The Housing Bubble

CBS 5 reports from California. “In the Central Valley community of Manteca, police have a new job: patrolling hundreds of foreclosed houses left empty and abandoned. They are half million dollar houses, often bought with nothing down, turned into suburban blight. Developers built more than 30,000 new homes in the last six years. But with the spike in adjustable mortgage rates the flood of buyers turned into a flood of defaults, 11,000 in the county in the past 18 months.”

“But for neighbors the problem that really bites is fast-falling house prices. Just-retired Corky Hine wanted to sell for $400,000. Now his home is worth $339,000 and his real-estate agent still can’t get anybody to look.”

“‘I already dropped it $60,000 (from the original appraisal price,)’ Hine said. ‘She said ‘There’s like 500 homes for sale within a two-mile radius of mine, and 150 of them are in foreclosure within a mile or something.’”

“One house will be sold at auction at the county courthouse. It opened for $464,885.15. That’s way below the $620,000 the house sold for two years ago.”

“Still the auctioneer has a lonely job. ‘There’s nobody here,” CBS News correspondent John Blackstone said.”

“The auctioneer, Ted Longley, chuckled: ‘Must not be any money involved in the equity area. I don’t know.’ ‘You can’t give these houses away,’ Osborn said.”

From CBS 13. “Northern California is home to one over the highest foreclosure rates in the entire country. Some homebuilders are leaving half-built homes in new developments. One of 15 sites in Elk Grove are on hold after struggling Dunmoore Homes company sold a local business man.”

“‘My personal best guess would be a few more months. It’s going to take some time. It’s a long process,’ said V.P John Slaughter who thinks it could be a white before the bulldozers break ground again, ‘The market has really hurt us.’”

“He’s also concerned about the half built homes with winter coming. ‘Currently, with our lenders, we’re looking at completing those homes to the point of making their weather proof,’ said Slaughter.”

“‘We asked for a gated community. Anybody can just walk if here in the middle of the night,’ said Sukheinder Kaur, resident.”

“What happens to people who bought homes on spec, or backlogged homes? Savage said nearly two dozen people paid for homes up-front statewide. The housing company offered to refund all of their deposit money, and most all of them took it.”

From News 10. “Roughly 10,000 homes in the Sacramento region are in some stage of foreclosure.”

“Michelle Steeb, the director of St. John’s Shelter for women and children recently checked in a family after their home wound up in foreclosure. ‘The bank showed up on their doorstep on a Monday morning and told them they needed to leave, and they lost everything,’ Steeb said.”

Inside Bay Area. “For the fourth consecutive quarter, the amount of money Tracy collects in taxes has dropped, this time by nearly 6 percent, the largest fall since revenue began declining a year ago.”

“Coupled with fewer new homes being built in Tracy, limited to 100 until at least 2012 through Measure A, the city might have to tighten its belt before the end of the year.”

“Jeff Morri, with Stan Morri Ford in the Tracy Auto Mall, the largest tax engine in the city, said the industry is in a downturn nationwide.”

“‘We all wish we could tell you why,’ Morri said. ‘Personally, I believe, with the housing market as soft as it is, and so many foreclosures, its creating a vacuum. It’s a very symbiotic relationship.’”

The Santa Cruz Sentinel. “After 26 years in business, Santa Cruz Mortgage has suspended operations indefinitely, caught up in crisis in the wake of risky loans gone sour.”

“‘These are unprecedented times, said minority shareholder Tom Powers, citing the difficulty of covering overhead with volume dwindling due to the housing market downturn. ‘There is a lot of uncertainty out there.’”

“Adding to their financial woes, the local lender was sued for breach of contract Sept. 12 by Green Valley Corporation, also known as Barry Swenson Builder, according to Santa Cruz Superior Court records.”

“Santa Cruz Mortgage, in 2002, claimed to be the second largest provider of home loans on the Central Coast. As the local sales volume peaked in 2004 with 2,800 homes sold and a median selling price of $622,000, Santa Cruz Mortgage had grown to 10 offices and opened a regional headquarters in Live Oak. The market was so hot that in 10 months that year, sales topped 200.”

