The Housing Bubble

The Mercury News reports from California. “The East Bay is among the regions most vulnerable to a slump in California’s housing market, a downturn that could be the worst in a quarter-century, an economist said Monday. And in a grim forecast, home sales activity could plunge more deeply by the end of the year, Robert Kleinhenz, an economist with the California Association of Realtors, told a conference meeting in San Francisco.”

“‘We’re definitely in uncharted territory,’ Kleinhenz said. ‘We haven’t seen the worst of the credit crunch in our numbers yet,’ Kleinhenz said.”

“The housing hazards in East Contra Costa and the Tri-Valley are akin to the jeopardy that confronts Central Valley communities such as San Joaquin County, Kleinhenz said. ‘You had a lot of new homes built in those areas,’ Kleinhenz said.”

“The implosion in home sales will likely trigger a boom-bust cycle in the East Bay, he said. Stagnant home sales have eroded residential building jobs. ‘The new-home construction overhang is having an adverse impact on the East Bay and the Bay Area,’ Kleinhenz said.”

The East Bay Business Times. “A proposal pending in a U.S. Senate committee that would raise government home-loan limits in California and other high-priced markets could provide a life raft for thousands of East Bay borrowers caught between softening home prices and skyrocketing adjustable-rate mortgages, mortgage brokers say.”

“‘We are just at the beginning. It hasn’t even started to get bad yet,’ said said Michael Tacconi, a broker in San Ramon and past president of East Bay CAMB.”

“‘Now with the market, they can’t afford the loan they have, they can’t refinance into a better deal and they can’t sell their home,’ he said.”

“‘In Alameda County, 21.4 percent of the 4,864 properties on the MLS as of Sept. 3 were in foreclosure, owned by a bank or in negotiations between the buyer and the seller to accept an amount less than face value as payoff of their mortgage,’ according to Movoto.”

“In Contra Costa County, 29.6 percent of the 6,365 properties listed were distressed, and 29 percent of 2,403 Solano County properties were posted because sellers are in distress, Movoto found.”

From Bloomberg. “Anna Morita, a neuropsychologist in the San Francisco Bay Area with near-perfect credit, was certain she could get the loan of her choice to buy an $880,000 three- bedroom house.”

“Morita, with more than $300,000 for a down payment and a credit score of 825 out of a possible 850, was banking on a 30-year loan with interest-only payments for 10 years. That mortgage became too expensive when her lender quoted a rate of 7.6 percent. She’s now applying for another mortgage.”

“Homeowners like Steve Binder are feeling the sting. Binder had an agreement in early August to sell his three- bedroom, 1,600-square-foot condominium for $618,000 in Aliso Viejo. The deal fell apart when the buyer was rejected by banks after he sought 100 percent financing that included a jumbo mortgage plus a second loan.”

“‘Our house is in turnkey condition,’ said Binder. ‘The only reason it won’t sell is what’s going on in the market.’”

The Bakersfield Californian. “Carl Cole, David Crisp and three employees of Crisp, Cole & Associates misled lenders on more than $12 million worth of loans, state regulators said in an accusation filed Monday. The 25-page document says actions by Cole, Crisp and the employees constituted fraud, ‘dishonest dealing’ and ’substantial misrepresentations of material facts.’”

“Principals and employees of Crisp, Cole & Associates deceived lenders into thinking the buyer planned to occupy a given property, the report states. This might have allowed applicants to receive more favorable loan terms, said Beth Cheatwood, a loan officer.”

“‘Most of the subprime lenders would not even consider a non-owner-occupied stated-income loan,’ she said, adding fees and interest rates are higher on investment property loans.”

The Daily Press. “As if a dismal housing market and the incredible shrinking mortgage scene were not bad enough, home sellers have a new enemy to contend with: Large homebuilders.”

“Builders of new tract homes have begun pricing them well below the median. At KB Home’s new Hacienda de las Flores, homes start at $225,000.”

“What a contrast to the median home price in the High Desert, which is $293,843, according to the Victor Valley MLS compiled by Larry Trombley.”

“Even more discouraging are creative buyers thinking to capitalize on a sky-is-falling mentality. ‘A lot of people seem to be watching television shows that say, make a lowball cash offer and the home will be yours,’ Local broker Caroll Yule said. ‘But sellers are just going to be offended if you go $100,000 lower.’”

