The Housing Bubble

The LA Times reports from California. “Home values are expected to drop next year for the first time in more than a decade and sales will remain slow as California’s housing market continues to languish, the the California Assn. of Realtors predicted today. Leslie Appleton-Young, the state Realtors group chief economist, warned that even higher-priced markets, including Los Angeles, Orange County and the Bay Area…will start to show signs of stress, though to a lesser extent.”

“‘Higher-priced regions of the state will react more to affordability constraints,’ she said. Appleton-Young declined to offer any predictions for the state’s housing market beyond 2008.”

“In August, the Realtors group found that there were so many existing, single-family homes for sale in California that it would take 11.8 months to deplete the supply if no additional houses came on the market.”

“‘Now is not the time for homeowners to ‘test the waters.’ Only serious sellers should put their homes on the market in what will continue to be a challenging sales environment,’ said association President Colleen Badagliacco.”

The Orange County Register. “Many agents gathering Tuesday for the first California Association of Realtors convention in Orange County in eight years said their business has suffered.”

“‘Doubt,’ Corona broker Paul Catapang said describing the disposition of fellow agents. ‘Fear of the unknown. You don’t know what’s around the corner.’”

“Anaheim’s gathering isn’t as joyous as past conventions held during the heady days of the boom market, said Enrique Lizarazu of Lizarazu and Associates in Pasadena. ‘The party’s over,’ he said.”

The Orange County Business Journal. “Newport Beach-based savings and loan operator Downey Financial Corp. says bad loans will bring a $23 million loss for the quarter.”

“Downey said it would make an $82 million provision for credit losses. Downey said delinquencies and foreclosures were highest in Sacramento and Stockton and in San Diego County.”

The North County Times. “The number of single-family detached homes sold in North County declined from 613 in September 2006 to 398 last month, a drop of more than 35 percent.”

“The median for detached homes in San Diego County as a whole fell by 2.6 percent, to $550,000, compared with a year ago, according to the monthly North San Diego County HomeDex report.”

“In a softening market, changes in sales volume can sometimes foreshadow changes in price.”

“‘The median price doesn’t tell the whole story,’ said Robert Brown, an economics professor at Cal State San Marcos who compiles the report for the association. ‘Sales volume in the midrange has fallen dramatically, with some strength at the high and low ends.’”

“For example, sales of detached homes between $500,000 and $600,000 have been cut in half over the last year, he said.”

“Mark Oatman, president-elect of the North San Diego County Association of Realtors, said the report shows that there is some pressure on prices to fall further over the next few months.”

“‘Because of signs of lengthening time for a sale, people may be motivated to reduce their sales prices a bit,’ said Oatman.”

From MSNBC. “Delia Toothman once pursued the American dream of owning her own home. Now, she is living the American nightmare.”

“In just three years Toothman, a former Navy officer in San Diego, went from $18,000 in savings to $16,000 in credit-card debt. She once lived in a home she co-owned; now she lives in her father’s garage.”

“‘I feel like my life is ruined,’ she said in an interview, wiping away tears. ‘I only wanted a house. I wanted my own property.’”

“She left the Navy in 2004 and returned to San Diego at what turned out to be the peak of the city’s real estate boom. Fearful of missing out, she and her younger sister decided to buy a home together. ‘We just wanted to get a piece of land, something we could own, so we weren’t paying rent; we were buying,’ said Toothman.”

“Any talk of a housing bubble was dismissed.”

“‘I got pressure from the real estate agent and officer,’ Toothman said. ‘The loan officer was saying, ‘Oh, prices always rise on houses.’ … The thing, is get into the house and I can always refinance you after that into another loan.’”

“‘If you’re renting, you’re losing this much money, but the way housing prices are going up, it’s really a good investment and you get your money back in taxes,’ recalls Toothman. ‘I was convinced it was a good thing.’”

“In late 2005, Toothman decided to sell. But prices were already falling, and by early 2006, the condo was worth less than the outstanding balance of the mortgage, putting her ‘under water.’ Toothman’s real estate agent found a buyer who offered $350,000, $65,000 less than what was owed.”

