The Housing Bubble

The Record Searchlight reports from California. “State Real Estate Commissioner Jeff Davi did his best to allay concerns about the housing market as he addressed a packed house of Shasta County agents Wednesday in Redding. It may not be the best of times, he said, but it certainly isn’t the worst. ‘Real estate is cyclical. You can’t deny that. You just have to be more aggressive and do things differently. It’s not a fun time for anybody,’ he said.”

“Home sales in Shasta County in the first half of 2007 totaled 1,192, a 10.5 percent decrease from 2006 and the fewest sales since 1,127 escrows closed in the first six months of 1998, according to DataQuick. ‘That’s not something to necessarily be negative about,’ Davi told members of the Shasta Association of Realtors.”

“Davi emphasized that unless California addresses its acute housing shortage, more and more people will be priced out of the market. The percentage of households that could afford to buy an entry-level in California stood at 24 percent in the second quarter of 2007, according to the California Association of Realtors.”

“Another problem is that wages in California have not kept pace with housing prices, Davi said.”

“Davi didn’t dwell too much on the subprime credit crunch that has enveloped the nation. Homes lost to foreclosure in Shasta County in July numbered 33, the most for any single month this year. For the first seven months of 2007, 175 homes were lost to foreclosure, a 573 percent increase from a year ago.”

“In an interview after his presentation, Davi said homeowners facing foreclosure have to be persistent, adding that 50 percent of people facing a default have not contacted their lenders.”

Inside Bay Area. “City leaders appeared to be sending mixed messages following their first look at a series of proposed changes to tighten code enforcement for vacant properties.”

“Slumping housing prices and bad lending practices have turned the northern San Joaquin Valley into one of the nations leading areas for foreclosures — with Manteca, a city that calls itself the Heart of California, at the center of the crisis.”

“Mayor Pro Tempore Vince said, ‘I have to say, I like what I see. I know its a heavy hammer, but it will keep neighborhoods with vacant houses safe,’ noting he lives near a vacant house he later discovered was used for teen gang parties.”

“Mayor Willie Weatherford hinted that he wasnt willing to go forward with ordinances that could cost taxpayers. ‘We wouldnt be able to get that money back,’ he said.”

“Several lenders and mortgage brokers were scattered about the City Council Chambers to hear the councils discussion, but none spoke during the period for public comment.”

The United Press Syndicate. “Q. ‘A couple of years ago, I purchased an investment property in Sacramento, Calif. In 2006 I was without a tenant for the first half of the year. Making the mortgage payments ate through all of my cash reserves. Currently I have tenants, but the income does not quite cover the expenses.’”

“‘As I look at the property, I see that my cash flow is negative and the value is static at best. If a tenant were to move, not pay the rent or if I lost my job, I would be in financial trouble almost instantly.’”

“‘I don’t know what to do. I can’t sell the property (even if there is a buyer out there) for what I owe on it (after closing expenses), and I don’t have the money to bring to closing if I lose money. I would love to just walk away. I know that would destroy my credit rating, but I am desperate enough to do that because it is likely to be destroyed as soon as there is any problem (so why continue to spend money just to keep an unsatisfactory status quo?).’”

“‘Is it possible to sign ownership over to the lenders? Would that free me from the problem, or would I still be responsible for whatever shortage results from their sale of the property? I am getting desperate. Any advice or information you can give would be appreciated.’ — D.T., Cedar Hill, Texas.”

“A. ‘You’re in a very tough position, akin to the people I described as ‘condo slaves’ during the worst of the late ’80s Texas real estate bust. The condo owners, however, had one advantage you don’t have: They could at least live in their overly expensive condos.’”

“If you give up the investment property, you will still have a liability. When the lender sells the property, it may sell it for less than the amount of the mortgage. In that case you will get a form 1099 indicating ‘income’ in the form of loan forgiveness.’”

“‘I have two suggestions. First, start learning to live with little or no credit today. Second, visit with a good real estate attorney, preferably one experienced in loan workouts.’”

The Times Herald. “They’re not calling it a trend, but school officials said Wednesday they’re encouraged by early figures showing Vallejo school district’s declining enrollment could be slowing down.”

