The Housing Bubble

The Tribune reports from California. “With San Luis Obispo County home sales for September plunging to their lowest level in 18 years and the median price dipping below $500,000 last month, economists and local real estate experts say it may be several years until the housing market begins to gain strength. The most recent figures from DataQuick show that show that sales of all homes declined nearly 28 percent from the previous year.”

“That’s the lowest September sales on record since DataQuick began keeping such statistics in 1989. Single- family home sales plummeted 37.3 percent from the previous year. The median price of all homes declined last month to $495,000, an 8.2 percent dip from the previous year when the median stood at $539,500.”

“The median for new home sales decreased 16.3 percent from the previous September.”

“‘Where’s the bottom? That’s the same question people were asking when we saw homes appreciating. They wanted to know how high will it go,’ said Keith Byrd of Century 21 Hometown Realty. ‘Where prices are going now is anybody’s guess. But there is room where we will still see a correction. I don’t see anything right now that will bring the buyers out.’”

“As of Oct. 1, the county had about 14.8 months of inventory. That’s up from 8.1 months in early July, Byrd said.”

The Napa Valley Register. “In Napa County, the number of foreclosures doubled in the third quarter of 2007 to 90 homes, compared to 45 in 2006. In Solano County, the number jumped by more than 700 percent in the same period, from 63 foreclosures to 473, according to the Solano County Tax Assessor’s Office.”

“About two years ago, said Calistoga Mayor Jack Gingles, he signed up for a subprime loan with 11 percent interest for two Calistoga properties his family members owned. ‘I had to come up with half a million dollars in two weeks,’ Gingles said. ‘I needed it pronto.’”

“The loan payments totaled $7,000 a month, Gingles said. The loan, he said, ‘bought me about a year.’”

“He tried to refinance the properties in April to lower his interest payments, but credit requirements had tightened and he couldn’t secure a better loan. Within four months, Gingles’ properties were in foreclosure.”

“They were scheduled to be sold this month on the steps of the Napa County Superior Court before a buyer finally came along, said Gingles, who considers himself fortunate.”

The Recordnet. “According to RealtyTrac, there were 1,932 home foreclosures in San Joaquin County the first nine months of this year.”

“Rosa and Alex Lejis lost their Manteca home to foreclosure earlier this year because they were facing insurmountable payments from an adjustable rate mortgage reset two years after buying.”

“Already struggling to make their $3,200 monthly mortgage, Rosa Lejis said, they were looking at monthly payments as high as $4,000. ‘We counted on being able to refinance,’ she said.”

“The house for which the Lejises paid $500,000 in May 2005 is now on the market recently as a foreclosure property for $299,000.”

The Modesto Bee. “Too many new houses. Too many investors. Too many exotic loans. They created a lethal mix that caused the Northern San Joaquin Valley’s housing market to soar, then crash into a painful collage of foreclosures, unsold homes and financial woes.”

“That’s the consensus of experts who try to explain why home values and sales have fallen so far and so fast in Stanislaus, San Joaquin and Merced counties.”

“The region’s homeowners were living large in 2005. Their houses had tripled in value in less than a decade. Developers couldn’t build houses fast enough. They sold more than 47,000 homes from 2001 to 2005 in cities throughout the three counties.”

“My, how times have changed: 2007 will be remembered as a brutal time for real estate in the valley. The three-county region has become America’s foreclosure capital.”

“In Modesto, about 2,400 houses and condos are for sale, nearly six times more than in spring 2005. Because only about 50 Modesto homes have been selling per week this fall, sellers are finding it extremely difficult to attract buyers without significantly dropping their prices.”

“Developers have sliced new home prices repeatedly, often by $100,000 or more, to unload their finished-but-empty inventory. Home auctions are becoming commonplace. Sale prices have plummeted 10 percent to 41 percent since the fall 2005 peak, depending on the city.”

“Atwater’s median home sales prices have plunged 41.6 percent since the peak. This weekend, Pacific Union Homes dropped the price $140,000 on one of its new Claremont Reserve homes. That 3,144-square-foot, five-bedroom house is now $352,310.”