“The only way she could sell was if the two lenders agreed to a ’short sale.’ The principal lender, Countrywide, agreed, but Wells Fargo, which held a second loan worth $82,000 rejected the terms because the lender would have gotten only $10,000.”

“Then the agent found another buyer, who also offered $350,000. This time, Countrywide said yes if Toothman would come up with another $10,000 to pay Wells Fargo more. But Wells Fargo declined the offer.”

“‘They figured I would make more money eventually, and they could take it out of me,’ said Toothman, ‘because if they agreed to a short sale, then they had no (legal) recourse to come after me for the $82,000.’”

From ABC 7. “Bay Area homeowners barely hanging on because of the mortgage crisis, turned-up on the doorstep of one of the country’s biggest lenders on Tuesday. The community activist group ACORN demonstrated outside Countrywide’s San Bruno office. Countrywide responded by locking its doors.”

“One of the protestors is Esthela Baldovinos who got her sub-prime loan through countrywide three years ago. ‘Nice opportunity to get a loan with no down payment,’ said Esthela Baldovinos.”

“She’s a single parent with nine children and she cleans homes for a living. Baldovinos bought her house with no money down and an adjustable rate loan starting at six and a half percent interest. It’s now up to almost 12 percent, making the monthly payments impossible. She’s called Countrywide for a loan modification.”

“‘They said I have no options. They want me to put the house for sale or short sell or just leave the house,’ said Baldovinos.”

The Santa Cruz Sentinel. “Has the bubble burst? That’s the question some people are asking, now that the Santa Cruz County median single-family home price dropped 8.8 percent in September, falling from $770,000 to $702,500.”

“Take a look at the other vital statistics for September, compiled by Gary Gangnes of Real Options Realty. Sales: 88 single-family homes — 11-year low. Listings: 1,337 — 11-year high. Unsold Inventory Index: 15 months. Of course, one month is hardly a trend. The drop could be an aberration. Could the market be poised for a rebound?”

“Gangnes isn’t sure. ‘Whether this month’s unsold inventory [index] is a trend or a spike remains to be seen,’ he said.”

“Watsonville repeats as the area with the highest index, 37 months, compared to 30 months in August. ‘Watsonville is getting hammered,’ said appraiser Bruce McGuire, calling it the fourth down cycle in his 32 years in business. ‘Every seven to 10 years, we go through a correction, then it starts up again.’”

“Foreclosure statistics show no letup as a steady stream of homeowners are missing mortgage payments and receiving default notices. According to the Santa Cruz Record, default notices have gone out this year to 664 homeowners in Santa Cruz County, 437 in San Benito County and 1,939 homeowners in Monterey County.”

“A total of 884 homes have been sold at foreclosure sales in the tri-county area, with the bulk of them in Monterey County.” “Michael Blomquist, formerly of Michael Scott Properties in Los Gatos, blames the rash of foreclosures on unconventional subprime loans, where interest rates adjust upward after two or three years.”

“The ‘most dangerous,’ Blomquist said, are the option ARMs, which have an introductory interest rate of 1 percent or 1.25 percent and an actual rate is 7.5 percent or 8 percent.”

“‘All sorts of sellers are in these products and their loan balance is growing $4,000 a month,’ he said.”

“Blomquist said he closed his mortgage office in 2004 rather than take the risk that lenders would require him to buy back loans made under false pretenses.”

“Aptos accountant Patricia Beckwith hailed the falling median. She had given up house-hunting in April because she felt asking prices were too high. ‘I decided my son and I deserve better than 800 square feet for $3,000 plus per month,’ she said.”

“‘Given the fallout of the mortgage industry, and the number of foreclosures, which I believe is just the tip of the iceberg, prices will adjust back to normal,’ she said. ‘I am willing to wait.’”

