The Housing Bubble

The California realtors report on August sales. “Home sales decreased 27.8 percent in August in California compared with the same period a year ago, while the median price of an existing home increased 2 percent, CAR reported today. ‘Despite the overall increase in the statewide median price, prices declined in nine regions last month, falling 11.5 percent in the Central Valley region and 12.1 percent in Sacramento,’ said C.A.R. President Colleen Badagliacco.”

“‘Price softness is even more pronounced when we look at different segments of the market. For example, the statewide median price in the entry-level price range of less than $500,000 fell 5.1 percent in August to $349,360 compared with $368,210 for the same period a year ago,’ Badagliacco said.”

“‘The median price per square foot for a single-family home is also on the decline, falling 4.3 percent this year to $336 compared with last year’s record high of $351 per square foot,’ she said.”

“‘While low affordability, tighter underwriting standards and expectations of lower prices continue to pose challenges for the market, the decline in sales accelerated in August as a result of the so-called credit or liquidity crunch that began in July,’ said C.A.R. Chief Economist Leslie Appleton-Young.”

“‘With credit drying up, even qualified buyers were unable to receive funding for home purchases,’ Appleton-Young said. ‘We expect the impact of the credit crunch to play out over the next several month, and that it will continue to negatively impact sales.’”

“C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in August 2007 was 11.8 months, compared with 5.9 months (revised) for the same period a year ago.”

The Recordnet. “Lodi-based Anderson Homes will auction off 34 homes in a Manteca subdivision and 25 more in Los Banos because sales are so slow. A minimum bid starting at $285,000 will be required for homes in the Manteca project, about 60 percent of the ‘reduced asking price.’”

“‘We decided that the auction format for us was probably the most efficient way of finding what the bottom-line price is for the buyers today,’ said Craig Barton, Anderson Homes’ chief financial officer. ‘The alternative is to continue to carry these homes for who knows how long.’”

“New-home auctions are starting to pop up as some builders try to come up with ways to keep cash flowing, and they likely will become commonplace in 2008 while new-home sales remain very sluggish, said Greg Paquin, president of the Gregory Group in Folsom.”

“‘Even if the return is not positive, it does bring some cash into the company,’ he said. ‘And in the Central Valley, where it’s challenging, it’s providing opportunities to sell homes where you wouldn’t sell otherwise.’”

“Over the weekend, Sacramento developer John Leonard auctioned off 22 new 1,600-square-foot townhouses in West Sacramento for between $270,000 and $320,000. The townhouses originally listed at more than $400,000.”

The Press Democrat. “Along Domenigoni Parkway northeast of Temecula, dusty graded lots, tattered flags and sagging orange fences are conspicuous signs of a stalled plan for 6,000 homes and new commercial parks in the unbuilt community of Winchester Hills.”

“Inland developers continue to plan for new housing, but Riverside County officials say many have put the brakes on construction of new communities amid the most significant housing-market nose dive to hit the Inland region in more than a decade.”

“The 2,000-acre planned community of Winchester Hills in southwestern Riverside County — promoted by Rancon Group, one of the region’s most prominent developers — is one of the largest to hit the skids, county officials say.”

“Fred Bell, executive director of the Desert Chapter of the Building Industry Association in the Coachella Valley, said developers are forging ahead with planning and approvals. ‘But they are not going to move forward until the market changes,’ Bell said.”

“The stalled development at Winchester Hills and nearby properties, together called Winchester Ranch, has left the landowners with a huge financial burden. Homeowners and businesses that were expected to occupy the development would have repaid the debt on more than $20 million in bonds for extension of nearby Domenigoni Parkway.”

“Instead, Rancon and other developers who invested in Winchester Ranch are saddled with paying off that debt until the community becomes a reality.”

“Rancon CEO Jeffrey Comerchero has asked Riverside County officials to indefinitely delay issuing $12 million in bonds that would have paid for new roads, sewers and flood-control improvements in Winchester Ranch.”

“The additional debt, without homeowners to share the burden, could have jeopardized Rancon’s ability to pay taxes on the Domenigoni Parkway extension, said Jerry Norris, senior analyst with the county’s executive office.”