“Schools have, so far, seen a 1.3 percent decline in student enrollment over last year rather than the 3.5 percent loss they experienced between the fall of 2005 and 2006, district spokeswoman Tish Busselle said.”

“Declining enrollment has hit the Vallejo school district budget hard, a phenomenon also hurting dozens of other California districts.”

“Reasons for the additional students haven’t been nailed down, but Busselle said one factor could be the local housing market slump. With families unable to sell their houses, many may be choosing to remain in Vallejo.”

The Orange County Register. “More homeowners are struggling to hold on to their properties and more are losing that struggle, says the latest national report from the Mortgage Bankers Association.”

“Doug Duncan, the MBA’s chief economist, said that the numbers could keep climbing over the next year, longer than previously thought, because investors have stopped buying as many as 40 percent of home loans for sale. ‘Even prime adjustable jumbo loans are not being purchased by investors. They have simply left the marketplace,’ Duncan said.”

“He said more folks with both good and spotty credit also are missing payments on adjustable loans after low initial ‘teaser’ periods end.”

“‘What is not clear, however, is whether subprime ARM loans are causing the problems for California or whether California is causing the problems for subprime loans,’ (he said.) California has 17 percent of the subprime ARMs in the country and over 19 percent of the foreclosure starts on subprime ARMs.

The Press Telegram. “Scott Hamilton takes a Zen-like philosophy on the chicken and egg question. As principal of DOMA, a real estate marketing company focused on downtown Long Beach, Hamilton and company have worked the past few years to market residential properties in downtown by promising residents that the streets would be alive with retailers, restaurants, bars and entertainment.”

“Three out of four isn’t bad. Downtown Long Beach, and Pine Avenue in particular, has a plethora of restaurants, bars and clubs.”

“‘We see that the type of buyer who’s buying in downtown doesn’t necessarily match the demographic of the Census data that retailers are looking at,’ Hamilton said.”

“That data is based on the incomes of people who have been living in downtown, not on those who have been moving into downtown, he said.”

“Hamilton acknowledged that loft sales will be impacted by the real estate slowdown. Builders have already adjusted their pricing and project plans to reflect the changes and the slower sales rates, he said.”

“‘They will adjust and things will start moving again,’ he said. ‘It’s a lot like the stock market: It takes a little bit of belief before it happens.’”

The Press Democrat. “Living within walking distance of church, the mall and other downtown destinations drew Leo and Margaret Trembley to rent in Santa Rosa’s newest luxury apartment complex. The Trembleys are among retirees and younger professionals moving into the Moore Building, the latest housing project in downtown Santa Rosa.”

“‘They’re testing the success of an urban product in a largely suburban community,’ said Scott Gerber, president of a Larkspur real estate firm.”

“The Moore Building offers 79 one- and two-bedroom units that rent for $1,325 to $2,670 a month, the highest rents in Santa Rosa. So far, 20 leases have been signed over six weeks.”

“The county’s rental market has tightened over the past year, a result of job growth and the housing slump, which is leading some potential buyers to rent instead. ‘We’re well positioned right now,’ Jereb said.”

“Downtown is where Steve Roybal wanted to be. The Santa Rosa native is single and plays in a rock and blues band when not holding down his day job.”"

“‘If you’re not going to live in a home, I want to be in the best place I can be,’ he said. ‘Being single and traveling a lot, I was willing to give up an outdoor patio or a front yard in exchange for a theater room and a nice gym.’”

“Roybal also didn’t want to stretch financially to purchase a house. He has friends that struggle to meet mortgage payments because of high housing costs, and now home prices are falling.”

“‘The market’s rocky,’ he said. ‘And what I’ve seen my friends buy, the building I’m in is 10 times nicer.’”

The East Valley Tribune reports from Arizona. “Cash-strapped homeowners facing foreclosure are abandoning their homes in higher numbers and leaving behind potential public safety and health risks. City code enforcers and county health officials are saying many of the vacated houses are showing up in newer high-end subdivisions historically immune to such trends.”

