The Housing Bubble

The Mercury News reports from California. “The housing meltdown and resulting credit crunch have unleashed new calamities on consumers, loan companies and home builders on an almost-daily basis. ‘Customers are looking for loans that no longer exist,’ said Christopher George, president of San Ramon-based CMG Financial Services, a mortgage vendor. ‘A year ago they would have qualified for loans. Now they no longer qualify.’”

“Amer Faraz, VP of Fremont-based Green Valley Funding, said his company is…doing about 10 percent of the loan volume it did a year ago, Faraz said. ‘This is brutal,’ Faraz said of the current market conditions. ‘Our company is in a building that had 15 mortgage companies last year. Now we’re the only one left.’”

The Malibu Times. “While Malibu has its share of property owned by people who ‘don’t even need a mortgage,’ there is plenty of vacant land, smaller homes and condos that are being foreclosed upon, said a source, who is a real estate investor and did not want to be identified.”

“‘Typically, foreclosures will be auctioned at a price well below market norm, so there’s a lot of bidding,’ Kyle Speer, a trustee sale auctioneer who overseas auctions of L.A. County homes at the Norwalk Superior Court, said. ‘But with the number of foreclosures going up, I’m seeing lots of houses whose bid price is higher than its real equity, so no one’s bidding on them.’”

“‘Probably 80 percent of foreclosures coming up for auction these days go to REO,’ Speer said. ‘There are still properties that have good equity, but if REOs flood the market, I think housing prices are going to go down.’”

“‘The REOs we’re seeing are due to a lot of people who took out their loans in ‘05 and ‘06 when the market was high and who can’t make the rising mortgage payments. There’s not a lot of equity there and the bank’s have less investment capital,’ Speer said. ‘So I predict that we’ll see a rise in foreclosures, which will ultimately make property values go down.’”

The LA Times. “It’s not just sub-prime borrowers who are having trouble getting affordable home loans. Creditworthy borrowers are getting hammered if they want mortgages with payment options or the ‘jumbo’ loans used routinely in Southern California and other high-priced home markets.”

“Rancho Palos Verdes marketing consultant Steve Ammons discovered the new jumbo reality after he began shopping for a mortgage on a Manhattan Beach home that he and his daughter own and rent out.”

“Ammons and his daughter have credit scores of 750 to 760, he said Wednesday, making them prime borrowers. What’s more, the house is worth an estimated $1.6 million and has a current $650,000 mortgage, so there is plenty of equity to serve as a cushion for the lender.”

“Ammons is looking for a 30-year, fixed-rate mortgage, but with a twist, the option to pay only the interest on the loan during the first 10 years. Such loans have been widely used by landlords seeking to maximize their cash flows. Ammons said a jumbo loan with an interest-only option that he took out just last year on another rental property had an interest rate of 5.5%.”

“But the story was different this time: A loan officer at Washington Mutual Inc. quoted him a rate of 9.75%, saying that the lender ‘had to charge such high rates so that they could sell off the loans,’ said Ammons, who has since put off refinancing.”

“‘It’s rough out there,’ said Doug Duncan, chief economist for the Mortgage Bankers Assn.”

“This week, borrowers were paying a full percentage point more for jumbos than for smaller loans, said Laguna Niguel mortgage broker Jeff Lazerson. In the sub-prime market for people with poor credit, fixed-rate mortgages that were in the 7% to 8% range six months ago can still be had, but only at 9% to 11%, Lazerson said.”

“And anyone with a credit score under 620 ‘is now automatically sub-prime,’ he said.”

“In June, 15 of the 20 U.S. markets tracked by the S&P/Case-Schiller index fell, including declines of 4.1% in the Los Angeles region, 7.3% in San Diego and 4% in San Francisco. In Southern California, the residential real estate market is skewed somewhat by stronger demand for higher-priced homes.”

“‘We’re getting different pictures as to how dire things are,’ said Raphael Bostic, an economist and USC professor. ‘I think the general picture says that things aren’t great, but that the sky hasn’t fallen in quite yet, certainly not in Southern California.’”

“‘These short-term fluctuations, while significant, won’t touch people on a day-to-day basis,’ Bostic said. ‘For the average homeowner, if you’re not looking to sell, try as much as you can to not think about this stuff.’”