“Since then, the number of homes sales has declined steadily. This year, defaults and foreclosure actions are up; sales are down. Even the summer did not bring the usual rebound.”

“About 650 homeowners in Santa Cruz County have fallen behind on mortgage payments this year, twice as many as last year, and nearly 200 have lost a home in a foreclosure sale. Many of them bought homes with no money down and received adjustable and interest-only loans, which earn brokers higher commissions.”

“Powers said he remained ‘fiercely loyal to Santa Cruz Mortgage,’ but admitted ‘you could see the writing on the wall.’”

“‘Those who have not taken care to trim expenses are going to be in trouble,’ said Peter Boutell, who was a shareholder at Santa Cruz Mortgage before leaving to form Santa Cruz Home Finance in 2001. Boutell remembers when home values fell after the 1989 earthquake and remained relatively stable for five years.”

“‘Our industry has a history of boom and bust cycles,’ he said.”

“‘Companies that made their money taking advantage of less sophisticated borrowers, many of whom had bad or challenged credit, are disappearing quickly,’ said Jim Chubb of Pacific Inland Home Mortgage in Soquel. ‘This is a good thing for the marketplace in general, as many of these companies were merely preying on innocent people and offering no value to consumers.’”

“‘Unfortunately the homeowners who should never have bought may lose their equity when they are forced to sell — many will walk away with trashed credit as well,’ he added.”

From Eye Out For You. “David Crisp is being investigated by the FBI and the California Department Real Estate and now his own home is on the auction block.”

“Public records show Crisp’s two story home on in Southwest Bakersfield is set for auction October 17th. The once, flashy realtor owes over $1.8 million dollars on the ‘Grand Island’ neighborhood home. It’s the same home FBI agents raided last month.”

The Bakersfield Californian. “Crisp…borrowed $2 million against (the) Seven Oaks mansion in January during a refinance. Crisp’s wife, is being sued by Chase Bank USA in a collections case filed late last month.”

“Real estate agents at the partners’ new firms have dwindled drastically, state records show. Cole’s company, Points West Group, listed no sales agents Monday. At least a half-dozen have worked there previously.”

“At the firm’s peak in 2005 and 2006, Crisp & Cole employed about 60 staffers.”

“‘I’m still selling real estate,’ Cole said Monday, but declined to comment further.”

“The 10,000-square-foot Stockdale Highway office Crisp bought this spring, currently in default, is for sale again, said Charles Haberkern, a sales associate at NAI Capital Inc., the company handling the listing.”

“The office is being listed for about $3.5 million, said Peter Yousefi, VP at NAI Capital. Crisp paid $2.5 million for the building in April. By May, he was trying to sell it for $4.5 million. Default notices arrived in late August.”

“An ongoing Californian tally of defaulted and foreclosed properties related to Cole and Crisp’s employees, family members and associates counted 94 troubled properties carrying more than $58.9 million in loans as of Monday. Of those, 34 have so far foreclosed.”

A report from the Arizona Daily Sun. “Laura Fenbert and her husband Richard bought a townhouse in Lower Greenlaw two years ago for $140,000 to help their daughter, an NAU sophomore at the time, escape dorm life. The couple also bought the home as an investment, hoping to save thousands in dorm fees as well as make a small profit. The couple came close to making that tidy profit last year, receiving unsolicited offers hovering around $260,000.”

“This year, prospective homebuyers regularly tour the three-bedroom, two-bath townhouse but no one has made any offers in four months. The family has poured thousands of dollars into the home this year…to help attract buyers, Fenbert said.”

“They have also cut their asking price from $249,000 to $244,000, but prospective buyers have slowed to a trickle as they try to compete with eight similar three-bed, two bath townhomes also for sale nearby.”

“Most likely, those homebuyers touring the Fenbert home made offers on the condo-conversions in Flagstaff. The former apartment complexes flooded the market this year with hundreds of condos, tempting buyers with incentives. Totaling approximately 900 units, the projects are offering attractive incentives that the Fenbert family cannot hope to match.”