“Prices are way down in Salida, too. The median peaked at $415,000, but was at $277,000 in September, a 33.2 percent drop.”

“‘It’s not rocket science, really. We just have an oversupply of homes,’ said Modesto builder Mark Wilbur. ‘As builders, clearly we overbuilt.’”

“‘The math just doesn’t work. We’re completely at a loss for what to do,’ said Summer Wolfe, who bought a new $439,000 home in Patterson two years ago at the peak of the market, using an adjustable-rate mortgage with no money down. ‘We thought that if we didn’t buy then we’d never be able to because prices kept going up,’ said Wolfe.”

“But their home recently appraised for only $315,000, a 28 percent decline. Their monthly payments, meanwhile, are rising as their mortgage interest rate adjusts. That rate could double within two years, increasing their mortgage payments $1,400 a month. ‘We’re just stuck,’ Wolfe said.”

“So are thousands of other homeowners throughout the region.”

The Fresno Bee. “More than 1,800 homeowners in Fresno County joined a record number of Californians entering foreclosure last quarter, according to DataQuick.”

“‘Talk about equal opportunity,’ said David Mendoza of the Community Housing Resource Center in Fresno. ‘Everything from very low-income housing to estate homes are being foreclosed upon.’”

“‘I saw one the other day where the [house] payment went from $1,500 a month to $2,300 a month. It was a big reset and they didn’t have the money,’ said Riley Walter, a bankruptcy attorney in Fresno.”

“Walter, like Mendoza, said families from all income levels are affected. ‘I’m learning the names of streets near Woodward Park I didn’t know existed,’ he said.”

“How prevalent is it? Mendoza said one lender he knows is issuing 400 new default notices every Tuesday.”

“In August, the median sales price of a new home in Fresno, Kings, Madera and Tulare counties was down 7.6%, and the number of houses finished and unsold or within 30 days of being done and unsold in those counties totaled 395, up 145.3% from a year earlier, according to Hanley Wood Market Intelligence.”

“‘August was particularly bad,’ said Jonathan Dienhart, director of published research.”

The Press Enterprise. “The trophy house has lost its luster. With McMansions being conspicuous casualties in a mountain of foreclosures and unsold homes, builders who during the past decade sold ever larger status-symbol homes are preparing to reverse course.”

“‘The next round of development will absolutely be smaller homes,’ said Alan Nevin, chief economist for the California Building Industry Association.”

“Steve Ruffner, president of KB Home’s Inland Empire division, said whereas KB Home in the past two years built homes sized between 1,800 and 4,000 square feet, the homes in its newest communities range between 1,300 and 2,800 square feet.”

“The turnabout will not occur overnight, say home-building industry experts, because builders that already have government approved plans for large homes on large lots cannot afford to make major revisions midstream.”

“Since the 1990s, Riverside and San Bernardino counties, once the bastion of housing affordable to first-time buyers, have seen an explosion of executive style and luxury homes. Many homeowners sold their houses and used their substantial equity as a down payment to buy something larger and fancier.”

“With the help of rising home values and lenient lending, there seemed to be a bottomless pool of Inland buyers able to buy the so-called McMansions.”

“‘In the last few years, most builders were going after that top 20 percent of the market, the one-in-five people, with a lot of income or a lot of equity,’ said architect Will Haynes.”

“As long as the economy allowed, Haynes said, the move-up market was favored by builders and land sellers because it could generate more profit than entry-level housing. He said government agencies also benefited because they could reap more tax revenue from higher-valued homes and demand more fees, parks and other benefits from developers, who could pass on the cost to well-to-do buyers.”

“‘Everyone was hooked on higher-priced housing and the market was chasing that,’ Haynes said.”

“But conditions have changed dramatically. Homeowners who might want a move-up house are reluctant to sell in a depressed market. Also, the risky adjustable mortgages with artificially low introductory interest rates are no longer available. Those loans once enabled many households to buy homes that were more expensive than they actually could afford.”