From MSNBC. “After years of double-digit returns, sellers are apparently having a hard time adjusting to the market’s new pricing realities.”

“‘They haven’t got it yet,’ said John Young, a homebuilder in southern California. ‘We’ve had such nice equity run-ups, and you get accustomed to that. I think most sellers haven’t got the idea that to really sell their house they’re going to have adjust their price down.’”

“Young says his cancellations are running about 40 percent — double normal levels. Young, who builds mostly entry level homes in Riverside and San Bernardino Counties, says it will be at least another 12-18 months before the market recovers.”

“‘We think its going to take all of next year,’ he said. ‘And we think we’ll see some normalcy in the supply demand mechanism in the first or second quarter of 2009. That’s my best guess.’”

The Daily Bulletin. “Housing starts in the Inland Empire have plummeted in 2007 and are down nearly 50 percent for the year to date. Numbers released this week by the CBIA show the San Bernardino-Riverside-Ontario area as the hardest-hit in the state, with just 12,274 starts for the first seven months of the year compared with 24,451 for the same period in 2006.”

“That’s a 49.8 percent decline, and it has been getting steeper. In July, local housing starts were off 55.4 percent from the same month in 2006.”

“Economist Eduardo Martinez said demand in the region had basically ’stopped in its tracks.’”

“‘For the last two or three years, you had these new financial products - adjustable- rate mortgages, no-document loans - that became commodities,’ he said. ‘They were bundled and sold on Wall Street, and the market didn’t have enough sense to assess their real value. It was like driving a car on souped-up gas. Once you burn through that …’”

“With record levels of housing available, Martinez said, supply has outstripped demand. ‘When that happens, you either have to increase demand or eliminate supply,’ he said. ‘They can’t pull these houses off the market, so they have to slash prices to sell them.’”

“Statewide, single-family permits were down 35 percent for the first seven months of the year and multifamily starts were off 23 percent. Alan Nevin, chief economist of the CBIA, said the relatively minimal decline on the multifamily side was due to a shift from condominiums to rental properties in several major projects.”

From ABC News. “Joe Morse has bought a 40-foot motor home that he plans to drive across America over the next several years. But Morse hasn’t been able to take off on his grand tour because he hasn’t been able to sell his house in Cerritos, Calif.”

“‘I had hoped the house would sell almost immediately,’ said Morse, who retired in April. But his open house drew few visitors, and there have been no bids in the two months it has been for sale.”

“‘Now I may have to take it off the market and wait until spring,’ he said. ‘It’s frustrating, because I’d like to get on the road.’”

“Phillip Cook, a certified financial planner in Torrance, Calif., who has worked with Morse, said that anyone developing a financial plan has to consider that there are ups and downs to the economy, including the housing market.”

“‘Real estate has its cycles just like everything else,’ he said. ‘After the kind of run-up we’ve had … people think it won’t slow down, won’t go down. But it does.’”

The Voice of San Diego. “This decade, the city of Chula Vista caught a bad case of housing fever. With sparkly new neighborhoods, and more where that came from, appearing as if from thin air, the city partied.”

“But now, with many of its sprawling suburban neighborhoods caught in the vortex of foreclosure, with unsold homes piling up, and with home prices dropping, it’s as clear in Chula Vista as it is in much of the county that the real estate heyday, and its accompanying spending power, is a past-tense phenomenon.”

“‘It’s pretty bleak,’ said Maria Kachadoorian, finance director for the city of Chula Vista. ‘The reality of the market as it is today is … we’re hit a little harder than most. The biggest shift is that the assumptions of growth clearly can’t be there.’”

“Lew Feldman, chairman of the Los Angeles office of law firm Goodwin Procter, likened the phenomenon to the state’s reaction to the dot-com boom. ‘It’s like Gray Davis, when he assumed that the dot-com boom would continue and spent 30, 40 percent more from the state dollars than were coming in for state income,’ he said. ‘It’s like anything — what goes up, must come down.’”

“Kachadoorian called the tapering of the sales tax revenue the ‘domino effect’ from the real estate slowdown and the increasing numbers of homes in foreclosure, and from the delay in opening State Route 125. ‘If you can’t afford to save your house, you can’t afford to go out and buy furniture,’ she said.”