A report from the Oregonian. “In the hot real estate summer of 2005, the futuristic John Ross tower generated a buzz never seen before in Portland. Within a week, 222 potential buyers plunked down $5,000 or more to reserve their condos in the 31-story tower on the Willamette River. The talk around town was that developers couldn’t build new big-city condos fast enough to keep up with downsizing baby boomers and newcomers. But two years later, the condo boom is over.”

“Today, the John Ross has seen so many canceled purchases that developers actually have fewer buyers — 192 — than they did two years ago.”

“The city has a condo glut, and thousands more are rising out of the ground. In the past six years, developers built 4,042 downtown condos, more than twice the figure from the previous 30 years. Today, developers have nearly 2,114 condos under construction.”

“Two towers already switched from condos to apartments. Other projects were shelved, and construction has stalled on smaller projects from Beaverton to Northeast Portland.”

“Developers of The Civic had deals to sell all but eight condos. But cancellations pushed that figure to 37, a higher rate than normal.”

“Nelda Newton, a senior VP at Wells Fargo…acknowledges that current condo sales can barely keep pace with cancellations. ‘That’s not great,’ said Newton, who led Wells Fargo’s lending for several downtown projects. ‘There’s no great way to slice that, put a positive spin on that.’”

“By early this decade, the city was gripped with full-blown condo fever. Construction cranes could be seen swinging over new towers from the Pearl to the South Waterfront. The condo craze meant developers nearly sold out buildings during construction. They staged lotteries to handle the sales rush.”

“Condos in the early 1990s went for about $120 a square foot. Today, prices sometimes are far above $500. But the hype is now on hold.”

“‘Definitely the brakes just kind of went on,’ said architect John Holmes, lead designer of the 937 tower in the Pearl. ‘The buyers aren’t there.’”

“Recently, developer Bob Ball shocked the industry when he converted the $50 million Wyatt building under construction in the Pearl to rentals. Before the switch, Ball said he’d cut prices and still sold only 53 units, just 21 percent of the total and barely half his goal.”

“‘The problem wasn’t with the Wyatt,’ Ball said. ‘It was the overall change in the market. We just have too much supply on the market.’”

“Bob Scanlan, whose real estate company invested in the John Ross, says sales are so slow in that tower that he expects his returns to be cut in half. The 303-unit building is almost two-thirds sold…far below initial expectations.”

“Even sales that developers thought were in the bag have fallen through in growing numbers. The Civic, the West Burnside Street building marketed to young first-time buyers, got hit by canceled pre-sales. Gerding Edlen Development Co. still has Civic condos to sell. But it is competing with about 20 of its own customers who are reselling just months after they moved in. So many units were for resale that real estate brokers for a time resorted to attaching lockboxes holding house keys to the building’s bike rack.”

“Scott Byer bought an eighth-floor condo for $250,000 and tried to flip it for $310,000. Like other resellers, Byer dropped his price, to $269,900 last week. But he got few lookers, and no offers.”

“Still, real estate insiders remain confident about the long-term future. They say Portland is immune from the downturn that’s infected other big cities. ‘It’s steady as she goes here,’ Scanlan said. ‘There’s no reason to panic.’”

“Dirck Lowe hasn’t found condo sales to be so vibrant. Lowe bought into the John Ross at the peak of the frenzy. In summer 2005, he went online to reserve one of the 20-minute slots with a salesperson. Lowe (and) his wife owned a 3,000-square-foot house in Milwaukie.”

“‘We thought this would be a fun, upscale New Yorkish condo,’ Dirck Lowe said of the 21st-floor unit. He later put down about $20,000 to reserve the 790-square-foot condo.”

“In 2006, Lowe took a new software job and moved to Long Island, N.Y. He closed on the $371,000 condo this summer when construction finished, then put it up for sale at $399,000. He joined a crowded market. Developers already have 1,000 new units for sale just in 16 downtown high-rises, according to Todd Prendergast, one of the city’s top condo sellers.”

“After just two showings and not a single offer, Lowe is considering renting the unit. ‘It’s quiet,’ said his real estate agent, Jonathan Heins. ‘Anybody that says it’s booming, it’s not.’”