“Jack Fales, a longtime local Realtor, said prices still have not fallen enough. ‘They’re just not down there far enough to get everybody excited about buying one,’ he said. ‘I think the market on the interest rate is messing things up, too.’”

The Orange County Register. “It’ll take until 2011 to sell the last of the homes now on the market in Santa Ana, according to one statistical report released recently.”

“‘Demand for Orange County (real estate) has taken a hard hit because of the current (lending) market crisis, dropping to its lowest level in years,’ wrote Steven Thomas, president of RE/MAX Realty Services in Aliso Viejo, who provided the latest home-supply calculations.”

“‘The reason our statistics in Santa Ana are so high is we have tons of subprime properties,’ said real estate broker Molly Doughty. ‘It’s really harder (to borrow money) now. … You’ve got to have excellent FICO scores.’”

“Sarah Covarrubias, former manager of Seven Gables Real Estate’s Santa Ana office, said at least half of Santa Ana’s listings are bank-owned properties, ’short sales’ going for less than the mortgage amounts or that are in pre-foreclosure. Problems are greatest for homes selling for $600,000 or less, she said.”

“‘There is a huge amount of inventory, and we have difficulty qualifying buyers (for loans),’ Covarrubias said. ‘It’s really become a sad situation.’”

“This is ugly. The call-it-what-you-want mortgage mayhem has the Orange County housing market in a chokehold.”

“By Thomas’ math, the number of shoppers countywide entering contracts to buy existing O.C. homes is down 600, to 1,206 last week. That’s a 33 percent decline in just four weeks. And it’s no seasonal quirk. In the same period of last year, the number of deals in the works dropped by only 116.”

“Thomas’ data shows the problem is most acute in the middle of the market: pending deals for homes priced from $500,000 to $1.5 million. Deals are off 40 percent in this prime slice. Meanwhile, the rest of the market is down 21 percent.”

“‘My opinion definitely changed the last few weeks,’ says Thomas, who helps run a family-owned brokerage with nearly 400 salespeople. ‘There’s a giant squeeze on demand thanks to the financial crunch.’”

“I dialed up Lou Mac, a Santa Ana broker who sold me my first house, a Santa Ana condo, and helped me sell it in 1993 when I moved to Trabuco Canyon. Things are not pretty in the old neighborhood, not far from South Coast Plaza.”

“He can take a stroll from his Santa Ana home without worrying that he’ll miss a critical phone call. That’s because the phones aren’t ringing.”

“Even steep price cuts, roughly 20 percent in Mac’s area, aren’t helping. For example, he sold a three-bedroom unit in my old condo complex for $484,000 in June 2006. (I gulped since 13 years ago I sold one for $130,000.) A similar unit now lists for $399,000 – and isn’t moving.”

“His own portfolio feels the pain. Four months ago, he was all-but-ready to close the $580,000 sale of a Garden Grove property he owns. The deal died when the buyer’s lender – New Century, the one-time subprime giant – closed its doors. He’s now listing that place for $539,000 with no luck.”

“‘It’s a scary scenario,’ Mac says of the ultraquiet market.”

“I asked Mac how today compared to the painful down cycle of the early 1990s. He offered only modest comfort. ‘We haven’t had it as bad,’ Mac says. ‘It was worse (in the 90s,) no question.’ That comes with a qualifier: ‘So far.’”

“Mark Boud from Real Estate Economics in Irvine thinks O.C. homeowners are behind the curve, or, at least behind local developers, when it comes to discounting.”

“‘Most new homes are now a bargain compared to resale listings,’ he says, noting big incentives in freshly minted projects. ‘Too many existing homebuyers are hanging onto a listed price that is overstated.’”

“He thinks a seller should be thinking a price drop of 10 percent to 12 percent is in order. ‘Resellers need a bit of a reality check,’ he adds.”

The Seattle PI reports from Washington. “Walking through a Georgetown house for sale in August, Jelena Senour said she was just looking. ‘I’m not comfortable buying at this point, with some of the prices (sellers) are putting out there,’ she said. ‘I’m not going to take their fall.’ Buyers’ reticence and difficulties getting a loan, or at least one with a desirable rate, are obvious in August statistics the Northwest MLS released Monday.”

“Seattle’s closed sales were down nearly 11 percent from August 2006, the first yearly drop since February and the largest since October. That was better than the 19 percent drop in King County as a whole and the 17 percent decline across the 19 counties the listing service covers statewide.”