“The decision to hold off on bond financing for the Winchester Ranch came as no surprise to Nancy D. Sidhu, senior economist for the nonprofit Los Angeles County Economic Development Corp.”

“‘Housing sales are falling like stone. … We don’t know yet where the bottom is on the housing market,’ Sidhu said.”

The Orange County Register. “Lennar Corp. reported its third quarterly loss in 12 months today amid news that the company is facing delays in the pace of development at two big housing projects in Orange County.”

“Lennar Chief Investment Officer Emile Haddad said that his company is evaluating when to launch construction of more than 3,500 dwellings in Anaheim’s Platinum Triangle and may decide to postpone some projects until market conditions improve.”

The New York Times. “The Torralba family’s taste of the American dream began to sour in May 2006, two months after they bought a modest home at the southern end of Silicon Valley, when they received notice from a man who claimed that they owed him money.”

“Without realizing it, the Torralbas had taken a $74,000 ‘down payment assistance’ loan from the man, Pablo Curiel, who now wanted them to pay $679 a month.”

“The Torralbas are one of nine families suing Mr. Curiel and the brokers and real estate agents who arranged mortgages for them. As the housing boom turns to bust, hundreds of lawsuits are being filed on behalf of borrowers who legal advocates say were shoehorned into homes beyond their means with creative and onerous mortgages.”

“Lawyers for the Torralbas assert that the family was never told about a third loan from Mr. Curiel, in addition to two from Washington Mutual, a mortgage for $446,000 and a revolving line of credit for $89,000. (The bank is not named as a defendant.)”

“All the documents signed by the family were in English. Mr. Torralba acknowledges speaking the language but says he is not fully conversant. His lawyers say the negotiations of his home purchase and mortgage were primarily in Spanish.”

“Families that resisted claim that their broker, Linda Tran, and real estate agent, Norma Valdovinos, told them that they would lose their deposits — usually a few thousand dollars that accounted for most of their savings. Some said they went ahead after being assured by Ms. Tran and Ms. Valdovinos that they would be able to refinance in a few months.”

“Tomas and Martha Hernandez said Ms. Valdovinos had convinced them that they could afford a $745,000 home in San Jose, even though Mr. Hernandez earned about $4,000 a month and told them he could pay no more than $2,500 a month.”

“The couple balked after learning that their monthly payments would be $4,660. But Ms. Tran assured them that they would be able to refinance in a few months and reduce the payments to less than $2,900 a month, according to the lawsuit and Mr. Hernandez. They moved into the home two days before Christmas in 2005.”

“‘They said not to worry, that we were in good hands,’ Mr. Hernandez said of Ms. Tran and Ms. Valdovinos.”

“In April 2006, the family sought to refinance after exhausting their modest savings. They now have the following loans: a $596,000 pay-option loan with a prepayment penalty from Countrywide; a second loan for $74,450 from National City with a balloon payment of $57,000 due after 15 years.”

“The third loan for $108,125 from Mr. Curiel was revealed on the day they signed the loan documents, according to the lawsuit and Mr. Hernandez. The loans included more than $40,000 in fees.”

“‘The American dream of buying a home, it may be real for some,’ Mr. Hernandez said. ‘But not for us. And many people are going through the same or worse.’”

“‘Everything was too easy,’ he said. ‘But nothing is easy now.’”

The Mercury News. “Although the Federal Reserve’s dramatic move to slash interest rates last week has lubricated the locked-up credit markets, it has offered comparatively little relief for Bay Area borrowers shopping for traditional fixed-rate mortgages, experts say. The simple reason: fear.”

“Lenders are insisting on top-notch credit and shying away from exotic loans that helped millions of borrowers stretch their home-buying budgets. Skittish investors are demanding unusually high premiums to buy so-called jumbo loans that are commonplace in high-cost regions like Silicon Valley.”

“‘All the disruptions, all the losses, all the bad credit issues are not going away any time soon,” said Keith Gumbinger, a mortgage analyst. ‘We all become accustomed to instant changes - you pull the switch and the light goes on. It doesn’t work that way in the credit markets.’”