Readers suggested a topic around the recent changes in the secondary mortgage market. “Wall Street and investors. They are in control of this whole mess and usually have the final say if a loan can be modified or not. Right now, investors refuse to modify these loans because they stand to lose more by working with a borrower or agreeing to some type of short sale.”

“This situation is complicated by the fact that these Mortgage Back Security (MBS) holders (INVESTORS) have insured against defaults, and the insurance payout on a default is a better result for the investor than accepting reduced returns. So the investor may actually be better off with a default as opposed to a mod.”

“In this circumstance, the investor can take the position that a mod goes against their best interests and threaten suit against the servicer if mods are undertaken. Investors are screaming bloody murder about potential mods that will wreck their insurance payout.”

“Hedge funds by nature do not need to disclose their losses or net asset value. There are HUGE losses that have not been disclosed, including cities, counties, pension funds, and bank money market funds that are NOT FDIC insured.”

One replied, “Can the loan servicer be successfully sued for an action that limits the losses to its investment pool based on the conditions of a subsequent deal made by a bondholder?”

“Imagine I buy a property from you, then take out insurance against an unexpected defect in the property. When a defect is found, you decided to fix it with a less comprehensive fix than the insurance company could have been made to pay for to avoid being sued. Can I demand that you don’t fix it? Legal mess.”

One pointed out, “In a lot of cases it is also in the owners best interest to default rather than modify, from the purely financial perspective.”

Another said, “But, sometimes Insurance Companies will not pay off if fraud was involved in the loan package, (which I think includes loan application fraud ). I would think that the Insurance Companies are going to be checking these loan packages to see if they have to pay or not.”

One added, “RE: loan application fraud. You can throw appraisal fraud into the bucket also.”

“Given the open, rampant and notorious nature of both fraud and corruption in the lending biz for the last 5 years any pay-out by an insurance company could take years.”

A homeowner said, “Respectfully, I am a homeowner, and I don’t feel as I am ‘held hostage,’ primarily because I am in a housepayment I can easily afford.”

“To the extend that some people took a risk on a loan to get a bigger house, those people made their own bed. People take risks all the time. If you want to take a risk whether it’s skydiving or a neg am loan, then hey, it’s a free country right? But lets not pretend like the people for whom the risk caught up to them, and they may be getting forclosed on or whatever didn’t get their all by themselves.”

“Sure, investors may have provided the airplane and parachute, but those homeowners willingly signed up in droves, strapped it on and jumped right outta that plane.”

“Just leave them all alone to work it out amongst themselves. For the rest of us, there is going to be a good deal on real estate for the next 10 or more years.”

The New York Times. “The props holding up the values of risky mortgage securities finally started to give way last week. And that means the $30 billion in losses and write-downs taken by big brokerage firms in the third quarter are not likely to be the last.”

“Even as developments in the credit markets went from bad to worse this year, investors for the most part have remained upbeat about the values of the mortgage securities they held. One reason that they could keep their heads in the sand was that these complex securities are hard to value in good times, impossible during periods of stress.”

“After last week, however, it was no longer plausible to deny that mortgage loans, and the complex securities derived from them, had crashed — and caused a lot of damage in the process. First to face the music was Merrill Lynch, which stunned investors Wednesday with an $8.4 billion write-down, $7.9 billion of which was for mortgage-related assets.”

“The write-down was $3.4 billion more than it had warned investors about just three weeks before. Merrill’s decision to write down its holdings as it did gives a clear signal to other banks and brokerage firms that valuing similar assets at lofty levels is no longer acceptable or credible.”

“Then, on Friday, Moody’s Investors Service began downgrading C.D.O.’s. Despite the subprime turmoil, some of these securities had continued to carry high ratings, until Friday. Moody’s cut or placed on review for possible downgrade securities from dozens of C.D.O.’s, some rated as high as AAA. The C.D.O.’s that may be subject to a downgrade hold subprime mortgage loans worth $33 billion, and there are probably more to come.”

