The Housing Bubble

The Contra Costa Times reports from California. “Bay Area home sales sank to their lowest point in about 20 years in September and jumbo mortgages fell by almost 50 percent, DataQuick reported Thursday. Homes purchased with jumbo mortgages, or those over $417,000, dropped from 3,762 in August to 1,935 last month, a decline of 48.6 percent.”

“A total of 5,014 new and resale houses and condos were sold in the nine-county Bay Area in September. That was down 31.3 percent from 7,299 in August, and down 40.1 percent from 8,374 for September a year ago.”

“Contra Costa County also dropped 48.7 percent from 1,784 to 916 while Solano County also dropped 47 percent year-over-year from 606 to 321.”

The San Francisco Chronicle. “A total of 5,014 new and resale homes and condos were sold last month in nine San Francisco Bay area counties — a 40.1 percent decrease from the same period a year ago, according to DataQuick. Last month was the slowest September since the firm began keeping records in 1988.”

“‘A lot of escrows just didn’t close in September because the buyers couldn’t get financing,’ DataQuick president Marshall Prentice said. ‘Some of those sales might close this month or next, but many of the deals are going to be put on hold or die on the vine.’”

“As Marcus Ison moved his belongings into his new townhouse in San Pablo’s Devon Square development last week, he had mixed feelings.”

“His excitement about buying his first home was tempered by a sobering reality: Outside, bright red signs announced that two dozen homes in the development would be sold at auction within days, with starting bids of $250,000, far below the $415,000 he had just paid for his three-bedroom-plus-den unit.”

“‘For the sake of my property values, I’m fairly anxious about the upcoming auction,’ said Ison. ‘I’ll cross my fingers and hope there will be numerous bidders to drive the price up. As a first-time home buyer, this has definitely been a bittersweet experience.’”

“Jeff Lawrence, Northern California regional manager for Watt Communities, which will auction 25 Rohnert Park townhomes Nov. 4, said that while some homeowners are disappointed, many realize it’s to their advantage for the community to be fully sold.”

“‘It’s difficult for homeowners to compete with the builder if they want to sell their home,’ he said.”

The Mercury News. “Sales of newly built homes in California fell nearly 45 percent in August compared with a year earlier, a home building trade group said Wednesday. In Santa Clara County, sales of new homes…declined 38.5 percent from August 2006, according to the California Building Industry.”

“‘Just when we had started to see signs of stability in some markets, the difficulty in gaining access to credit has made purchasing a new home unattainable for many prospective buyers,’ said Jonathan Dienhart of Hanley Wood Market Intelligence.”

“Many prospective buyers are shying away from purchasing now while they watch prices. In many parts of California, including many Silicon Valley neighborhoods, prices are falling. Fewer people are willing to buy when they believe they could get a similar home for less money a few months later.”

“In the Stockton area, for example, just 67 new homes sold in August this year, compared with 202 in August 2006, a decline of 66.8 percent. Statewide, a total of 3,420 new homes of all types sold in August, down 44.7 percent. Of the different housing types, condominium sales were hardest hit, dropping 54.7 percent from August 2006.”

The Press Democrat. “In Sonoma County, home sales plunged 40.8 percent in September, compared to a year ago. Buyers purchased 218 homes last month — about half the number of sales during a typical September and the worst showing for the month since 1991.”

“More buyers are sitting on the sidelines in Sonoma County, wary of purchasing homes as prices continue to fall.”

“‘It’s been very slow all over the place,’ said Joan Picard, president of the Redwood Empire Mortgage Lenders Association. ‘What’s happening is the buyers are waiting for the bottom.’”

“The number for sale in the county has climbed, reaching 2,786 in September. At the current sales pace, there is a nearly 13-month supply of homes for sale, the highest level for the month since 1991.”

“No buyers have made an offer to buy Geoff and Theresa Purcell’s two-bedroom home in northwest Santa Rosa since they put the house up for sale in November. The couple wants to move up to a larger home but must sell first.”