“Rates on 30-year fixed-rate mortgages actually inched higher after the Federal Reserve’s unexpected decision last Tuesday. That’s because fixed-rate loans are more closely aligned to long-term bond rates, not the short-term rates that the Fed regulates.”

“Investors feared that rate-cutting will spur inflation, which gnaws into the value of long-term bonds. Mortgage specialist Debi Zenter anticipated such a scenario. A week before the Fed’s move, she encouraged her clients to lock in their loans when rates dipped Sept. 10 and 11.”

“‘I tell clients all along, ‘If you see inflation, that is not good for us. Rates will be higher,’ said Zenter, who works in Pleasanton. ‘There’s no way they can’t be.’”

“‘What it’s going to take to clean this out is to find out what these mortgages are really worth - and we don’t know at this point,’ said Tom Higgins, chief economist for Payden & Rygel Investment Management in Los Angeles. ‘We’re in the delinquency phase, and we haven’t gotten to the foreclosure phase yet. Nobody knows how many pennies on the dollar they will get.’”

“A Wells Fargo rate sheet provided to mortgage brokers last Friday was notable for what you don’t see. It included two entirely blank grids of ‘expanded financing alternatives’ for exotic ‘Atl-A’ loans.”

“‘It doesn’t matter the credit score - that product is gone,’ said a retired mortgage banker who shared the rate sheet on condition of anonymity. ‘You’re seeing what everybody is going through now.’”

Chicago Business reports from Illinois. “Home sales in the Chicago area plunged 20.1%, according to the Illinois Assn. of Realtors, the 17th straight monthly decline. Statewide, sales dropped 17.9% to 14,349 homes. Separately, a gauge of home prices in the Chicago-area declined from a year ago. Home values in the Chicago region fell 0.9% in the 12 months through July, based on Standard & Poor’s/Case-Schiller Home Price Index.”

The Chicago Tribune. “Locally, the wincing was even more pronounced: The Illinois Association of Realtors said Chicago-area home sales, year over year, were down more than 20 percent.”

“‘While buyers with good credit have options’ for financing, said Illinois Association President Kay Wirth, ‘the credit crunch combined with more hesitant buyers waiting out all the mixed messages on the housing market took a toll on sales in August.’”

The News Democrat. “Metro-east home builders are dealing with an overabundance of homes as mortgage defaults have hurt the market, but home inventories are even higher elsewhere.”

“Statistics from the National Association of Home Builders in Washington, D.C., show that the greater St. Louis metropolitan area witnessed a 19 percent decrease in new single-family housing starts between the first six months of the year and the same period in 2006.”

“In that span, that number was higher in other Midwestern metropolitan areas. The greater Chicago metropolitan area witnessed a 34 percent drop, a 28 percent decline was reported in Indianapolis and a 30 percent drop in Kansas City.”

“Statistically, housing starts in St. Clair County have declined in the last two years and dropped over the last three years in Madison and Monroe counties. According to Market Graphics, the highest monthly number of housing starts this year in St. Clair County was 115 in May. In comparison, the county had a monthly high of 175 in August 2005.”

“Madison County had 168 housing starts in May 2004, but hasn’t exceeded 100 this year.”

“Monroe County witnessed 44 and then 35 housing starts in April 2004 and April 2005, respectively, but hasn’t seen more than 27 in a month this year.”

“Taylor-Morley Homes, of Creve Coeur, Mo., has built its share of subdivisions in the metro-east, but has recently decided to scale back its projects and has laid off 40 percent of its staff over the past 12 months. CEO Bill Taylor said the company has had to downsize in response to the shifting market.”

“‘Taylor-Morley is working through this downturn,’ Taylor said. ‘The only thing that will change is we will be a different-sized company and may be building 150 to 200 homes, instead of 300 or 400 homes, a year.’”

“‘We had a good run for several years, from 2001 to early 2005,’ he said. ‘But in 2004 and 2005, we overbuilt, and in 2006, we saw demand slacked, and it become very clear that we had excess supply. What we’re dealing with now is there are more homeowners out there looking for more homes than there are buyers at the moment.’”