“And it looks like there will be more empty homes dotting the Valley. More than 2,400 foreclosure notices were sent to Valley homeowners in July, according to the Information Market. Last month, more than 2,800 were mailed out as of Aug. 30 — about 93 per day — according to the firm.”

“Currently about 37 percent of the houses for sale in the Valley are listed as vacant, said Jim Sexton, owner of a Phoenix based realty firm.”

“Three years ago there were about 20,000 to 25,000 houses for sale statewide. ‘Now there’s about that many vacant homes just in the Valley,’ Sexton said.”

The Arizona Republic. “Metro Phoenix home sales and building are off 20 percent to 30 percent from last year - which was down 30 percent from the overheated housing market of 2005, according to RL Brown, housing analyst and publisher. Home prices are down about 5 percent. Foreclosures have climbed 10-fold. A record 50,000-plus homes are for sale across the Valley.”

“Many companies and real-estate buyers and sellers thought…that the Valley’s strong population and job growth were enough for housing to boom awhile longer. They weren’t.”

“‘I have yet to meet anyone who thinks they predicted a market downturn quick enough,’ said Landiscor Aerial Information President Nora Hannah. ‘It takes about six months to realize a slowdown isn’t just a blip.’”

“Brown said Arizona companies need to face reality and try to make money in the current housing climate, because a repeat of 2004 and ‘05 isn’t going to happen.”

“‘Businesses that made a lot of money because of the housing market a few years ago better expect to give some of it back this year,’ he said.”

“‘The slowdown in housing and now the rise in foreclosures are putting pressure on prices,’ said Mary Gomez, a West Valley real-estate agent. ‘If people don’t need to sell, they should wait.’”

“Many believe the southwest Valley, which has much vacant land, is an indicator of where the overall Valley real-estate market is headed. Goodyear, Avondale and Buckeye are among 2007’s 10 fastest-growing suburbs in the U.S.”

“Sharon DeMoss, a realty agent in Goodyear, said…because of the subprime meltdown, the market is flooded with listings.”

“‘Many of them (resale homes) are overpriced,’ DeMoss said. ‘We are sitting with our sellers and saying, ‘You guys have to be the lowest price in your subdivision for your floor plan.’ And many times that doesn’t even do it because many buyers are coming in and saying, ‘I don’t think the bottom is here yet. If I pay $250,000 for this house, how do I know that in six months I’m not going to be able to get it for $200,000?’”

“DeMoss said new homes are a great buy now because builders are cutting prices or offering incentives.”

“‘A couple of years ago, these same builders were making people stand in line to get on a list to get a house,’ she said. ‘My personal opinion is that during that 2005 frenzy, many builders went out and bought a whole bunch of land, and now they have no choice but to go ahead and build.’”

From AZ Family. “Just a few years ago, housing permits were going through the roof and many speculated that Buckeye could soon pass up Mesa when it came to the number of homes. Well, a lot of those homes in Buckeye were built, but that doesn’t mean people are living in them.”

“As lifelong resident and Buckeye Realtor Brenda Bruehl will tell you, many of the homes are vacant. ‘There’s a lot of investors that bought and couldn’t get them rented out so it’s been sitting vacant,’ Bruehl.”

“According to the Arizona MLS, there are 708 houses for sale in Buckeye and 241 of those are sitting vacant. That’s more than a third. ‘I remember when there was only 500 homes in Buckeye,’ Bruehl said. ‘Seven hundred and eight active is a lot.’”

“According to data compiled by the research group that tracks foreclosures in Maricopa County, there were 453 foreclosure filings alone in the town of Buckeye this year. That means Buckeye makes up 10 percent of foreclosures right now compared to the rest of Maricopa County.”

The Arizona Daily Star. “The developer of the Santa Rita Hotel renovation in Downtown has dropped its idea of turning the property into high-class condominiums, citing softness in the housing market.”

“Building owner Lopez said he’ll turn the building back into a boutique hotel. It’s just not a good time for condos, said Lopez, whose company HSL Properties owns many apartment complexes in Tucson.”

“‘The whole housing market is extremely soft, prices are falling and the mortgage market is very difficult,’ he said.”