“‘The condo-conversions have cannibalized the townhome resale market,’ said Realtor Stephen Brighton.”

“As their daughter prepares to graduate in December, Fenbert says there is still some room to attract buyers. She says she could offer a serious buyer some incentives if it helped close the sale.”

“The ups and downs in the sale of her home has also been a teachable moment, said Fenbert. ‘My daughter has been given a wonderful learning experience about the housing market,’ Fenbert said.”

Newszap reports from Arizona. “Like the outside temperature, Surprise’s once red-hot housing market has started to cool.”

“‘In 2004 we saw an incredible amount of activity in the housing market. This phenomenon lasted for another 1 1/2 years to the end of 2005,’ explained Associate Broker Rowdy Dawson. ‘Unfortunately, we won’t see this again in our lifetime.’”

“Mr. Dawson said during this explosive time, out-of-state buyers saw an opportunity to buy inexpensive homes in the Northwest Valley while making a profit.”

“‘The housing industry at that time became a ball of fire that most thought would continue to burn,’ Mr. Dawson added. ‘As soon as a sign went up, the listing agent had 2-3 offers minimum. But now, the problem is the housing market is parallel to affordability of a client. Now the clients are not able to buy these homes because of the prices.’”

“According to the real estate broker, an 1,800-1,900-square-foot house in Surprise in early 2004 was closing at approximately $162,000. By the end of 2005, the same size home cost an average of $280,000.”

“‘That’s a 43 percent increase in less than two years,’ Mr. Dawson said. ‘Did your salary increase 43 percent in that time — I know mine didn’t. That’s what is making the market so stagnant.’”

“There are approximately 2,200 single-family home listings now available in Surprise, up by approximately 200 over the previous month. Additionally, city data indicates at least 1,000 Surprise homes involved in foreclosure or pre-foreclosure actions.”

The Arizona Republic. “Florida-based TOUSA Inc., the parent company of Arizona builder Engle Homes has hired a Wall Street firm for advice and stopped offering earnings guidance in response to worsening market conditions.”

“Its Western operations accounted for the largest share of losses. For its second quarter ended June 30, TOUSA lost $132 million on a 10 percent drop in revenues to $577 million. Net home sales fell 15 percent year over year.”

“Its operations in Arizona, Colorado and Nevada accounted for $47 million in red ink from continuing operations.”

“Morningstar analyst Eric Landry indicated the lack of guidance signals management’s inability to deliver on prior predictions of positive cash flow for the second half of 2007.”

“‘The fact that it’s no longer confident of its cash-generation abilities indicates that a crucial element of its deleveraging strategy is probably now gone,’ Landry wrote recently. ‘It’s likely TOUSA will now have to turn more heavily toward asset sales in an effort to stave off a restructuring, a strategy we think has little chance of success.’”

Reuters reports on Nevada. “Dana Fillmore was like many of the thousands arriving to the casino capital every month when she moved from Minnesota in 2004. With no money down, she landed a house with a pool for a $2,100 monthly mortgage.”

“But her marriage collapsed soon after, and her husband, who works in real estate development, had trouble with support payments as his industry slumped, she said, so she is now trying to sell her house.”

“Fillmore bought the place in Henderson next to Las Vegas for $329,000 in July 2005, around the peak of the boom. Since listing the house at $317,000 a few months ago, she has dropped the price to $289,000 and is still hoping for her luck to change as she cannot afford to pay the mortgage on an annual salary of $42,000.”

“‘It’s always been a dream of a lot of people in the northern states to move to a southern state,’ she said wistfully. ‘I wish now that I never moved.’”

“‘Say they paid half a million. They might be able to sell in the low $400,000s, maybe,’ said Rita DeSimone, a broker working with Fillmore. DeSimone said her income is down by half from last year. ‘Come May, the phone just stopped ringing,’ she said.”