The Joplin Globe from Missouri. “Joplin’s housing market has been largely insulated from the highs and lows of the national market, but that may be changing, said Ed August, a Realtor (in)Joplin. Lately, August said, local housing signs aren’t good. Home foreclosures are up, banks are getting cautious, and the growth rate of a home’s value has slowed.”

“‘As our economy becomes more diversified, and more people are living in a smaller area, we are becoming like other areas, and we’re not as well insulated from the dips and spikes,’ he said.”

“August also finds some local trends disturbing. According to data from the local Board of Realtors MLS, new-home sales through August 2007 lagged behind the previous year’s by 22 percent and were down 41 percent from the figure for 2005.”

“Sales of existing homes are doing better, August said, with the number of sales for the first half of 2007 coming in close to the total for the year before. But he said those numbers are still 21 percent below the 2005 sales figures.”

“August said his office also is seeing more foreclosures in the Joplin area, and banks are being more careful about lending, so fewer people are in the position to buy homes.”

“‘Last year, if you had a couple of dings in your credit, you could still walk into a bank and get a 100 percent loan; that’s hard now,’ he said.”

The Star Tribune from Minnesota. “The number of homeowners who are carrying the riskiest type of mortgages more than doubled over the past three years in the Twin Cities area.”

“The increases weren’t just in low-income communities. The percentage of subprime mortgages grew rapidly in wealthier areas, too. Overall, subprime first and second mortgages rose from 11 percent in 2004 to 26 percent last year, according to the Federal Home Mortgage Disclosure Act. That jump means the foreclosure crisis likely won’t end anytime soon.”

“The data suggest ‘that people are certainly stretching to afford houses in those areas,’ said Michael Grover, community affairs project director for the Federal Reserve Bank of Minneapolis.”

“In Carver County, one of the wealthiest counties in the metro area, the number of homes purchased with a subprime mortgage increased from 7 percent in 2004 to 17 percent in 2006. Even though Carver County had the lowest percentage among the 11 counties in 2006, it was a shocking number considering the suburb’s relative wealth.”

“‘It makes me more pessimistic,’ said Prentiss Cox, a University of Minnesota professor and former assistant attorney general who has been tracking the foreclosure problem. ‘That makes me think that the foreclosure problem is going to continue to be more geographically dispersed.’”

“‘I’m … very concerned about the impact that foreclosures have on the broader community,’ said Julie Gugin, executive director of the Minnesota Home Ownership Center. ‘We’ll continue to deal with this foreclosure crisis for several years to come.’”

The Detroit Free Press from Michigan. “The number of home foreclosures in Wayne County has caused a flood of complaints from residents about high grass at vacant homes and forced some communities to contract with landscape companies to keep the lawns cut.”

“‘It’s a new problem to Canton,’ said Tim Faas, director of Canton Municipal Services. ‘It affects property values.’”

“In Garden City, Jack Barnes, director of the Department of Public Services, said that up through May alone, they had 125 complaints about tall grass. For all of 2006, they only had 70, he said.”

“In Westland, officials were forced to take action because of numerous complaints. Kevin Buford, Westland director of public services, said there were 304 complaints so far this year. Normally, there are 50 to 75 complaints for the whole year, he said.”

“‘This spring that was the No. 1 grievance being called into the mayor’s office,’ said Westland Deputy Mayor Courtney Conover.”

The Cresent News from Ohio. “Just over 300 houses are for sale in Defiance County, a number that is higher than average, making real estate in northwest Ohio a buyer’s market. However, sellers are still keeping their eye on the bottom dollar and many are not allowing buyers to ’steal’ their properties.”

“Despite the national news that housing markets are crashing and prices are dropping faster than flies, numerous local realtors have said that the market in northwest Ohio is holding steady.”

“‘Defiance has always been different than the national average,’ said A.J. Minton of Sam Switzer Realty.”