The Idaho Business Review. “If there’s one place where a declining housing market might be good news, it’s Valley County. Real estate prices in small towns like Donnelly and Cascade shot up when Tamarack Resort was built and the cities made the abrupt transition from speck-on-a-map status to resort community.”

“Home prices have dropped by about $20,000 to $30,000 in recent months, said Carol Amburgy, the broker and owner of Idaho Mountain Properties.”

“That’s still not enough to serve all the people who need affordable homes in the area, Amburgy said. An average family making $50,000 can afford roughly $174,000 for a home, she said. There are currently 13 listings in Donnelly, Cascade and McCall between $150,000 and $175,000.”

“‘Most of those are old fixer-uppers not on a foundation or they’re old trailers,’ she said.”

“But the price drop frustrates developers like Karl Bonar, who is developing a 65-acre, 128-lot project in Cascade called River Woods. Homes in River Woods will range from $150,000 to $500,000, Bonar said, but the low end of the range is required by the city of Cascade. That means 15 percent of the homes they build must be priced from $150,000 to $170,000.”

“Bonar said he knows of eight affordable units that are sitting on the market. ‘Nobody wants them,’ he said. ‘The builders are sitting there paying for them…. Qualified families aren’t taking them.’”

“Falling home prices have put some market-rate homes in the same price range as the affordable homes developers have to build to meet city code, Bonar said.”

“Some homes priced up to $250,000 have dropped to $200,000 to $210,000, said Michael David, executive director of Valley Adams Regional Housing Authority.”

“But that doesn’t take care of most middle-income people, he said. ‘You have to make $70,000 to afford a $210,000 home.’”

“Moreover, middle-income families are hurting more than ever because the lending environment has tightened, he said. Thanks to stricter mortgage requirements and the overall housing market, many people are hesitating to buy real estate at any price.”

The Pioneer Press reports from Minnesota. “The hilltop trophy house in Stillwater, built in 2003, was once valued at $1.4 million. But $729,000 will start the bidding on it at a mass foreclosure auction this month. The house is among 325 bank-repossessed homes from across the Twin Cities headed to the auction block in one of the largest foreclosure auctions in many years, observers say.”

“‘Lenders aren’t in the business of holding property,’ said Michael Schack, senior VP of the company running the Minneapolis auction.”

“Of course, it’s not the first time banks have bid for buyers en masse in slow markets. Schack’s company has been around since the 1990s, when it auctioned off houses after the savings-and-loan crisis in the late 1980s, Schack said.”

“It ‘went dormant,’ he said, after 1997, until last January when lenders sought it out again. He expects swift business for at least the next two years.”

“The 325 homes it’s auctioning in Minneapolis are just a fraction of the record 34,800 homes for sale in the Twin Cities, where foreclosures have been rising steadily for years. This year, more than 8,000 homes in the seven-county metro area have gone into foreclosure and been sold in sheriff’s sales.”

The Journal Sentinel from Wisconsin. “This year’s building permit volume is running about 22% behind last year, MTD Marketing Services of Wisconsin Inc. reported Monday. ‘Builders are busy, but not as busy as they could be,’ said Bruce A. Johnson, president of the Metropolitan Builders Association of Greater Milwaukee.”

“Average prices are rising, to $326,755 in September, not counting the building lot, because today’s buyers, though fewer, are commissioning bigger, more expensive homes, said Matt Moroney, executive director of the builders association.”

“‘My educated guess is that prices are at last year’s levels or a little below - maybe five percent,’ Moroney said of overall prices.”

“Three builders, whom Moroney would not name, have gone out of business this year, he said.”

“MTD’s report shows that much of Wisconsin shares the nation’s housing sales and price slump, the backlash from speculative and lending excesses during the 2001-’05 boom. All markets it tracks - metro Milwaukee, metro Madison, Racine-Kenosha, Jefferson and Walworth counties, the Fox Valley and Green Bay - have shrunk this year by varying volumes.”