“‘We’ll definitely see a lot more write-downs,’ said Josh Rosner, an expert on asset-backed securities. ‘I think that the exposures that we are seeing and the announcement out of Merrill are the leading edge, not the end.’”

“One reason that Mr. Rosner expects more losses from banks and brokerage firms relates to the calendar. Intense auditor scrutiny comes once a year, and that is the period we are in now — fiscal years at many big brokerage firms, Morgan Stanley, Lehman Brothers and Bear Stearns, for example, end in November.”

“‘When it comes time for the auditors to attest, they are going to be very conservative,’ Mr. Rosner said. That means write-downs will have to reflect the reality in the market, not some rosy scenario.”

The Orange County Register. “As loan defaults and foreclosures rise, politicians and consumer groups have directed many of their attacks toward mortgage brokers. They say some brokers steered consumers into loans they couldn’t afford to earn a bigger commission.”

“Brokers, meanwhile, are firing back and say an entire industry is being blamed for actions of a few bad apples. And banks, not brokers, bear the ultimate responsibility for every single home loan, brokers say.”

“Brent King, senior VP in the mortgage division of Wachovia, said while his firm works with and values brokers, loans touched by brokers historically go into default more often than retail loans. The reason may be fraud, he said.”

“‘The more hands that touch the file, the greater opportunity for fraud,’ King said.”

“In Orange County in July, 2.47 percent of outstanding loans made by brokers were delinquent or in foreclosure vs. 1.21 percent of retail loans, according to First American LoanPerformance, which tracks about 80 percent of the market. Statewide the difference is greater with 5.88 percent of broker loans gone sour vs. 2.2 percent of retail loans.”

“The differences are small but telling. In Orange County, broker loans account for just 35 percent of outstanding loans but in July made up about twice as many loans in foreclosure.”

“‘We only give out the products that we have been given by lenders,’ said John Marcell, a broker in Upland and former president of the California Association of Mortgage Brokers. ‘The lenders create the products and say here are the products you can sell. If we didn’t have the products to sell, we wouldn’t have sold them.’”

“Raphael Bostic, a professor of real estate and associate director with USC’s Lusk Center for Real Estate, said banks didn’t carefully scrutinize brokers or their loans when most mortgages could be profitably sold.”

“That’s all changed amid a housing downturn two years long and still going. Banks are looking for the causes of costly defaults and finding the ’safety of broker loans is qualitatively different,’ Bostic said.”

“Wachovia’s King said the lending industry pendulum now is swinging against brokers, but not entirely. ‘I think it will end somewhere in the middle,’ he said. ‘It’s just heading in the other direction right now.’”

The Post & Courier reports from South Carolina. “Shandon Fowler is prepared to rent while itching to get into a house of his own. The New Jersey resident plans to move soon to Charleston with his wife. But even though the couple can afford to buy a house now, they plan to rent as they learn the layout of the Lowcountry and watch for the local real estate market’s next move. ‘Our hope is that the prices come down and we can get more for our money,’ he said.”

“For more than 18 months, the market has shown signs of weakness. And basic economics suggests that after a significant drop-off in sales, prices quickly would follow, especially in a market where more than 10,000 sellers are courting an increasingly limited pool of buyers.”

“‘It’s certainly a buyer’s market, but there is absolutely no urgency on them to buy a house,’ said Tom Guidera, a Mount Pleasant-based broker. ‘They see a soft market. They see sellers reducing their prices daily. They are not worried about interest rates, and they have time on their side. So why not wait? ‘”

“On the outskirts of Mount Pleasant, homes are selling at about the median price (of) $404,577. There, sellers of existing residences are competing with heavy incentives offered by builders in big developments such as Park West, agents believe.”

“Industry experts and local real estate agents agree: For the Charleston market to get back on an upswing, the number of homes for sale has to return to a more normal level.”

“Though sales began slowing in February 2006, buyers continued to list their homes, creating a massive buildup in available properties.”