“The increase in foreclosures in the past few years has had the market feeling a bit volatile. In 2006, the Defiance County Sheriff’s Office had 122 foreclosure, or sheriff’s auction sales, averaging 10.2 a month. So far this year, there have been 103 sheriff’s auctions, averaging 11.5 a month. ‘All in all, the market is not as strong,’ said Defiance broke Brent Joost.”

“Personally, Joost said he believes more homes are on the market because ‘the banks and mortgage companies are making it too easy to get a loan. I see so many people who borrow 100 percent. Then, if they get behind (on their mortgage payment a month or two), they just walk away from the house.’”

“With about 60 more homes for sale than the average, Joost said the market has shifted to a buyer’s market, however, he warned: ‘Buyers are not able to steal properties.’”

“‘People try to offer (sellers) 20 percent less,’ Joost said, thinking that with the number of homes on the market the buyer can dominate a sale. Instead, Joost said the seller will simply reject the offer.”

“‘Often times, the seller still needs their equity to buy something else, so they’re just patient and wait for a good offer,’ he said.”

Some housing bubble news from Wall Street and Washington. “Existing-home sales fell in August when mortgage availability problems were peaking, according to the National Association of Realtors. Total existing-home sales…are 12.8 percent below the 6.31 million-unit pace in August 2006. Lawrence Yun, NAR senior economist, expected the decline.”

“‘The unusual disruptions in the mortgage market, including a significant rise in jumbo loan rates, resulted in a fairly high number of postponed or cancelled sales, with many buyers having to search for other financing when loan commitments fell through,’ he said. ‘Lower sales contributed to a buildup of unsold inventory.’”

“‘The abundant choice of homes is permitting buyers to better negotiate price and terms,’ said NAR President Pat V. Combs. ‘Price gains in the Northeast and Midwest were largely offset by a decline in the West, while the median existing-home price in the South was down slightly, demonstrating that all real estate is local.’”

“Regionally, existing-home sales in the Northeast 5.7 percent below a year ago Existing-home sales in the South are 12.7 percent lower than August 2006.Existing-home sales in the Midwest are 10.5 percent below a year ago. Existing-home sales in the West are 21.7 percent below August 2006.”

The Associated Press. “The fall in sales pushed the inventory of unsold homes to a record 4.58 million in August. That means it would take 10 months to exhaust the inventory of homes on the market at the August sales pace, also a record figure.”

“‘Once we get through these disruptions, we’ll get a better sense of where the actual market is in late fall as conditions begin to normalize,’ Yun said.”

“However, other private economists are forecasting that sales of both existing and new homes will not stabilize until mid-2008 because they believe it will take that long for prices to fall far enough to reduce the large number of unsold homes.”

From Bloomberg. “Home prices in 20 U.S. metropolitan areas fell the most on record in July. Values dropped 3.9 percent in the 12 months through July, steeper than the 3.4 percent decrease in June, according to the S&P/Case-Shiller home-price index.”

“The index declined in January for the first time since the group started the measure in 2001, and has receded every month since then.”

“‘The decline in home prices clearly continued into the summer months,’ said Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, in a statement.”

“The housing slump ‘doesn’t seem like it will go away any time soon,’ said Michael Gregory, a senior economist at BMO Capital Markets in Toronto. ‘As far as consumers go, this is another sort of pall over’ their ability to borrow against the value of their homes, he said.”

From MarketWatch. “Lennar Corp., one the nation’s largest home builders, said it posted a loss for its fiscal third quarter as falling prices and mortgage-market turmoil continued to weigh on the housing market.”

“‘It is already well documented that the housing market has continued to deteriorate throughout our third quarter,’ said CEO Stuart Miller in the earnings release. ‘Heavy discounting by builders, and now the existing home market as well, has continued to drive pricing downward.’”

“For the quarter ended Aug. 31, Miami-based Lennar said it swung to a loss of $513.9 million. Total revenue fell 44% to $2.34 billion as the company delivered 41% fewer homes and the average selling price decreased 6% from the previous year, driven mainly by higher incentives to attract nervous buyers.”

“Lennar said incentives averaged $46,000 per home in the latest quarter, up from $35,900 a year earlier. New orders fell 48% to 5,804 homes.”

