The Housing Bubble

It’s Friday desk clearing time for this blogger. “John Davidson re-located to Horry County, South Carolina, a few years ago. ‘We were real excited about the way the area was growing, no way it was going to slow down…how could it possibly slow down?’ Davidson said. ‘It’s amazing how quickly it turned.’”

“‘What’s happened is the people who bought on the high end can’t afford to lower their homes that much because they paid a lot for them,’ said Tom Maeser, a local real estate market analyst. ‘The buyers are sitting here, knowing there’s a lot of inventory, saying, ‘I want the best deal.’”

“Davidson’s had his house on the market since April and now has to sell it just so he can keep his condo. ‘We’ve had a steady flow of people coming through, but the consistent remarks are: love the house, but it’s priced a little too high, and they’re going to wait and see what happens,’ Davidson said.”

“‘There’s only one reason a home doesn’t sell, and that’s price,’ said Maeser, who has been a real estate agent for 15 years. ‘Sellers are going to have to get the 2007 mentality instead of 2005.’”

“Economist Jerry Johnson broke the bad news as home builders and bankers dined on scrambled eggs, hash browns and bacon at the Oregon Convention Center. ‘2008 is going to be a tough year,’ he said.”

“Speaking on housing prices, economist John Mitchell said: ‘There will be increasing affordability. That’s a polite way of saying price declines.’”

“As for a rebound, ‘It’s going to be 2009,’ Mitchell said. ‘You’ve got a lot of inventory to work through.’ So what does this mean for real estate jobs? Mitchell told one story: ‘My daughter’s Realtor is becoming a phlebotomist.’”

“From South Memphis to Southwind, Memphis is losing value. ‘Right now, Memphis is down about as far as I can remember in 30 years,’ auctioneer John Roebuck said.”

“Treasurer’s offices all over the country are bracing for the day when lenders stop paying the taxes on many properties in the worst hit neighborhoods. Many houses in Cleveland’s central city neighborhoods have been so damaged by looting, fires and weather that they are almost total losses. The lenders will eventually walk away from them.”

“‘The lenders will come to us and say, ‘We just can’t hold the properties any longer. We don’t want to pay the demolition costs. Here’s the property,’ said Jim Rokakis, Treasurer of Cuyahoga County, which includes Cleveland.”

“Zoe Cruz, co-president of Morgan Stanley and Wall Street’s highest-paid female executive, was ousted three weeks after the firm disclosed $3.7 billion of losses on mortgage-related securities at the division she oversaw.”

“‘I’m surprised, she’s been a big disciple of John Mack,’ said Douglas Ciocca, who helps manage $1.6 billion, including Morgan Stanley stock. ‘It may well be to satisfy the public’s need for scapegoats.’”

“The Singapore Housing and Development Board is building up the supply of new flats by 10,362 units to meet rising demand. Separately, the HDB plans to build another 6,000 units under its BTO system in the first half of next year. The total number of flats offered under BTO this year is 4,800 units, double that of last year.”

“The National Development minister urged buyers not to be too choosy when offered a new flat.”

“‘Be realistic about the chances of getting a flat. If you need a new flat, please take up the new flat even if it’s not something you like, even if it’s not ideal for you. Take it up and then gradually over time, you may upgrade to the flat that you like,’ said Mr Mah.”

“American Residential Group, a Tulsa real estate development and management company, is now in a ‘pre-marketing evaluation’ of changing the Tribune complex from apartments to condominiums….as a testing ground for a multimillion-dollar expansion.”

“Senior VP Steve Ganzkow said no one has attempted this type of effort since the late 1970s to early ‘80s. ‘We’re dealing here with an asset class in the real estate world that is pretty new and unique to this market,’ he said.”

“Ganzkow suggested prices could range from $175 to $200 per square foot. ‘There’s a lot of people who would say for that kind of money I would go get a house somewhere, and you probably can,’ he said. ‘But then you wouldn’t be downtown.’”

“The NAR and Lawrence Yun, its new chief propagandist — er, economist — continued to fiddle and insist that all was well. Take a look at this ridiculous and self-contradictory release, titled ‘Mixed Results for October Existing-Home Sales; Mortgages Improving.’ The NAR follows that front-line fib with what I can only characterize as a big, fat, stinking lie. The first line begins, ‘Single-family existing-home sales were stable in October.’”