“Many would-be deals have been delayed or dashed by contract contingencies from buyers who want to get their old place sold first and see what price it fetches, said builder-developer Scott Simon in Brookfield. ‘They’re hesitant,’ he said.”

The Flint Journal from Michigan. “Kevin and Kassie Gast listed their four-bedroom home in Grand Blanc’s tony Kirkridge Hills subdivision last July for $267,000.”

“When it didn’t sell in three months, they repainted and recarpeted, and lowered the price to $230,000, then to $220,000 and again to $203,000. Finally, in July they slashed it to $199,000.”

“No luck yet. ‘I haven’t received a single offer,’ said Kevin Gast, who moved from the area with his family to work.”

“Gast might have to lower his asking price even more to compete in today’s local housing market. During the past year, the average sale price of homes has dropped in every school district in Genesee County, according to a new survey by the Flint Area Association of Realtors.”

“There are more than 8,000 homes for sale across the county, a number that’s been climbing by about 1,000 each year for the past three years. Real estate agents say a whopping 45 percent of area homes for sale are foreclosures, the bulk of them in Flint. Agents said banks are accepting offers so low they are driving down the price of other homes.”

“Gast said he’s willing to take a hit in the pocketbook just to unload his 2,800-square-foot home, which he bought seven years ago for $215,000.”

“‘This was going to be the one house I’d make money on. I knew it for a fact,’ he said. ‘I couldn’t predict the economy was going to hell. Now I know I will take a loss. I’m just trying to mitigate how much of a loss.’”

“In the meantime, he’s paying two mortgages and double taxes, with no end in sight.”

The Chicago Tribune from Illinois.”Deb O’Dell has been renting since her divorce several years ago. ‘I initially did feel that I had missed the housing boom,’ she says admits of her first years in the two-bedroom 1,200-square foot Oswego home.”

“But now, with home sales slowing and foreclosures swelling, O’Dell says, ‘I’m kind of relieved I didn’t buy because I would be tied to a mortgage I couldn’t afford.’”

The Journal World from Kansas. “Fewer homes are being sold and at lower prices than last year in Lawrence, leaders of the Lawrence Board of Realtors said Monday.”

“‘Buyers are a lot more careful here, but it’s nowhere near the stories I’m hearing when I talk to my cohorts in other parts of the country,’ said August Dettbarn, the county’s appraisal manager. ‘I have a friend in California, and some of the horror stories he tells are really, really scary.’”

“Through the first nine months of this year, Dettbarn shows that 1,271 single-family homes have been sold in Lawrence and North Lawrence. That’s down 296 — or nearly 19 percent — from the 1,567 sold through September 2006.”

“The median price in Lawrence is down less than 1 percent so far this year; in North Lawrence, which is tracked as a separate market by the appraiser’s office, the median is $122,500, down 3.5 percent. Some high-end homes in certain pockets of Lawrence are pushing two years on the market, Dettbarn said.”

The Business Journal from Missouri. “The number of loft apartments in downtown Springfield is expected to nearly double by 2012 – and there likely will be people to fill them, according to an urban housing study.”

“About 11 percent, or 28,848, of the Greene County population resides downtown, according to the study. That’s down from about 15 percent in 1990.”

“More attention from older buyers, namely ‘empty nesters,’ is the reason why local lenders aren’t too worried that increasing foreclosure rates both locally and across the country will hurt downtown loft-buying activity, Great Southern Bank VP Brian Fogle said.”

“‘When we were looking at the housing market five years ago, we had a lot of anecdotal demand for housing,’ Fogle said.”

The Daily News from Missouri. “Despite reports of a national housing crisis, several local lenders and Realtors didn’t feel there was such a crisis in Neosho. To them, the local housing market is business as usual, although at a somewhat slower pace.”

“‘What we’ve learned is that the homes that are priced within the market value are seeing good activity,’ said Steve Kenny with Red Carpet Realty. ‘Homeowners who insist on pricing properties at three years ago market conditions are not seeing this type of activity. The market is much more sensitive to accurate pricing and good marketing.’”