“The company said it saw a home-building operating loss of $787.7 million, including a large $847.5 million charge related to valuation adjustments and write-offs of option deposits.”

The Street.com. “Lennar CEO Miller said the company has responded by continuing to adjust pricing to meet current market conditions in order to keep inventories low. ‘The net effect has been a continued deterioration of our net margin and accordingly, higher impairments to our inventory,’ he said.”

“The company has reduced it workforce to date by approximately 35% and expects continued reductions in the fourth quarter.”

“Lennar’s aggressive price cutting is on display in Port St. Lucie, Fla., where the company is offering discounts to move townhomes at its Newport Isles development.”

“Florida realtor Mike Morgan says Lennar is offering a 2,200-square-foot townhome for a listed price of $215,000. However, he says a Lennar salesperson said an offer of $195,000 might be accepted.”

“The value of the Lennar’s backlog, or homes under contract and not yet sold, slumped 60 percent to $2.2 billion from a year earlier. Lennar’s cancellation rate was 32 percent, up from 29 percent in the second quarter.”

“Lennar’s charges included $242.5 million in write offs of options on land it doesn’t plan to buy, $114.6 million in writedowns on property, and a $138.7 million charge on investments in entities it doesn’t include in its operations.”

“The company’s gross margin on home sales excluding land valuation writedowns was 14 percent, compared with 19.5 percent last year.”

“‘People are going to be loath to put their hard-earned money down with the prospect of it evaporating in a relatively short period of time through continued falling home prices,’ said Robert Stevenson, an analyst at Morgan Stanley.”

“Shares of Standard Pacific Corp. sank at the opening bell Tuesday after the homebuilder eliminated its dividend and arranged to borrow $100 million, stirring fears that the company needs the money.”

“As a homebuilder, Standard Pacific forms various partnerships to buy land, build homes on it and sell them. In some cases, the partnerships borrow money using the land as collateral, and Standard Pacific is obligated to repay the lender if the land loses too much value.”

The International Business Times. “Lenders did little to help subprime borrowers with adjustable-rate mortgages stay in their homes, even as it became clear many homeowners would struggle to keep up with their payments, a study shows.”

“Moody’s Investors Service said banks eased borrowing terms on just 1 percent of subprime mortgages with interest rates that reset higher in January, April and July.”

“It said that ‘only recently’ have servicers begun to modify more loans to help homeowners avoid foreclosures, ‘despite much industry dialogue and heavy press attention’ on the problem.”

“The credit rating agency said it based its study on 16 servicers that handle $950 billion of subprime mortgages.”

“Moody’s said that while some servicers actively reach out through phone calls to borrowers who may face resets, a majority still relies on more ‘passive’ letter-writing.”

“‘These trends can be a cause for some concern,’ said Nicholas Weill, Moody’s chief credit officer in structured finance, in a statement. ‘The number of future loan modifications by subprime servicers on loans facing reset may be lower than needed to mitigate losses meaningfully.’”

“Moody’s did not name the servicers it evaluated, but said its study covered 80 percent of the subprime servicing market. This suggests that many big servicers were included.”

“Americans may be disappointed that the Federal Reserve’s interest rate cut won’t translate into lower monthly mortgage payments and a revival of the housing market.”

“‘Mortgage rates won’t stimulate demand,’ said Scott Anderson, senior economist at Wells Fargo & Co. in Minneapolis. ‘The Fed may be a little impotent here because what caused this housing crash was overpriced housing, not mortgages.’”

“Investors concerned about inflation following the Fed’s half-point interest rate cut have driven up the yield of 10-year Treasury notes by 23 basis points, or 0.23 of a percentage point, to 4.7 percent. The increase has dashed hopes that lower home-loan costs might entice more Americans to overcome their fear of falling prices and buy homes.”

“Total mortgage originations fell 8.8 percent in the second quarter to $730 billion from a year earlier, according to Inside Mortgage Finance. The number of subprime mortgages fell 66 percent to $56 billion, according to the newsletter.”