“‘Mixed’ results? ‘Stable’ sales? There’s nothing mixed about a nearly 21% drop from October 2006. There’s nothing stable about a housing inventory that has jumped 15.4% year over year, so that the months’-supply number screamed upward by 46%.”

“House prices dropped by an average £65 a day this month, the fastest rate for 12 years. Further fuelling fears of a property slump, mortgage approvals in October also crashed to just 88,000.”

“It was the lowest figure since February 2005 and contrasted to a recent monthly average of 109,000. Nationwide’s chief economist Fionnuala Earley said: ‘This data confirms the market is cooling.’”

“The Council of Mortgage Lenders urged the Bank of England to ‘unblock the funding logjam.’”

“With Arizona ranked eighth in the nation in the number of foreclosures, some advice for people who fall behind on their mortgage payments. Number one, call your lender.”

“Banks don’t want you out on the street, says Chase Bank’s Tom Kelly. ‘What we want to do as mortgage servicers is to work with customers to try to keep them in their houses. We don’t really want to own houses. We would like people to pay us back.’”

“A lot has changed in the real estate market in the past year. Advice that brokers gave clients only a few months ago no longer applies.”

“As far as Johnny Matos is concerned, the prices haven’t come down enough. The Levittown native recently sold his home in Orlando, Fla., and moved back to Long Island. He and his wife are now renting a one-bedroom apartment in a Wantagh house.”

“For the time being, Matos says, he thinks it’s more economical to rent than to own. He is paying $850 a month but figures he would likely pay about $4,000 a month in mortgage payments, taxes and insurance if they bought a home.”

“Still, he expects to purchase a place in the next year because his wife wants to start a family. He says he’s hoping prices will drop more by then. ‘In the last year nothing has enticed me to buy,’ says Matos. ‘For me, it’s just waiting until somebody gets desperate.’”

ABC News reports from California. “Two years ago, Kelley Lowry camped out overnight to buy a four-bedroom home in the upscale community of Fairfield, Calif., northeast of San Francisco. He paid $580,000. ‘We bought at the top of the market,’ Lowry said. Just six weeks later, his house was worth $750,000, but now? The value has plunged to just about $400,000.”

“‘It’s pretty devastating, especially when you owe more than that,’ Lowry said. ‘It’s tough to swallow.’”

“Lowry is sure his home will continue to lose even more value. ‘I know for a fact it will,’ he told ABC News.”

The Orange County Register. “In a week where we’ve been reminded by S&P Case-Shiller, Realtors and federal house trackers that recent months have been painful, DataQuick today tells us that this month won’t likely be any better. Mid-November O.C. home-buying stats show extremely slow sales counts and pricing that’s roughly 8% below a year ago.”

“For the 22 business days ended Nov. 14…three South County ZIPs appear in the top 10 rankings of neighborhoods with the worst yearly declines in sales activity in O.C.: Irvine 92620, sales down 76.0%. Ladera Ranch 92694, down 73.8%. Irvine 92602, down 67.5%.”

From KFSN TV. “In new rankings released Thursday, Merced moved to the top spot in foreclosure rates at nearly seven times the national average. Stockton and Modesto are second and third on the list.”

“‘I think it’s disgraceful,’ said Sean-Pierre Wilson, resident.” “Wilson says he won’t even consider buying a house right now, especially when the center for responsible lending says California can expect to lose 180-k homes.”

“‘Forty or 50 homes open and then no one’s buying. The other side of that is people are also trying to auction homes just to get a return on their investment,’ said Wilson.”

“In California, one in 88 homes is at threat of being foreclosed. In Merced, for sale signs on one side of the street and empty lots on the other side of the street are all too familiar sights.”

The Mercury News. “Lawmakers unveiled five proposed laws and asked Gov. Arnold Schwarzenegger, who also has been vocal about the impact of the mortgage crisis on the state, to call a special legislative session so the measures can be adopted more quickly.”

“But lawmakers conceded there is little that can be done to help those who already have lost their homes to foreclosure - or those facing it - other than to use the bully pulpit.”

“‘We believe we can shine the spotlight on what lenders are doing,’ said Assemblyman Ted Lieu, the chairman of the Assembly Banking and Finance Committee. ‘We can’t rewrite these contracts. It will be through cajoling, shame and persuasion.’”

“‘If we think we’re in trouble now,’ said Assembly Speaker Fabian Núñez, ‘let’s wait to see what happens in the next four or five years. We need to keep this from escalating.’”