“Locally, that number has climbed to more than 10,000 homes, giving the region an 11.6-month supply of inventory based on the number of sales made last year through the Charleston Trident Association of Realtors’ MLS.”

“‘A lot of buyers have got a house to sell, so they aren’t taking advantage of the reduced prices,’ said broker Ralph Wetherell.”

“That’s the case for Caroline Fernandez of Asheville, N.C. Her husband recently took a job at the Medical University of South Carolina, but the two won’t be able to afford another mortgage until their North Carolina home sells.”

“‘We’d like to buy in Charleston, but we can’t do much now,’ she said.”

The St Petersburg Times from Florida. “The Qandil family began a financial nosedive shortly after buying their $249,000 home last year. Today, they are one of about 5,000 families in the Tampa Bay area facing foreclosure. In September, Florida’s foreclosure rate was the nation’s second highest.”

“The Qandils haven’t made a house payment since April. They are $11,000 behind on a $189,000 mortgage. Deutsche Bank, their mortgage lender, is weeks, or maybe days, from taking their home.”

“Last November…after selling a 900-square-foot Pinellas Park home for $205,000, they discovered a 1,400-square-foot home in Seminole. The Qandils agreed to buy the home when they heard the price had dropped to $249,000.”

“Nader preferred to rent, but his wife, Evangeline, who had bought two previous homes, felt renting ‘was just throwing your money away.’”

“‘I should have listened to my husband,’ she says now. ‘I wanted a house, house, house.’”

The News Press from Florida. “If you owe $300,000 on a house that’s only worth $200,000, you may still be able to sell it — banks are increasingly willing to make up the difference.”

“But first you’ll have to go into foreclosure or at least fall behind on payments, and you’ll have to convince a banker you’re broke and not just trying to pull a fast one by selling to your mother so she can sell it back to you later.”

“As real estate prices have tumbled in Lee County, short sales have skyrocketed — accounting for almost one in five houses on the market right now from the occasional sale just a couple of years ago.”

“At the low end of the price range, short sales loom much larger: 32.5 percent of homes listed for sale at $150,000-200,000 in the MLS of the Realtor Association of Greater Fort Myers and the Beach.”

“In September, 1,220 foreclosures were filed in the county: more than five times as many as the 237 recorded a year earlier.”

“Josie Burdier bought her Cape Coral house in 2006 with a mortgage of $186,600 but wasn’t able to afford payments or sell the house for what she owed. ‘I tried to pay it off, paying the mortgage with my savings,’ she said, ‘but I’m five months in default.’”

“HSBC Bank filed a foreclosure action against her Oct. 4, but she still hopes to get a short sale approved by HSBC. ‘Basically, they’re waiting as well as me’ to see if a short sale is possible, Burdier said.”

“As foreclosures continue to mount, banks are more willing to deal, said Jonas Elliott of Loss Mitigation Services of Southwest Florida, which also negotiates short sales. ‘Lately it’s gotten a lot easier, especially a deal that makes sense,’ he said. ‘Banks are willing to take 50 cents on the dollar whereas before, they’d say 80, 90 percent.’”

The Herald Tribune from Florida. “For most developers, this is a time to hibernate, or at least scale back. Consider the forthcoming Marquee on the Bay, a water-view luxury condominium project at 1301 Main St. in Sarasota. The grand plans there have been adjusted to slash starting prices from $3.5 million to $1.6 million.”

“‘All the huge national builders had to start slashing prices. Then our top-end stuff was competing with their mid-range stuff — that’s what started putting a hurt on us,’ said Brad Gaubatz, VP of community development for DeMorgan Communites, which formed in 2003 to provide workforce housing, has delayed two forthcoming “affordable” communities.”

“Centex Homes has six communities open in the Sarasota/Manatee area…but doesn’t foresee any forthcoming projects until 2008 or 2009, according to David Lepow, director of sales and marketing. It felt the first pinch last summer.”