“Mortgage originations may drop to $460 billion in the fourth quarter, down 36 percent from a year earlier, according to the Mortgage Bankers Association.”

“Tighter lending guidelines are the biggest challenge facing borrowers, not mortgage rates, said mortgage marketing consultant Scott Tucker. ‘To paraphrase Will Rogers, the banks are not concerned about the return on their money, they’re concerned about the return of their money,’ Tucker said.”

A report from the Philadelphia Inquirer. “The word that best describes the real estate market at the Jersey Shore over the last 20 months is volatile. Sales dropped by more than a third in 2006 from 2005 in Atlantic, Cape May and Ocean Counties, and that decline continues overall. But median prices have yet to follow suit.”

“It’s not uncommon for prices to rise as a real estate market cycles downward, said Kevin Gillen, a Wharton School research fellow. ‘Volume and days on the market are leading indicators’ of how a market is performing, he said, ‘whereas prices are a lagging indicator.’”

“The Inquirer analysis showed that sales in Ocean City fell by more than half in 2006 compared to 2005, to 642 from 1,314, while the median price dropped by $61,000, to $538,250. Still, the median price is twice what it was at the start of the real estate boom in 1998.”

“These days, ‘incentives and price concessions are both creative and abundant,’ said Jay Lamont, host of WPEN-AM’s All About Real Estate and an Ocean City property owner.”

“‘It’s the flippers who built duplexes in the middle of nowhere and are asking for $2 million who are watching their properties sit and sit and sit,’ said Main Line real estate broker John Duffy.”

“For those people who bought at the high end of the market two years ago and now are trying to sell, there is no guarantee they’ll get their money back, said AAvalon Real Estate broker Paul Leiser.”

“What seems to be missing from the current Shore market is the not-so-well-heeled buyer, he said, possibly as a result of the turmoil in the national mortgage market.”

“Duffy said many younger buyers who spent summers at the Shore as kids stretched their resources to the limit to buy pricey places in traditional vacation destinations. Now the mortgage rates that allowed them to do so are getting ready to adjust.”

“‘They bought a place for $1 million two years ago, that’s now worth $900,000,’ he said, ‘and they soon won’t be able to manage the mortgage.’”

The Pocono Record from Pennsylvania. “Jennie Scott is facing higher mortgage payments next month that she can’t afford on her $1,000 monthly Social Security income.”

“The North Philadelphia widow took on a $55,000 loan three years ago to pay off credit card debt and the remainder of her original mortgage. A mortgage broker locked her into the loan with a prepayment penalty. Now, her adjustable rate mortgage is scheduled to reset higher — a fact she said her broker failed to disclose when she was signing the papers.”

“‘I’m a little depressed, but I’m trying to keep on going,’ Scott said.”

“It might be too late for Scott, but the state Banking Department hopes to help other consumers by proposing the most sweeping mortgage reforms in the state in nearly 20 years.”

“‘We’re pursuing it ardently,’ said Steven Kaplan, the state’s banking secretary. ‘I would hope that later this year or very early next year we might actually have something that we can enforce.’”

The New York Times. “Along the streets of Far Rockaway, many recently built two- and three-family town houses sit waiting for even one family to move in. Desperate developers hoping to cover their bets, and stem their losses, tape up both For Rent and For Sale signs inside windows that face nearly deserted streets.”

“The same blocks were once home to sprawling single-family houses with wraparound porches. But during the superheated real estate market of just a few years ago, longtime residents sold out to developers who rapidly demolished the old to build rows of plain vanilla town houses sold, it seemed, to anyone who could sign a mortgage application.”

“As the market cooled and credit got tighter, many of the new homes sat empty. On a few blocks, developers have built nothing but plywood walls to hide the weed-choked lots after the old houses were torn down.”

“‘Folks just went crazy and got into the feeding frenzy,’ said City Councilman James Sanders Jr. ‘They thought money was going to come to everybody left, right and center. Irrational exuberance is what I call this.’”

From Reuters on New York. “The Manhattan apartment market has remained resilient, despite problems in the mortgage market, but brokers are working harder, and for New York City as a whole, the edges may have started to fray.”