“‘We’ve seen plenty of houses we like. It’s gotten to a point where we don’t even look any more,’ Geoff Purcell said. ‘We’re stuck. It’s gotten pretty disheartening.’”

“The Purcells have lowered their price twice, a total of $34,000. The couple won’t go lower than the $425,000 they now seek because it would be more difficult to afford a larger house. ‘It’s a very tough market,’ Theresa Purcell said.”

“If they can’t sell soon, the Purcells said they likely would take their home off the market.”

The Sacramento Bee. “The summer seizure that gripped the nation’s mortgage markets and made it harder for buyers to find home loans delivered a nasty blow to Sacramento-area home sales during September.”

“Escrow closings for new and existing homes hit a new 2007 low with 2,371 homes changing hands in the eight-county region, according to DataQuick… 603 fewer sales than August’s anemic tally. That compared to 3,558 sales in September 2006 in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties.”

“Sacramento real estate agent Rosanna Garcia attributed the dive to new lender standards that are blocking many would-be buyers. She said a fear of falling prices - ‘how much more are they going to drop?’ - is also keeping many from buying.”

“But the region’s falling prices have opened up a new segment of the market, according to Trend Graphix, a division of Lyon Real Estate. That’s homes priced below $200,000. The Sacramento Association of Realtors reported 9.5 percent of existing home sales in September were priced under $200,000.”

“Sacramento County’s median price for existing homes was $310,000 in September, down 17 percent from an Aug. 2005 high of $374,000. Placer County’s median price for existing homes was $405,000 in September. That’s 20.7 percent lower than the county’s Aug. 2005 price peak of $505,000.”

“The 1,234 escrow closings for new and existing homes in Sacramento County were the lowest since DataQuick began keeping records in 1989.”

The Victorville Daily Press. “In a sign that local developers and homeowners alike are feeling the financial pinch, Hesperia is considering foreclosing on 143 parcels in the Mission Crest development, where some property owners have not paid special taxes.”

“About 50 percent of the parcels facing foreclosure are dirt lots, some with concrete pads, owned by developers Prestige Homes, Beazer Homes and Empire Land.”

“‘The national issue is basically on our doorstep,’ said Brian Johnson, Hesperia’s director of management services in reference to declines in the national housing market.”

The Press Enterprise. “More than 8,100 homes changed hands in Riverside and San Bernardino counties in September 2006, according to DataQuick. A year later, only 3,717 homes were sold, prices are 11 percent lower, and one economist who watches the Inland area said he expects the slump to last into 2009.”

“‘The big problem, of course, is that buyers have no sense of urgency,’ said Steve Johnson, director of Metro Study. ‘No one wants to make a bad decision.’”

“Randall Lewis, executive VP of Upland-based Lewis Group of Cos., which develops new-home communities, said Eastvale developers have been taking more than $50,000 off the prices in some cases.”

“Esmael Adibi, chief economist for Chapman University, said he thinks the slump could last into 2009 and beyond. ‘Two things have to happen for this to be fixed,’ Adibi said. ‘Home prices have to come down more and incomes have to come up, and I don’t see that happening in one year.’”

The Wall Street Journal. “Walking away from a mortgage is almost always a bad idea. You can lose your ability to take out future loans, and you might find the lender coming after your personal assets, such as your principal residence, depending on your state’s laws and the terms of your loan.”

“In some cases, lenders can go after an investor’s other assets to satisfy a loan if the borrower defaults. But that often depends on the loan agreement. Most loans are recourse loans, which means that the borrower’s other assets may be at risk.”

“Partnerships and LLCs are good to ‘protect you against slips and falls on your property,’ adds Jay Adkisson, a Newport Beach, Calif., lawyer, but they offer little protection if a lender requires you to sign a personal guarantee.”

“Mr. Adkisson says he has received about 30 calls a week in recent months from real-estate investors seeking to shield their assets, just as lenders are beginning to chase after them. ‘There’s just an absolute flood of people seeking asset protection, and it’s all after the fact. It’s like buying auto insurance after the car wreck.’”