The Daily Herald on Nevada. “Walking through the gated community of Black Mountain Vista on a hill in Henderson, Nev., Thomas Blanchard offers a guided tour of real-estate woe. A row of stucco duplexes that recently sold for as much as $500,000 sit empty.”

“‘That’s a repo,’ the real-estate agent says as he stands in front of 678 Solitude Point Ave. Then he points to the adjacent houses, where yellow patches blot the spartan lawns and phone books lie on front porches, their covers bleached from weeks under the desert sun. ‘No. 680, repo; 684, repo. Those two at the end, repo.’”

“Three years ago, this Las Vegas suburb was teeming with modern-day prospectors armed with low-interest mortgages, all hoping to strike it rich in real estate. Now, what started with the subprime-mortgage mess and subsequent credit crunch are turning communities like Black Mountain Vista into luxury ghost towns.”

“Real estate is turning into a money pit, sapping the fortunes of home buyers, hedge-fund managers and house painters alike. The really bad news? This is only the beginning.”

In Business Las Vegas from Nevada. “Not even the luxury single-family home market, which had been a bright spot, is immune from the housing slowdown in the Las Vegas Valley. Sales of new $1 million-plus single-family homes during the first half of 2007 fell nearly 34 percent from the same six-month period in 2006.”

“‘I think there is a common misperception that the luxury (home market) hasn’t fallen,’ said Brian Plaster, president of Signature Custom Homes, who predicted the second half of the year could be worse.”

“Luxury homebuilder Toll Brothers blamed part of its dismal third quarter showing when it had an 85 percent drop in its profits to its showing in Las Vegas. The company reported a $29 million write-down in Nevada, the same amount as in California, and reported it’s renegotiating deals and trying to reduce its land options.”

“In a recent report, Toll Brothers rated Las Vegas as an F minus, but CEO Robert Toll said last week, ‘You might add another minus to that.’”

“‘What are we doing about it?’ Toll asked. ‘We are out there with the rest of the builders in Vegas praying. There’s not much you can do. You can’t advertise your way out of that situation. You just have to wait for the market to come back. Yes, in the last eight weeks we have taken seven agreements. So that is what we consider real bad.’”

“As sales have declined, the inventory has grown, in part because of more existing homes coming on the market.”

“‘More people were able to buy in that price range, and they stretched their financing and maybe they shouldn’t have,’ said Kenneth Lowman, broker/owner of Luxury Homes of Las Vegas. ‘They bit off more than they could chew with adjustable-rate mortgages. Their payments all of a sudden go from $4,000 a month to $7,000, and they are forced to sell.’”

“‘Even the wealthy are affected by the credit crunch because interest rates have risen on jumbo loans, making it more costly for them to purchase, Plaster said. ‘I think people are scared right now,’ Plaster said. ‘They don’t know what’s going to happen in the market.’”

“Despite the pullback, the luxury market is faring much better than the market as a whole. New-home closings are down nearly 43 percent for the year, while existing-home closings are down nearly 35 percent.”

The Gazette Journal from Nevada. “As the number of building permits dwindle in Washoe County and local governments discuss staff cuts, spending restrictions and hiring freezes, experts say the longer-term effects of the building and housing market slump have yet to be seen.”

“‘The bubble has burst,’ said Tom Cargill, an economist at the University of Nevada, Reno. ‘This is the beginning of how it’s going to play out and spread through the economy.’”

“While building permit numbers were down in Reno, Sparks and Washoe County as compared with the previous year, single-family home permits showed the steepest decline, 50 percent or more. In Sparks, single-family home permits dropped 57 percent.”

“‘The direct and indirect effects keep going,’ Cargill said, adding the slump has a chilling effect on people not directly affected by the real estate or construction industries.”

“‘There’s a lot of uncertainty in every part of the economy,’ he said. ‘The gaming industry and tourism in general will also take a hit, not so much because of what’s happening here but from what’s happening in California.’”

“‘The economy is not going to collapse,’ he said. ‘We’re looking at a readjustment in (real estate), an important sector of the economy.’”