“Pending sales, which can be a better indicator of recent activity, were down 17 percent in Seattle and 23 percent in King County and the 19 counties as a whole. The number of homes for sale, meanwhile, shot up about 50 percent in Seattle and King County, and 46 percent in Western Washington.”

“Ira Sacharoff, a Skyline Properties agent, said he was the only one of 13 agents in a recent class who thought area prices would drop. ‘In the real estate industry you’ve got a bunch of cheerleaders who don’t like to face reality,’ he said. ‘I’m in the minority.’”

The Seattle Times. “‘Sales are occurring, but closing is taking longer than usual,’ said Jake Jacobsen, managing broker in downtown Seattle.. ‘Our lenders are being somewhat more cautious.’”

“Jacobsen said…sellers should ensure their homes are priced properly. ‘This is not the time to put a price on a property and see if it’s going to work,’ Jacobsen said.”

“Sellers trying to jump in while prices are still high have pushed up the number of homes for sale, said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University.”

“That means buyers have an edge. ‘We do have buyers looking for bargains,’ Crellin said. ‘They have an opportunity to do more negotiating.’”

The News Tribune. “Sales activity in Pierce County, and around the Puget Sound area, looked much like it has for months: More homes for sale with fewer pending and closed sales compared with the same month last year.”

“Pierce County’s housing market appreciation in August continued to rebound from a June low. Real estate agent Bob Niehl said the apparent contradiction between rising prices and sluggish sales can be attributed to the best houses selling at the best prices.”

“And some sellers who see the state of today’s market are sitting it out, he said. ‘A lot of sellers are looking at this and think, why take a beating? If you don’t have to sell, why sell now?’ Niehl said.”

“Some pockets saw inventories beyond the six-month mark that indicate the difference between a seller’s and buyer’s market. Gig Harbor’s inventory grew to 9.6 months, the Parkland/Spanaway area was at nine months and the Bonney Lake area had seven months of inventory in August, said Dick Beeson, a MLS director and Windermere broker.”

“Thurston County’s median-price drop can be attributed, he said, to a lack of diversity in the mix of homes – very few condos and lots of new construction.”

The Olympian. “Last month, 439 houses and condominiums sold in Thurston County, down from 522 sold for the same period last year, the data show. Meanwhile, inventory levels continued to rise for both houses and condos, up 20 percent to more than 2,400 units.”

“It…is a different market from last year, said real estate agent Ted Leland. ‘It’s definitely a buyer’s market all the way,’ he said.”

“Home seller Anna Kitner of Lacey is just glad to get an offer on her home. Kitner is selling an 800-square-foot house that occupies a 12,000-square-foot lot with seven pear trees.”

“After listing her home on July 16, Kitner didn’t receive her first offer until this month. By then she had cut the price by $10,000 to $190,000. ‘It was stressful because the market is so slow right now,’ she said.”

The Columbian. “With new home sales in Clark County down this year by a stunning 44.4 percent from 2006, home builders are finding creative ways to unload inventory.”

“‘At this point, every builder in Clark County is giving something away,’ said Michael Shanaberger, director of sales and marketing for Manor Homes, a Vancouver builder.”

“Through July, only 718 new home sales were filed at the Clark County Court House compared with 1,192 in the same period a year ago, reports a service of Riley & Marks appraisers.”

“‘Our sales have held steady. If we weren’t giving anything away, we wouldn’t be selling any houses at all,’ Shanaberger said.”

“Prices appear to be slipping as sellers make concessions. The median price of a new home sold in Clark County was $296,000 in July, down 8.8 percent from the median price of $324,420 for a new home in July 2006.”

“The figures suggest that Clark County is a buyer’s market, said Joe Keizur, public relations director of Vancouver-based Pacific Lifestyle Homes. His company is offering discounts of up to $15,000 on new homes, along with extras with the purchase of a home.”

“‘Most builders are offering discounts on prices now,’ depending on how many speculative homes the builder has on the market, Keizur said. ‘With everyone competing, it ultimately means great prices for customers.’”

“Industry experts say builders carrying a glut of higher-priced inventory here are particularly vulnerable to the national housing market slowdown. Those developers are counting on out-of-town buyers, said Travis Maley, a Realtor in Vancouver.”

“Without subprime lending, ‘Many of the people who want to move here can’t sell their homes in California and other markets,’ Maley said.”