A report from the Coloradoan. “While it’s no surprise the real estate market is battling with foreclosures stemming from the subprime fallout, some industry experts say the region hasn’t seen the worst of it. For the first quarter of 2007, the Colorado Division of Housing reported 9,254 foreclosure filings in the state, equal to one-third of all filings for 2006.”

“The Genesis Group reports 738 foreclosures for Larimer County in the first half of 2007, on pace for a record year. ‘We have not tightened down our underwriting guidelines,’ said Pete Lansing of Universal Lending Co. ‘There’s not enough appreciation in the market.’”

“With new home sales down 23 percent, builders are regulating their construction with inventory down 26 percent, reported John Gerhard, senior market analyst with the Genesis Group.”

“The slow down in production has created an increase in vacant lots. John Covert of Metrostudy pointed to an almost 60-month lot supply for Larimer County and almost 70 months for Weld County.”

“‘We’ve been completing more homes than closing,’ he said. ‘It has taken awhile for our developers up here to respond to the housing slowdown. It’ll be awhile before we return to that path of growth.’”

The Arizona Daily Star. “A Tucson housing market analyst is projecting a much deeper, longer slowdown than earlier anticipated. In his monthly Southern Arizona Housing Market Letter, analyst John Strobeck said it might not recover until 2010 if inventory levels remain high and the sales pace stays the same.”

“‘It will be at least that long, maybe longer,’ he said.”

“Earlier this year, Strobeck predicted that a recovery might come as soon as the first quarter of 2008.”

“Strobeck’s report, released Tuesday, showed drops of about 20 percent in the number of new-home sales and about 18 percent in the number of existing-home sales in September compared with the same month last year.”

“The median, or middle price, for new homes fell about 8 percent to $235,496 compared with September 2006, according to Strobeck’s report. The median price for existing homes rose by about 3 percent to $206,000, compared with the same month last year, according to the report.”

“The volume of new home permits in September dropped to 286, the lowest monthly number since January 1993, according to the market letter.”

“Strobeck, whose company is called Bright Future Business Consultants, said tighter mortgage-lending standards, a growing number of foreclosures and other financial problems may have a greater impact on the market in the future.”

“‘It will be at least that long, maybe longer,’ he said about the 2010 projection and joked that he is now ‘wearing black all the time.’”

“Tucson-based mortgage lender First Magnus Financial Corp. says it can pay wages to employees laid off before the company filed for bankruptcy, according to a plan filed with the court Tuesday.”

“But other unsecured creditors could end up with pennies on the dollar under the plan.”

“Tucson bankruptcy attorney Matthew R.K. Waterman, who is representing unsecured creditor National Bank of Arizona, said it is too soon to tell how much money will actually be available for unsecured creditors because the company is still determining how much it owes.”

“As a ‘ballpark figure,’ Waterman said he expects creditors to receive around 20 cents on the dollar. ‘I wouldn’t be surprised if it’s substantially less than that,’ he said.”

The Arizona Republic. “If you’re a renter looking for a new apartment, you could be in for some good deals in the coming months. Apartment managers around the Valley are starting to offer rent specials again as occupancy falls and rents increase at a slower rate.”

“The culprit behind the trend, according to brokers and property managers, is a burgeoning number of single-family homes that are being rented out by their owners.”

“Falling home prices and ‘condo reversions,’ or the transformation of apartments that were to be turned into condos now being turned back into apartments, also has had an impact on the supply of vacant units.”

The Associated Press. “A bankruptcy judge this week converted Spectrum Financial Group Inc.’s Chapter 11 case to a Chapter 7 liquidation after the mortgage lender said it lacked the ability to reorganize. Judge Sarah S. Curley of the U.S. Bankruptcy Court in Phoenix signed off on Spectrum’s conversion request Tuesday.”

“A trustee will be appointed to sell off the company’s assets, pursue claims on the estate’s behalf and oversee distributions to creditors. The Scottsdale, Ariz.-based company sought shelter under Chapter 11 on Aug. 28, one of a number of housing lenders to succumb to the credit crunch squeezing the U.S. mortgage industry.”

