The Housing Bubble

The Daily News reports from California. “Housing experts painted a grim picture of Los Angeles’ real-estate market Tuesday as City Councilman Richard Alarcon called for city, state and federal funds to help bail out city homeowners who can’t pay their mortgages. Foreclosures hit a record level in California last month and officials said 1,074 homes were foreclosed on in Los Angeles County, up more than 600 percent from last year.”

“‘We’re seeing people who borrowed $600,000 and can only afford $300,000,’ said Lori Gay, CEO of Los Angeles Neighborhood Housing Services.”

“‘Is there a fix? It’s hard to imagine the fix for people who have to pay $1,500 more a month and don’t have a way to pay it,’ said Dan Blake, director of the San Fernando Valley Research Center at California State University, Northridge.”

“‘It’s a real dilemma. People bought houses they couldn’t afford and can’t make their payments now. Does local government want to subsidize people who made an irrational purchase?’ Blake said.”

“‘There has to be some element of personal responsibility here,’ said David Wolfe, legislative director with the watchdog group Howard Jarvis Taxpayers Association. ‘Is that a good use of taxpayer dollars to, in effect, bail out people who should have known the consequences of those mortgages when they signed them?’”

“No relief is expected. ‘We’re in for another quarter of record activity,’ said John Karevoll, DataQuick’s chief analyst.”

“Leslie Appleton-Young, chief economist at the California Association of Realtors, said some adjustable loans taken out in 2005 and 2006 still have to reset, and it could result in more homeowners being unable to make their payments.”

“In fact, the market might not start rebounding until late next year. ‘We have definitely not seen the bottom yet,’ she said. ‘I know this is not going to be a quick turnaround.’”

The LA Times. “Lawmakers and lenders called on the state’s troubled home mortgage industry Tuesday to step up efforts to help financially strapped Californians avoid losing their homes to foreclosure. But they stopped well short of endorsing calls from consumer groups for a moratorium on foreclosures, now at a 20-year high.”

“‘Legislative efforts to intervene in the market are not the answer,’ said state Sen. Michael Machado, chairman of the Senate Banking, Finance and Insurance Committee. ‘They can cause befuddlement at best.’”

“Dorothy Hicks, an Oakland retiree who is fighting off a foreclosure, said she was struggling to meet a new monthly payment on a refinanced mortgage that jumped to $2,700 a month.”

“‘My credit is now in the toilet because I’ve had trouble meeting the payments,’ she said. ‘Unless I can figure out a way to get out of this mess, I’m going to lose a home I’ve lived in for almost 40 years.’”

The San Francisco Chronicle. “Homeowners and consumer advocates urged a state Senate committee to help save foreclosure victims’ homes and improve lending standards on Tuesday, the same day a study showed that foreclosure filings in California almost quadrupled in July compared with a year ago.”

“RealtyTrac.com said 39,013 California households, 1 of every 333 in the state, received a notice in July that it was in some stage of foreclosure. That was 289 percent higher than in July 2006 and gave the state the fourth-highest foreclosure rate in the nation.”

“‘Today illustrated that we’re looking at the tip of the iceberg in terms of the problems of foreclosures,’ said Sen. Machado, in an interview after the hearing. ‘In October, $50 billion in loans (will) reset as part of $1 trillion over the next year and a half.’”

“In the Bay Area…the most-affected county, Contra Costa, saw 1,271 homeowners receive notices that they were behind on their mortgages, 649 receive notices their properties would be auctioned and 389 lose their properties to foreclosures. The 2,309 total foreclosure notices in Contra Costa was up 466 percent from last July.”

The Sacramento Bee. “Regionally, banks repossessed 2,251 homes and filed default notices against 5,200 more during the three-month period in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties.”

“Lenders, who have been criticized for being slow to offer alternatives to foreclosure, said they’re busy doubling and tripling ‘loss mitigation’ staffs to offer loan makeovers.”

“But industry reps acknowledged it’s harder, though not impossible, to help with subprime loans packaged on the secondary market and sold to global investors.”

“Nonprofit loan counselors were skeptical about the workout claims. ‘We don’t see them (lenders) coming to the table…a significant amount of the time,’ said Martha Lucey, CEO of Fresno-based By Design Financial Solutions.”