“Slumping sales elsewhere mean the supply of high-end homes on the Clark County market continues to swell, Maley said. At last count, he tracked more than 190 homes priced between $400,000 and $700,000 listed in Washougal and Camas and 291 homes in that price range and higher in Battle Ground, Hockinson and Brush Prairie.”

“‘Who are the buyers? Not many of them are coming from our local area,’ Maley said.”

“Real estate experts say the ample supply of homes on the market means sellers of existing homes need to think realistically when setting their price. ‘When the market is headed down, you will get behind it if you overprice your house,’ said Scott Mikel, a Vancouver broker.”

“Real estate expert Terrie Cox said she sees sellers that are more anxious to work with potential buyers. ‘The difference is, two years ago, buyers had to act quickly if they wanted a house, because we usually had multiple offers bidding for the home. Today, buyers are asking for more and offering less,’ said Cox, a Realtor in Vancouver.”

“She advises sellers to give in if it means saving the sale. She also counsels sellers to take a hard look at the home they’re trying to market.”

“‘If you’re not in a prime location, you’re a poor decorator and you’re trying to get the maximum price for your house, you’ve got a problem,’ Cox said, ‘and you’re going to sit on the market for a very long time.’”

The Herald Net. “The number of homes listed for sale in Snohomish County mushroomed in August amid slow sales. There were almost 63 percent more single-family houses and condominiums on the market last month than a year ago, according to the Northwest MLS figures. Sales dropped 25 percent compared with the previous year.”

“For the year, single-family home sales in Snohomish County lag behind last year’s totals with 7,733 closings reported in 2007 compared with 9,636 in 2006. There were 6,841 homes and condos on sale in Snohomish County at the end of August.”

“And that isn’t bad news if you’re in the market to buy. ‘I think it’s a great buyers’ market,’ said Nathan Gorton, with the Snohomish County-Camano Island Association of Realtors.”

“In Island County, the number of houses and condos for sale went up 27 percent, and pending sales were down 25 percent.”

The Bellingham Herald. “According to the Northwest MLS, 319 single-family homes sold in Whatcom County in August, up 4.6 percent compared with the same period last year. In July, sales in Whatcom County were up 6.8 percent compared with a year earlier.”

“One concern I have is that pending sales are down significantly, so that’s something worth watching in the coming months. These (August) home sales were being finalized before the national credit issues began surfacing,’ said Lylene Johnson of The Muljat Group’s South Side office. Johnson analyzes MLS data for Whatcom County.”

“There were 169 Whatcom County foreclosure filings in the first half of 2007, up from 84 in the same period in 2006, according to Realtytrac Inc. Last quarter, when there were 90 filings in Whatcom County.”

“Also at the mid-year point, a study by Coldwell Banker Miller-Arnason showed the number of high-end homes sold — priced at more than $700,000 — are ahead of last year’s pace.”

“‘I remember there were people frustrated that they couldn’t find a home in the city that fit their needs a year or two ago,’ Johnson said. ‘There is much more supply out there now.’”

Some housing bubble news from Wall Street and Washington. CNN Money, “Home values and housing sales will take an even bigger hit than previously forecast and will not recover to their earlier levels throughout all of 2008, at least, according to the latest economic outlook from the National Association of Realtors released Tuesday. The group has continually been revising price estimates lower…As recently as the March economic forecast, it had still been looking for an annual gain of 1.2 percent in existing home prices.”

“The group is now forecasting an 8.6 percentage drop in the pace of existing home sales this year, which is not only worse than its previous estimate of a 6.8 percent decline, but also would top the 8.5 percent drop seen in 2006.”

“New home sales volume is expected to drop even more sharply, posting a 23.8 percent drop this year, and another 7.4 percent drop in 2008.”

From Bloomberg. “‘There’s been an unusual hit to home sales, starting in March when subprime problems emerged and more recently when problems spread to jumbo loans,’ Lawrence Yun, an economist for the group, said in the forecast.”

“New home sales won’t reach a bottom until the first quarter of 2008, the organization said. A month ago, the Realtors said the low point would be at the end of this year.”

“‘The Realtors keep splicing a little more off their outlook to make it more gloomy, but they are still more optimistic than we are,’ said Lehman Brothers economist Michelle Meyer in an interview. ‘The data from the mortgage and credit markets is all pretty dismal.’”