“Lenders are sending 2,000 foreclosure notices a week in California, and that number will more than double beginning next year.”

“The California Association of Mortgage Brokers said it applauded the lawmakers for addressing the foreclosures but urged a balanced approach.”

“‘While we strongly support the goal of consumer protection,’ said Pete Ogilvie, president of the group, ‘CAMB urges legislative leadership to work with lenders, brokers and consumer groups to ensure that reform measures preserve the ability for families to obtain suitable financing to purchase the home of their dreams.’”

The San Francisco Chronicle. “The number of foreclosures in San Francisco makes up just 2 percent of foreclosures in the Bay Area, city leaders estimate, and Mayor Gavin Newsom said city residents have ‘been fortunate to date.’”

“But, he warned, ‘It could hit here, and if it does it’s going to hit very acutely and very immediately and that’s why we want to be prepared.’”

“A coalition of city leaders…called on major subprime lenders Thursday to change the way they do business with homeowners on the brink of foreclosure. Dustin Hobbs, a spokesman for the California Mortgage Bankers Association, said today’s deadline isn’t realistic. City leaders mailed letters to banks outlining the requests last week.”

“‘It’s an unreasonable demand. Anything this extensive and far reaching would require a lot of deliberation by any company,’ he said, but also noted that many lenders have already instituted such programs.”

“San Francisco officials conceded Thursday that they can only hope institutions comply with their request.”

“John Eller, head organizer at the Association of Community Organizations for Reform Now in San Francisco, called it ‘a good first step. We know (the agreements are) toothless right now because they’re just calling on the lenders to do the right thing,’ he said.”

The Sacramento Bee. “Not everyone believes that Gov. Arnold Schwarzenegger’s pact with mortgage lenders to help troubled subprime borrowers will dampen the impact of California’s foreclosure crisis. So far, no other major lenders have joined Schwarzenegger, the Governor’s Office confirmed. Four of eight big lenders brought to the table declined to join the pact.”

“One for whom it comes too late is Desiree Reno of Sacramento. She had a loan serviced by HomEq. ‘What really upset me was the day after they auctioned my house, I saw that they were going to help all these people when they could have helped me,’ she said.”

“Last year, subprime borrowers accounted for 27 percent of home loans in El Dorado, Placer, Sacramento and Yolo counties, and 32 percent in Yuba and Sutter counties, according to a Bee analysis.”

“Some doubt that freezing subprime loan rates for those who can’t afford higher payments will make a dent. Thousands of 2006’s subprime borrowers are already defaulting before their loans reset, said economist Chris Thornberg.”

“‘It’s not the mortgage that’s the problem,’ he said. ‘A lot of people bought houses they just can’t afford.’”

“Thornberg said there really isn’t much anyone can do. Falling home values are aggravating a foreclosure problem that’s likely to worsen, he said. Values will fall, he said, until most people can afford homes again.”

“Jeff Tarbell, managing partner of Sacramento-based Comstock Mortgage, also doesn’t see much practical impact from the governor’s announcement. Tarbell said it takes time to verify that a subprime borrower can’t make higher payments – and lenders don’t have the staff.”

“Tarbell wants a freeze on rate resets – at least temporarily – across the country to allow the real estate market to stabilize.”

“‘We’ve got to stop the pricing decline,’ he said.”

The Bakerfield Californian. “Carl Cole, former managing broker of now-defunct Crisp & Cole Real Estate, counted his first two foreclosures Thursday, trustee’s deeds recorded with the county show.”

“They are so far the only foreclosures in the Cole family, but just a pair among more than 100 defaulted and foreclosed properties associated with the former company’s employees, family members and associates, according to an ongoing Californian tally.”

“Lenders took a hit when the homes were auctioned off last week, records indicate, a situation now common in the current real estate market.”

“Cole borrowed more than $1 million total against the two homes in January 2006, property records show, while banks repossessed them last week for a total $722,325.”

“As of Thursday, 102 troubled properties with more than $62.3 million in total loans can be pegged to former Crisp & Cole associates, according to The Californian’s ongoing tally. Of those, at least 57 have so far foreclosed.”

“On Monday, the Seven Oaks mansion of Cole’s former partner, David Crisp, is scheduled for the auction block. Two previous auctions were postponed.”

“Federal investigators are currently looking into Crisp & Cole operations for possible mortgage fraud after a federal raid of 13 Bakersfield sites Sept. 12.”