“‘In an inflationary market for housing, as long as it’s going good, things are jim dandy,’ said Pat Youngblood, owner of At Home Mortgage ‘As long as it works, they’re as happy as a clam at high tide. We hit this cap, and prices started falling off. When that happens, you’ve got people making the choice of buying gas to get back and forth to work, buying food to feed their families, or making an extra $300 or $500 a month house payment. It’s easy to see what the choice is.’”

“‘What caused this thing? It all boils down to one word: Greed. Wall Street decided they had all of this flood of money they wanted to put out, and what better than real estate?’ Youngblood said.”

“Youngblood has been in the lending business since 1967 and said the bursting of the housing market bubble is something he has seen many times before.”

“‘I can’t tell you how many times I’ve gone from the top of the hill to the bottom of the valley,’ he said. ‘It seems like every few years, somebody says it’s time to shake up the industry, there’s too much greed, someone is making too much money and it’s time to slap them down a little bit.’”

“Steve Kenny tended to echo these sentiments. ‘The national lenders got exactly what they asked for,’ Kenny said. ‘In the overall scheme of things, this is a necessary correction. It’ll mean less foreclosures, better pride of ownership, and a more stable housing market in the long run.’”

“Richard Clemons, owner of Spiva Realty, sales of homes priced above $200,000 are sluggish. This can be seen in areas such as Northwest Arkansas, where homes priced at $500,000 to $750,000 sit vacant.”

“‘The builders went wild on that end,’ Clemons said. ‘I don’t care how much money you make, there’s only a finite number of people who can afford three-quarter of a million dollar houses.’”

The Democrat Gazette from Arkansas. “Home sales in Arkansas for August continued a 20-month decline, dropping 14 percent from a year earlier, the Arkansas Realtors Association said Tuesday.”

“Northwest Arkansas’ market continued to deflate as Benton County sales of previously owned and new homes were off more than 26 percent. Sales dropped more than 17 percent in Washington County.”

“‘On the new-home side, there has been more [downward ] movement in price. With existing homes, people are less willing to give up their perceived gains,’ said Jeff Collins, a partner with Streetsmart Data Services of Northwest Arkansas.”

“Developers are being forced to lower prices to get some sales, Collins said. ‘If you have an inventory of a half-dozen [speculative ] houses, you’re saying, ‘Well, I’ve got to at least move one,’ Collins said. ‘So they’ve been more willing to move prices. You almost can’t get a spec house loan in Northwest Arkansas now. It is very unlikely you can find a lender to finance a spec house.’”

“The average home price increased in August for the 24 th time in the past 25 months, but that’s misleading, Collins said. The reason, he said, is that very high-priced homes, in ritzy areas like Chenal Valley in west Little Rock or Pinnacle Hills in Rogers, continue to sell well.”

“‘That [high-priced ] market hasn’t gone away,’ said Collins. ‘There are not that many homes that are sold at those price points, but there are enough of them — and others at very high price points — that it skews the average price.’”

“The median price of homes has declined in recent months, Collins said. The Arkansas Realtors Association doesn’t release median prices. Multiple-listing services in the state also compile median prices but likewise do not make them public.”

“Pat Harris, president of Harris-McHaney Realtors in Rogers, (believes) the housing market in Arkansas will begin to turn around next year. ‘It’s not going to jump back to 2005 levels,’ when home sales set records in Arkansas and the country, Harris said.”

“‘It may be at 2003 levels and back to where we have been before,’ Harris said.”

A report from the Tennessean. “Homes sales fell 25 percent in September — their sharpest drop since 1991, but prices edged up slightly, a sign that sellers are continuing to hold out for higher prices despite a dramatically slower market. Richard Courtney, the Greater Nashville Association of Realtors’s president, said in a statement that sales may have been deflated by buyers’ looking for better deals.”

“‘It may be that potential homebuyers are waiting for the market to get better so they can save money, and that’s simply not the case,’ he said.”