“Joy Gillen has had her home on the market for nearly a year and a half. She initially listed the home at $597,000 then $539,900 and since refused to budge, even though she paid only $291,000 for it five years ago.”

“‘I never thought it would ever take so long to sell my house here — the market was so hot,’ she said. ‘I could sell for a cheaper price, but I would shoot myself (financially).’”

“Thousands of signs in front of single- and two-story homes illustrate a glut of available properties, many of which are now vacant. Along one stretch of six homes on Edgeworth Place in south Las Vegas, four show ‘for sale’ signs.”

“After more than half a year on the market, one house is in the process of being sold after the owner dropped the price from $324,000 to $250,000, broker Doug Helen said: ‘They literally wanted to get rid of it.’”

From KLAS TV. “The prices of new and existing homes have been steadily dropping in Las Vegas since mid-2006 and likely will continue to plummet…according to several professional traders and national economists monitoring the valley’s real estate market.”

“Last month, the world’s leading Century 21 realtor filed for bankruptcy in Las Vegas.”

“Kelly Kuntz bought a real estate business last year as the housing market was starting to crash. He calls the situation dreadful. He says although he has plenty of work, he won’t make any money this year. ”

“‘What happens is this doesn’t become a slow market, I am swamped.’ He is swamped with sellers, many of whom are desperate to sell.”

“‘They believe that through some miracle somebody is going to come to their home and the chances are very very remote,’ Kuntz said.”

The Pahrump Valley Times from Nevada. “Pahrump has been affected by the high rate of foreclosures and a slowdown in the real estate industry affecting the rest of the country, statistics show. Some of the figures weren’t as alarming in Nye County, however.”

“Andrew Alberti Jr., a local real estate broker helping people avoid foreclosure, said almost all of the property owners he’s working with defaulted on loans taken out from 2003 to 2006. They got a good initial interest rate after signing the loan for a couple years before the adjustable interest rate began to rise.”

“But he said in one case an individual bought vacant land in January and defaulted by March.”

“‘If your income dropped by 60 percent, how long would you be able to stay in the line of business you were in?’ asked Norma Jean Opatik a realty agent…who represents the Greater Las Vegas Association of Realtors in Pahrump. ‘The media drove this market to make it boom the way it did. Now I think it’s the media once again doing it. If we could get those prognosticators to stop this doomsday thing the market would rebound much quicker than it’s doing.’”

“Lenders are now questioning appraisers of property, Opatik said. ‘Our appraisers know our market. Even the appraisers who come out from Las Vegas, they know our market, and yet they’re questioned all the time, and that’s totally beyond the scope of what a lender should be doing,’ she said.”

“‘Now people can no longer afford the home because of the adjustment their loan took. Now again, that’s the mortgage industry. When this boom happened they would lend to many people that probably shouldn’t have been lent to. They call it creative financing,’ she said.”

“Opatik thinks investors will step in to scoop up the bargains. A home that may have been on the market for $300,000 to $350,000 might be selling for $250,000 to $280,000 now, she said.”

The Salt Lake Tribune from Utah. “At first, it looked as though Utah’s homebuilders would be able to avoid the sharp downturn in new-home construction that followed the nation’s subprime-lending debacle.”

“But by July, it became painfully apparent that even Utah’s hot economy couldn’t prevent residential construction along the Wasatch Front from plummeting to 10-year lows. Builders have been forced to make substantial layoffs and offer thousands of dollars in incentives.”

“‘This is going to be a tough year for builders,’ said Jim Wood, director of the University of Utah’s Bureau of Economic and Business Research.”

“By summer demand for new homes had dropped sharply, with homebuilding activity in August the worst in years.”

“Lenders nationally and in Utah have imposed tighter lending standards in recent months that have made it more difficult for people to qualify for a home loan. And several years’ worth of home-price increases from Ogden to Provo, in many cases vastly outpacing wage gains, have put homeownership out of the reach of many Utah families.”

“Richmond American Homes has run ads touting free options and upgrades of as much as $35,000, and up to $3,500 in down-payment assistance. Not to mention the drawing for a really nice television.”

