The Housing Bubble

It’s Friday desk clearing time for this blogger. “You’ve likely heard plenty about the problems adjustable rates jumping, foreclosures increasing. Those problems are very real for more and more people and Realtors at the annual New York State Association of Realtors convention in Saratoga Springs admit the Capitol Region is seeing a slowdown.”

“‘I was busy as anything right up through July. Closed more than I did last year. So amazing. And then in August, I wondered if the batteries went dead in my phone. It was so quiet,’ said Realtor Jacquelyn Witbeck.”

“For potential homeowners like Mike and Jody May, the cooling down of the housing market has given them an advantage. ‘It seems like prices have come down a little bit, and with a lot of homes on the market, we can kind of pick and choose and make some requests on our end,’ said Mike May.”

“‘The houses where the price is dropping drastically are the houses that inflated prices initially. If the house has been priced correctly, the prices are not dropping… the value is still there in the homes,’ said Marlene Finger, President Elect of the Vermont Association of Realtors.”

“Their house in Colorado has been on the market for several months, so instead of selling it, they decided to rent it out. Said Mike May: ‘Yeah, we’ll rent it until the market gets better… so who knows how long that will be.’”

“During the first six months of the year, sales were off 6 percent on the Missouri side of the metro area, pushing them back to 2003 levels, said Dennis Norman, president of the St. Louis Association of Realtors. With more homes hitting the market, that’s creating a bit of a glut and a buyer’s market to go with it.”

“‘I don’t mean that in the sense that there are fire sales,’ Norman said. ‘But there are some great values.’”

“‘This is not a one-year problem,’ said Larry Swedroe, a principal of research at Buckingham Asset Management Inc. in Clayton., who sees few incentives for people to buy. ‘You’ve got supply increasing and demand collapsing at the same tim. It doesn’t take a genius to figure out that house prices are going down. The only question is how far.’”

“Amid world fears of a global credit crunch, the small Baltic states are starting to see property prices falling after almost five years of spectacular gains.”

“Though industry players see the price falls as a correction, some analysts see the move down as the start of a long slump, exacerbated by the fact that the economies of Latvia, Lithuania and Estonia are overheated and plagued by high inflation.”

“The availability of cheap loans that has been stoking the construction boom could even increase when Cyprus joins the euro zone in January since the bloc’s interest rates are currently half a percentage point lower than those of Cyprus.”

“‘There is currently a bubble [in the real estate market], comparable to what we had at the stock exchange between 1999 and 2000,’ said Yiannis Telonis from Hellenic Bank.”

“Economist Marios Mavrides said there was a danger that in two or three years, clients would experience difficulties in paying back their debts. ‘The expected decrease in interest rates as a result of euro adoption will not be able to offset the decrease in demand,’ he said.”

“An Associated Press analysis of new census data provides insight into the reasons for the slumping housing market: Since 1990, homeowners have faced a growing gap between their incomes and the price of their homes.”

“‘We had an artificial economy,’ said Brad Geisen, founder of a Web site that lists foreclosure properties. ‘There was all this wealth created in real estate, and it wasn’t really created.’”

“San Antonio home builders still have plans on the books for 14,000 more homes. In one of the most telling signs of the transition to a buyer’s market, I was recently contacted by a builder’s sales representative with a list of entry-level to midrange inventory homes to sell.”

“When I asked if the builder was currently selling to investors, the sales rep said yes–the first time I’ve heard that answer in 3 years.”

“Speeches by U.S. President George Bush and Federal Reserve Chairman Ben Bernanke aimed at calming turbulent stock markets could merely delay what one international economic group is calling ‘nothing less than one of the biggest asset bubbles in history.’”

“The Economist Intelligence Unit, a London-based arm of the group that publishes The Economist magazine, says current falling stock prices, soaring credit costs and roiling currencies ‘trace back to 1997, when the value of housing in the U.S. began to jump.’”