“Often, said Ed Delgado, a senior VP at San Francisco-based Wells Fargo, troubled borrowers are reluctant to give up cell phones and satellite TV to work out financial solutions.”

“‘Some of this behavior does fall on the consumer,’ he told the committee.”

The Orange County Register. “Orange County reported 1,560 filings, or one for every 652 households. It ranked 24 out of 55 metropolitan areas in the state. Total filings were up 166 percent from July 2006.”

“Rick Sharga for RealtyTrac, said loan servicing companies have to follow certain rules agreed to by investors. ‘In some cases they are allowed to do loan modifications and in some cases they aren’t,’ Sharga said. ‘That’s really a maddening thing for the homeowner.’”

The Times Herald. “A faltering economy is sending a chill through American Canyon’s red-hot housing market, local real estate agents said Tuesday. Out of roughly 160 homes available for resale in the city, only four sold during July.”

“It was one of the slowest months for homes sales in the past three years, said David Barker of RE/MAX Napa Valley. ‘There were only four sales in July, which is somewhat worrying because it’s usually one of the better months of the year,’ he said.”

“That marks a drastic change from what Realtors were seeing in 2004 and 2005, Barker said, when available American Canyon properties were in tight supply and home values were rising up to 20 percent a year.”

“Cori Badertscher, an independent real estate agent, said it is the worst market she has seen since relocating to American Canyon about seven years ago. Over the previous two years, she said there were typically no more than 40 homes on the market at any given time.”

“Last year, 16 homes were sold during July and 23 were sold during the same time period in 2005. Now the glut just keeps growing, with the 160 homes listed for sale in July growing to 172 as of Tuesday.”

“Erin Heeley of Prudential California Realty, said now sellers have to be patient because buyers are becoming more cautious and selective. The current housing market slowdown originated years ago when the average Bay Area home price sailed over $600,000 but the average income was around $70,000, she said.”

“‘Obviously, someone making $70,000 a year is not going to be able to afford a $650,000 house,’ she said.”

“As a result, she said many people artificially inflated their incomes with loans, which were relatively easy to get but were structured with risks that could leave payments going up while home values fell.”

“In the meantime, earlier home buyers who did get those easy loans are now losing their houses to foreclosure and can’t find a buyer offering enough to bail them out.”

“Meanwhile, many sellers keep dropping their prices to sell their homes and everyone in their neighborhood follows suit to stay competitive. ‘It’s kind of a mess,’ Heeley said. ‘I think things will keep dropping into next year then level off for a while.’”

“‘It’s really sad to see these people get foreclosed on and it makes the market even worse,’ Badertscher said. ‘Well, it’s bad for sellers. It is a buyer’s market.’”

“Such a buyer’s market, in fact, that many are forecasting what homes will be selling for next year and offering that price now, said Heeley.”

A report from the Idaho Statesman. “Pam Hannam was hoping for a fresh start when she left San Diego for Idaho almost three years ago. Since arriving in October 2005, Hannam has purchased a duplex for $127,000, then tried to sell it, only to discover she owed more than the property was worth. She finally abandoned it to two different lenders, who foreclosed on the duplex in Caldwell.”

“‘I moved here with so many hopes and aspirations. And the first day people were flipping me off because of my California license plate,’ she said. ‘How did things go so wrong?’”

“Boise State University business professor Gundars Kaupins said the nation’s dilemma is the result of skyrocketing home appreciation rates combined with lenders who were eager to fund even the riskiest loan. ‘There was this element that life would go on like this forever,’ Kaupins said.”

“‘A lot of people bought these homes as investment properties, and now they’re losing their shirts,’ said U.S. Bankruptcy Court Trustee Bernie Rakozy. ‘They were trying to make a quick buck, and the truth is now hitting them in the rear because the homes were way overvalued.’”

“Demand for residential building permits reached their lowest point of the year in July, as Ada and Canyon counties issued the fewest permits for any month this year.”

“Experts say builders have scaled back on their construction plans this year, hoping to give the market time to absorb an inventory of almost 8,000 unsold homes.”

“Individually, Boise, Meridian and Nampa issued 27, 48 and 24 permits, respectively. Through July, Ada County issued 45 percent fewer permits than for the same period a year ago. Canyon County was off even more with 61 percent below the comparable period a year ago.”

“‘What those numbers tell you is that there are a lot of people who are no longer builders,’ said Buildingcredibility.com founder Trey Langford.”