“In September, Richmond American took out permits for the construction of only six homes locally, down from 90 in September 2006.”

“Many builders, such as Utah’s Hamlet Homes, say the slowdown came on rather suddenly, in July. ‘Suddenly we hit this brick wall,’ said David Irwin, VP of sales and marketing. ‘Sales were down, traffic was down. The initial thought was that it was a temporary blip. But it continued, through August and September.’”

Some housing bubble news from Wall Street and Washington. USA Today, “At the end of July, Reeves Williams, a home builder in the South, began offering $20,000 in incentives or cash assistance. In the first week, 22 buyers had signed contracts for new homes. Then the mortgage market fell into a tailspin. ‘We lost 17 of them. It was a huge hit,’ says Martha Fondren, VP of sales. ‘It was a credit issue. They did not have horrible credit. But they didn’t have the credit scores to get (a loan), and six months ago they would have.’”

“‘Based on activity since early August, our experience is worse’ than the past two corrections, Robert Toll, CEO of Toll Bros. told investors at a recent Credit Suisse (CS) conference. ‘Who can’t be concerned, with what we’re looking at right now?’ Toll says.”

“KB Home said its cancellation rate jumped to 58% for its third fiscal quarter, which ended in August. ‘There was a significant deterioration in the housing market, and this accelerated dramatically toward the end of the quarter,’ said Jeffrey Mezger, CEO of KB Home. The number of buyers touring model homes and signing contracts hit ‘the lowest levels of the current housing downturn.’”

“Half of Ryland’s buyers backed out of their contracts in the most recent quarter, says Gordon Milne, CFO. ‘There is definitely a lot of discounting going on in some cities,’ Milne says, adding that many builders are offering 5% to 20% in incentives and price cuts, depending on the community.”

“‘It’s hand-to-hand combat out in the field,’ Milne says. ‘We look at the competition down the street, what they’re doing, and we’ve got to match it.’”

“Stuart Miller, CEO of Miami-based Lennar, says he thinks some builders’ price cuts have been ‘unrealistic, maybe even ridiculous.’ Lennar reported the worst quarterly financial results in the company’s history and a surge in cancellation rates.”

The New York Times. “Javier Miglin may walk away from an $80,000 down payment on a condominium with water views in Miami. Randal Mills may give up a $130,000 deposit on a 15th floor condo on the Strip in Las Vegas.”

“Whether buyers like Mr. Miglin and Mr. Mills close on their condos will be a crucial indicator for Corus Bankshares. Many condo projects that started during the real estate boom are just being completed, and developers must begin repaying construction loans taken out before the market turned sour. If buyers do not close, and developers struggle, lenders like Corus may be left holding the bag.”

“‘We’re at the riskiest point of the condo lending cycle as these projects are being completed,’ bank analyst Jefferson L. Harralson said. ‘In the coming weeks and months, we’re going to find out what the demand for these condos really is.’”

“Then there are smaller markets like San Diego, where developers are also struggling to sell units. Corus helped finance 11 condo projects there. Downtown San Diego is scheduled to have 3,000 units completed by 2008.”

“Among the projects is the Icon, where Jeanette Graham bought a one-bedroom apartment last year for $374,000. She said that her building sold 80 percent of its apartments. But she said that the building is now offering even better incentives.”

“Still, she questions whether there will be any takers, especially since her building feels empty. ‘I can go a whole week without seeing a neighbor,’ Ms. Graham said.”

From Bloomberg. “Thornburg Mortgage Inc., the Santa Fe, New Mexico-based mortgage provider, lost $1.1 billion selling bonds backed by adjustable-rate home loans as rising defaults eroded demand for the securities.”

“Thornburg, which has sold $22 billion of ‘high quality’ adjustable-rate mortgages since Aug. 10, concentrates on so- called jumbo loans, which exceed the $417,000 limit that government-chartered Fannie Mae and Freddie Mac can buy.”