“‘Home prices need to come back down to more affordable levels so that people can take that inventory off the market,’ said said Alex Barron, who follows homebuilders for Agency Trading Group Inc. ‘Everything I see points to lower prices, much lower prices.’”

The New York Post. “Countrywide Financial Corp. is putting together another multi-billion dollar bailout plan as the nation’s largest home lender continues to struggle amid the global credit crunch and declines in the housing market, The Post has learned.”

“‘Countrywide is in desperate need of cash right now to continue funding mortgages and the credit markets are still largely closed to them,’ said one source familiar with the company.”

The Seattle Times Newswires. “Washington Mutual CEO Kerry Killinger said WaMu has the financial strength to add billions of dollars in home loans to its balance sheet, even while setting aside an extra half-billion dollars for old loans gone bad.”

“Frederick Cannon, who follows WaMu, wrote in a note to clients last week that the company ran the risk of picking up more low-quality loans than anticipated if it expands too fast.”

“‘The market is forcing you to be disciplined,’ Bradshaw said. ‘If you’re out booking loans that aren’t 80 percent conforming loans, you aren’t going to be able to sell them.’”

From Reuters. “A global credit crunch, fueled by an economic slowdown and U.S. subprime mortgage defaults, will remain ‘quite ugly’ possibly until March, the head of Canada’s second largest bank cautioned on Tuesday.”

“‘I think it is going to be quite ugly in the next few months. I think there are a lot of shoes to drop,’ said Ed Clark, CEO of Toronto Dominion Bank.”

“Clark said the core of the problem was that many investors didn’t understand what was in the investments they made. ‘I think the market sits there and says ‘I didn’t understand when I was buying that German bank that I was buying California risk,’ he said.”

“‘I think it’s going to be an ugly fourth quarter here and the market will reel back. I would counsel people that this is good because people did stupid things … You’ve got to cleanse this out,’ Clark said.”

The Chicago Tribune. “The problems in the housing market were supposed to stay there. Or at least that’s what most of Wall Street was espousing until July. Yet, in the last eight weeks, it has become clear that their analysis was wrong.”

“Investors would like to sell their holdings and escape, but no one wants these securities at full price, so they are plunging in value. Institutions holding the nearly worthless securities ‘are keeping mum,’ which is part of the problem, said Brian Bethune, an economist at Global Insight.”

“Merrill Lynch economist David Rosenberg said no one knows how big the losses are going to be. ‘Nobody knows which banks or funds are sitting on losses, and, as a result, lenders are refusing to lend,’ he said.”

The Washington Post. “When something goes badly on Wall Street, people wind up in court. And the subprime mortgage mess is no exception. A consortium of investors is going after the collapsed Bear Stearns hedge funds.”

“‘We will look at those responsible for any potential fraud, by company management, auditors, lawyers, credit-rating agencies or others,’ said Walter Ricciardi, a deputy enforcement director at the SEC. And this is just the beginning, say legal experts tracking the steady stream of lawsuits.”

“Russell Sherman, spokesman for Bear Stearns, said the allegations are ‘unjustified and without merit. The accredited, high-net-worth investors in the fund were made very aware that this was a high-risk, speculative investment vehicle.’”

The Dallas Morning News. “Don’t look for a quick turnaround in the housing market downturn. ‘We had thought we would hit bottom the second quarter of this year,’ Amy Crews Cutts, an economist with lending giant Freddie Mac, told mortgage industry members. ‘We have now pushed that out to the second quarter of next year.’”

“And even then, there may not be a sharp rebound. ‘We are in this for a while,’ Ms. Cutts told an audience.”

“Ms. Cutts said some of the subprime borrowers could have qualified for conventional loans but were persuaded to take nontraditional mortgages. Now, thousands of those homes are winding up in foreclosure.”

“‘Foreclosures create a vicious cycle,’ Ms. Cutts said. ‘They can’t sell the home so they end up in foreclosure. Then the foreclosure sales depress prices in the area.’”

“‘It’s hard to go get a mortgage now – especially a jumbo or subprime loan,’ Ms. Cutts said. For all mortgages, lenders are requiring more up-front money and better credit. ‘The days of $500 down payments are over – nobody is going to touch those,’ Ms. Cutts said.”

“Some 57 percent of mortgage broker customers with adjustable-rate loans were unable to refinance into a new loan to avoid higher monthly payments in August, a national survey reported on Tuesday.”

