson & Marshall spokeswoman Crystal Wright, wouldn’t disclose the reserve prices but said some of the properties could sell 20 to 30 percent below market price. That was the case at a recent auction in Northern California, she said.”

“‘It is a sign of the times and economic situation that is occurring nationwide,’ Wright said. ‘There is a struggling real estate market and there is a huge surge in foreclosures. It is a perfect storm for buyers.’”

“In a sign of a struggling housing market, Meritage Homes has shuttered its sales center at Inspirada after making no sales. The homebuilder has opted to go back to the drawing board and design homes that are more affordable and better fit the buyer’s lifestyle.”

“The recent decision by Meritage to close its sales center that opened May 18 reflects the stiff competition in the Las Vegas market that has seen builders such as KB Home continue to cut prices to lure buyers.”

“New-home prices are down 11 percent from their high in April 2006, and new-home closings are down 48 percent during the first six months of 2007, according to SalesTraq.”

“‘There has been a big turn for the worse in the last 30 days,’ said John Burns, a California-based housing market analyst. ‘The homebuilders in Las Vegas have catered to entry-level buyers, and rising interest rates and tightening credit has hurt the Las Vegas market pretty substantially more so than other markets.’”

“‘I have heard from several clients that Las Vegas is one of the worst markets and that was not the case before.’ said Burns.”

“‘My clients tell me they are getting plenty of traffic,’ Burns said. ‘A lot of people want to buy a home but with poor credit and low incomes they don’t qualify. I think what has happened in the last 30 days is that mortgage lending has gotten more stringent. They are finding buyers, but if you are making $30,000 a year, you are not going to get a $300,000 loan. You could have before.’”

“Meritage owns 3.5 percent of Inspirada, where it plans to build 370 homes of the 13,500 proposed in the master plan. But when it didn’t record any sales in Inspirada, it decided to retool its models, which will be reintroduced next spring.”

“‘It is very disappointing, but you take your medicine and move on,’ said Robb Beville, Meritage’s division president. ‘You can drop prices and try to force product down buyer’s throats, but that is not our intention for that community. We are listening to what the buyers are telling us to provide product they want and not product we think they want.’”

“Meritage said its changes will appeal to a broader range of buyers but also provide a better price. For example, its town homes, which started at 1,400 square feet and priced at more than $300,000 will now start at 1,300 square feet with a starting price of less than $200,000, Beville said.”

“Ken Perlman, an analyst in San Diego, said what Meritage did at Inspirada worked when the market was hot in 2004 and 2005 and people ‘would buy any product put out there.’ Now builders need to be sensitive to both their product lines and pricing, Perlman said.”

“Builders can’t close their doors when sales are going poorly as they need to sell homes even if they are not profitable, which may be the case with KB and its latest price cuts in the valley, Burns said.”

“‘You have interest on loans to pay back and people you have to pay and you have expenses,’ Burns said. ‘They will bring in revenue. Whether they are making money or not, they have already sunk in a lot of dollars and have to recoup as much as they can to pay down their debt so they can be in great shape to buy land.’”

“‘Prices are getting back to the level where they need to be,’ Perlman said. ‘Nobody likes to see prices depreciate, but sometimes that’s what it takes to stimulate market activity.’”

Some housing bubble news from Wall Street and Washington. Financial Times, “Toll Brothers, the largest US luxury homebuilder, on Wednesday warned that home sales might fall even further in the latest sign that the worst housing slump in 16 years has yet to reach its lowest point. The rate of new home sales in June was at its second lowest since September 1999.”

“‘With the uncertainties roiling the mortgage markets right now, the pace of home sales could slow further until the credit markets settle down,’ said Robert Toll, CEO. ‘We are now in the twenty-third month of a down housing market. Hesitant customers remain on the sidelines, unsure of whether home prices have bottomed.’”

The Wall Street Journal. “Toll’s home-building revenue fell 21% in its fiscal third quarter. For the quarter ended June 30, net signed contracts declined 31%. Toll Brothers said the fiscal third-quarter cancellation rate was 24%, compared with 19% in the fiscal second quarter. Backlog for the quarter fell to about $3.67 billion, down 34% from $5.59 billion in the year-ago period.”

“And Toll Brothers signed 1,457 gross contracts in the quarter, a 17% decrease from 1,760 gross contracts signed a year ago.”