“‘The global dislocation of the mortgage finance and credit markets this past summer has had a greater impact on our balance sheet than we initially estimated,’ Larry Goldstone, Thornburg’s president and chief operating officer, said.”

The Associated Press. “Thornburg Mortgage will also take a $286 million writedown on the value of its portfolio for the quarter, more than the $262 million it initially planned on writing down.”

“The company will report a $16 million loss on loans funded during the third quarter, due to fundings made in September on loans where the interest rate was locked before August.”

The Street.com. “‘Despite the greater than previously reported losses, we believe we have adequate liquidity to support our current borrowings portfolio and excess capital to continue to fund new loans and to opportunistically purchase and finance other high-quality mortgage assets, provided market conditions do not deteriorate further,’ said Thornburg COO Goldstone.”

“The expanded losses are primarily due ‘to the receipt of actual sale price documentation for asset liquidations conducted by third-party financing counterparties as opposed to those sales conducted by the company,’ Thornburg said.”

“Ellington Management Group LLC, the Old Greenwich, Connecticut-based hedge-fund firm that focuses on mortgage securities, suspended client redemptions from two funds because it’s too hard to value their assets.”

“Setting asset values wouldn’t be ’simultaneously fair both to investors redeeming from these funds and to investors remaining in these funds,’ CEO Michael Vranos and Vice Chairman Richard Brounstein wrote.”

“The letter said ‘enormously wide spreads have developed’ between the asking and selling prices for some subprime-backed bonds.”

From MarketWatch. “Banks should strengthen underwriting standards on loans including those that are sold to third parties, the Comptroller of the Currency said in a speech Monday.”

“‘Bank underwriting standards for these products, in many cases, moved too far away from what they would have been if the bank had held those loans on its own books,’ Dugan said.”

“Dugan said in prepared remarks that banks ‘need to strengthen their underwriting standards so that they move back towards the fundamental principle of maintaining a reasonable expectation that loans will be repaid, even if the loans are to be sold to third parties.’”

“However, Dugan also noted that despite the current credit market turmoil, federally regulated banks have ‘weathered this period remarkably well’ so far. The OCC supervises about a quarter of the nation’s banks.”

“On the subject of credit rating agencies, which have been accused of failing to give investors adequate warning of the risks associated with mortgage-backed securities, Dugan said that ‘legitimate questions have been raised about just how well they assessed and understood the risks’ of mortgage securities made to borrowers with shaky credit.”

“Fitch Ratings cut ratings on two Asian collateralized debt obligations linked to company debt, indicating an increased risk of default, the company said today.”

“Investors are shunning CDOs and other credit assets on concerns that losses on U.S. home loans to buyers with poor credit records are spreading to other credit markets. Sales of CDOs, once the fastest-growing part of the debt market, fell to $16 billion worldwide during September, the lowest in 21 months, according to Morgan Stanley.”

“One in five managers of CDOs is likely to be forced to cut costs or go out of business as investors avoid the securities following losses on subprime debt, Fitch Ratings said.”

From Reuters. “The U.S. subprime housing crisis will not peak until 2009, rating agency Standard and Poor’s said on Tuesday, adding it had underestimated the extent of fraud in the industry.”

“‘We underestimated the extent to which fraud was occurring in the industry,’ said David Wyss, S&P’s chief economist. ‘It looks, based on some surveys that had been done, the extent of frauds increased sharply in 2006.’”

“‘We think in the United States the housing market is not going to bottom until winter. We think the losses in these sectors won’t really hit their peak until 2009,’ Wyss said. ‘We are not halfway through with this crisis yet.’”

National Mortgage News News. “The secondary market for delinquent second liens isn’t getting any better these days — unless you’re a buyer. Traders tell us that seconds that were part of 80/20 loan structures are selling for 10 to 15 cents on the dollar. Unsecured seconds are fetching just one to two cents on the dollar.”

“‘Debt collection agencies are the ones bidding on this stuff,’ said one investor.”