“‘Nine years later, the value of property had surged by $12 trillion. Asset bubbles almost always end in tears, and the U.S. housing market is no exception. Banks and investors are now being punished for ignoring risk, lending recklessly and thinking property prices would always rise.’”

“About a year ago I took an oath to stop whining about Chico’s housing prices. But a new era has dawned, so I no longer have a reason to whine.”

“At the height of the bubble, ordinary, everyday Chico houses were selling for $300,000. That’s just plain madness in a community where $50,000 a year incomes are the norm.”

“Lately, I’ve been noticing that asking prices for houses are dipping down into the high $200,000s. What would constitute a full recovery? I’d like to see the ordinary, everyday Chico house selling for about $200,000 three to five years from now.”

“As Chico housing prices cool, I hope people will stop claiming that alleged no-growth policies were responsible for the high prices. Chico is decades away from having a scarcity of buildable land.”

“Not long ago, lenders were handing out mortgages to anyone with a phone number and a pulse. No money for a down payment? Not a problem! Low credit score? Who cares? Incarcerated? You’ll need a place to live when you get out, right?”

“Those easy-money days are history. The good news: Home prices have fallen in many parts of the country and real estate analysts aren’t expecting a turnaround anytime soon. That means you have time to save up for a down payment, and will probably be able to buy more house for your money.”

“A new report showed August home sales in Southern California fell by 36 percent. What impact does this have on San Diego?”

“The La Boheme Building in North Park will be the site of a condo auction this weekend. The one and two bedroom condos were first offered up between $300- and $500,000. But this Saturday, 35 condos in the building are being auctioned off, with starting bids beginning at $149,000.”

The San Francisco Chronicle reports from California. “Bay Area home sales in August plunged to their lowest level since 1992, amid a credit crunch that is quashing home shoppers’ ability to buy. In some outlying and entry-level markets, in particular, home prices are also taking a hit as foreclosures surge higher.”

“‘Devastated is a strong word, but when you have 29 homes for sale in a three-block area, that’s a lot of homes,’ said Jay Bedsworth, a Sotheby’s real estate agent who has listed several homes in Brentwood, including two ’short sales.’ ‘The farther out from San Francisco you get, the worse it is.’”

“For the last year, Andy Wajdak has been trying to sell a four-bedroom home in Santa Rosa that has been in his family for about four decades. The Fresno window blind manufacturer said he has chopped the price twice by $20,000 each time, but still has no takers. Since the family owns the property outright, there is no immediate pressure to sell. But Wajdak worries the market may deteriorate further.”

“‘At some point we might decide to just dump it - lower the price to where it’s the lowest in the area,’ he said. ‘But I’m not sure we’re quite willing to do that yet.’”

The Press Democrat. “Home values are continuing to fall in Sonoma County, according to a report issued Thursday. Home sales tumbled 24.8 percent in August, compared with a year ago. The price for a typical Sonoma County home dropped to $505,000 in August, down from $550,000 a year ago, an 8.2 percent decline. The figure includes new and resale houses and condominiums.”

“Increasingly stringent loan qualifications are taking out even more buyers as lenders tighten the money supply with mortgage defaults soaring.”

“‘That worsened it. The first-time home buyers went away. So the affordability is just not here any longer,’ said Alice Curtis, Creative Property Services manager in Santa Rosa.”

The Mercury News. “In many of Santa Clara County’s more affordable neighborhoods, home values fell compared to last summer. Deepak Satya, a renter in Cupertino who plans to buy a house there relatively soon, said he has noticed some reduction of list prices recently in that city among homes priced in the $1 million range.”

“He said he and his wife will wait until at least late October to make an offer, because they expect little competition from other buyers at that time of year.”

“‘Right now, what’s happening is those ‘too many offers’ situations are gone,’ said Satya. ASatya moved to Cupertino about three years ago for the school district. ‘Since the day I moved into Cupertino I’ve wanted to buy a house, but the prices keep going up and up and up. There’s no logic to it.’”