“Also hurting some high-end builders is the fact that buyers recently have been concentrating on homes priced between $200,000 and $250,000. ‘I think anybody who built anything over $400,000 is pretty puckered up about now,’ said Don Hubble, president of Meridian-based Hubble Homes.”

“Recent Intermountain MLS data shows that sales in the Valley last month were 26 percent below the numbers for July 2004. Moreover, the July permit numbers in Ada and Canyon counties were 69 percent and 54 percent below 2004 numbers, respectively.”

“Rod Blackstead, president of Blackstead Building Co., said builders have had to ‘go back to the basics.’ ‘That means building at the right location, at the right price and on the right land,’ he said.”

“About the only good thing happening for home builders is that land prices have come down significantly from the days when ground in northwest Meridian was going for $165,000 an acre. ‘I think that price has come down anywhere from 40 percent to 50 percent,’ said.”

“Marc Leibowitz is the new executive officer for the Ada County Association of Realtors, where he has been working to convince everybody he meets that the slowdown in the local residential housing market is not as bad as it appears.”

“Q: With almost 8,000 homes on the market, isn’t it going to be a while before the market recovers here?”

“A: ‘I see it differently. When there is a greater opportunity for you to buy a house, that’s when you want to buy a house. So from the buyer’s side, excess inventory is not a bad thing. Right now, you have five times the number to choose from than you had 90 days ago. That’s a good time to buy a house.’”

The Bend Bulletin from Oregon. “Life in Central Oregon’s sluggish real estate market is a double-edged sword this summer. On one hand, for first-time buyers with good credit and some savings, life is good. There are plenty of homes to look at and plenty of sellers willing to cut a deal.”

“For sellers, though, the laws of supply and demand could be conjuring little more than gloom.”

“Things have gotten to the point in the local markets, especially for home builders on recently purchased land, where prices can’t sink much further without inviting losses, Redmond-based agent Pam Lester said.”

“‘I don’t expect prices to go anywhere but up from here,’ Lester said, ‘because they can’t go any lower.’”

“In Bend, 1,588 single-family homes on less than an acre were listed for sale on Aug. 6, according to Bratton Appraisal Group’s Mike Caba, more than 11 months’ worth of inventory based on average monthly sales over the past 12 months.”

“In Bend, the inventory bulge is at its worst in the $400,000-and-under price range, which accounts for more than 68 percent of the homes for sale, according to Bratton’s graphs.”

“It’s no accident that that’s the price range most production builders build in, and the price range that attracted the heaviest interest from speculators and investors during the boom years, Lester said.”

“Some of the speculators who tried to flee the markets beginning in June 2006 when it showed the first signs of weakness, are still trying to sell homes, although many in Redmond have given up and rented them out, Lester said.”

“Builders, meanwhile, are trying to keep their operations moving, but they’re forced to wheel and deal to sell the fewer homes they are building. Asking prices also are dropping as sellers adjust to the new market realities, said broker Bill Berger.”

“Average list prices in Bend dropped from $533,481 on all types of housing in May to a little less than $467,000 in July, Berger said.”

“‘The buyers tend to be first-time home buyers,’ Lester said, ‘because they don’t have to go out and sell a house first in order to do it.’”

The Whidbey News Times from Washington. “There’s little doubt that the subprime mortgage crisis has affected Whidbey Island and will continue to do so for some time.”

“‘The market slowed down about a year-and-a-half ago and went back to normal,’ said broker Rick Schutte. ‘For about three years before that we were in a highly-funded market.’”

“Schutte feels that North Whidbey is pretty well insulated from subprime problems because of the military population and the number of loans guaranteed, in portion, through the U.S. Department of Veterans Affairs.”

“Gregor S. Strohm, ASA, a real estate appraiser in Oak Harbor, sees things a little differently. ‘It’s going to get worse before it gets better,’ he said.”

“Strohm…says the subprime crisis gradually killed off the real estate frenzy of two years ago. Back then, it wasn’t uncommon for buyers to bid against each other and for sellers to enjoy sales above the listing price.”

“But no more. ‘Some people are going to have to sit back and lower the prices of their homes,’ he said.”

“He said Whidbey Island doesn’t operate in a vacuum. Interest rates are up and banks are tightening up lending practices. ‘People who would qualify two months ago now may not qualify,’ he said.”