The News Journal reports from Delaware. “While foreclosure filings continue to rise throughout the state, housing counselors at Neighborhood House Inc. in Wilmington say they’re overwhelmed with pending mortgage defaults. Filings in Delaware continued to tick up in September, bringing the total filings for the state up 32.7 percent for the first quarter of the fiscal year. Hardest hit was Sussex County, which saw a 75 percent increase in foreclosure filings for the quarter ending in September.”

“‘Our books are filling up with default clients,’ said counselor Brenda J. Dryden.”

The News Post from Maryland. “The executive director of the Frederick County Builders Association said those in the housing field should have been more prepared for the real estate downcycle.”

“‘Housing bubble? It was more like a dirigible filled with hydrogen, an explosion — kaboom,’ Bryan Patchan said, addressing the Frederick County Association of Realtors.”

“‘Go back two years ago,’ Patchan said. ‘You knew the law of gravity would make it come down,’ he said, referring to several years of soaring prices and buyers lining up to bid on homes.”

“The ‘occupation at the moment’ is to unload the inventory of homes, Patchan said, currently more than 2,400 in Frederick County. Right now, ‘Housing starts are down by one-third, sales are the lowest in 12 years and there is a downward pressure on home prices,’ he said of the market.”

“He has spent his career in the housing industry, serving in…public affairs for the National Association of Home Builders prior to joining the local group. Describing himself as an industry pessimist, Patchan said builders should have known better than to try to get ahead of the market.”

“‘Builders need to do one house at a time, with a contract with a qualified buyer,’ Patchan said.”

“Patchan reflected on other down markets, such as in the 1980s when buyers faced double-digit interest rates. ‘What’s different this time?’ he asked. ‘For one thing, this past market was full of speculators. We didn’t realize the impact of this until the downturn. Secondly, there is the subprime market.’”

“‘It may sound like heresy from someone in the housing field, but there is too much emphasis on homeownership,’ he said. ‘It costs money to own a home. It’s like a car. You have to buy gas, maintain it, as well as make the payments. People are euphoric. They want a piece of America — a home. We are at nearly 70-percent home ownership in this country, but maybe it should be less than that.’”

The Washington Post. “Won-Ki Choi and his wife Janice had their eye on the townhouse at East Market at Fair Lakes for some time. But the $536,449 price tag was much too high for them.”

“Then they saw a newspaper ad from Ryland Homes: For two hours on a recent Saturday afternoon, the builder would sell 140 homes in the Washington area at a discount, through a silent auction. The minimum bid for the 2,068-square-foot Fairfax County home was $429,999. Won-Ki Choi wrote his name down minutes before the auction was scheduled to end at 3 p.m. He was the only bidder.”

“‘This is your lucky day,’ Jerie Wolicki, a company receptionist, told him amid applause.”

“Builders say they have no other choice. ‘We were trying to figure out how do we break through all the clutter that’s out there with home builders’ said Mike Disler, Ryland’s Washington Division president. ‘I think people understand that it’s totally beyond our control and all the builders are reacting to market conditions.’”

The Courier Journal from Kentucky. “The median price of a home in the Louisville area has risen nearly 5 percent a year over the past two decades, better than inflation, and about the same as the national rate.”

“But as the national housing slump deepens, properties are sitting on the market longer, making sellers nervous and prompting some to slash asking prices and throw in such incentives to close deals.”

“Agent Kim Farris said a glut of available properties has given buyers the upper hand in negotiations, with some offers coming in at 15 percent to 25 percent below the asking price.”

“‘There’s just so much to choose from, the market is saturated,’ said Farris, who got her real-estate license in 1994. ‘They (buyers) feel like the sellers are desperate, so they go in with a low-ball offer. And some sellers are accepting them, because they’re worried they won’t get their house sold.’”

“Joe Simms, who just stepped down as president of the local Realtors’ association, urged its members to carry with them at all times a copy of figures showing positive local trends. In a recent letter, Simms advised agents to show the figures to any buyer who wants to make an offer 20 percent below the asking price, and to share the numbers with the media to ’straighten them out.’”