“‘It was drastic. It was perceptible within a 30-day period,’ said Lepow. ‘For many, many months, many quarters, extending beyond even two years, there were more than 10 people there waiting to buy those home sites (in the first hours they were available). Then, within minutes or hours, those home sites had sold. In July (2006), we had maybe half the sites sold. That was the beginning of the end.’”

“For those speculators who got burned in real estate, the ‘American Dream’ turned into a matter of ‘commoditization,’ developers said.”

“‘What happened over the past 10 years was wrong — it was wrong and it was bad,’ said Lepow. ‘When I was in school, you learned about commodities — not to buy your primary residence and become rich. Not on your primary residence. Let the Donald Trumps of the world invest in real estate, (not) the people who borrowed against their retirement and got themselves into debt with these crazy loan programs.’”

The Palm Beach Post. “Even after the South Florida housing market peaked in 2005, Johnson Cuffy knew how to score big profits in real estate. First, the Broward County real estate investor found a Fort Lauderdale house for sale for $245,000. Then, inflated appraisal in hand, he convinced the lender that the home was worth $340,000.”

“Cuffy landed a loan for $340,000, paid the seller $245,000 and pocketed the $95,000 difference, state investigators say. Profits secured, Cuffy let the home go into foreclosure. He was arrested in July after the seller alerted officials to the scheme.”

“An isolated case? Not by a long shot. ‘My phone has been ringing daily with people wanting to report suspicious real estate sales,’ said Detective Ted Padich of the Florida Department of Financial Services in West Palm Beach. ‘This is going on in every neighborhood in Palm Beach County.’”

The News Journal from Florida. “East Volusia’s waterfront land commanded record-breaking prices during the condominium development rush of 2005 and 2006.”

“Now, however, with new condo construction slowing, values have leveled off and, in a few cases, have started to fall, according to the latest tax assessments issued by the Volusia County property appraiser’s office. The downward trend is expected to accelerate in 2008, county officials say.”

“‘We’ll probably have some massive decreases next year,’ predicted Morgan B. Gilreath Jr., the county’s property appraiser. ‘It’s going to be a tremendous challenge to determine values.’”

“Gilreath said up-to-date values are getting tougher to calculate because there have been so few land sales this year.”

The Miami Herald from Florida. “The deteriorating housing market took its toll on BankAtlantic Bancorp in the third quarter. The Fort Lauderdale-based banking company said Friday it lost nearly $30 million while experiencing a seven-fold increase in its problem loans in three months.”

“The ratio of nonperforming loans to total loans rose from 0.47 percent at the end of the second quarter to 3.53 percent at the end of the third quarter. The bank also increased its reserves for bad loans from $42.5 million at the end of the third quarter of 2006 to $92.4 million in the quarter that just ended.”

“‘The impact of the decline in the Florida residential real estate market has been significant,’ BankAtlantic Bancorp Chairman and CEO Alan Levan said in a statement.”

“Trump Tower Palm Beach was supposed to be the toast of the town when it comes to luxury condos. Now it looks like Trump Tower could be toast.”

“Real estate mogul Donald Trump confirmed he is close to shelving the 23-story condominium in West Palm Beach. ‘We won’t go forward unless we see a robust market,’ Trump said in an interview.”

“What happened to the Midas touch of Trump? It ran smack into the worst real estate market in more than a decade, that’s what.”

“Only nine months ago, Trump pooh-poohed concerns Palm Beach County’s flailing home sales would affect this ultra-luxe venture.”

“Looks like the hype didn’t help, however. Not even The Donald could surmount the relentless downward slide in real estate. ‘The market in West Palm Beach is not exactly great-looking,’ Trump said.”

“It’s not great-looking in Fort Lauderdale, either. Earlier this month, Trump suspended a condo hotel known as Trump Las Olas Beach Resort, citing a weak condo market.”

“In June, Related exec Barbara Salk said less than half the project’s 150 units had sold (Prices range from $900,000 to $2.4 million for the over-amenitized condo.) Developers were shooting for at least 60 percent, or about 90 units, before starting construction.”