“But appraiser David Lafferty said that it’s sellers who are holding firm, refusing to budge from their prices amid the slower market.”

“‘It depends on your inclination to sell: Do you really need to sell your house, or do you want to put it out there at a high price and it not?,’ he said.”

The Outer Banks Sentinel from North Carolina. “Dare County has felt the crunch of a sluggish real estate market for the past 12 months evidenced by land transfer fees down more than 34 percent.”

“Adding to the financial squeeze is a 78 percent increase in the number of foreclosures in the county. Between Aug. 31, 2005 and Aug. 31, 2006, there were 217 foreclosures. From Aug. 31, 2006 to Aug. 31, 2007, the number jumped to 387.”

“The increase is startling when compared to the percentage increase across the state which is 7 percent.”

The Morning Call from Pennsylvania. “The average price of an existing home in the Lehigh Valley fell last month for the third time this year, while the number of homes sold fell for the 16th consecutive month.”

“At the same time, the number of homes coming on the market rose 11 percent in September, according to statistics from the Lehigh Valley Association of Realtors.”

“September’s results show a strong continuation of the slowing trends that began last year. The outsize increases in prices and the fast pace of sales that became common during the boom years of 2004 and 2005 are now a thing of the past.”

“‘It is not like a perishable good. If you don’t sell your home, it will not go bad,’ said Bethlehem economist Kamran Afshar. ‘If you are not selling, [the price change] is a paper change.’”

“Experts have also said the slowing market has provided a needed correction to the excesses of the boom years, in which buyers had little power to negotiate. The large number of homes listed for sale this year has provided prospective buyers with lots of choices, and the ability to reject many of the properties they see.”

“According to LVAR, which does not distinguish between new listings and relistings, the number of homes listed for sale in the first nine months of the year, 13,915 homes, has surpassed the amount of new listings in all of 2005.”

“The lull in sales and the slower rate of price increases comes after blockbuster years in which low interest rates and an influx of people from New York and New Jersey brought new buyers into the market and sent prices soaring. Last year was the fourth consecutive year that prices for existing homes in the Valley climbed by double digits.”

“Some real estate agents say the influx of buyers from the east has begun to slow. That’s because homes in New York and New Jersey are sitting on the market longer, and high gas prices and the lengthy commute are deterring some prospective buyers.”

“Now a tightening of borrowing standards has served only to further reduce the relatively small pool of buyers in the market. As foreclosures have increased, buyers with shaky credit histories are no longer qualifying for mortgages.”

“Sellers can no longer be reluctant to accept offers or reduce prices,’ wrote Jeffrey Burnatowski, a real estate agent in Allentown. He added, now is ‘not the time to hold out for the ‘best’ price possible.’”

The Express Times on Pennsylvania. “Home sales in the Lehigh Valley continued to decline in September while prices slipped, according to a report released Tuesday by a real estate group.”

“The September results seal a summer that, compared with the prior boom years for the once-hot housing market, failed to sizzle. According to the Lehigh Valley Association of Realtors, 554 home sales were recorded last month. That’s 18 percent fewer than September 2006.”

“Add up July, August and September and the summer months posted a 15 percent decline in sales from the same period in 2006, according to LVAR figures.”

“‘This is a significant correction,’ said Kamran Afshar, a Bethlehem-based economist.”

“Afshar noted that sellers are not rushing into the market like years past. For the past three months, LVAR’s new listings rose 5 percent from last year to 4,559.” “‘It’s still a high number but not anything resembling euphoria,’ Afshar said. ‘It seems the euphoria is out of this market.’”

“Prices also declined a bit, a contrast from prior months where prices rose slightly even as total sales declined.”

“‘For the majority of people, it has no effect,’ Afshar said. ‘For those who are looking to buy, this market has become a lot more interesting because things are a lot more flexible now.’”

“Other data revealed in LVAR’s monthly report indicate that homes are taking longer to sell and pending sales, an indicator of future activity, are down. The agency listed 392 pending sales for September, down 30 percent from 560 in the same month last year.”

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