“The fastest-moving part of the county’s market is comprised of Palo Alto, Mountain View and Los Altos, where it would take about 56 days to sell out the houses for sale, based on the recent pace of sales. The news is worse for sellers in east, central and south San Jose, where it would take 760 days to exhaust the supply.”

“It’s likely that September and October data will show a more pronounced slowdown in sales. Mortgage brokers reported that some clients who were in the middle of purchases had their loans suddenly yanked away by lenders who had killed certain loan programs.”

“The result? Only 713 new sales were initiated in August, said broker Richard Calhoun, who crunches local MLS data daily. That’s fewer initiated sales than in any August in at least nine years (when his data set begins).”

The Sacramento Bee. “It’s come to this: For roughly every two homes sold in August in the capital region, one house went into foreclosure, according to the newest sales statistics released Thursday.”

“Clearly, such numbers are fuel for still more for-sale signs — now at a record 16,262 in El Dorado, Placer, Sacramento and Yolo counties — and further declines in sales prices. The number of sales, meanwhile, fell to a 12-year August low in Sacramento County and an 11-year low in Placer County.”

“DataQuick had other encouraging news Thursday for buyers in the region: median sales prices in Sacramento and Placer counties are nearly 20 percent off their 2005 highs.”

“None of the numbers, however, deterred Kelly Lawson from buying. He closed escrow last month on a 1950s three-bedroom, one-bath house in North Highlands.”

“Lawson is an example of conventional real estate wisdom that buyers who intend to stay in their homes can ride out the current slump and see gains in the future. Asked how long he intends to stay in his house, Lawson answered, ‘Till I die. After this move, I am not moving again.’”

The Signal. “Homes in Santa Clarita go fast. But on Sunday, six homes will sell in a matter of minutes, as Kennedy Wilson Auction Group is planning to auction six homes at Deer Creek at Placerita Canyon Estates in Newhall.”

“President Rhett Winchell said…he was unsure about the level of competition now with the current housing market. The minimum bid for each of the six houses is $595,000. Winchell said the auction offers up to 40 percent off of the asking price of each house.”

“Winchell said buyers are able to bid on multiple properties during the auction. ‘If they don’t get their first choice, they can move down the line and try the next property,’ he said.”

The Malibu Times. “Notwithstanding current market ‘corrections’ following the recent real estate credit meltdown, there will always be a buying audience for the tony higher-end properties of Malibu.”

“This is why Todd Wohl, VP of Premiere Estates Auction Company feels absolutely confident that he will sell an (appraised) $12.9 million, Ocean View Drive Malibu home with sweeping views of the coastline in what some say is an unusual approach to exclusive property sales; a live auction.”

“‘There is a growing inventory of available properties from $4 million up in Malibu,’ Wohl said. ‘We’re seeing the same in Huntington Beach and Newport. The psychology of the marketplace might have changed in recent months, but there is still tons of credit available for these kinds of properties, if you can qualify.’”

“Rick Wallace, a local broker, said he has doubts that auctions are the best way to sell properties. ‘This is quite unusual and will probably not become a trend,’ he said. ‘I can think of only a few property auctions that have happened in Malibu.’”

“Whereas Wallace agrees that sellers can be pretty much assured that their property will ultimately sell at auction, ‘it might not sell at the best price the market can bear,’ he said.”

The LA Times. “Home prices fell in most Southern California neighborhoods and the number of sales tumbled to a 15-year low for August.”

“Sales for the month plunged 36% from a year earlier. What’s more, 71% of the Southland’s ZIP Codes showed price declines, according to DataQuick Information Systems. The survey excluded areas with 14 or fewer sales.”

“Nearly 9% of the homes sold last month were foreclosure properties, DataQuick reported, up from 2.2% a year earlier.”

“‘People just don’t have the income to support these prices except with crazy mortgages — and now the mortgage money is going away, and people are walking away from their homes,’ said economist Christopher Thornberg.”