“Tom Haynes, fiscal and policy analyst for the city of San Diego, said more than a slowdown in property tax revenues, he’s concerned about the ’spillover impacts’ of the housing downturn on the economies of the city of San Diego and the rest of the county.”

“Job growth in real estate, construction, finance and retail like furniture and home furnishings is slowing, he said. The ‘wealth effect’ that stemmed from skyrocketing home values has vanished, tightening the spending of some homeowners, he said.”

“‘When we start seeing disposable incomes decrease, that’s kind of a scary situation,’ he said.”

“‘I’d say they’ve been extremely cavalier in ignoring the warning signs in San Diego and they’ve been spending like drunken sailors,’ said local political consultant Scott Barnett. ‘They could become San Diego South here.’”

The Rocky Mountain News reports from Colorado. “Colorado is on pace to see a 25 percent increase in foreclosure filings this year, with 19,460 being filed in the first six months of the year, according to a Colorado Division of Housing report released today. Zachary Urban, administrator of the Colorado Foreclosure Hotline, said there’s been no dropoff in hotline activity. ‘What concerns us the most, though, is that there is an increasing number of properties going to sale at auction,’ Urban said.”

“‘There are still plenty of adjustable-rate mortgages set to readjust, and there is plenty of inventory on the market. If you can’t make your payments, and you need to sell your house, odds are that you won’t be able to sell it quickly or easily. That’s certainly part of what’s driving the foreclosure numbers we’re seeing along the Front Range,’ said Kathi Williams, director of the Colorado Division of Housing.”

The Sun News from New Mexico. “Fewer homes sold in July than a year ago in Las Cruces. Homes, new and previously owned, are still selling at a decent clip in Las Cruces, but certainly not as fast or in the same numbers as years past.”

“C.J. Pierce of Steinborn Realty…said, there is a lot less room for error in today’s market. Houses will sit ‘if you have the wrong price, in the wrong place in a competitive market.’”

“Stacey Melzer has had her house on the market in Las Cruces for more than six months. ‘I did not think it would take this long (to sell),’ she said.”

“‘There are a lot of homes on the market giving buyers more to choose from so it’s made it more difficult to commit to a purchase,’ said Las Cruces real estate agent Karen Trujillo.”

“Real estate agent Annette West reported that 173 homes sold in July. That is off significantly from last year’s pace. West reported that 246 homes sold in July of 2006. West pointed out that the overall average price is down from $212,921 in July 2006 to $199,872.51 in July 2007.”

“Louis Sauceda, owner of the Official Mortgage Team of New Mexico in Las Cruces, said that adjustable-rate mortgages and no-down-payment loans have gone away. ‘We’re back to mortgage lending 101,’ he said. ‘People who have good credit and good jobs and incomes can still get loans.’”

The Casa Grande Valley Newspapers from Arizona. “New homes still are being built, though not at the same pace as a year or two ago. ‘(The boom of 2005 and early 2006) was almost like the perfect storm. It was bound to slow down,’ says Rick Miller, director of planning and development for the city of Casa Grande.”

“Maricopa has seen the biggest drop-off, recording just 208 sales in July at an average price of under $230,000. That’s the lowest for any month in the new city in the last two years. Early 2006 saw two months with sales of more than 500 homes, and the average purchase price during a month was as high as $281,000 in May 2006.”

“Figures from the Western Pinal Association of Realtors, which includes home resales in most of western Pinal County, show a similar trend. The most disturbing numbers, especially for anyone thinking of selling a home, are those for average time on the market.”

“Also discouraging is the fact that the average sales price on the homes that sold this June was $168,300, but the average price of the homes listed was $217,500. The average sales price was $169,200 for all of 2006, the culmination of a spike in prices for existing homes. The average selling price was $150,100 in 2005 and $112,200 in 2004.”

“If you intend to sell an existing home, even if it’s the almost-new one you bought just a year or two ago, you’ll need patience. Lots of patience. And don’t even dream of selling it for the price it would have fetched a couple of years ago - even if you paid that price for it yourself.”