“We caution that, with the uncertainties roiling the mortgage markets right now, the pace of home sales could slow further until the credit market settles down,’ Toll said in a written statement. ‘In the near term, tightening credit standards for borrowers should reduce the pool of potential buyers: liquidity and affordability issues may impede some customers from closing, while others may find it more difficult to sell their existing homes.’”

“Toll Brothers estimates pretax writedowns related to operating communities, land and land options in the third quarter will be between $125 million and $175 million. ‘Given the current state of the market, we are not comfortable giving earnings guidance,” the company said.”

The Associated Press. “A trade group for real estate agents on Wednesday lowered its outlook for existing home sales this year by 1 percent, or 70,000 homes, as the housing market continues to slump.”

“‘With the population growing, the demand for homes isn’t going away it’s just being delayed,’ Lawrence Yun, NAR’s senior economist, said in a statement. ‘More buyers, and cutbacks in new construction, will eventually draw down the inventory levels and support future price appreciation, but general gains will be modest next year. Serious buyers today have a long-term view of housing as an investment _ speculators have left the market.’”

From Bloomberg. “U.S. home sales will tumble to a five-year low this year as a widening credit crunch reduces the number of buyers who can get mortgages, the National Association of Realtors said today.”

“New-home sales, which account for about 15 percent of the housing market, probably will fall 19 percent to 852,000, a 10- year low, the group said. ‘Mortgage disruptions will hold back sales over the short term,’ Yun said in the report.”

The Dow Jones Newswires. “UBS AG is telling mortgage brokers that it will no longer buy loans lacking documentation about borrowers’ ability to repay, another sign that the supbrime mortgage virus has spread to the broader loan markets.”

“UBS Home Finance was one of the lenders to American Home Mortgage Investment Corp., which filed for bankruptcy on Monday. Like many banks, UBS has found itself stuck with purchased residential loans it can no longer funnel to investors in the form of mortgage-backed securities.”

“UBS’s new policies on ‘no-doc’ loans went into effect last Friday. The company reiterated the policy in an email sent to clients Monday morning, a spokesman confirmed. ‘UBS will only accept full documentation, alt documentation, express documentation and stated income/verified asset documentation loans,’ the email said.’

“Washington Mutual Inc., the biggest U.S. savings and loan, has raised requirements for accepting so-called low-documentation mortgages.”

“Washington Mutual told brokers Friday that it will no longer accept mortgages unaccompanied by traditional documentation of income or assets if the loan exceeds 65 percent of the home’s value and the borrower’s credit score is below 680, said Sara Gaugl, a spokeswoman for the Seattle-based bank.”

“Standard & Poor’s may cut its ratings on $913.9 million of mortgage securities backed by Alt-A loans because of rising delinquencies and losses that may ‘exceed historical precedent.’”

“The bonds now have ‘delinquency and default loss trends that are indicative of poor future performance, and these trends will continue to exceed historic precedent and our original ratings assumptions,’ S&P analysts said in a report.”

From MarketWatch. “Fitch Ratings said Wednesday it downgraded IKB Deutsche Industriebank AG’s individual rating. ‘The downgrade of the Individual rating reflects Fitch’s opinion that IKB would have defaulted without the rescue measures put in place,’ Fitch said.”

From PBS.org. “Across the country, mortgage foreclosures are skyrocketing, home prices are dropping, ‘For Sale’ signs are becoming part of the landscape, and construction is slowing down, as the nation’s housing slump becomes a stubborn fact of life.”

“Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies; ‘The problem is, we’re trying to do two things at once. We’re trying to make sure we don’t make loans like these again, but at the same time we’re trying to help people who are stuck with these loans to get other loans, again, tough to balance those two.’”

“Gwen Ifill: ‘That sounds like two competing interests that you’re trying to satisfy.’ Retsinas: ‘They are. And there’s probably a way to do it, but it’s not going to be perfect, and it may not always be pretty.’”

“GI: ‘So what happens then to this big market we saw a year ago? We were probably sitting across this table saying, ‘No end in sight to the housing boom.’ Was that all an illusion? NS: ‘Well, we said it was too good to be true for so long, and we were right. It was too good to be true.’”

“Federal Reserve Chairman Ben S. Bernanke isn’t blinking in his battle against rising prices even as tumult in financial markets threatens to slow growth.”

“Fed officials said higher inflation is ‘the predominant risk’ when they kept their benchmark interest rate at 5.25 percent yesterday. ‘The signal from the Fed was unmistakable: turbulent markets, in and of themselves, will not be sufficient to force their hand,’ said Peter Kretzmer, senior economist at Banc of America Securities LLC in New York.”