Some housing bubble news from Wall Street and Washington. Bloomberg, “The number of Americans who may lose their homes to foreclosure rose to a record in the second quarter as late payments by subprime borrowers surged to one out of every seven loans. The share of all U.S. mortgages entering foreclosure rose to 0.65 percent in the second quarter, an all-time high, from 0.58 percent in 2007’s first three months, the Mortgage Bankers Association said in a report today.”

“The number of subprime borrowers making late payments rose 14.82 percent from 13.77 percent.”

“Growth in overdue payments on U.S. home loans has hurt global markets as investors shy away from risk, driving down the value of mortgage-backed securities and cutting into the profit of lenders.”

“‘We’ve got a history of irrational borrowing, irrational lending, irrational homebuilding, and we now are getting an irrational market response to these numbers,’ said Jay Brinkmann, VP of research and economics for the Washington-based bankers trade group.”

“‘The assumption was that home prices would go up forever, which of course is never a good bet to make,’ said Brian Bethune, director of financial economics for Globe Insight Inc.”

From CNN Money. “Deliquencies hit 5.12 percent of all outstanding mortgages, up from 4.39 percent a year ago, the MBA said in a quarterly survey. Serious delinquencies, those 90 days or more late, jumped to 1.11 percent of all loans, from 0.98 percent in the first quarter.”

From MarketWatch. “Driving the numbers were the states of California, Florida, Nevada and Arizona, said Doug Duncan, MBA’s chief economist. These are also markets that have experienced a high share of investor loans, Duncan said.”

“The share of non-owner-occupied loans that are 90 days or more past due or in foreclosure, as of June 30, was 32% in Nevada, 25% in Florida, 26% in Arizona and 21% in California. Comparatively, 13% of these loans were in default in the rest of the country.”

From Builder Online. “Some of the same builders whose companies created the excess inventory that helped push the housing industry into its current downturn are reportedly meeting today behind closed doors with Federal Reserve chairman Ben Bernanke to discuss what can be done to prevent owners from losing their homes to foreclosure.”

“The actual agenda of the meeting, however, is not completely clear, as NAHB, which arranged this meeting through its High-Production Homebuilders Council, and spokespeople for several large home builders declined to answer questions about it.”

“‘[The] housing industry needs a psychological boost right now,’ Hovnanian’s chief Ara Hovnanian told CNBC.”

From Reuters. “U.S. house prices may fall further as credit availability tightens, according to a new study from the Cleveland Federal Reserve.”

“‘House prices may still fall in the future,’ wrote the researchers. ‘Any change in the ability to purchase a home, such as from innovations in the lending environment, can have a large impact on the level and volatility of housing prices.’”

“The study went on to forecast that the boom-bust cycle of lending could crimp the ability of households with a weaker credit profile to borrow.”

“Turmoil in the credit markets will take a toll on the U.S. economy but the full impact will not be clear for another two or three months, William Rhodes, senior vice chairman of Citigroup Inc, said on Thursday.”

“Only when positions in subprime mortgages and other financial instruments are unwound will the extent of the damage become clear, Rhodes told a meeting of the World Economic Forum.”

“The Organisation for Economic Cooperation and Development on Wednesday trimmed its forecast for U.S. growth because of the fallout of a slump in housing stemming from subprime mortgage defaults. The Paris-based forum said it could not rule out a recession.”

“Rhodes said banking regulators, including the Federal Reserve, should also have acted more swiftly on subprime loans. In a paper presented to a Fed conference last week, Ed Leamer, director of an economic forecasting group at the University of California, gave the central bank a failing ‘F’ grade for understimating the impact of the housing downturn.”

“‘My own view is that that’s a generous grade,’ Stephen Roach, Morgan Stanley’s Asia chairman, commented.”

“Credit derivatives awarded the top ratings by Moody’s Investors Service and Standard & Poor’s may be as vulnerable to default as high-risk, high-yield bonds, according to independent research firm CreditSights Inc.”

“Constant proportion debt obligations, known as CPDOs, use credit-default swaps to speculate that a group of companies with investment-grade ratings will repay their debt. An increase in credit rating cuts for investment-grade companies may cause losses that CPDOs would struggle to recoup, CreditSights said in a report entitled ‘Distressed CPDOs: We’re Doomed!’”