The Arizona Daily Star. “Looking on the bright side of the market slowdown is getting tougher for local real estate agents. As financial problems increase for mortgage lenders across the country and lending standards tighten, several Tucson agents said they expect the number of buyers probably will shrink too.”

“‘The market’s really scary right now,’ said Pamela Young, an agent for the past 10 years. ‘There’s a lot of agents who don’t even come to the office anymore.’”

“The collapse of Tucson-based First Magnus Financial Corp., formerly the nation’s second-largest privately held mortgage lender, is inspiring some particularly strong misgivings in the local market, agents said.”

“‘I think people are really, really holding off right now, and partially because they don’t know if they can get a loan,’ said Luke Adams, an agent who deals with a lot of first-time buyers.”

“‘They have to have a good job, good credit and cash,’ said Eric Schrader, owner of Century 21 First American. ‘If they have two out of three of those categories, we can still do a deal. The lenders were just giving people loans who had no business getting loans.’”

The Explorer News from Arizona. “For First Magnus employees the news wouldn’t have been such a shock if the company had not announced just days before that everything was OK.”

“‘We’d been told a week before that our company was fine and we were going to weather the storm and come out even better,’ Brian Leahy recalled. ‘And a week later, ‘Oh, by the way we’re declaring bankruptcy and you don’t have jobs as of tomorrow.’ We didn’t think it was going to happen.’”

“Back when houses were selling in record volume and at record prices..the rush was on to get rich, and many sought the bounty of opportunities the mortgage industry promised. ‘People used to get dressed up to go to the bank (for a loan),’ said Mark Lilly, a broker with Pusch Ridge Home Loans. ‘Now you go to a restaurant and the bartender hands you a card and says he’s a (mortgage) broker.’”

“Lilly, who has been in the mortgage and real estate business in Tucson for 25 years, said the rapid increase in property values people experienced in the heat of the housing boom was unprecedented. His customers who had bought homes in Rancho Vistoso were able to double the worth of their investments in less than four years.”

“‘They made $10,000 in equity every month just sitting there,’ Lilly said. But now there are more price reductions than new listings on the MLS, Lilly said.”

“The national housing boom, which began roughly around 2001, sent the real estate market into a frenzy. Historically low interest rates only fueled the craze. ‘If you fogged a spoon, you didn’t need any money down and you didn’t need any assets (to buy a house),’ Lilly said.”

“The construction market is already having trouble with an abundance of supply, said Roger Yohem, VP of the Southern Arizona Home Builders Association. ‘We’re looking at an inventory problem,’ Yohem said. ‘There’s too much supply out there for demand.’”

“For instance, during the first seven months of 2007, there were 6,368 permits issued for new homes. During that same span in 2007, there were 3,620 new home permits issued, according to numbers from Bright Future Business Consultants.”

“‘Before the problem with the mortgage problem popped up, the communities were down 40 to 50 percent anyway,’ Yohem said.”

The Tucson Citizen from Arizona. “Thousands of former employees of First Magnus Financial Corp., which closed Aug. 16, will not get paid before other creditors, a bankruptcy judge said Wednesday.”

“‘They can stand in line with everyone else,’ said Judge James M. Marlar, who is presiding over the case.”

“Marlar questioned First Magnus’ plans to keep on retainer…members of a Miami law firm handling the bankruptcy case and a consulting firm an estimated $75,000 per month to handle administrative aspects of the process.”

“First Magnus Chief Counsel Doug Lemke argued that the in-house lawyers and other staff will ensure that the liquidation is handled by mortgage industry experts. If First Magnus simply drops everything and walks away, the assets, which include thousands of loans that will have to be sold, could lose value before they are sold, he said.”

The Gazette Journal from Nevada. “No official Northern Nevada figures for July were available Monday, but Dennis Wilson, president of the Reno-Sparks Association of Realtors, said last month’s sales and median prices of existing homes are expected to be essentially unchanged from June.”

“‘A lot of people have pulled their houses off the market. Others are simply waiting,’ Wilson said.”

“The nationwide median price of an existing home has now fallen every month for a year, not seen in Realtor records in nearly 40 years. That reflects the geographic magnitude of the housing slump, said Brian Kaiser, analyst at the University of Nevada, Reno.”