The Wall Street Journal on Nevada. “During the height of Las Vegas’s real-estate boom two years ago, property investor Rob Rozzen bought 16 homes, hoping that skyrocketing prices would pump up his retirement nest egg.”

“Now, Mr. Rozzen says he is considering filing for bankruptcy protection. As the housing market slowed, the 40-year-old was unable to sell the homes, and his full-time job as a real-estate agent was no longer able to support mortgage payments totaling $45,000 a month.”

“So one by one, over the past 14 months, Mr. Rozzen has stopped making payments on his investment properties, for which he paid between $226,000 and $390,000, and lenders have foreclosed.”

“He says, walking away from his investment properties was his only option. ‘You get to a point where your hands are tied,’ he says.”

“Certain data point to the trend. According to an August study by the Mortgage Bankers Association, defaults on mortgages where the owner doesn’t live in the house are a major driver of the defaults in Florida, Nevada, California and Arizona, four of the states with the fastest rising rates of seriously delinquent loans.”

The Gazette Journal from Nevada. “The Truckee Meadows’ ongoing housing slump has left its mark on the office market in south Reno, according to area commercial real estate firms.”

“Colliers International’s third-quarter report shows cutbacks at Lennar, Centex and other homebuilders have swelled office vacancies in south Reno to what officials believe will hit 25 percent by early next year.”

“Added co-author Kevin Annis, Colliers senior associate, ‘With (vacancy) of upwards of 25 percent, it doesn’t make sense to build.’”

“Don Welsh, VP of office properties at Grubb & Ellis, said his pending report will show the same trends. ‘They (homebuilders) don’t need the square footage,’ he said. ‘So it’s a little bit scary. We could easily be up 25 percent.’”

The Salt Lake Tribune from Utah. “The news just keeps getting worse for home builders along the Wasatch Front, where demand for new homes in September plummeted to the lowest level since 1990.”

“Builders took out permits for the construction of 485 homes locally last month, down from 1,191 in September 2006, according to Construction Monitor. The last time residential building activity along the Wasatch Front was this low was 17 years ago, when builders pulled 396 permits for new housing units.”

“Utah’s real estate market, like many others, is being hurt by tighter lending standards put in place after the nation’s subprime lending debacle. Perhaps an even bigger issue is that several years’ worth of home-price increases, from Ogden to Provo, have put homeownership out of the reach of Utah families whose incomes haven’t kept pace.”

“Laura Murdoch and husband Matt said they have been trying to sell their home in Draper since early July. They have lowered the asking price by $50,000, but ‘barely anyone has even looked at it,’ Laura Murdoch said.”

“The problem is that the Murdochs signed in January a contract to construct a new home, which is scheduled to be finished in three weeks. With no buyer for their old home in sight, the couple is facing the specter of two mortgage payments.”

“The couple is considering further price cuts on the home they are trying to sell. Even better, the couple said, would be if the builder would let them out of the contract of their new home.”

“‘We’re even willing to walk away from our down payment,’ said Laura Murdoch.”

“Builders say the biggest problem they face is fear among prospective buyers. ‘People are afraid to purchase’ a home right now, said Jordan Bangerter, a managing member of Bangerter Homes in South Jordan who also is the first VP of the Salt Lake Home Builders Association. ‘Everybody thinks prices are going to fall.’”

“And that is a concern for a number of builders in the state, who are grappling with high levels of unsold inventories and layoffs. ‘There’s a tough adjustment ahead of us,’ Bangerter said.”

Some housing bubble news from Wall Street and Washington. MarketWatch, “Bank of America Corp.’s third-quarter net income fell 32% from a year ago as trading losses, write-downs on a wide variety of loans and soaring reserves for likely future loan losses undermined profit, financial results showed Thursday. The bank put aside $2.03 billion for loan loss provisions, which are reserves the bank takes to cover loans that are likely to go bad.”

“J.P. Morgan and Citibank, as well as several smaller regional banks, all boosted loan loss provisions dramatically this quarter. The banks also all said that they expect to see rising defaults in the consumer area, specifically with adjustable rate home equity loans.”