“The poll of 1,744 brokers in the last week of August found…prime borrowers were impeded by appraisals and high loan-to-value ratios.”

The Columbus Dispatch. “To stem the rising tide of foreclosures in Ohio, the state should urge mortgage companies to modify loans rather than foreclose on them, a task force said yesterday.”

“Michael Van Buskirk, CEO of the Ohio Bankers League, said that while his organization approved of much of the report, the emphasis to ‘coerce lenders to rewrite existing loans’ was outside the state’s authority and could ‘lead to the drying up of mortgage funding in Ohio.’”

“‘We’re not objecting to the concept, but some of the recommendations are phrased so vaguely that it could prevent (consumers) from being able to refinance or obtain a new mortgage,’ Buskirk said.”

From Dow Jones Newswires, “Regulators want banks to help subprime mortgage borrowers avert disaster by easing their loan terms, but for bond investors, the cure may not be better than the disease.”

“Changing the terms of these home loans after they have been packaged into bonds leaves investors scrambling to adjust to new terms they hadn’t expected at the outset. That type of uncertainty, the concern is, could make an already unpopular asset class even more unpopular.”

“It’s not clear, for example, that modifying the terms of a loan will ultimately bail out many struggling homeowners over the long term.”

“‘Even in the best of times, [many of] these modifications just served to push off foreclosures for a later period when home prices were increasing,’ said James Grady, a structured finance portfolio manager for Deutsche Asset Management in New York. ‘Now with home prices declining, you’re arguably just increasing your loss severity.’”

“By far the biggest objection investors have to loan modifications, though, is that if borrowers, for example, are suddenly paying a lower interest rate, then investors don’t get the cash flows they expected when they bought the bonds.”

“‘That’s coming out of someone’s pocket. That’s not a free ride,’ Grady said. ‘You may find investors no longer willing to buy future or similar securities on the same terms’ as they did earlier, he said.”

“On top of that, investors in bonds backed by loans that end up being modified also tend to find themselves having to hold those securities for far longer than originally expected.”

“That’s because borrowers who might have refinanced into new loans had the terms of their loans remained the same choose instead to take the modified rate and keep their loans longer. And bondholders, as a result, don’t get cash back early from as many loans as they had anticipated.”

“Suddenly, a bond that investors had expected to hold for three or four years now lasts 10 or 11 years, said Walter Schmidt, manager of securitized products strategy for FTN Financial. That not only upsets investors’ cash-flow calculations, ‘you’re extending the time over which you have credit risk’ to bear as an investor, he said.”

“The bottom line is market participants don’t seem to think easing loan terms will solve the subprime mortgage bond sector’s troubles.”

From Origination News. “The president of the National Association of Mortgage Brokers declared the industry to be ‘at war’ against a number of parties.”

“George Hanzimanolis, speaking at the annual convention of the California Association of Mortgage Brokers here, said, ‘We are at war against the legislators who want to legislate us out of business.’”

“The industry is also at war against the media who put the blame for the current mortgage crisis solely on mortgage brokers, against regulators who want to promulgate new rules, which only affect mortgage brokers and even some consumer who did not tell the mortgage originator the whole truth when they applied for a loan.”

“Echoing the themes of the other speakers, Rep. Gary Miller, said in talking with people in the lobby, ‘I thought you were on the deck on the Titanic.’ But the situation is not that bad.”

“A former developer, he remembered past recessions, including the early 1980s. ‘This time it took the press two years to get a decent recession going,’ Rep. Miller said.”

“Mortgage brokers are being blamed for abusive practices, Rep. Miller said, but the truth is many mortgage bankers need to be looked at.”

“Keeping alive jitters that the Federal Reserve won’t cut interest rates as much as hoped for, several bank presidents in speeches Monday said that the Fed’s job is not to protect risk takers.”

“San Francisco Fed President Janet Yellen said that while market turmoil has the potential to hurt the economy, rate policy should not be used to shield investors from losses.”

“‘Yellen said the goals of price stability and full employment must be the ‘unswerving focus’ of policymakers. ‘Monetary policy should not be used to shield investors from losses.’”

“‘I do not believe the Federal Reserve’s job is to protect specific risk takers who failed to protect themselves from potential downside wounds,’ said Dallas Federal Reserve Bank President Richard Fisher. ‘In my humble opinion, the standard tools of monetary policy are insufficient, by themselves, to deal with the subprime market fallout,’ he added.”