“‘It gives you a sense of how widespread this whole market correction has been,’ he said. ‘We’re probably in for another year of declining prices and longer times on the market. This is probably going to stick around for a while. I think most people are hunkered down for the rest of this year and the first half of next year until things shake out.’”

“A couple of years ago, median existing home prices in some areas of Reno were rising 30 percent to 40 percent amid the region’s white-hot real estate market. ‘It was such a dramatic upswing in prices, it was not sustainable,’ Kaiser said.”

“And even with the median sales price in Reno falling 12.1 percent in the second quarter of this year from a year earlier, it’s not catastrophic, Kaiser said. ‘Reno’s in a unique position that the rest of its economy is solid.’”

“‘My experience with sellers is if you price your home according to the market, the time on market will be less,’ Wilson said.”

Some housing bubble news from Wall Street and Washington. “Flippers and other speculators investing in single-family homes helped drive up prices in many hot housing markets during the boom. Now they’re contributing heavily to mortgage delinquencies in several of those markets. ‘Defaults are on the rise in most parts of the country, but…it is not always the case of a homeowner losing his or her home,’ Doug Duncan, the Mortgage Bankers Association’s chief economist, said in a statement, ‘but [it's] often the case of an investor gambling on a continued increase in home values and losing that gamble.’”

From MarketWatch. “California, Nevada, Arizona and Florida were among the states with the fastest home-price appreciation over the last five years, Duncan noted.”

“‘This rapid price appreciation attracted both speculators and home builders, a volatile combination that lead to an oversupply of homes that was beyond the capacity of the local populations to support,’ he said. ‘When this oversupply became apparent and prices began to fall, many of these investors simply walked away from their mortgages.’”

“Freddie Mac’s second-quarter net income slipped 45%, primarily due to a higher provision for credit losses and mark-to-market losses on credit-related items, the mortgage giant reported Thursday.”

“‘On the credit front, we are seeing weakening,’ said CEO Richard Syron in the company’s press release.”

From Dow Jones Newswire. “Freddie Mac shares fell after the home-mortgage financier took a $320 million loss on new mortgages.”

“Freddie Mac, which is recovering from a massive accounting scandal, also predicted that third-quarter results would reflect credit-market related stress for its guarantee-related obligations.”

“Freddie also said its exposure to subprime mortgages had grown from the end of 2006. The company said its investments of non-agency mortgage-related securities backed by subprime loans rose to $125 billion at the end of June compared with $119 billion at the end of 2006.”

The Associated Press. “H&R Block Inc. on Thursday cast new doubt on the pending sale of its troubled mortgage lending arm. ‘The mortgage origination market is in the midst of the most severe dislocation it has seen in years, maybe the most severe since the 1930s,’ Mark Ernst, CEO, told analysts.”

“The company said Option One and two small non-mortgage businesses that are being dismantled lost $192.8 million.”

“H&R Block has already slashed its Option One work force by more than half. The company announced Thursday it has stopped approving any new loans that don’t comply with Fannie Mae and Freddie Mac requirements, limiting loan originations to $200 million a month, beginning in September. Last year, the company originated $27.1 billion in loans.”

From Bloomberg. “Basis Capital Fund Management Ltd., the Australian investment company, sought bankruptcy protection for its second-biggest hedge fund.”

“The Sydney-based company’s petition to liquidate the Basis Yield Alpha Fund stokes concern that the rout in the U.S. subprime market will lead other hedge funds to report losses when they disclose August valuations to investors next week, said James Chirnside, chief investment officer at Asia Pacific Asset Management in Sydney.”

“‘We will see some blood,’ said Chirnside, who oversees $70 million of funds of hedge funds. ‘The contagion spread and was at its worst by the middle of August.’”

“Basis Capital… had more than $1 billion in assets as recently as May. Losses at the Yield Alpha Fund could exceed 80 percent, according to the petition filed yesterday.”

“‘We are not quite sure what assets are in the fund,’ said Sydney- based said Paul Billingham, a liquidator for the Basis fund at accounting firm Grant Thornton. ‘There were a number of counterparties that secured the assets and the value of those was changing.’”

From Reuters. “New evidence of damage wrought by the U.S. mortgage sector surfaced in the United States and Europe on Wednesday while banks demanded a record amount of cash at a euro zone money market auction.”