The News Press reports from Florida. “The National Credit Union Administration is auctioning $26 million worth of bad debt on houses built in Cape Coral and Lehigh Acres, likely the first in a wave of houses that experts say could drive down the market with fire-sale prices. Current values of the houses weren’t available but since December 2005, when the median price of an existing single-family home in Lee County reached an all-time high of $322,300, the price has fallen 26 percent to $239,300 in October, according to FAR.”

“As a result, bidders will likely demand a deep discount in the price of the debt, Naples-based real estate consultant Michael Timmerman said. ‘Some of them could be 30 to 40 percent off what the construction cost was’ depending on what the houses are worth now at today’s much lower prices.”

“Fort Myers-based real estate broker Ed Bonkowski was even more pessimistic about how much the bad debt will fetch.”

“‘If they get 25 percent, they’ll be in hog heaven,’ said Bonkowski, who helped the federal Resolution Trust Corp. sell thousands of properties in the early ’90s when many savings and loan associations went down because of bad debt. ‘The institutional guys will be in at 10 cents on the dollar.’”

“NCUA spokesman John McKechnie wouldn’t say exactly what his agency would accept in the way of bids, but Bonkowski said he won’t bid on behalf of his clients until later batches are auctioned off.”

“‘They’re going to be shocked at what the public will pay’ for the properties and lower bids likely will be accepted in later auctions, Bonkowski said.”

“Steve Koffman, of Sunbelt Realty, said the homes that will be pouring onto the market ‘are going to make it difficult for us as a county to try to absorb the excess inventory’ with about 15,000 houses already listed for sale.”

“Timmerman said the NCUA will have to be careful not to release too many houses onto the market too fast and crash prices, lengthening an already painful slowdown in housing here.”

“But the results are hard to calculate, he said. Releasing a lot of houses onto the market ‘may spur people to say, ‘Now’s the time to go ahead and buy things,’ and people may jump in,’ he said. ‘The flip side’s that they could say, ‘Let’s just wait’ for even lower prices.’”

The Herald Tribune. “Foreclosure activity in Southwest Florida gathered momentum during October, with month-to-month foreclosure filings rising 93 percent.”

“George Huhn, a Venice real estate agent, knows the foreclosure process intimately: he works with local banks on the process. But Huhn is now losing his own home to a repossession by Sarasota-based Century Bank, one of area banks for which he has worked.”

“‘I got behind in my payments and the bank, a local lender, has not been able to come to an agreement on a workout that would be workable for either one of us,’ Huhn said.”

“‘A nonperforming loan older than 90 days goes from being an asset on the bank’s balance sheet to a liability that has to be charged against earnings,’ Huhn said. ‘Banks are preparing to file year-end financial statements and are facing disclosures about foreclosures ‘that have unpleasant consequences for their stockholders,’ Huhn said.”

“Also pushing the foreclosures now is the holiday season. ‘Banks won’t foreclose during the Christmas season,’ he said. ‘It’s bad publicity. No one wants to be seen dragging Christmas trees onto the curb after a family has been foreclosed upon in December. But after New Year’s, the gloves come off again.’”

“Until recently, lenders were ‘dragging their feet’ when a Horizon Realty agent made a presentation on why the bank should accept an offer at less than the loan amount, said Matthew Augustyniak, Horizon’s CEO. ‘Now they are realizing, the offers that are on the table, they better start taking them,’ Augustyniak said. ‘They’ve got to get it off their desks.’”

The Orlando Sentinel. “Homes throughout Central Florida continued to lose value in the third quarter, including the best homes in good neighborhoods, according to federal survey.”

“Beth Goldstein, a former top sales agent, is now running a Nature’s Table cafe in her church. She said Thursday that she got out of real estate, after seven years in the leading Coldwell Banker sales office in Florida, because sales were so slow, relative to previous years, that she decided to gamble on a restaurant franchise as a better revenue producer.”

“‘I think we’re going to see this [local] correction run for another three to five years,’ Goldstein said. ‘I tell my friends, ‘I don’t think we’ve hit bottom.’ I hate to say it, but I tell them if they are thinking of buying, to wait. There’s such a glut.’”

“Active Realtors contend that economists who repeat their statistics of declining sales and journalists who disseminate those reports are a major factor in the ongoing slump, said Ken Bennett, Central Florida regional manager for Watson Realty Corp.”