“In July, 58 homes were sold on North Whidbey, as compared to 78 homes in July of 2006. In July, 379 homes were listed for sale, while there were only 260 a year before.”

“Home prices are also down. The 12-month moving average price on North Whidbey is down about $10,000, from a peak in February of $302,131 to $292,173 last month.”

“One impact she does see from the subprime crisis, said Realtor Marilyn Sherman Clay, is fewer number of people selling their homes in California for huge bucks and scooping up prime real estate on Central Whidbey.”

“‘Prices are still holding, though they aren’t as good as they were two years ago,’ she said.”

The Bellingham Herald from Washington. “In 2002, Washington state’s then-Attorney General Chris Gregoire came to Bellingham to announce what was billed as a historic legal settlement with mortgage giant Household International that would curb nationwide abuses in subprime mortgage lending.”

“After the Household International episode and several similar cases gave clear evidence of the risks, many are wondering why subprime lending excesses were allowed to go on unchecked until the mortgage system went into a tailspin.”

“Joseph Mason, associate professor of finance at Drexel University, has done extensive research into the financial underpinnings of the subprime mortgage industry. As he sees it, the potential for disaster in the subprime lending arena should have been obvious before, during and after the Household International affair.”

“‘Household was among a number of aggressive players,’ Mason said. ‘It was not unique in its business model….By not cracking down after seeing this kind of behavior, regulators allowed it to grow and become standard industry practice.’”

“Chuck Cross was the Washington Department of Financial Institutions’ lead investigator in the Household International case. ‘We had all these dollars coming off Wall Street, looking for these high-return investments,’ Cross said.”

“‘Sound underwriting was just thrown out the window. Wall Street wasn’t asking the questions. Nobody was doing due diligence. You had greed meeting up with naiveté,’ he said.”

“Washington Attorney General Rob McKenna said the burgeoning subprime mortgage business fed on itself. ‘Credit was too easy,’ McKenna said. ‘The sale and resale of mortgages accelerated.’”

“Now, with investors yanking their money out of the subprime financing system, wouldbe homeowners with less than great credit histories may find it harder than ever to get a loan.”

“‘The music has stopped,’ said Bob Parlette, the Wenatchee attorney who sued Household International on behalf of Whatcom County clients. ‘The people without a chair are going under.’”

Some housing bubble news from Wall Street and Washington. Bloomberg, “Toll Brothers Inc., the largest U.S. luxury homebuilder, said third-quarter profit fell 85 percent as the deepening housing slump cut sales, increased cancellations and forced the company to write down property. Cancellations jumped to 24 percent in the quarter and CEO Robert Toll said a glut of homes is curbing demand.”

“Toll said today the housing market hasn’t stabilized. ‘We continue to wrestle with the interrelated challenges of softer demand and excess housing supply in most markets,’ Robert Toll said in the statement.”

“While the company has been helped during the downturn by building homes only when an order is received, ‘we have experienced a much higher rate of cancellations than at any time in our 21 year history as a public company,’ Toll said.”

“Profit included a pretax writedown of $147.3 million for land, developments and options.”

“Five of the largest U.S. homebuilders reported combined losses of $1.85 billion and took charges of $2.9 billion to write down land values and walk away from property options in their most recent quarters.”

The Street.com. “‘We, along with many others, are concerned about the dislocation in the secondary mortgage market,’ said CEO Bob Toll. ‘Tightening credit standards will likely shrink the pool of potential home buyers: Mortgage market liquidity issues and higher borrowing rates may impede some customers from closing, while others may find it more difficult to sell their existing homes.’”

From MarketWatch. “WCI Communities, the Bonita Springs, Fla.-based builder of multi-family houses, high rises and retirement homes, said it swung to a second-quarter loss of $33.2 million.”

“‘We believe the slowdown in new unit orders is attributable to a national softening in demand for new homes as well as an oversupply of homes available for sale, particularly in our Florida market,’ WCI said, adding it has ‘little or no visibility on when market conditions are likely to improve.’”

“‘WCI continued to focus on reducing costs and generating cash flow in the second quarter,’ said Jerry Starkey, CEO of WCI Communities.”

“For the three months ended June 30, 2007, the aggregate value of Traditional and Tower Homebuilding net orders fell 96.2% over the same period a year ago to $9.1 million, while the number of unit orders declined 82.6% to 50.”