“‘When the market slows, then we have to do more selling,’ Simms wrote, adding that agents could counter negative publicity by ‘telling the truth attractively.’”

“Roughly one-third of the nation’s largest metro areas, including nearby places such as Cincinnati, Lexington and Memphis, saw home prices fall in the second quarter of 2007 from a year earlier, according to the National Association of Realtors.”

“But that’s little consolation for couples such as Mark and Annie Baker, who live in the SpringView subdivision. Working with Farris, the Bakers put their four-bedroom home on the market in February for $159,900. It took eight months to find a buyer, after they dropped the price by $8,000.”

“‘This has been a proverbial nightmare, to say the least,’ said Annie Baker. ‘Everybody’s lost that warm and fuzzy feeling that the market is good.’”

“Pat Harrison, who owns Harrison Realty in New Albany, Ind., said the local real-estate market is approaching the status of the early 1980s. Harrison, a licensed real-estate agent since 1968, said the local market is hurting from a combination of problems in the lending industry and subprime loans made to borrowers with patchy credit.”

“Those issues have contributed to a surge in foreclosures in recent months. Jefferson County, for example, is on track for a record 3,125 foreclosure auctions this year, up from last year’s record of 2,710.”

“In southwestern Jefferson County, agent Berenda Burnssaid she was baffled about her inability to quickly find a buyer for a four-bedroom ranch with vaulted ceilings, a Jacuzzi in the master bath and more than 1,700 square feet of space.”

“When the home was first put on the market at the beginning of the year, the listing said it was ‘a real buy and will not last long.” The asking price was $119,900 — after several price cuts, the property sold late last month for $70,000.’”

The Daily News from Tennessee. “For numerous homebuilders, the Mid-South Parade of Homes can’t come soon enough.”

“As home sales continue to slide, the buzz created by the debut of this four-county, 161-home bonanza could be the shot in the arm that many companies need to finish the year strong.”

“But with residential home sales in the pits, the Parade might not be enough to salvage 2007’s slumping housing market. Residential sales took another nosedive during the third quarter (July through September), falling 20 percent from Q3 2006, according to Chandler Reports.”

“Just 5,734 residential sales were recorded during the quarter, down from the record 7,169 in 2006. And many of the top builders reported drastic sales dropoffs, a reflection of diminishing consumer confidence and lingering subprime fallout.”

“‘We’re now having to wean ourselves from subprime mortgages being available,’ said Jerry Gillis, president of FaxonGillis Homes. ‘When 30 percent of your buyers are subprime buyers, and that market is taken away from you, it has a profound effect.’”

“Even the usually strong submarkets have struggled. Three of the five ZIP codes with the highest average sales dollars for Q3 also registered a decrease in home sales. It’s difficult to figure out what the public is looking for - if they’re even looking at all.”

“During the current foreclosure fiasco, banking is the only industry that has registered an increase in home sales. That anomaly stems from banks being forced to reacquire homes from defaulting homeowners and then sell them.”

“‘After the foreclosure, the bank or other owner of the property can decide whether to auction the property immediately and move on, or hold the property in anticipation of receiving a better price and minimizing their loss,’ said Andrew Gibbs, VP of the Memphis-based financial advisory firm Mercer Capital. ‘I think you’re seeing people make these determinations now.’”

“Indeed, banks made up three of the top five residential property sellers during Q3, with a couple of them seeing more than 200 percent increases from Q3 2006.”

“This is negative for financial institutions, which don’t like to manage such large volumes of ‘non-earning assets,’ or assets that produce no interest income for the bank, Gibbs said. ‘This is particularly an issue in markets where you’ve seen declining home prices and loan structures in which the borrower has little or no equity in the property,’ Gibbs said.”

“Will the housing market rebound? ‘The housing market has slowed some, but in recent months, as can be seen in our third quarter, we feel like it’s stabilizing now,’ said said Keith Grant, president of the Memphis Area Home Builders Association. ‘We can only look up from this point.’”

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