From CNBC. “While most investors and economists applauded the Federal Reserve’s decision to hold interest rates steady, there were some critics who feel the central bank blundered by not cutting rates.”

“Robert Froehlich, DWS Scudder: ‘The Fed is out of touch with reality and should be cutting rates right now!!!’”

“Like many economists, Brian Wesbury thinks Bernanke did the right thing. ‘We’ve had a siren call when we should not have had one,’ he added. Wesbury said that the problems in the U.S. economy are not due to overly high interest rates: ‘In fact, [rates] are quite low.’”

“The economist described what he sees as the real culprit: ‘Everyone expected the fed to bail them out, so they put too much leverage on. Now that that bailout’s not happening, people are mad, worried, concerned — but we’ve got to get that excess leverage out of the system.’”

From Reuters. “U.S. inflation has been well contained since the late 1980s and the public understands the benefits of this achievement, Federal Reserve Bank of Minneapolis President Gary Stern said on Wednesday.”

“‘I regret to note that today we are again witnessing some painful and belated learning, by policy-makers and consumers alike, in our consumer financial markets,’ Stern said, in an oblique reference to problems in the subprime mortgage market for borrowers with risky credit.”

“‘This is not the time to go into details of how the Federal Reserve and the other financial regulators are responding,’ he said.”

“The Fed also said in its Tuesday statement that inflation remained a top concern, and Stern said there was broad support for this position. ‘The public continues to understand the long-term benefits of low inflation and thus to support the Federal Reserve’s pursuit of this objective,’ he said.”

The Orlando Sentinel reports from Florida. “Room 350 of the Orange County Courthouse once buzzed with people trying to outbid one another for foreclosed homes so they could turn around and make a sale for a sizable and nearly instantaneous return on their investment. On Tuesday morning…more than a dozen potential investors showed up at the courthouse for the daily auction. All of them left empty-handed.”

“The homes up for auction are so over-leveraged that it doesn’t make financial sense for anyone but the lending bank to take them. The homeowners who were forced into foreclosure owe more on the homes than the property is worth in today’s sinking market.”

“‘This is the beginning of a pretty bad 12 to 24 months,’ said Kraig Braeuning of Bay Hill Financial Group, who attended Tuesday’s auction. ‘It’s going to be pretty brutal.’”

“It’s been that way for the past three months, said deputy clerk of court and auctioneer Jim Moxley. And the volume of properties up for auction has nearly tripled, he said. ‘When I first started [two years ago]…there was competitive bidding,’ he said. ‘That’s come to a halt.”

“‘I don’t want to say things are bright because anybody out there living in the real estate market will throw bricks at me if I do,’ said University of Florida economist David Denslow. ‘This will be a year to a year and a half to work itself out.’”

The Palm Beach Post from Florida. “In Palm Beach County, 1,142 homeowners lost their bid for the American dream - or their investment flip - compared with 370 foreclosures in the same month a year ago, the Palm Beach County clerk’s office said Tuesday.”

“It was worse in St. Lucie County, where a total of 429 homeowners got foreclosure notices last month, nearly five times as many in July of 2006, according to the clerk’s office.”

“The foreclosure crisis also is being felt in the once-robust Treasure Coast housing markets. In St. Lucie County, the sound of hammers was the constant price of living in this part of paradise during the boom years.”

“The 429 homeowners in St. Lucie County who slid into foreclosure in July translate to a startling 377 percent increase over last July, when the 90 homeowners faced this fate. ‘We’re swamped,’ said Angela Roselli, who works in the St. Lucie County clerk’s office. ‘I’m surprised there are still any people living in this county.’”

The News Journal from Florida. “One of the most ambitious real estate developments in the history of Santa Rosa County has been put on hold because of money problems. Work has stopped at the massive Jubilee development in Pace, and more than $3.8 million in liens has been filed against the project developer.”

“Sandy McCranie, president of the Santa Rosa County Board of Realtors, said she’s not surprised by Jubilee’s setback.”

“‘It’s a buyer’s market, and the market is saturated with houses right now,’ McCranie said. ‘For someone to go in and build a big project like that, it would take years for them to sell out. We all kind of suspected that this was going to happen.’”

The Sun News from South Carolina. “Home prices on the Grand Strand are now showing declines for the first time, according to July sales statistics from the MLS.”

“The price declines signal to Rod Smith, director of general brokerage at Coldwell Banker Chicora, that what he’s seeing in the market is having an effect. Sellers are finally getting the message that they have to cut prices to sell.”