“‘Virtually every community in Riverside County has massive inventory levels, which almost certainly will require price corrections in order to be absorbed,’ Riverside County-based appraiser Michael Mathis said.”

“Dennis Hsii is counting on builder desperation to help him buy his first home. This weekend, the Los Angeles technology consultant hopes to renegotiate his contract to buy a $700,000 town home in Playa Vista that has been under construction for the last year.”

“That’s because the town home’s builder, Irvine-based Standard Pacific Corp., is hosting the equivalent of a car dealership ‘blowout’ sale at Hsii’s community and 48 others starting Friday.”

“On Wednesday, the company sent Hsii an e-mail promising a refrigerator, a washer and dryer, window blinds and a 42-inch flat-screen TV ‘at no additional cost’ if he went ahead with his purchase. Hsii is looking for a cash discount instead.”

“‘My goal,’ Hsii said, ‘is to get the lowest price possible.’”

“‘Buyers are hearing more and more about foreclosures and declining values, and frankly they are terrified even with these ‘great values’ being offered and are afraid to be purchasing when prices may still go down,’ said Steve Johnson, regional analyst for MetroStudy.”

“Appraiser Mathis said that in parts of the Inland Empire it could take as long as three years to sell off all the homes currently on the market, a glut that is likely to further erode prices.”

“‘Outlying markets have been showing significant weakness for over one year now, and this direction is now clearly being followed by the remaining Inland Empire markets,’ he said. ‘Equally ominous is the fact that most recent analysis suggests that the decline is accelerating.’”

The Voice of San Diego. “Fewer homes sold last month in San Diego County than in any August in 15 years, DataQuick reported. The 3,104 homes sold marked a 19.4 percent drop in sales volume from August 2006, and a 48 percent drop from the nearly 6,000 homes sold in August 2005.”

“Many of the deals that closed in August, and that show up in data now, began in July or early August, before the drastic tightening in the mortgage market.”

“RealtyTrac reported 2,699 new foreclosure filings in July, a 139 percent increase over July 2006 and a 907 percent increase over July 2005.”

“‘It’s like somebody turned off the spigot all of a sudden,’ said mortgage broker Mark Goldman. I get two to three calls a week from people who are upside-down in their houses, getting behind in their payments.’”

“‘There’s no places for them to go for a loan; they don’t have equity,’ he said. ‘There’s a world of hurt out there for these people.’”

“Sharyn Crown, a Coronado-based real estate broker, said her 30 years in the real estate business have taken her through several downturns and booms, but there’s something different about this one.”

“‘The market is just different because people are so nervous,’ she said. ‘The lenders are running scared and the buyers are running scared. When you have a company like Countrywide (Financial Corp., a mortgage lender) laying off thousands of people, people get nervous.’”

“‘The South Bay is really suffering — it’s terrible,’ she said. ‘And in the East County, sometimes a price reduction doesn’t even get the house sold. It’s hard for a lot of people to get realistic when things happen like this.’”

“‘Yeah, a lot of people have been squeezed out with requirements for higher credit, full documentation (of income), reserves — the stuff people should have always had,’ Goldman said. ‘The dumb money has left the market.’”

Some housing bubble news from Wall Street and beyond. Forbes, “The moment that the British banking sector has been dreading came on Friday. Northern Rock, the country’s fifth-largest mortgage lender, confirmed late on Thursday that it had requested and received a line of emergency funding from the Bank of England.”

“‘It has now become clear that the global credit and liquidity markets have not recovered in the early part of September, and that there continues to be a severe liquidity squeeze,’ said the bank on Friday.”

The Financial Times. “Early on Friday, anxious Northern Rock customers reported they were unable to access their online accounts following news reports of the Bank of England rescue. It appeared the volume of traffic from depositors and mortgage holders had caused the website to freeze.”