“‘If you assume defaults and downgrades come in bunches rather than being evenly spaced out, CPDOs’ default rates are more what you would expect for low junk ratings than for AAA,’ David Watts, a CreditSights analyst in London, said in a telephone interview yesterday.”

“Prices of CPDOs dropped to as little as 70 percent of face value last month. New York-based Moody’s said on Aug. 21 it may downgrade $244 million of Aaa rated notes issued by ELM BV, a Dutch special purpose vehicle.”

“‘If you assume defaults and downgrades come in bunches rather than being evenly spaced out, CPDOs’ default rates are more what you would expect for low junk ratings than for AAA,’ said David Watts, a CreditSights analyst.”

“The underpricing of liquidity risk, more than the pricing of default risk, was the weakness in the credit markets that led to the current crisis, said Peter Praet, an executive director of the National Bank of Belgium.”

“He said he had not foreseen the degree to which the market would react to the problems in the U.S. subprime mortgage market. ‘The extent to which the money markets froze as a result of subprime was beyond my imagination,’ Praet said at the European CDOs, Credit Derivatives and Structured Credit Products Summit.”

“Short-term funding has dried up in recent weeks for structured investment vehicles (SIVs), whose strategy has run into trouble as the financing freeze has coincided with a sharp decline in prices on their investments, mostly financial debt and asset-backed securities.”

“The lack of a strong secondary market for these products, with even less demand in the current liquidity crunch, has meant prices have dropped for even some of the highest-rated structured products, even while their credit quality has remained unchanged.”

“Manfred Exenberger, managing director of Omicron Investment Management, told the conference: ‘It is sort of a buyer strike. More than a liquidity crisis, it is a crisis of confidence, of credibility.’”

“With structured paper trading at 50 cents on the dollar, it is also a valuation crisis, he said. ‘Investors can’t believe the ratings anymore, and they can’t believe the valuations anymore. It is much more than a market re-rationalisation.’”

“The amount of distressed bonds is increasing at the fastest rate in four years on growing concern that the era of record-low defaults is coming to an end.”

“Investor appetite for risk declined in the past two months as losses in securities linked to subprime mortgages caused sudden increases in the cost of credit and sparked concern that the worst U.S. housing market in 16 years would slow the economy.”

“Since June, the amount of distressed bonds has risen more than fivefold to $24.8 billion, according to an index Merrill Lynch began compiling in 1997.”

“‘Unless the market is being totally irrational, it’s telling you default rates are going up,’ said Lawrence Post, CEO of Post Advisory Group, which manages $8 billion in high-yield, or junk, debt. ‘We’re moving in that direction.’”

“Until June, companies had few difficulties refinancing debt because investors were confident an expanding economy and rising earnings would allow borrowers to meet their debt payments.”

“‘The last couple of years we always used to say, ‘Gee, isn’t it crazy, we’re seeing top-of-market behavior and this can’t be sustained,’ said Thomas Marshella, a managing director of leveraged finance at Moody’s. ‘It did go on longer and we were wrong. You always thought there’d be an inflection point and, finally, an inflection point came,’ he said.”

The Connection reports from Virginia. “Condominium sales have dropped by more than 50 percent, changing the course of some of Northern Virginia’s major projects and crippling sales of one of the regions most important types of housing. Some 20,000 condominiums currently are standing unsold in the region with some 9,500 unsold in Northern Virginia.”

“Between June 2006 and June 2007, Delta Associates VP William Rich reports, only 2,000 units were sold. During the last 12 months, Rich said, about 1,800 condo units were cancelled in Northern Virginia and about 8,800 units were ‘reprogrammed’ to rent as apartments.”

“‘When a condo project has been built and has to change to a rental building, certainly the developer has lost money. He has to hold the asset longer and leasing is a way to pay off the debt.’ Rich said.”

“Jeff Shumaker argues that condos ‘always have a high rate of investor ownership.’ ‘In the old days, you couldn’t get a loan on a condo if the building wasn’t FHA approved, but then they began giving $100,000 loans without FHA approval and investors were taking higher proportions of the units,’ he said.”