“Cheyne Finance, a structured investment vehicle (SIV) managed by hedge fund Cheyne Capital Management, said it was seeking to restructure after being forced to start selling assets to pay down debt.”

“Standard & Poor’s downgraded Cheyne Finance sharply. Just two weeks ago, the agency said ratings on SIVs, including the Cheyne vehicles, were weathering turmoil caused by defaults on U.S. subprime mortgage lending.”

“‘The only thing that is certain is that more uncertainties in the direction of asset prices and volatility are on their way,’ Bank Julius Baer said in a report.”

“U.K. lenders responsible for 12 percent of the nation’s mortgages are tightening standards for loans on house purchases, withdrawing offers and raising the cost for borrowers with less than perfect credit.”

“‘There are some lenders who have pulled their current product range and not announced any new ones,’ said Ray Boulger, senior technical manager at Britain’s biggest online mortgage broker. ‘Others have put up rates until they get little or no business.’”

“In the U.K., so-called subprime lending to homebuyers with a shaky credit history accounts for about 6 percent of the market, half the level of the U.S., according to the London-based Council of Mortgage Lenders.”

“‘Subprime lending has been of a higher quality in the U.K.,’ said Kelvin Davidson, a property economist. ‘But the problems don’t really emerge until the market starts to turn down.’”

The Birmingham Post. “More than £2,000 was knocked off the price of an average house in the Midlands last month amid growing signs of a property slowdown.”

“Charles Smailes, chairman of the board of the National Federation of Property Professionals, thought this was the beginning of a stagnation in prices which would run into 2008.”

“He said: ‘The slowdown is entirely predictable after the seven interest rates we have had. If the average mortgage is over £100,000, every interest rate increase has added £16 per month. When that happens seven times, it begins to bite.’”

“Mr Smailes thought the slowdown was a good thing and would allow time for incomes to catch up with house prices. ‘It’s the best thing that could happen to the market; the level of increases we have seen since 2000 have been totally unsustainable.’”

“Only six weeks ago London’s financial hub seemed headed for another round of hefty bonus payouts from a bumper first half of transactions. But a global financial downturn has dampened the mood.”

“Bankers and traders who splurge on fast cars, vacation homes and luxury yachts with the extra cash each year may be forced to scale back their spending plans as the U.S. subprime turmoil and credit squeeze have brought dealflow to a grinding halt.”

“‘Banks are having significant increases in their costs. They can’t access liquidity as cheaply as before,’ said Jonathan Said, a senior economist at the Centre for Economics and Business Research. ‘The first costs that you take off are bonuses.’”

“One senior London-based banker said he was not expecting a dramatic fall in bonuses because of the strong first half. ‘I am reasonably relaxed about that from a European point of view,’ he said. ‘We all get paid too much anyway.’”

“The U.S. Federal Reserve is not rushing to cut benchmark interest rates because it wants to break investors of the view that the central bank is there to bail them out, an article in the Wall Street Journal said on Thursday.”

“‘Officials acknowledge the perception of bailing out investors exists and if allowed to grow, could erode the credibility they need for keeping inflation low and encourage lax attitudes toward risk,’ the article said. ‘They hope that taking time to weigh the economy’s need for rate cuts will help discourage investors from thinking Fed officials are overly concerned with falling asset prices.’”

The Tribune. “Indymac Bank has hired more than 600 former American Home Mortgage Investment Corp. employees who were recently let go by that company. Tuesday’s move comes just five weeks after Indymac announced the layoff of 400 workers, roughly 4 percent of its then-total work force of 9,200, in the face of an increasingly tough mortgage market.”

“At that time, Indymac CEO Michael W. Perry said industry loan volumes and profit margins were under pressure. Perry said Indymac’s challenges have come from a credit cycle with unprecedented liquidity in the capital markets.”

“‘You had excess lending capacity from the 2003 refi boom and you had a strong economy with pent-up housing demand, which created a housing boom,’ he said. ‘And that housing boom caused consumers - including a lot of consumers who speculated like they did on stocks - lenders, rating agencies and investors to become too aggressive.’”

The Bradenton Herald. “Since the beginning of 2007, National Association of Home Builders’ chief economist David Seiders has lowered his expectations for the housing market four times. ‘The reason for the revisions is all because of the new eruptions on the mortgage side,’ Seiders said.”