“For the second quarter of 2007, the number of gross and net orders declined 43.4% and 57.4%, respectively….The cancellation rate for the second quarter of 2007 was 47.8%, up from 19.7% in the first quarter of the year. Cancellations during the quarter totaled 98.”

“For the three months ended June 30, 2007, revenues in the Tower Homebuilding Division decreased 99.0% to $2.1 million from $214.4 million for the same period a year ago, primarily due to the reversal of revenue during the quarter related to reserved tower defaults as well as less progression of building percentage of completion among the towers under construction.”

The Associated Press. “Accredited Home Lenders Holding Co. will slash its work force by more than half and stop accepting new mortgage applications in the U.S. as it struggles to survive in the troubled home lending industry, the company said Wednesday.”

“‘These difficult decisions were made out of necessity in light of the continued and widely publicized turbulence in the mortgage and financial markets’ James A. Konrath, CEO, said in a prepared statement.”

“In Arizona, Scottsdale-based 1st National Bank Holding Co. said it would close its wholesale mortgage unit and mortgage centers in Virginia, North Carolina and Nevada. The company said it…will lay off 541 workers.”

“‘I have never seen a market shift as drastically as has occurred in the mortgage business over the last four months, but even more precipitous in the last few weeks,’ owner and Chairman Raymond Lamb said in a statement.”

From Reuters. “First Magnus Financial Corporation, one of the largest independent American mortgage lenders, filed for Chapter 11 bankruptcy protection yesterday, becoming the latest provider of home loans to collapse as the housing market slumps.”

“With plans to sell-off its Option One subprime mortgage business already set, H&R Block Inc. said Wednesday it has used $1.05 billion in credit lines to fortify operations.”

“‘In recent weeks, the credit markets have become increasingly constrained and unstable,’ William Trubeck, H&R Block’s chief financial officer, said.”

“H&R Block’s access to cash may be pinched because markets for its commercial paper and subprime mortgages offered by the Option One unit are at a near-standstill.”

“While Cerberus Capital Management LP has agreed to buy Option One, the sale may be delayed from October to December. Hedge fund manager Richard Breeden is pressing H&R Block to ’stop the bleeding’ and shut the money-losing unit.”

“HSBC Holdings Plc, Europe’s biggest bank by market value, will eliminate 600 U.S. jobs and close a mortgage office as it retreats from the subprime home loans that have triggered a rise in defaults.”

“The London-based bank will close the mortgage-services office in Carmel, Indiana, by June 30, 2008, spokesman Michael Trevino said in an interview today. HSBC employs 60,000 people in the U.S., Trevino said.”

“‘It’s about matching capacity with business volumes,’ he said. ‘It’s about fat.’”

From Thisismoney. “HSBC Lloyds TSB and others are affected by the latest twist in the global credit crisis that has seen the funding for vehicles that drive their day-to-day operations dry up on the soaring cost of credit.”

“UK’s biggest mortgage lender HBOS admitted last night it had been forced to lend £310m to finance Grampian, its credit investment vehicle, and its rivals may be forced to follow suit. Grampian had $35.4bn in debt outstanding as of the end of May, according to Moody’s Investors Service, making it the biggest issuer of assetbacked commercial paper in Europe.”

“Reduced interbank lending may become a problem for Germany’s banks if it persists and may require central bank intervention, the head of the eastern German savings bank association said on Wednesday.”

“‘We’ve got assets that are not very moveable for the moment. If it stays like that for long, it will become problematic,’ Claus Friedrich Holtmann told a news conference.”

“The comments echo those on Tuesday by state-backed lender WestLB’s CEO Alexander Stuhlmann, who said Germany’s banks faced a ‘not uncritical situation,’ with foreign banks becoming less willing to extend credit lines to them.”

“From the looks of things at the newly built Aparta Hotel Residencia, you’d never know that it’s the high summer tourist season in Canet d’En Berenguer, a town of 5,000 just north of Valencia on Spain’s Mediterranean coast.”

“The compound’s 308 apartments, completed this spring, are all unoccupied. Grass has started to sprout between the red terra-cotta tiles.”