“Northern Rock had concentrated almost exclusively on mortgages. To finance this growth it imported innovative financing techniques from the United States, such as issuing securities backed by mortgages, which were eventually copied by other large banks. Northern Rock was showered with praise by the investment banks that helped arrange this financing, and its executives could often be seen picking up awards at industry events.”

“But just as Northern Rock benefited from the markets, so it has fallen victim to their fragile confidence.”

From Thompson Financial News. “Customers of Northern Rock were rushing to withdraw their savings today despite reassurances from the group that their cash is safe.”

“At Moorgate, the line of worried customers included retiree Arthur Smith of Islington, north London. ‘I’m closing my accounts and my ISAs. It’s my life savings, about 60,000 pounds. I hope the Bank of England will help them out,’ he told Thomson Financial News.”

“Another retired man, who declined to be named, said: ‘The Bank of England won’t back them indefinitely. This brings back memories of Equitable Life. It’s quite likely the Bank of England will say it’s the end of the road at some stage.’”

The Guardian. “The Bank of England has talked a lot about the ‘moral hazard’ of bailing out institutions that have made poor business decisions as they chase after profits.”

“But now the crisis has moved away from the City and on to the high street it is likely to take a very different line. It has opened a line of credit to Northern Rock, which means the bank will be able to meet any and all of its liabilities. That said, it was also unthinkable that Equitable Life would go under.”

“Northern Rock will no longer be in the business of offering cheap remortgages and may be forced to raise its standard variable rate.”

“Of course, borrowers can always remortgage to an alternative lender, but expect to see lending criteria tighten sharply across the board. If you were a borrower who took a 125% Together loan at Northern Rock, there won’t be many other lenders willing to take you on.”

“The only silver lining is for savers. Mortgage rates may be on the way up, but so are savings rates.”

From MarketWatch. “‘Northern Rock is a definite takeover target,’ said David Buik, a strategist at Cantor Index in London. Although the bank has far too much exposure to the U.S. mortgage market because of its twin role as a lender and as a trader of collateralized-debt obligations, it still has a ‘decent mortgage book’ and some nice assets, Buik said.”

“Christopher Kummer, president of the Zurich-based Institute of Mergers, Acquisitions and Alliances, stressed a possible scarcity of bidders. ‘In such a situation, the list of possible acquirers will be quite short unless the risks are transparent and limited and the price would be extremely low,’ he said.”

“‘I doubt that given the current market situation any responsibly behaving company board would approve the possible acquisition of Northern Rock,’ he added.”

The BBC. “Shares in UK buy-to-let mortgage lender Paragon Group slumped, as fears deepened over the ability of banks to finance their loans.”

“Paragon Group is solely a mortgage lender with no deposit facilities, which means it is reliant on issuing debt supported by the interest income from its mortgages and credit deals with major investment banks for cash flow.”

“‘It is able to pass higher funding costs onto borrowers, but there will be a timing lag,’ said Joanna Parsons, an analyst at ABN Amro, of Paragon’s position. ‘Plus, higher mortgages will reduce the attraction for landlords to buy, unless higher mortgage charges can be passed onto tenants.’”

From Bloomberg. “London house prices fell the most since 2004 this month after five interest rate increases in a year and turmoil in financial markets sapped buyers’ confidence, according to a Rightmove Plc report.”

“Growth in London property values is faltering after the collapse of the U.S. subprime mortgage market triggered losses in securities linked to the loans and spurred banks to raise lending rates.”

“‘We’ve reached the peak of the current boom,’ Miles Shipside, commercial director of Rightmove, said in an interview. ‘Affordability is stretched, and people are concerned about global financial markets and their ability to take on greater commitments.’”

From CNN World Weekly. “In the last 15 years countries such as the U.S., UK, Australia and Canada have enjoyed an economic golden age. But a flip side is emerging from this era of excess, with potent signs in the last week that the party is coming to a close.”

“Rising U.S. home foreclosures and a persistent housing slump have triggered a U.S. credit crunch which has unsettled global markets and raised concerns about a possible economic slowdown.”