“‘Not too many economists know what’s going on,’ he said. ‘They just tend to focus on the gloomers and doomers.’”

“Bennett, who oversees a sales area from Walt Disney World to Daytona Beach, concedes that housing prices are lower than they were earlier this year, and in many cases are down by 15 to 25 percent from a year ago in parts of Central Florida.”

“‘That is a phenomenon. I’ve never seen it,’ Bennett said. ‘But all that means is, it’s a good time to buy, a good time to invest. You can buy for less.’”

“Goldstein, who was among the top 14 percent of agents for three straight years, said she also thought investor psychology was the main problem. She said she and other Realtors were told repeatedly by their managers to ‘focus on the positive,’ regardless of the market. ‘But you could see it crumbling around you.’”

The Palm Beach Post. “Gov. Charlie Crist and other state leaders Thursday temporarily halted all further withdrawals from a state-run investment pool in hopes of keeping the fund from becoming the latest casualty of the ever-expanding maw of the subprime mortgage meltdown.”

“Local governments…had pulled nearly $13.5 billion from the pool in the past two weeks, including $3.7 billion on Thursday morning. The withdrawals were a reaction to news that a fraction of the fund’s investment portfolio was downgraded because of the mortgage crisis.”

“If the pace of recent withdrawals had continued, the state board could have been forced to sell the pool’s troubled securities at a deep discount and left some governments with the losses. ‘What happens to the participants who have the last $2 billion in the pool?’ said state Chief Financial Officer Alex Sink . ‘They get zero.’”

“Sink, who requested the emergency board meeting Thursday, said the remaining investors should help decide the next step so ‘the pain can be shared. The people who got their 31/2 billion today are lucky,’ she said. ‘Is that fair?’”

“‘I’ve been told to pull all my money from SBA as soon as I can and to never use them again,’ said Port St. Lucie Finance Director Marcie Dedert. Port St. Lucie has $426 million remaining in the investment fund, the largest balance of any Florida city.”

“Dedert, whose most recent deposit into the pool was Wednesday, said she has only about $30 million on hand to pay the city’s bills and is liquidating all available accounts. She said she hoped the state would let the city make some withdrawals to pay employees and make debt payments.”

“‘All our excess cash is there,’ she said. ‘I’m robbing Peter to pay Paul.’”

The Sun Sentinel. “In an effort to halt what one official called ‘an investment world version of a run on the bank,’ state officials froze withdrawals Thursday from a $27 billion investment fund that local governments drained by almost half during the past two weeks.”

“‘It is certainly unprecedented, and there is a nervousness out there that we’ve never seen before,’ Broward County Commissioner John Rodstrom said.”

“The Broward County School District began withdrawing money on Nov. 15 and removed more than $384 million from the fund, district treasurer Henry Robinson said.”

“‘We smelled a rat,’ Robinson said.”

“‘We’re fiduciaries, we’re investment professionals and we know what we’re doing,’ said SBA Executive Director Coleman Stipanovich. ‘We do not have direct exposure to sub-prime mortgages.’”

“Though the state may not have direct exposure to sub-prime mortgages, its own Nov. 9 report describes how the commercial paper into which it placed some public revenues was backed by residential mortgages that were downgraded by Standard and Poor’s, which said it had not rated the fund.”

“The state’s action to freeze public revenues was a surprise to some South Florida finance managers. ‘Folks have always thought the SBA was a safe investment. Some thought it was backed by the state, but that’s not the case and they are subject to market risk,’ Broward County Commissioner Rodstrom said.”

The News Journal. “The Volusia County school district withdrew $265 million for deposit into U.S. Treasury secured money-market accounts, according to a statement from Robert Moll, deputy superintendent for financial services.”

“‘We can make payroll, but the fact is the purpose of that system is to help us move our money in and out and at any given time — 24 hours a day,’ said Wayne Blanton, executive director of the Florida School Boards Association. ‘Right now they have frozen that ability.’”

“‘We’ve got every dime of our cash in that pool,’ said Hal Wilson, chief financial officer for Jefferson County schools. ‘What were they thinking?’”

“He is now short $850,000 for today’s payroll and spent Thursday afternoon alternately pleading with state officials for relief and negotiating with a local bank to cover the overdraft. Wilson’s only other option: leave the small county’s 220 teachers and staff without money to pay their own bills.”

“Cape Coral took out $120 million a month ago, leaving only $200.99 still in the fund. ‘I already knew that something like this was going to happen,’ said Cape Coral finances director Mark Mason.”