“In a teleconference Tuesday, Seiders said a recent Home Builders survey found that 62 percent of the builders who responded are feeling the crunch of tighter lending practices. That number is up from just 33 percent in March. He predicts it could take until 2011 to see a full recovery.”

“After the unsustainable boom of 2003, 2004 and 2005, prices started to return to normal. Seiders and many other economists found hope in the market’s stabilization. Then the mortgage meltdowns began.”

“‘It looked like things were stabilizing the middle of this year, but I’m sure we’ll see another decline,’ Seiders said. ‘It’s an overreaction to the subprime market that triggered other issues. Consumers feel tremendous uncertainty.’”

“He also said that while prices have tumbled in many markets, they still have a way to go until they get to a mark where individuals with good credit can get a more traditional mortgage without a skewed income-to-debt ratio. He predicts price appreciation across the nation may not start until sometime in 2009.”

“‘The reality is we did have a lot of overaggressive lending during the boom,’ Seiders said.”

The Ellsworth American reports from Maine. “Sales of single family houses in Hancock County dropped 19 percent for the first six months of this year compared to the same period last year, according to the Maine Real Estate Information System. ‘House sales are definitely off,’ said Danny Sargent, president of Sargent Real Estate. ‘I have more inventory now in this office than I can ever remember and a lot of listings still coming on the market. The listings just continue to come in. Price-wise you’ve got to be very competitive.’”

“Derek Hayes, VP of business banking for Bar Harbor Bank & Trust said, ‘It’s really a buyer’s market.’ The area saw ‘really rapid appreciation for a few years,’ but now prices are declining, said Hayes.”

The Concord Monitor from New Hampshire. “Al Wait’s Contoocook home has been sitting on the market for 10 of the last 15 months, and it hasn’t sold yet. He started listing the three-bedroom, 1,600-square-foot home on Park Avenue at $299,500, and has dropped the price by more than $20,000.”

“‘I’m trapped. I can’t afford to live here, but I can’t go away,’ Wait said.”

“Wait’s home is one of about 90 single-family homes in Hopkinton and Contoocook currently on the market, according to the MLS, a figure area Realtors say is unusually high. ‘We’ve had double to triple our normal inventory for the last 12 months,’ said Judy Hampe, broker in Concord.”

“‘People are hesitant about investing, and generally feel real estate is overpriced,’ said Hopkinton Realtor Mary French. ‘A lot of buyers are hoping real estate will come down. Nowhere is housing flying off the market.’”

The Nashau Telegraph from New Hampshire. “Foreclosures are on the rise in New Hampshire. And the percentage increases look scary: Hillsborough County is on track to nearly double last year’s numbers and quadruple the year before.”

“Home values dipped again this year and houses are staying on the market a bit longer, according to the latest statistics from the New Hampshire Association of Realtors.”

“There were 353 foreclosures in Hillsborough County through Aug. 14 of this year, according to Registrar of Deeds Judith MacDonald. If that pace keeps up, foreclosures in the county could reach an all-time high of 500 by year’s end.”

“By comparison, last year there were fewer than 300 – all year. In 2005, there were 101. In 2004, there were 73. ‘I’ve been here for 27 years and I’ve never seen it like this,’ MacDonald said. ‘The future, to say the least, is bleak.’”.

The Hartford Courant from Connecticut. “In the latest sign that the nationwide credit crunch is worsening, lenders are saying no to borrowers who want no-money-down mortgages. ‘If someone walks in today with an A-plus credit history and a $200,000 salary but no money for a down payment, I can’t help them anymore,’ said Michael Menatian, president of Sanborn Mortgage Corp. in West Hartford, Conn.”

“The company was notified by its lender earlier this month that the lender no longer will cover no-money-down loans.”

“‘There is a credit squeeze occurring,’ said Michael Sheahan, director of mortgage banking at Webster Bank, one of Connecticut’s largest banks. ‘There is less money available for less credit-worthy borrowers or those providing less documentation on their loan.’”

“‘Our industry is changing by the hour,’” said Dan Rosenfeld, VP of a mortgage company based in Avon, Conn. ‘My screen flashes all day long, ‘No longer available.’ Lenders are really tightening their standards.’”