“Economist Andrew Charlton from the London School of Economics believes the U.S. housing slump and high levels of personal debt are part of the same problem: People on low incomes getting in over their heads with either housing stock or personal debt they cannot afford.”

“Philip Hodson sees a few factors responsible for our credit binge: ‘We’ve developed retail therapy — it’s a drug — but it’s a very fragile plant and to build an economy based on it is ridiculous.’”

“He also says the government has encouraged a people to be reckless with money through their own bad example: ‘The government must take much of the blame for encouraging a debt culture.’”

“Economist Charlton believes our reliance on credit is symptomatic of prosperity: ‘It’s the by-product of the boom. In for example, Australia almost 30 percent of the population have never lived through a recession — young people believe you can always take on debt because it’s always easy to pay off.’”

“Merrill Lynch & Co., the biggest underwriter of collateralized debt obligations, signaled that third-quarter profit may be hurt by the subprime-mortgage crisis and said making money in credit markets remains tough.”

“The New York-based firm said in a regulatory filing today that it made ‘requisite fair value adjustments’ for potential losses to date on holdings and financing commitments. Merrill is at risk because it participates as an investor, lender, counterparty and guarantor in markets tied to subprime mortgages.”

The Orange County Register. “Long Beach Mortgage Co., one of Orange County’s first big subprime lenders, is facing its final days amid ongoing downturns in the mortgage and housing markets.”

“Parent company Washington Mutual, the largest U.S. savings and loan, said it’s shuttering Long Beach’s Anaheim headquarters and letting all 155 workers go in about 60 days.”

“Wall Street investors are shunning all but the safest home loans amid higher loan delinquencies and foreclosures. In Orange County, for example, banks foreclosed on 469 homes in August, the highest since October 1997, reports DataQuick.”

“Hovnanian Enterprises Inc. CEO Ara Hovnanian said the U.S. housing market is near the bottom and won’t recover until 2009. ‘The bottom is very near but I think its going to stay along the bottom for a while before a recovery,’ Hovnanian said today.”

“Hovnanian, whose family has been building homes since 1959, said a three-day sale starting today may help boost revenue in the company’s slowest markets, including California and Florida.”

“The company’s sale will be held in 18 states including California, New Jersey, New York, Arizona, Ohio and Illinois. Hovnanian is offering discounts of up to almost $150,000 on homes.”

“Buyers will ‘realize unprecedented savings’ with incentives of up to $100,000 in some California developments and more elsewhere, the company said in statements issued this week.”

“Asked whether the sales event was an act of desperation, Ara Hovnanian said it was a ‘logical thing to do’ in the current market.”

The Associated Press. “A Friedman Billings Ramsey analyst said Friday any benefit stocks of mortgage lenders will enjoy if the Federal Reserve cuts its interests rates this month will be temporary. Analyst Paul J. Miller Jr. said cutting rates will strengthen lenders’ profit margins, but will not fix the fundamental problem that led to the drainage of cash in the first place: sinking home values.”

“No matter what it does with interest rates, Miller said the Fed cannot rescue slipping home prices. As long as investors have no faith in housing, they will not finance mortgages, he said.”

“Former Federal Reserve Chairman Alan Greenspan acknowledges he failed to see early on that an explosion of mortgages to people with questionable credit histories could pose a danger to the economy.”

“In an upcoming interview, Greenspan said he was aware of ’subprime’ lending practices where homebuyers got very low initial rates only to see them later jacked up, causing severe payment shock. But he said he didn’t initially realize the harm they could do.”

“‘While I was aware a lot of these practices were going on, I had no notion of how significant they had become until very late,’ he said in a CBS ‘60 Minutes’ interview to be broadcast Sunday. ‘I really didn’t get it until very late in 2005 and 2006,’ Greenspan said.”

“Critics say the Fed kept rates too low for too long, encouraging a Wild West mentality in housing.”