The Daily Business Review. “PB Capital has come to the rescue of South Florida real estate investor Morris Stoltz II on a Boca Raton condo conversion that got caught up in the housing recession.”

“PB Capital, part of Germany’s Deutsche Postbank, bought overdue loans from two lenders Nov. 20 and filed a $107 million foreclosure suit against Stoltz’s Mizner Court on Nov. 21.”

“Both sides went to Palm Beach Circuit Court on Tuesday asking for permission to transfer the 30-acre property to PB Capital by year-end in one of the South Florida’s largest foreclosures of the residential downturn.”

“‘In a market like this a lot of times holding the mortgage is more valuable than holding the real estate,’ said David Dabby, president of Coral Gables-based real estate research firm Dabby Group. ‘With the agreement, the developer gets his chance to get out, the previous lenders probably took a loss to get out and PB becomes the new owner,’ he said.”

The Sun Journal reports from Maine. “Golf course owner Gard Craw is an old hand at reading the green. So, despite the softness in the local housing market, he’s ready to commit upward of $20 million in a new residential subdivision across from his Apple Valley Golf Course. ‘You do it when the times are bad,’ he said, noting that contractors are very competitive when the housing industry slows. ‘Besides, it took me three years to get to the point where I’m at.’”

“When Craw purchased the golf course four years ago, he had hoped to build another nine holes across Pinewoods Road, financed by a smaller residential complex. ‘When I looked at it from a return on investment, the (larger) residential development won out,’ he said.”

“Once the first phase is sold, the next phase will begin. Craw said he knows there are plenty of unsold homes on the market right now, but he’s pretty sure Apple Valley Estates will move.”

“‘You can’t do something conventional,’ he said. ‘There’s too much inventory out there.’”

The Boston Globe from Massachusetts. “The median price for a single-family house in Massachusetts slumped 6.5 percent in October, the biggest percentage decline this year, according to a report on the state’s housing market.”

“The Warren Group said the median house price last month was $290,000, down from $310,000 in October 2006. House sales plunged 17.1 percent, to 3,646 in October compared with a year ago.”

“As for the Massachusetts Association of Realtors, it said the October median selling price for a Bay State condo was $279,950, up 7.3 percent from October 2006, and the volume of Bay State condos sold in October was 1,309 units, down 13.2 percent from October 2006.”

“‘While sales were down last month, it is important to note that year-to-date residential sales activity is off only 2 percent from this time last year,’ Doug Azarian, president of the Massachusetts Association of Realtors, said in a statement. ‘For qualified buyers, this remains a good time to buy.’”

The Wall Street Journal on New York. “Even as the national housing market has been hit by slow sales and falling prices, Manhattan has continued to shine. But now its light may be dimming. Fewer apartments are being sold, 858 went into contract in September, a 9.9% drop from a year ago and the lowest total in two years, according to Corcoran Group, and the inventory of unsold apartments is increasing.”

“Prices The median price of a Manhattan apartment fell 3.4% in the third quarter from the previous one, according to Radar Logic. The firm says properties are sitting on the market longer, too, an average of 123 days, up from 94 days at the peak of the market in 2005.”

“Developers used to seeing yet-to-be-built apartments get snapped up sight-unseen are increasingly offering incentives, from help with closing costs to museum memberships, to jump-start sales. ‘Buyers are more hesitant,’ says Hall Willkie, president of brokerage Brown Harris Stevens.”

“One big factor is how much money New York’s army of financial executives will make this year, given the wild swings on Wall Street. ‘Right now, everyone’s waiting for bonus time,’ says Stephen Kliegerman, executive director of development marketing for brokerage Halstead Property. ‘No one knows what to expect.’”

“In recent months, the continuing strength of its real-estate market has…led many local real-estate professionals to contend that Manhattan is immune to the forces that have battered much of the rest of the country.”

“But few independent experts buy that argument. Christopher Mayer, a Columbia University professor and director of the school’s Paul Milstein Center for Real Estate, says the idea that Manhattan will continue to boom amid a nationwide housing bust is ‘wishful thinking.’”

“‘I certainly don’t think Manhattan is recession-proof,’ Prof. Mayer says. ‘History just says that’s a wrong argument.’”

“Some buyers are already finding bargains. When hedge-fund executive Jerry Lavish and his wife, Stanka, started looking at apartments earlier this fall, they liked a three-bedroom co-op on East 72nd Street, but not its $1,775,000 price tag.”