“For an army of brokers and real estate agents, life isn’t quite the same as it was in the heady days of the past two years, when in many cases condominium buildings were sold out before they were built.”

“People ‘were calling us order-takers,’ said Pamela Liebman, CEO of brokerage The Corcoran Group. ‘People would walk in the door and sign a contract. Now, you have to have some selling skills.’”

“For New Yorkers who have been spared the pain, a paranoid pall punctuates much of the day-to-day real estate chatter. The financial industry and its big end-of-year bonuses, a major driver of demand for New York apartments, have been roiled since the summer.”

“‘I would think there’s more concern about ‘09 than ‘O8,’ said appraiser Jonathan Miller. ‘There’s more unknowns depending upon how this thing unfolds.’”

“For the whole of Brooklyn…the number of homes sold is down 11.9 percent to 1,247 and the number of days it takes to close an average sale is up 25 days from the beginning of the year to 198, more than six months.”

“Those figures most likely don’t reflect the recent mortgage crunch, as it usually takes at least two months from contract to closing, said Rich Schuloff, executive director of the Brooklyn Board of Realtors.”

“‘The number from September 1st to the end of the year — that’s the number that’s really going to tell the tale,’ Schuloff said.”

“The overall New York City market and even Manhattan has been affected by credit market problems, as it has become more difficult to get or qualify for mortgages, especially jumbo loans, those above $417,000.”

“‘We’ve seen a few people have to back out because they couldn’t get the financing they needed,’ said Michael Moran, executive VP, Prudential Douglas Elliman in Williamsburg

The Times Union from New York. “House sales in the Capital Region fell 11 percent in August, and are down 6 percent so far this year, the Greater Capital Association of Realtors reported Monday. The decline was greater than that for the state as a whole, where sales were down just 7.6 percent, according to figures from the New York State Association of Realtors.”

“Douglas Engels, president of the Greater Capital Association of Realtors, said…while he wouldn’t say that the worst of the housing slowdown has passed, ‘the national news isn’t necessarily affecting our local marketplace,’ he added, referring to the collapse in the subprime mortgage market and increasing foreclosure rates nationwide.”

“He called the local market ‘relatively stable,’ and said financing was readily available ‘unless you have horrible credit.’”

“The number of homes sold so far this year — 6,449 — is the lowest since 2003, when 5,761 houses were sold through August. In that period, median prices have climbed more than 40 percent, to $194,500 in the first eight months from $138,000 in 2003.”

The Boston Globe from Massachusetts. “The median sales price of a Massachusetts single-family home fell nearly 5 percent in August, the 16th straight month of year-to-year price declines, and the volume of sales fell 1.5 percent, according to the Warren Group.”

“August was the seventh month in 2007 in which prices fell between 4.5 and 5 percent on a year-to-year basis.”

“A separate report from the Massachusetts Association of Realtors offered a sunnier forecast. According to the realtors’ group, which uses a different methodology to capture data, the median sales price for a single-family home in Massachusetts rose 1.4 percent in August to $357,000 when compared with August 2006.”

“‘Although sales numbers have fluctuated throughout the first eight months of this year, we’re seeing remarkable consistency in price changes,’ CEO Timothy Warren said. ‘It seems the market is reaching its natural level for the time being. That trend is likely to continue during the last four months of this year.’”

The Glouchester Times from Massachusetts. “The apartments at Pond View Village were back on the market this week at steeply discounted prices.”

“Ruth Pino of Carlson GMAC said Carlson had been directed to drop prices on 33 condos by as much as $100,000 by the representative of major private lenders and the owner-developer.”

“Pino said the 33 units, a mix of one- and two-bedroom condos, which had been pulled from the market at prices of $269,000 to $339,000, are now for sale at $165,000 to $259,000.”

“The regional condo market, while soft across all prices, is at its strongest in the under $250,000 sector, according to Carlson listing agent Anne Pardee. ‘Overall, the market is down,’ Pardee said. ‘But right now, it’s healthiest at under $250,000.’”

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