“After the 2001 recession, the Fed cut its benchmark rate to a four-decade low of 1 percent. That move, along with Greenspan’s hands-off approach to regulation, have brought him under fire as this year’s bursting of the housing bubble and the subprime mortgage crisis again threaten to sink the broader economy.”

The St Petersburg Times reports from Florida. “Last year, a Brandon townhouse seemed like the perfect investment for Richard Wojciechowski. He bought a 1,700-square-foot Sabal Pointe home and listed it at $229,000. The retired banker thought it would be an easy sell. But 14 months later, in Hillsborough’s slowest housing market in seven years, the place is still for sale.”

“Realtors have persuaded Wojciechowski to drop the price to $204,900. That’s more than $15,000 lower than the median home sale price in Brandon last quarter, and it’s as low as he wants to go.”

“‘Everything went downhill after I bought, so I got stuck,’ said Wojciechowski, of Chicago. ‘I’m not interested in taking a loss. The mortgage is killing me every month.’”

“Hillsborough County’s noticeable price declines last quarter occurred in neighborhoods where home builders were most active during the boom.”

“Today, areas like South Shore, Riverview, the Race Track Road corridor and New Tampa may have the largest surpluses of houses to unload. They also may have some of the largest numbers of investor-owners, because that’s where homes were available when the 2005 buying frenzy mobilized speculators.”

“‘Those are the areas that came down the most, because the prices were the most inflated,’ said Kristy Darragh, a New Tampa Realtor.”

“Anthony Teta tried lowering the price on his 1,400-square-foot Brandon home. He started at $229,000 and went to $189,000. ‘I was coming down to a break-even point,’ he said. But with nearby builders offering major incentives, Teta felt he could not compete.”

“A real estate Web site still lists his house as ‘priced to sell.’ Teta took the ‘For Sale’ sign down weeks ago. ‘I love the house. I love the neighborhood,’ he said. ‘I had to remind myself of that. I’m going to be happy to stay there for longer.’”

“Brad Monroe, a New Tampa Realtor, tells the 48 agents in his Coldwell Banker office that home prices should be dropping about 1 percent a month. But they catch resistance from sellers. ‘They don’t want to lose their paper gains,’ Monroe said.”

“Realtors say many clients cannot afford to lose those gains, because they obtained home-equity loans, borrowing against the soaring value of the house. ‘They paid for boats, and BMWs and trips and whatever,’ Tampa Realtor Ginger Perkins said.”

“Many sellers in Old Seminole Heights have too much invested to concede prices, says broker Mike Massimini. ‘People have bought the homes, spent several years fixing it up, financed, and now they’re in the situation where they have to sell it at almost full price.’”

The Miami Herald. “When Micheline Louis-Charles bought a house in North Miami 20 years ago, her salary was enough to pay her mortgage and raise five kids.”

“But since then, her monthly house payment, which includes mortgage, taxes and insurance, has doubled to $1,200 a month, and her income has not kept pace. She rents out a room in her three-bedroom house to help cover costs.”

“‘Everything goes toward the house. I survive in a very hard way,’ said Louis-Charles. When asked if she has thought of selling her house, she says, simply: ‘Where would I go?’”

The Sun Sentinel. “Home builder Hovnanian Enterprises is trotting out big bargains this weekend, in Palm Beach County and other areas nationwide, to cope with the worst housing slump in 16 years.”

“The builder is advertising a national ‘Deal of the Century’ sales event that involves thousands of homes, including some in Boynton Beach and Royal Palm Beach.”

“Buyers can expect price reductions and other incentives worth as much as $50,000 at each of the developments on Southern Boulevard, said Mark Hodges, president of Hovnanian’s South Florida division.”

“‘We’ve told our sales staff to be ready to sit down with everyone who walks in the door and find a way to get them into the home,’ Hodges said.”

“The largest discounts nationally are on the most expensive homes, including a three-bedroom condominium by the Hudson River in West New York, which has been reduced $240,000, or 22 percent, to $862,000 this weekend. A 25 percent discount is being offered on a two-bedroom home in Jackson Township, N.J., which lowers its price tag to $300,501.”