“‘I set aside the passions of the moment and the conventional wisdom in the markets and keep a steady focus on the Fed’s mission,’ he said. ‘Conducting monetary policy is not a popularity contest.’”

“The booming housing market is one of the ‘most unbridled failures’ of government policy, a leading economist has said.”

“Roger Bootle, managing director of Capital Economics, said ‘extraordinary’ house price growth in the UK in recent years has had severe consequences for the economy and consumers.”

“Bootle said: ‘Most people see the UK housing market as a story of great success: I don’t. On the contrary, I see it as one of the UK’s most unbridled failures.’”

“He said the rise in property prices had brought ‘misery’ to the masses, and that the blame lay with government of all political parties for sitting on huge swathes of the country’s undeveloped land.”

“‘I wish the government would forget all the gimmicks,’ he told the delegates. ‘The central issue is quite clear: it’s getting to grips with the availability of land for building and ensuring that the rate of building moves up quite sharply after that.’”

“Bootle concluded: ‘My question and challenge for the government is this: are you going to have the political will to raise the availability of land for building even at a time when house prices are pretty soggy?’”

“Mark Clare, CEO of Barratt Homes, said the Barker Review, which was published last year, found that most people thought more than 50 percent of land in the UK had been developed, compared to the reality of just 13 percent.”

The Orlando Sentinel reports from Florida. “A record 26,313 homes and condos were listed for sale last month just in the core Orlando market, up another 295 listings from the month before, according to records kept by the Orlando Regional Realtor Association. And thousands more are on the market as for-sale-by-owner properties. Only 1,343 homes and condos sold during August in the core market, a decrease of 40.3 percent from a year ago”

“For homeowners such as Benjaimal Sukhram, the softness of the once-hot Central Florida market continues to astonish and dismay.”

“‘I’m waiting and waiting, and it’s frustrating,’ he said. Sukhram’s home-for-sale listing recently expired after six months. Not one person came to see his Lake County house during that 180 days, much less make an offer to buy it.”

“Although the local median price is still roughly double what it was in 2001, the pace of existing-home sales so far this year has slipped back to levels last seen seven years ago, and the current slowdown is beginning to more closely resemble the historic boom in its potential to be a historic bust.”

“Sukhram brought his wife and children to the Orlando area two years ago and bought a home in south Lake County for $212,000. A little more than six months ago, Sukhram listed his home with a real-estate agency for $348,000. He held firm to that price for the first six months, even though his agent brought no one around to look at the house.”

“‘He said he didn’t get any calls,’ Sukhram said. So he agreed to cut his asking price to $340,000 when he signed with said Robert G. McAdams, a real-estate agent in Clermont, though he said Monday that he’s not willing to negotiate further cuts.”

“Sukhram said homes in the Orlando area already are priced too low compared with areas of the country such as New York, where a relative of his recently sold a house for more than $500,000. That tells him, he said, that he should hold firm.”

“He said he has not made any improvements to the property to raise its value during the two years he has lived there, but he needs the $128,000 profit, minus his agent’s commission, to be able to afford the kind of home and large yard that he really wants.”

“‘I would not sell it for less than $340,000. That’s a fair price for me,’ Sukhram said.”

The Times Online on Florida. “Until the housing slump hit two years ago, the worst thing that Floridians feared was the hurricane season. Now, they are in the middle of a different type of storm. In some areas of Florida, real estate prices have fallen by as much as 40 per cent since the height of the property boom in 2005.”

“Kay Patel moved to Celebration, the Disney town in Florida, two years ago and set up a laundry business. With soaring insurance costs and property taxes, as well as the slide in real estate prices, Ms Patel told The Times that she was going to have to put her house on the market soon.”

“She is planning to advertise her four-bedroom, three-bathroom home with a pool at about $535,000, but is concerned that should she fail to get less than $485,000 for it, she will be in the territory of negative equity. ‘We hear that Florida is heading for a two-year recession, and there is no way I can sit that out,’ Ms Patel said.”

“Craig Studnicky, a property broker, said: ‘We are having to cope with five or six years of oversupply. Right now, the market is a Mexican stand-off. There are buyers out there, but no one wants to drop their prices. The market is at a complete standstill.’”

“He said that in some of the more depressed areas of southern Florida, property was selling in 2005 for about $250 per square foot. That has fallen to between $150 and $200.”