“The residence is just one of a trail of buildings dotting the sandy coastline constructed by Enrique Banuelos as he amassed a fortune of more than 4 billion euros ($5.4 billion) over the past 15 years. Banuelos lost much of that money, and shareholders’, as the stock market punished the firm he founded, Astroc Mediterraneo SA, amid a rapid cooling of Spain’s housing market.”

“Meanwhile, about 700,000 new housing units will go on sale across Spain this year, 300,000 more than projected demand, says Fernando Rodriguez de Acuna, president of R. R. de Acuna & Asociados.”

“‘There are about 60,000 real estate firms in Spain, and 75 percent of them are disasters that will vanish,’ Rodriguez de Acuna says.”

“Tightening global credit markets have taken a toll on U.S. mortgage-backed securities issued by Fannie Mae and Freddie Mac and it will take more than recent Federal Reserve measures to boost liquidity.”

“While the central bank’s recent move to cut the primary discount rate boosted liquidity in financial markets overall, it may be too late to help the roughly $4.25 trillion ‘agency’ MBS market.”

“At roughly $7 trillion in size, which includes the subprime sector, the mortgage bond market is the world’s largest, dominated by Fannie Mae and Freddie Mac.”

“‘Liquidity in the agency MBS market is not only worse than it was a few months ago, it is worse than it was a just a few weeks ago,’ said Arthur Frank, director and head of MBS research at Deutsche Bank Securities in New York.”

“Alec Crawford, head of MBS strategy at RBS Greenwich Capital, said there have recently been large differences between quotes on prices to buy and prices to sell agency MBS, indicative of a lack of liquidity.”

“‘The bid/ask spreads on mortgage bonds have certainly widened because the Street knows that a $300 million trade today is similar in risk to a billion dollar trade six months ago and that’s because there’s so much more volatility,’ he said.”

“FBR Research said on Wednesday that $150 billion to $250 billion of permanent capital is needed to normalize pricing in the depressed market for mortgage-backed securities.”

“However, in a note to clients, the research arm of securities firm Friedman, Billings, Ramsey & Co Inc said the process would take up to a year and will be painful for mortgage investors and originators. FBR Research said the new capital is needed to compensate for the massive ‘deleveraging’ underway among companies that hold mortgages.”

“More than $20 billion worth of mortgage bonds not backed by mortgage finance companies Fannie Mae and Freddie Mac have been offered for sale in the past few days.”

“Mortgage investors increasingly question the underlying value of mortgage-backed securities given that orginators’ lax lending standards which led to a jump in defaults. Also, many economists expect weak home prices to drop further.”

“‘Investors believe the collateral has been impaired since they expect home prices to decline materially over the next year,’ the note said.”

“The Federal Reserve’s attempts to provide liquidity in the past few days are not reaching the players who need it since they cannot borrow directly from the central bank, leaving the $7.2 trillion U.S. mortgage bond market struggling to clear the volumes being offered.”

“Losses emanating from the U.S. subprime mortgage market have hit the balance sheets of banks and funds around the world in recent weeks and created the worst credit and liquidity squeeze in world financial markets in a decade.”

“‘The Fed is spraying the fire but it’s hitting the houses around the fire,’ said Michael Youngblood, a managing director at FBR Investment Management.”

“On Monday, one list of more than $500 million non-agency adjustable-rate mortgages drew offers as low as 93.5 cents on the dollar, Youngblood said.”

“The problem for many lenders is that they rely on private funding sources and cannot borrow directly from the Fed, and so are being forced to sell assets to raise cash, analysts said. ‘This flood of supply will pressure all sectors of the mortgage market, as investors and dealers are forced to sell other assets to absorb those,’ JPMorgan said in a note.”

“Two European mortgage-backed securities funds had their ratings slashed to junk from AAA by Standard & Poor’s after investors refused to provide short-term financing as the fallout from the U.S. subprime slump spreads.”

“Investors including Bill Gross, chief investment officer at Pacific Investment Management Co., have criticized ratings firms for failing to accurately value collateral backing the debt and waiting too long to cut rankings.”

“‘With the benefit of hindsight, the agencies clearly got it significantly wrong,’ said Mark Bowles, who oversees $10 billion of asset-backed securities at UniCredit SpA in London. ‘But we are in market conditions that nobody could have foreseen.’”