“Keith Gumbinger, VP of a consumer loan research firm found the sale remarkable, given low mortgage rates. ‘You wouldn’t think there is a need to go to the marketplace with such discounts,’ he said. ‘This is a pretty good indication from a prominent homebuilder that the market is troubled.’”

The Coloradoan. “One of the home builders linked to Norlarco Credit Union’s pile of delinquent loans is offering six-figure discounts on some of its properties this weekend as it attempts to draw interest in slumping markets.”

“Hovnanian Enterprises’ sales blitz involves dropping prices by more than 20 percent on some of its prime real estate, including in Florida, where Norlarco has issued numerous construction loans for Hovnanian property.”

“Borrowers have left Norlarco with $70 million in delinquent loans, many of them in Lee County, Fla. In Lehigh Acres alone, Hovnanian First Homes is offering almost 60 spec homes for between $143,000 and $200,000.”

“Swollen inventories are likely to lead to more discounting, said Sam Chandan, chief economist a real estate research firm.”

“‘We’ve certainly seen conditions in the housing market continue to deteriorate in the last several months,’ Chandan said. ‘The downward adjustment in prices, whether for new homes or existing homes, is going to be far more severe than what many people thought earlier this year.’”

“This weekend’s sales involves thousands of homes in 19 states.”

“‘We think it will effectively overcome the malaise that people have been carrying around since the subprime debacle occurred in late February,’ said Michael Skea, VP of marketing and sales for the Hovnanian’s northeast sector. ‘It’s just a matter of getting the buying public to realize this is a great time to buy.’”

The News Press. “Southwest Florida’s homes are still overpriced — but they’re a far better buy than they were a year ago, according to a national survey released this week.”

“Homes in Lee County, now the 95th most overpriced of 330 markets nationwide, were overvalued by 23.3 percent in the second quarter of 2007, compared to 38.8 percent a year earlier, according to the report by Global Insight/National City Corp.”

“In the same time period, prices in the area fell from a median single-family-home price of $298,700 to $230,000.”

“The Naples area was still overpriced by 49.5 percent at $376,000, making it the 17th most overvalued market in the country. But that’s still a big improvement from a year earlier, when it was ranked eighth: overpriced by 65.5 percent at $393,600.”

“Charlotte County, in 54th place, was over by 32.6 percent with a median home price of $193,900, improved from 56 percent over at $212,400.”

“Southwest Florida’s numbers are cause for optimism, said Jamie Pirrello, president of Fort Myers-based Vision Homes USA. ‘I actually felt, ‘Wow, maybe we’re finally approaching close to bottom,’ he said. ‘Clearly the amount we’re overvalued has definitely decreased.’”

“Prices are coming back to what people can actually afford to pay, he said. ‘One of the reasons that things get overvalued is that they get out of alignment with incomes,’ Pirrello said. ‘If you look back a couple years, incomes haven’t kept up with massive increases in price.’”

“As for the future, Pirrello said any recovery of the market in Lee County will depend on reducing the inventory of 23,551 houses and condos that are for sale through Realtors here. There’s room for optimism, he said, noting that the price of land and home construction costs have been falling lately.”

From Wink TV. “A well known real estate analyst came to Naples today in an attempt to bring some hope to the slow housing market.”

“Lawrence Yun, the Senior Economist for the National Association of Realtors…says real estate agents, as well as the public should not be disturbed by the lack of sales in Collier County. He believes things will pick up in the next year, and even more in the distant future.”

“Some real estate agents tell WINK News the market just keeps getting worse.”

“Yun says, if you buy now you’ll be better off later. ‘It looks like over the long term, twenty years from now it looks like Naples will be commanding very high price in the country,’ said Yun.”

“Yun also predicts renters beginning to buy once they realize the cost of rent is just about as much as a monthly mortgage payment.”

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