“‘The company also added reserves for its home equity and homebuilder loan portfolios in view of the impact of the weakened U.S. housing market,’ was how Bank of America put it in its Thursday press release.”

From Bloomberg. “Bank of America invested $2 billion in Countrywide Financial Corp., the biggest U.S. home lender, in August when the company was running short of cash. Bank of America’s share of total U.S. mortgage originations climbed to 7.1 percent as of June 30 from 5.7 percent a year earlier, Credit Suisse Group analyst Moshe Orenbuch said.”

Dow Jones Newswires. “Bank of America has about $ 2 billion in subprime mortgage loans in its warehouse awaiting securitization. Its pipeline of collateralized debt obligations stood slightly above $1 billion at Sept. 30, said Joe Price, Bank of America’s chief financial officer.”

“Bank of America said it is bracing for higher home-equity chargeoffs.”

“Washington Mutual Inc., the largest U.S. savings and loan, said third-quarter profit fell 72 percent as the company wrote off bad home loans.”

“CEO Kerry Killinger vowed in April to make WaMu’s mortgage unit profitable by year-end, a target that he now says won’t be met.”

“‘That is an unrealistic goal,’ Killinger said in an interview today. ‘Beginning in the third quarter, the whole environment changed to a severe correction, arguably some of the most difficult housing conditions we’ve seen in decades. The challenge for home loans grew much greater than what we could have seen in the second quarter.’”

“The home lending unit’s loss widened to $348 million from $23 million a year earlier. Washington Mutual lost $222 million on the sale of home loans in the third quarter.”

“The company plans to set aside as much as $2.9 billion this year to cover credit losses, up from a previous maximum of $1.7 billion. Washington Mutual may need to earmark as much as $1.3 billion in the fourth quarter to meet this level.”

“Washington Mutual ranked 11th last year among subprime lenders, according to trade publication Inside Mortgage Finance.”

The Seattle Times. “Nonperforming assets, including past-due home loans and foreclosures, grew to $5.45 billion at quarter’s end, or 1.69 percent of all assets. A year earlier, by contrast, WaMu reported $2.4 billion in nonperforming assets, representing 0.69 percent of all assets.”

“‘I have never seen housing credit conditions change so significantly over such a short period of time, nor can I remember a period when there was less clarity about near-term housing and credit trends,’ Chief Financial Officer Tom Casey said during the call.”

“PMI Group Inc., the second-largest U.S. mortgage insurer, estimated a third-quarter loss, as borrowers’ ability to repay their home loans ’significantly worsened’ in September.”

“The cost to bail out lenders is expected to increase fivefold from the same period a year earlier to about $350 million, the insurer said in a statement today. PMI also withdrew its earnings forecasts for the year.”

“‘PMI has the largest Florida exposure of the `big three’ mortgage insurers,’ said Seth Glasser, a credit analyst at Barclays Capital Inc. ‘Loss severity in that state must be accelerating quickly.’”

“Credit-default swaps tied to PMI climbed 38 basis points to 195 basis points, a two-month high, according to CMA Datavision in London. The price of the contracts, used to speculate on the company’s ability to repay its debt, means it costs $195,000 to protect $10 million in PMI bonds from default for five years.”

“Write-offs of mortgages and related home equity loans led E-Trade Financial Corp. Wednesday to report a third quarter loss of $58 million. E-Trade took $187 million one-time provisions in the quarter to cover nonperforming loans. Part of those provisions included some $53 million in charge-offs.”

“E-Trade also wrote down about $200 million in asset-backed securities.”

“E-Trade had some $29.7 billion of mortgage loans that were considered high-quality on its balance sheet by quarter’s end. ‘A lot of people think that subprime loans is where the problems center,’ said Jarrett Lilien, E-Trade’s president. ‘But that’s not our problem. Our issue is that the value of high-quality loans is underperforming.’”

The Associated Press. “Logitech International SA, a maker of computer mice and other peripherals, has become the latest victim of the crisis in U.S. subprime mortgage.”