“Paradigm Company’s Carlyle Place complex in Alexandria was built on the concept of being part of a new city within a city. The condos were advertised at $300,000 for a one bedroom to a price ‘in the high $700,000s’ for a three bedroom. The buildings were expected to open in 2007.”

“Between the time of conception and the opening, the sales of condominium apartments dropped through the floor. Carlyle Place abandoned the condo concept last year and is now renting apartments, offering one month free rent for a year’s lease on certain apartments.”

“Shumaker says the ‘majority of the people buying those types of condos are planning to buy them for a short period of time and reselling them for a profit. If you did that now, you’ll own that condo for 10 years. Reselling is no longer an option.’”

“Rich too argues that the condominium business will ‘come back,’ perhaps by 2009, but he doubts it will hit the ‘go-go” years of 2003 and 2004. ‘There were never condominium sales like that historically,’ he said.”

The Daily Press. “Stubborn sellers of homes in Hampton Roads finally began to give in somewhat to get deals done in the oversupplied market in July, according to data from the Virginia Association of Realtors.”

“In July, sellers dropped prices and made concessions to get deals done. The data for July suggests that sellers may have even been motivated by a national credit crunch to start making concessions they had stubbornly resisted so far this year. It is still very much a buyer’s market in Hampton Roads, and it takes 35 percent longer to sell than a year ago.”

“The Williamsburg market, which includes sales in upper York County and James City County, continued to swing erratically in June. Prices dropped dramatically, which got more homes sold - and sold quicker - than in July 2006.”

“The median price of $292,000 was down 6 percent from a year ago, and nearly $31,000 from May.”

The Washington Post. “The new house on Allison Street in North Brentwood is two stories higher than the older homes that surround it. It doesn’t have a porch, shutters or any of the other distinguishing features found on the century-old bungalows on the block.”

“‘It’s humongous,’ a neighbor said of the house, as yet unoccupied. ‘It just doesn’t fit in.’”

“The complaints sound the same as those in Chevy Chase and Arlington County: Builders are constructing large houses on small lots, knocking down trees, obstructing sunlight and destroying the character of the town.”

“But in North Brentwood and other small municipalities in northern Prince George’s County, mansionization comes with a twist: Some of the new homes, neighbors and town leaders say, are being used as boardinghouses for several families or unrelated people.”

“‘Our concern with these McMansions is they are not single-family homes,’ LaVerne Williams of Lewisdale told a group of county planners and elected officials in Riverdale. ‘You are turning our communities into rooming communities.’”

“County law declares that no more than five people unrelated by blood or marriage can live in a single-family house. But enforcement has been lax, said Bob Schnabel of College Park.”

“‘There is no penalty,’ he said. ‘Properties in my neighborhood are rented to more than five people.’”

“Del. Barbara A. Frush said she understands the plight of neighbors, feeling helpless while their community is altered. ‘They make these things into not a McMansion but a McApartment building,’ Frush said.”

From NBC 29. “The mortgage market is getting tougher for everyone, but a new national report says it’s worse if you’re trying to borrow $417,000 or more. That’s the line for a jumbo loan and lenders are getting skittish. The question is: is the same true in and around Charlottesville?”

“Last year, for the first time in a long time, housing prices in the Charlottesville dropped. Those prices are a long way from the boom that drove prices sky high a couple of years ago.”

“Charlottesville is definitely a buyer’s market: there are 3,500 homes up for sale -some at discounted prices-and sellers are offering some incentives.”

“While buyers have plenty to choose from, sellers have to bite the bullet. Many sellers are cutting prices, but realtors have high hopes for the future. ‘It’s a great time to buy a home and we just need to get back to market basics and the real estate market will rebound in the future,’ insisted David Phillips with the Association of Realtors.”

“Phillips says in a lot of places people just aren’t buying because they can’t obtain a mortgage and many people are defaulting on the ones they have.”

“‘So our prices while their higher than what we’d like to see them in our community for our size, they aren’t unrealistic. We see folks come down from the north who think our prices here are great,’ shared Phillips.”

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