The Sun Sentinel from Florida. “The dramatic collapse of the nation’s mortgage markets has hit home in South Florida, with almost 800 people losing their jobs in recent months as lenders slash operations.”

“‘The layoffs have impacted an industry that expanded like wildfire in recent years,’ said Alex Garcia, VP of 1st Interstate Mortgage in Delray Beach.”

“Sergio Grady is trying to refinance his Hollywood house. But his mortgage broker told him one application with a potential lender hit a snag because Grady is a telephone operator for a Fort Lauderdale hotel, not a higher-paying concierge.”

“He said, ‘Well, we’re going to have to go somewhere else,’ Grady said. ‘The bank is asking for me to show more money.’”

“Peggy Richardson, HomeBanc’s director of marketing in South Florida for two years, was one of those who lost her job. ‘It was always considered a high-value, ethical company,’ she said. ‘But we were let go without getting paid for our accrued vacation time or any severance. We were left with nothing.’”

“Like other former colleagues, Peggy Richardson is trying to find work in a different line of business. ‘Most everyone is looking outside, considering the state of the mortgage industry right now,’ she said.”

“Despite the credit crunch and the trouble it’s causing, the mortgage industry ultimately will benefit from the shakeout, said Louis Spagnuolo, VP of mortgage banking for WCS Lending in Boca Raton.”

“Spagnuolo said he’s glad to see the demise of lenders who pushed risky loans on clients who couldn’t afford them, which helped fuel the housing boom in the first place.”

“‘In the long-term, I really think this will be better for the consumer,’ he said. ‘We’re going to have more professionalism. I think it’s going to elevate the standards of the whole industry.’”

From Florida Today. “Compared with Florida’s other metropolitan areas, Brevard County is a good bargain when it comes to renting an apartment, a new report shows. Both apartment rents and occupancy levels are down locally from a year ago, according to a study.”

“Lisa Davidson, a Via Tuscany leasing agent, said she has seen a change in the complex’s clientele in past year or so, with the downturn in the housing market. Before, Via Tuscany had more renters who were waiting for their homes to be built.”

“Now, the complex doesn’t see as many of them, and instead is seeing more tenants who are renting while trying to sell their homes, and even some whose homes may be in foreclosure, Davidson said.”

“The pace of new housing construction of all kinds on the Space Coast is continuing at a relatively slow pace, according to the latest permit statistics from the Home Builders & Contractors Association of Brevard. ‘Builders are really suffering,’ said Franck Kaiser, the association’s CEO. ‘They’ve laid off as many people as they can, and some have gone out of business.’”

The Post & Courier from South Carolina. “Home sales in the three-county region declined 15 percent in August compared to the same month last year, extending the residential real estate slowdown that began to take hold about 18 months ago.”

“After a long run-up, the local housing market peaked in early 2006, following national trends. Since then, residential investors have all but headed for the exits, while mortgage lenders have started tightening their credit standards for most borrowers.”

“As of Monday, there were 10,893 homes offered for sale through the association’s MLS.”

“‘There’s an oversupply right now, and it’s a buyer’s market,’ said Everett Presson, an agent with the region’s biggest residential firm. Anyone considering a house purchase ’should be shopping around,’ he suggested.”

The Charlotte Observer from North Carolina. “Area real estate agents concede that…things have changed a bit. Even borrowers with good credit need to present more documentation proving they can make payments, real estate agents say, while good homes may sit on the market longer than expected, and sell at a bit of a lower price.”

“‘Now we’re starting to feel the brunt of it,’ said Raine Spivey, broker/Realtor in Ballantyne. ‘It’s going to really show you who’s serious about buying.’”

“And prospective homebuyers looking to move to the Ballantyne area from other cities in slow-selling markets, like Florida or the Northeast, are having a harder time selling their homes to get here, real estate agents say.”

“Home sales in the Charlotte region were down last month, continuing a summertime slump of double-digit declines.”

“Charlotte-area real estate agent Lisa Hines, in the business five years, said the housing market malaise has cut her income by about 40 percent. She said once-happy agents now talk about getting out of the business.”

“‘The mortgage companies are the problem,’ she said of toughening lending standards. ‘(The type of) people who got loans last year can’t get them this year.’”

“Local agents also blame soft markets elsewhere, saying some transplants can’t buy here until they sell homes in other slumping markets, such as in Florida, California and the Midwest. So they rent and wait.”

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