“The company said Thursday that it will have to write off investments in credit securities of between US$55 million and US$75 million (between €39 million and €53 million) that resulted from ‘unauthorized actions and misrepresentations to management of its treasurer, whose employment has been terminated.’”

From Reuters. “Anworth Mortgage Asset Corp said it realized a loss of about $14 million from the sale of about $904 million worth of mortgage-backed securities in the third quarter.”

“The real-estate investment trust said its unit, Belvedere Trust, might not be able to obtain alternative financing to its repurchase agreement borrowings. Belvedere invests in ‘jumbo’ adjustable rate mortgages.”

“Standard & Poor’s lowered ratings on $23.4 billion of subprime and Alternative-A mortgage securities that were created as recently as June.”

“S&P’s action, in the same year as the securities were created, is its swiftest mass downgrade of mortgage bonds and the first time 2007 bonds have been cut by any company.”

“‘I would suspect that this is just the first downgrade,’ said Joshua Rosner, co-author of a study last month that said ratings companies understate the risks of subprime mortgage bonds.”

“AAA bonds from 2007 that were downgraded include bonds sold by Merrill Lynch & Co., Goldman Sachs Group Inc., Barclays Capital, Bear Stearns Cos. and RBS Greenwich Capital. The cuts were also on second-lien subprime loans, those given for second mortgages.”

“While 2007 bonds don’t have a long payment history, they are already demonstrating similar risks as 2006 securities, S&P said.”

“The downgrades show S&P ‘didn’t have an accurate model for these types of securitized asset pools,’ said John Coffee, Professor of Law at Columbia Law School.”

“Coffee said this latest ratings cut proves S&P’s methodology has been ‘flawed for some time.’”

From Fortune. “‘No one knows what anything is worth.’ Lately I’ve heard that from lots of people. We’re in one of those odd periods when things feel unmoored.”

“Six months ago you knew, or at least you thought you knew, what your house would sell for. Now you probably don’t. The bond market is quaking with fear about the credit crisis.”

“The inventory of unsold and new homes is still extremely high, which suggests that a ‘clearing price’ — a price that buyers and sellers agree upon — has yet to be found.”

“Now it turns out that Wall Street didn’t understand its own mad, tangled creations either. A Bank of England official called the tests that financial firms used to measure the risk of these new products ‘completely hopeless.’”

“In August a Morgan Stanley equity analyst recommended that investors buy the stock of insurer Ambac, which guarantees the payment on billions of dollars of bonds backed by subprime mortgages. A Morgan Stanley fixed-income trader promptly fired off an e-mail calling the recommendation ‘absurd.’”

“‘My analyst has no idea how to value’ the securities Ambac guarantees, he wrote. ‘No one in the world can put a definitive view on recovery levels’ for some of these bonds.”

“In 2004 even the Federal Reserve Bank of New York argued that a chunk of the increase in house prices was justified by the easing of lending standards. ‘The price exists at the pleasure of the financing,’ is how one hedge fund manager put it to me recently. ‘That is true for stocks and houses and bonds and buyouts.”

“But if the financing doesn’t exist, or only maybe exists, then how do you determine price?”

“For asset-backed collateralised debt obligations, no one foresees either a beneficial outcome or a market recovery. ‘There is no future for asset-backed CDOs based on subprime,’ Brian McManus, managing director of Wachovia Securities. ‘The CDO market has never gone back to any asset that has underperformed.’”

“Asked what the next asset class may be to take its place, he replied, ‘It’s unclear to me that there is a next asset.’”

From Business Week. “The megafund that the nation’s three biggest banks are hoping will resuscitate a chunk of the credit markets was initially greeted with enthusiasm. But it isn’t clear how the plan, hashed out in six weeks, will work—a weakness that could undercut its original intent.”

“Part of the problem is the inherent contradictions in the proposal. For one thing, the superfund plans to buy only the best-rated securities from the SIVs, mainly those that haven’t been tainted by subprime.”

“So the SIVs still won’t be able to unload the most troubled investments in their portfolio. It’s a bit like trying to keep a mortally wounded patient alive while harvesting the good organs for transplant.”