“Sales compared to last year have continued to plummet, with home sales dropping 35 percent in July and condo sales dropping 29 percent.”

“The good news is that stability in the market wouldn’t happen until this price correction showed up, said Tom Maeser, president of the Fortune Academy of Real Estate.”

“Condo prices did not show year-over-year drops in July, but Maeser says those numbers are skewed by preconstruction condos, sold at 2005 prices, that are closing now. Plus, more higher-end condos are being added to the mix, so the overall prices do not give an accurate sense of appreciation.”

“‘If I were to go into [condo] communities and look at prices, I’m pretty positive we’d see a decrease [in price],’ Maeser said.”

The Daily Report from Georgia. “The opening sentence of Haddow & Co.’s mid-year 2007 condominium market overview sends a blunt warning about Atlanta’s Intown market: It’s clearly entered the danger zone.”

“‘[We’re] definitely trying to send a message and want people to try to pay attention to what’s going on,’ said David Haddow, president of Haddow & Co., a real estate consulting firm. He said ’supply is running away from demand.’”

“At a time when the pace of development needs to slow, a record 3,050 units in 35 projects were started in the first half of this year, according to the report. This comes at a time when sales volume has decreased considerably and inventory continues to build.”

“In the current development cycle, which began in 1997, about 409 projects with a total of 32,454 units have been completed or started. Of this, 137 projects with a total of 13,366 units still have unsold units. Only 44.5 percent, or 5,949, of the active condos have been sold or are under contract, the report states.”

“During mid-year 2006, the ratio of unsold units to annual unit sales was 1.37, or 5,457 to 3,981. As of mid-year 2007, the ratio was 3.31, or 7,417 unsold units to 2,239 annual unit sales.”

“Roger C. Tutterow, an economics professor at Mercer University, said…over the next couple of years, inventory will remain elevated, but ‘anyone that’s willing to take a longer term perspective of this should be in good shape provided that we don’t continue to bring as much product forward.’”

“Tutterow said the continued migration Intown will help to absorb the existing condo supply. ‘The migration Intown is real. After decades of talking about people moving back Intown, it’s actually coming true,’ Tutterow said.”

The Community Press from Kentucky. “Despite constant warnings from township officials, many Sycamore residents continue to leave their properties in a state of disrepair. Zoning Administrator Greg Bickford said nuisance properties have increased recently, leading to more citations and fines by township trustees.”

“‘It’s on the rise and it’s only getting worse,’ he said.”

“Bickford said reasons for the rise in nuisance properties are likely just that people don’t take care of their homes, are living somewhere they can’t afford or that a home has been foreclosed and left to rot.”

“Sycamore Township Planning and Zoning Inspector Paul Kremer noted the recent number of foreclosures in particular have been ‘through the roof.’”

The News Sentinel from Tennessee. “Times are good if you’re buying a house in Knoxville, unless you have to sell one first, of course.”

“That’s the impression one gets after crunching numbers and talking to local real estate gurus. While East Tennessee has largely avoided the all-out slump of housing markets like Florida and Michigan, there’s no doubt that the national slow-down is starting to pinch sellers in Big Orange Country.”

“‘What I’m finding is there’s a lot of houses on the market right now, so it’s a buyer’s paradise,’ said Brenda Albert, of Rocky Top Realty. ‘And they’re being more deliberate and more selective because they do have so much to choose from.’”

“For evidence of the trend, look no further than the Knoxville Area Association of Realtors second-quarter report, which found home and condo sales in a 32-county region were down nearly 14 percent compared to the same period a year ago.”

“And that’s not the only harbinger. The average market time for homes sold in June was 90 days, the largest June number in the nine years of data on the association’s Web site.”

“And for readers who take comfort in knowing that others are worse off, consider the numbers out of Florida, where home sales were down 30 percent and median prices were down 5 percent in June.”

“That’s not necessarily good news for Tennessee, since many of the ‘half-backs’ looking to skedaddle out of Florida may first have to sell their Sunshine State home.”

“Existing homes aren’t the only ones being hit. Victor Jernigan, president of Blue Ribbon Homes, said his company has seen traffic drop ‘precipitously’ in the last 60 days because people are afraid the market is still going down, although he said that fear is misplaced.”

“‘We are seeing slower sales in every price range,’ said Jernigan. ‘It’s not just bigger homes or smaller homes. It’s in every price range because of credit standards.’”

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