“Katie and Allan Chipps locked into a no-money-down mortgage through Sanborn in mid-August, on the last day they were offered. Securing that loan allowed the couple to submit a competitive offer on a new house they are buying in West Hartford, they said, without having to add a contingency clause to sell their current home first.”

“Katie Chipps said once the couple sells their current house they will use the profit to pay down the second mortgage or to pay other bills.”

“‘We would not have been able to make a competitive offer on a home without this mortgage product,’ she said. ‘It gives us flexibility in pricing our home and in using the proceeds from that sale.’”

From Hartford Business in Connecticut. “Sales statistics compiled by The Warren Group show condominium sales in Hartford County dropping 16.4 percent for the first six months of 2007. For the month of June, sales dropped a staggering 21.1 percent.”

“‘What we were going through in 2005, during the height of the craziness, was a crazy, elevated, goofy market,’ said Beth DiLoreto, with Prudential Realty Connecticut’s Wethersfield office. ‘That wasn’t normal, this is normal. I believe this is just a correction and not a time to panic.’”

“One explanation for the odd trends is that there isn’t so much an onslaught of individual condos being put on the market, as there are former apartments being converted to condos, asserts Christina Brine, with ERA Broder Group Real Estate in West Hartford.”

“‘The problem is that we had a bunch of condo conversions that flooded the market,’ Brine said. Some of those former rental units are too small to be attractive as ownership units. So they sit unsold, and unreasonably depress the market statistics.”

“‘Sellers are going to eventually have to bite the bullet on some of these condominiums,’ said Brine. ‘The sellers are still stuck in a year or two ago.’”

“Brine noted that the hype surrounding the impending retirement of baby boomers contributed to the condominium explosion that has not yet come to its expected fruition.”

“‘There was all this talk and so many articles about the baby boomers retiring to the city and to condos to be near their grandchildren,’ said Brine. ‘There’s a lot on the verge of happening in the city but it just hasn’t happened yet.’”

The Boston Herald from Massachusetts. “The foreclosure epidemic shows no signs of peaking yet in Massachusetts, with the number of homeowners unable to make mortgage payments soaring again in July, a new report shows.”

“Petitions to foreclose filed by lenders in court shot up 66.5 percent in July compared to the same period last year, the 18th straight monthly increase, according to the Warren Group, publisher of Banker & Tradesman.”

“‘July held more of the same for Massachusetts homeowners,’ said Timothy Warren, CEO of the Warren Group, in a statement. ‘More people are having trouble paying their mortgages, likely because rates on many are resetting, and more of those people who get into trouble are having a hard time getting out.’”

The Gloucester Daily Times from Massachusetts. “Thirty-three condos at Pond View Village that couldn’t be sold at full price and were pulled from a crumbling market earlier this year will be discounted and offered for sale again this fall, the owner-developer and the representative of major private lenders said yesterday.”

“With the markdowns, Joseph Flatley, CEO of the investment corporation, said he expected the consortium, including Bank of America, ‘to take significant losses.’ ‘We’re going to take a hit on this and it’s going to be substantial,’ he said.”

“‘We’ve never had a loss in our 17 years - this is the first,’ he added.”

“Flatley’s company will decide the new, discounted price for the 33 units, whose sale was projected to provide much of the cash flow to repay the loans. The units were offered at an average price of $289,000 before they were pulled from the market.”

“Buyers will benefit from his consortium’s losses, Flatley said. ‘You sell it for what you can,’ he said. ‘We’ll have to reduce the prices significantly.’”

“Under the work-force concept promoted by Gov. Deval Patrick, employers help their workers buy homes. Tina Brooks, undersecretary of housing and economic development, who received Flatley’s bailout proposal in June, disagreed. She said the work-force proposal for Gloucester was vague.”

“Brooks also questioned the need for work-force housing on Cape Ann. ‘Gloucester is not exactly a high-cost market,’ she said. ‘I’m not sure what the hurdle is for workers.’”

“‘My take,’ said Sen. Bruce Tarr, ‘is it’s a terrific project caught in a market collapse. Now all parties are trying to make it fit into the requirements and get it sold.’”

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