“Deborah A. Cunningham at Federated Investors of Pittsburgh, which was involved in the negotiations about the fund as an investor that lends money to SIVs…said the group that created the fund, which is known as the Master Liquidity Enhancement Conduit, is hoping that the fund’s mere creation will provide some comfort to investors.”

“‘The Treasury Department will consider this an extreme success,’ she said, ‘if this is never, ever funded — if it’s never needed.’”

“After a five-year boom in which housing sales climbed to record highs, demand for both new and existing homes fell last year and prices, which had been soaring at double-digit rates, have been stagnant. The National Association of Homebuilders reported this week that its index of builder confidence fell to an all-time low in October.”

“‘Builders are in a panic mode and are trying to catch up with a rapidly falling market,’ said Mark Zandi, chief economist at Moody’s Economy.com.”

“Pulte Homes Inc., the third largest U.S. homebuilder, will hold a Halloween-themed ‘Monster Sale’ this weekend in an effort to clear inventory as the housing slump continues.”

“The three-day sale in Pulte’s 51 American markets will begin Friday, 12 days ahead of the popular, ghoul-themed holiday.”

“‘It’s a weak market and you’ve got to be more aggressive to attract people,’ David Goldberg, an analyst at UBS Investment Research, said in an interview.”

“The five largest homebuilders have written down more than $4.7 billion in the value of real estate and other expenses in the most recent quarter, as customers cancel orders and homes sit unsold in the worst housing market in 16 years.”

“‘If you’ve been dreaming about the comfort of a new home but having nightmares about making the move, why not treat yourself to monstrous savings during The Monster Sale,’ reads an advertisement on the firm’s website.”

“Pulte is offering free appliances and landscaping and 5.875 per cent, 30-year fixed financing, with no closing costs to buyers at its Bailey Commons development in Phoenix, Ariz. Its website shows three houses for sale there, with prices starting at $164,880.”

“In Tampa, Fla., Pulte is reducing prices by $5,000 to $20,000. In Raleigh, N.C., the company is offering $10,000 to $40,000 off homes that close in 2007 and $5,000 to $20,000 off homes that close next year.”

A report from the New York Post. “Mayor Bloomberg provided the answer yesterday to the question that’s on a lot of New Yorkers’ minds: Are housing prices here going to drop? Yes - with an important qualifier - was the mayor’s assessment. ‘I think you can expect real-estate prices to fall,’ he said. He added, ‘We’re part of America and what happens in the rest of the country’s economy is going to have an impact on our economy.’”

“The mayor pointed to new data released this week by the MLS of Long Island, which reported that the median sales price of a home in Queens dropped last month to $446,000 from $480,000 in the same period last year.”

“Jim Walker, a 30-year veteran of the real-estate industry, said prices have indeed fallen in Queens, but not as much as in Nassau and Suffolk counties. Walker suggested the downturn would bring the city’s overheated property market back to reality.”

“‘It’s an adjustment we have to go through because the market was artificially inflated,’ he said. ‘We’ve experienced appreciation [in some areas] of 25 percent a year. That’s not normal.’”

From Newsday in New York. “The number of Long Island homes for sale grew by 7.6 percent, but it was the smallest increase since the boom began deflating in 2006 and houses piled up on the market, according to the third-quarter report commissioned by Prudential Douglas Elliman.”

“Considering that inventory went up by 75 percent two winters ago, the latest figure may be a tantalizing indicator of more stable times. ‘It’s still a little early to see if it’s an upturn,’ said Jonathan Miller, executive VP at Radar Logic, which compiled the report, including data for Queens.”

“Dottie Herman, Prudential’s CEO, saw the slower growth in inventory as a sign that more sellers are lowering prices to reflect reality. ‘Buyers are out there,’ said, ‘but they’re not buying, because they don’t feel the price is right.’”

The Brooklyn Daily Eagle from New York. “Prices were cut on 15 of the 230 new condo projects in Brooklyn within the last two months in neighborhoods like Park Slope, Williamsburg, Downtown Brooklyn and Dumbo, and more reductions could come as thousands of recently-constructed units compete for buyers, according to the New York Times.”