“Trump wouldn’t admit saggy sales are the culprit, of course. ‘We’ve done very well with presales. We’ve had substantial sales,’ he said. But he refused to provide details: ‘There’s no reason to be specific.’”

What do you see in your local housing market this weekend? Builder price cuts? “‘The cut is deeper, and they’re bleeding more heavily than ever before,’ said Jill Flink, a broker in Raleigh who has sold homes in the Triangle for 21 years. Last weekend, Pulte advertised discounts of as much as $40,000 on some new homes.”

“Comstock is offering $75,000 off its townhouses in North Raleigh, a 16 percent discount from the original $463,900 price. Discounts of $35,000 are available at Comstock’s townhouses in Cary’s Preston neighborhood, a 10.5 percent cut. Drees Homes’ biggest discount is $60,000 off a 4,400 square-foot home in Cary’s Cold Creek development, normally $659,000.”

“The sales aren’t helping homeowners who made recent purchases in the same subdivision, Flink said. ‘They’re not just bona fide reductions, they’re lessening the value of the neighborhood,’ Flink said. ‘If you pay $250,000 and the next guy pays $225,000, what’s your house worth? It’s less than $225,000, because your house is older.’”

Or foreclosure statistics? “A new report said foreclosures jumped 311 percent in Maricopa and Pima counties in September. ‘Maricopa was about 2,100 - exact number, I believe is 2,127 foreclosures - and then in Pima we had 287,’ said Serdar Bankaci with Default Research.”

Or overbuilding? “Like the rest of the country, Texas has more new homes than it needs. ‘We gain about 400,000 folks a year, so we need about 160,000 to 180,000 new housing units. We’ve been building 205,000 to 210,000 new homes a year, so we’re overbuilt by 10 to 15 percent,’ said Waco-based economist Ray Perryman.”

“That’s nothing, he added, compared to places like Florida and California, which are overbuilt by 40 percent.”

Related markets? “AutoNation Inc., the nation’s largest automotive retailer, said Wednesday its third-quarter profit tumbled 12 percent on a decline in new vehicle retail sales, particularly due to the weak housing markets in California and Florida.”

“New car sales fell 7 percent last year in Manatee, Sarasota and Charlotte counties, and, as of July, were on track to fall 12.5 percent in 2007. The two worst states for new car sales are Florida, down 11 percent, and California, down 17 percent. They are also the two states that have been hit hardest by the slide in real estate values.”

“‘Wherever you have the biggest declines in the values of homes and the sales of homes, you have the biggest decline in automotive retail sales,’ said AutoNation CEO Mike Jackson. ‘Actually it’s any big-ticket item … anything that requires a long-term commitment, the consumer is very unwilling to do that while there’s this big cloud over housing.’”

“Falling home prices, slower home sales and tougher lending standards have dampened the once-booming home- remodeling industry. According to Harvard University, overall growth in spending on remodeling projects in 2007 is expected to be 3 percent. In 2004 and 2005, at the height of the housing boom, it was nearly 20 percent each year.”

“The reason is simple, said Gopal Ahluwalia of the National Association of Home Builders: ‘When prices are declining, the homeowners don’t want to spend a whole lot of money on their homes. When prices are rising, they tend to take care of their investment.’”

“With prices falling, people who bought in recent years won’t be able to take out home-equity lines of credit, which many homeowners use for renovations. Lenders will ‘be more skeptical about what your home is worth,’ said Kermit Baker, director of the Harvard’s Remodeling Futures Program.”

Or appraisal fraud? “Two appraisers valued the Kansas City home of Katheryn Shields and Philip Cardarella at $1.2 million, about $500,000 more than its listed sales price. One of them was working with the FBI. The other later was charged with mortgage fraud conspiracy.”

“Jeremy Plagman testified that he told the mortgage brokerage employee who hired him that he did not think the house was worth $1 million. He said she told him that if he appraised it over $1 million, she would ’send more business my way.’”

Please post off-topic ideas, links and Craigslist finds here.