The Boston Globe reports from Massachusetts. “Home prices in Massachusetts fell for the 15th straight month in July, and the turmoil in the mortgage market in recent weeks is likely to drive prices down further this year. Earlier in the slump, sales slowed because stubborn sellers refused to lower their prices to adjust to new market realities. Sellers have reduced their prices, but buyers are now facing increased scrutiny when they try to obtain financing.”

“‘People who are ready, willing, and able to buy a house can’t do it because they can’t find a mortgage,’ said Timothy Warren Jr., Warren Group’s chief executive. ‘That’s got to be bad.’”

“Ra’ufa and Bryn Clark recently bid $465,000 on a property in Beverly; it was listed for about $100,000 less than it was in 2005. During that time, the seller took the house off the market for a while, said Ra’ufa Clark.”

“‘The people decided they needed to sell the house,’ she said. ‘We decided to go for it. The price drop made it possible.’”

“Ronn Huth, owner of Buyers Choice Realty in Wenham, predicted house prices and sales will decline in coming months. ‘More buyers are looking, but they’re still reluctant to take that step,’ he said.”

The New York Post. “The nation’s housing foreclosure crisis has walloped Manhattan with a vengeance this summer, as the number of filings leaped 184 percent in one month alone, according to new statistics.”

“Staten Island also suffered from the frightening flood of foreclosures between June and July, recording a 102 percent jump, reports RealtyTrac. ‘It may have taken a little bit longer, but the subprime [mortgage foreclosure] wave has finally hit New York,’ one industry source said.”

“‘When prices are going up, it makes a lot of sense to want to partake and benefit in that prosperous housing market,’ said Solomon Greene of NYU’s Furman Center for Real Estate and Urban Policy. ‘It used to be that lenders would put the brakes on overambition. Lenders have been willing, with the advent of the subprime industry, to be much looser in their standards. There’s a crisis in the subprime industry.’”

The New York Daily News. “Although New York’s real estate market has fared better than several others around the nation, Sen. Chuck Schumer said statistics show foreclosures in the city and state are on the rise.”

“‘Anyone who thinks New York City is going to escape the subprime crisis is just plain wrong,’ said Schumer. ‘The foreclosure storm that’s been brewing elsewhere in the country has now made its way to New York.’”

The New York Sun. “Rents are down in nearly every neighborhood across the city after peaking earlier this summer, with prices retreating for all classes of apartments except studios in buildings with doormen and two bedrooms in non-doorman buildings, according to a report by the Real Estate Group.”

“Since July, rents for one-bedroom apartments in buildings with doormen dropped by $250 in the East Village and by $450 for two-bedroom apartments in buildings with doormen in SoHo, the report said.”

“‘This is not a cause for concern,’ the chief operating officer of the Real Estate Group, Daniel Baum, said. It is more a sign of ‘property owners becoming a bit more rational about what the market will bear for their properties,’ he said. Mr. Baum said the rental market has been ‘overheated’ and that the drop in rents is a sign that potential tenants are simply unable to pay the prices being offered.”

“Foreclosures in the city are on the rise, according to RealtyTrac Inc., which found that foreclosures in the city jumped to 2,561 from 1,648 from July 2006 to July 2007, an increase of about 55%.”

“‘I think you’d be naive to think that New York is immune from the credit crunch going on right now,’ the president of a New York real estate appraisal firm, Jonathan Miller of Miller Samuel, said. ‘I don’t see it as a doom and gloom situation, but I am concerned.’”

The News Times from Connecticut. “According to RealtyTrac, there were 2,118 foreclosure filings in Connecticut in July, more than double the 1,038 in July 2006. In July 2005, there were 563 foreclosure filings.”

“In July 2007, New Haven County had the highest number of filings, at 706, followed by Hartford County at 450 and Fairfield County at 403.”

“‘We are seeing more foreclosures overall,’ said Norm Krayem, president of the Connecticut Association of Realtors. He blames predatory lending as well as high prices.”

“A slowing in price appreciation is also hurting new homeowners, Krayem said, because ‘you would owe more than your house could bring today.’ Except in Fairfield County, Krayem said last year’s buyer who only put 5 percent down likely wouldn’t have any equity in his home if he needed to sell today.”

“For Connecticut, Krayem is more optimistic, because the state’s economic underpinnings are good. ‘Home prices needed to come down and they have,’ Krayem said.”