“Absorption rates have also increased, according to David Maundrell, president of Williamsburg brokerage AptsandLofts.com, who said a 55-unit building there may take 14 months to sell out as opposed to eight months a year and a half ago.”

“Greenpoint and Williamsburg have 2,274 apartments under construction and another 9,571 in the planning stages, according to the Times, and Joe Chan, president of the Downtown Brooklyn Partnership, has said there are 14,000 units in the works in Downtown Brooklyn.”

“In Park Slope, Brooklyn Heights and Fort Greene, experts seem to agree that, generally, buyers are gaining leverage in Brooklyn as more units come on the market.”

The Boston Globe from Massachusetts. “Massachusetts will impose some of the nation’s most stringent regulations on the mortgage industry in an effort to curb practices that have led to record numbers of foreclosures.”

“Lenders and brokers will be prohibited from arranging loans that they do not have a ‘reasonable belief’ the customer can repay, using available information about the borrower’s financial circumstances to make that judgment.”

“‘There’s been mortgage after mortgage where there’s clearly been no ability to pay,’ she said, citing one example where a borrower had a monthly income of $1,800 and received a loan with a monthly payment of $7,000.”

“‘It cries out for some reasonableness here,’ she said.”

“‘If these rules were in place five years ago, I think it would have gone a long way toward preventing some of the horror stories that we hear happening in the marketplace now,’ said Representative Ronald Mariano, awho chairs the financial services committee and has helped shepherd the bill.”

The Street.com on New Jersey. “The subprime mortgage crisis that dragged the country’s housing market down this year hit our family’s pocketbook in a big way. How big? We came up $140,000 short of our expectations.”

“Our perceptions of property values during 12 years as homeowners were guided by the unrealistic frenzy of a hot seller’s market. But a surprising development unfolded after listing our home in West Windsor Township, N.J., in April: nothing.”

“We had braced ourselves before listing our house in a sagging real estate market, knowing we’d have to lower our expectations about the sales price. That didn’t stop our stomachs from churning, however, when we finally agreed to a sales price that was substantially lower than where we started.”

“Our desirable town was a hub for corporate transferees, attracted by its top-rated schools and proximity to New York City commuter trains. The nation’s economy wouldn’t affect us as much, we reasoned.”

“The sea of for-sale signs in our community should have been a warning sign. Comparable homes we visited in order to price our own competitively had already been sitting for weeks.”

“Price proved to be what ultimately mattered in this market, as perhaps in any market. The small upgrades that real estate experts suggest owners make to enhance a home’s appeal were also irrelevant. Prospective buyers didn’t seem to notice the shiny cabinet hardware or new ceiling fan.”

“The most difficult part of selling was absorbing how quickly and drastically the market was falling, from soft in April to historic lows within a few months.”

“Our home’s value peaked at over $800,000 in 2006, nearly twice what we paid seven years ago (even we had commented on the absurdity of the home being worth so much). In that context, letting it go in the high $700,000s seemed fair. But we lowered the price another $25,000 after a few weeks passed with just a trickle of interest.”

“The process wore us down, enough to tolerate a second price reduction, down to $749,900. But interest, not offers, was all we attracted as the ‘resale inventory’ (other homes for sale in the same price range) ratcheted up to 15 in our community.”

“Some neighborhood houses, meanwhile, finally sold in the $680,000 range, the first scary indication that we’d have to let the house go for less than we imagined. Our bottom line sales price of $725,000 was slowly slipping away, we realized, as we lowered the price yet again.”

“The chance to unload our house, for $650,000, finally arrived in August. Even our buyers claimed to be hurting, falling stock prices consumed a chunk of their anticipated down payment, necessitating a low offer, they said.”

“We’ve moved on, to a different state with lower property taxes and real estate values. Friends who asked if we bought a bigger house were surprised that we did not, another choice that helped us make the most of the cash that we managed to net from the sale.”

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