The Norwich Bulletin from Connecticut. “Angela Barlow is nearly at the end of her rope. The East Killingly resident has had her white-shingled, three-story home on the market for more than a month without a single offer. Barlow said if something doesn’t happen soon, she’ll lose everything.”

“‘I almost lost the house to foreclosure once,’ said Barlow. ‘If I don’t sell, I’ll have lost close to $100,000 worth of equity. There’s been at least three families on this street who have lost their houses just this summer.’”

“Connecticut had 13,198 foreclosure filings from January to June, or one for every 108 households in the state, the ninth-highest rate in the country, according to RealtyTrac.”

“Statewide, Windham County households recorded the highest number of foreclosure filings. The Killingly Town Clerk’s Office has received paperwork for 12 foreclosures since January, one fewer than the total number received in 2006. The situation is more pronounced in Thompson, which had nine foreclosures in the last eight months, three more than for all of 2006.”

“Attorney Jonathan Peck, whose office is in New London, said the increased number of foreclosures can be traced to…the inability of homeowners to refinance subprime loans and the depreciation of home values.”

“‘Those subprime loans are a killer, and I think that’s a big reason for what we’re seeing up here,’ First Selectman A. David Babbitt said. ‘But our building inspector says construction on new homes is continuing. We’ve had 12 permits taken out for new homes in the last six months, so we seem to be as busy as ever.’”

“Peck said many home buyers purchased homes within the last three years by financing up to 100 percent of their home’s value, with the hope of refinancing before interest rates jumped. ‘People borrowed so much to get in with the expectation of a degree of appreciation,’ Peck said. ‘No matter how you cut it, it’s a sad event.’”

“‘In 2005, a person may have bought a home for $200,000 by financing $190,000 of it,’ Peck said. ‘And if that home is appraised at $180,000 in 2007, which is possible because of the current market retreat, that person still owes $10,000.’”

“Housing statistics for New London and Windham counties showed fewer houses are being sold this year. A 2007 second-quarter housing comparison report lists 272 single-family homes sold this year, compared with 1,161 units sold during the same period last year. The average price for a home was $345,552 this year, while similar residences went for $323,153 in 2006.”

“‘I think 2007 will turn out to be a normal market year,’ said John Bolduc, executive VP of the Eastern Connecticut Association of Realtors. ‘Keep in mind, the last five years have been a boom, so this had to happen sooner or later. You can’t sustain double-digit numbers forever. The market is taking a breather.’”

The Times Leader from Pennsylvania. “The number of building permits issued in Luzerne, Lackawanna and Wyoming counties for new, privately owned housing fell dramatically in June compared to a year earlier, and so did their average value. The decline is even greater if only single-family homes are counted.”

“‘We can feel a little effect,’ said Bill Price, owner of H.W. Price & Sons in Forty Fort. ‘There is a glut of empty homes out there.’”

“And when builders come under pressure, they can turn to subcontractors to help absorb the blow. ‘It’s definitely a more competitive situation right now,’ Price said. ‘Most builders look at price first,’ so he knows to bid aggressively when seeking that kind of work.”

“‘We notice a little bit of a pullback,’ said Larry Bonner, president of Sand Springs Real Estate Corp. in Butler Township. Like many builders, Bonner said his company is offering incentives to potential buyers, such as up to $10,000 in options at no charge or a free one-year membership at the Sand Springs golf course.”

“‘We’re not getting a lot of young buyers,’ which may relate to difficulty in obtaining financing, he speculated.”

From WFMZ TV in Pennsylvania. “As a result of all the foreclosures and the ‘mortgage meltdown,’ dozens of realtors, lenders and others from the industry put their heads together in Bethlehem Monday.”

“Janet McIlhenny has been a realtor in the Lehigh Valley for 7 years and a banker for 15 years before that. She says she’s never before seen some of the things happening in her business now. ‘As a realtor my costs are going up of doing business every day and client frustration is going up which leaves it more frustrating for me.’”

“A big question is ‘who do I work with’ when many mortgage giants are going under? The experts say people need to seek out certified and trusted real estate and mortgage professionals who make informed decisions on what someone’s pocketbook can afford instead of what someone’s willing to lend you.”

“Sam: ‘I think the days of, ‘I’m going to take a borrower somewhere and if they don’t get the answer they want I’ll take them to the next guy,’ those days are gone for a while..and that’s good.’”

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