“Two weeks later, however, the sellers cut the price to $1,575,000, and the Lavishes jumped; they’re expecting to sign a contract today. Mr. Lavish, who says he did extensive online research before making an offer, believes the same property might have gone for $1.9 million a year ago.”

“‘We’re getting this apartment for probably 2004 pricing,’ he says. (The downside: The Lavishes are listing their current apartment for $475,000, nearly 10% below their original asking price.)”

“Sellers and local brokers point to August or September as the start of the shift. Sean Connell and his wife listed their pied-à-terre on East 28th Street for $495,000 in May. They quickly accepted an offer for $480,000, but their co-op board rejected the buyer.”

“By the time the apartment went back on the market in August, the market had changed and the price was too high; earlier this month, the couple cut the price to $450,000. ‘Since the summer, [buyers have] been a little more cautious,’ says their broker, Carlos Saavedra.”

“Supply, however, is increasing. The city approved the building or conversion of 14,748 condo and co-op units in Manhattan in 2006; citywide, such approvals were up 75.8% from 2005. And more are in the pipeline. ‘I would not want to be owning a project that’s coming on the market in the next year or two,’ Prof. Mayer says.”

“The impact of the increased supply is already being felt. A handful of new developments have begun to offer incentives to attract buyers, something nearly unheard of at the height of the boom. Several projects are offering beefed-up commissions, or even gift cards, to brokers who sell units.”

“Blair MacInnes is handling the sale of her 85-year-old mother’s Upper East Side apartment; she listed the two-bedroom co-op in September for $2,095,000, the price recommended by her broker.”

“‘We were very worried about putting the apartment on the market,’ Ms. MacInnes says, ‘but we had been told by any number of people that the exception to the housing crisis had been Manhattan.’”

“The apartment drew little interest, however, and Ms. MacInnes and her mother agreed to cut the price, first to $1,995,000 and then again a few days later to $1,779,000, a total cut of more than 15%.”

“Although the new price has generated more interest but no solid offers, Ms. MacInnes says she and her mother aren’t in a rush to sell. ‘But do we want to wait until the market bounces back?’ she asks. ‘Who knows when that will be?’”

The Times News from Maryland. “The numbers of foreclosures are reaching those of divorce rates. At Allegany County Circuit Court, a civil clerk who is charged with various duties spends nearly 50 percent of her time on them.”

“A court spokesman said he’s seen the number of foreclosures increase over the last five years to the point where attorneys from the metropolitan areas are paying couriers to drive here with paperwork rather than risk sending it through the mail.”

“‘It’s catching up with divorces,’ he said of the foreclosure rate.”

“As the new president of the Historic Highlands Association of REALTORS, Melanie Pratt Dimaio, a real estate agent for 14 years, is well aware of the issue but finds it to be much better here compared to other areas.”

“‘We are very fortunate in our area to only be experiencing a slight increase in foreclosures, mainly in the low- to mid-price ranges,’ she said in a prepared statement. ‘Our local foreclosure rate is not nearly as high as in the rest of the state of Maryland.’”

“‘Local lenders are to be given much of this credit for their conservative lending and appraisal procedures versus Internet lenders who give consumers enough rope to hang themselves with by using over-inflated appraisals from out-of-town appraisers and crazy loan programs,’ she continued.”

“A report issued in October by the Maryland Department of Housing and Community Development, said the ‘growth in mortgage loan delinquency and foreclosures’ actually began in the second quarter of 2005 when the housing boom slowed not only in Maryland, but also across the country.”

“A National Delinquency Survey by the Mortgage Bankers Association found the number of delinquencies in the state reached an all-time high in the second quarter of 2007, which runs from April through June. At 43,980, that’s an increase of 19.8 percent from the first quarter of the year and 30.8 percent more than 2006.”

“Baltimore City along with Prince George’s, Montgomery, Baltimore and Anne Arundel counties have the majority of all foreclosures in Maryland at 75.2 percent.”

“The story is much worse in nearby Washington County, which ranks third in the state for the number of foreclosures. With 125 in the second quarter, that’s a 12,400 percent change from the first part of this year and 6,150 percent change from the second quarter of ‘06.”

From ABC News 7 in Virginia. “One of the communities hardest hit by the foreclosure problem, Prince William county, isn’t just having an impact on those who default on their mortgages, but those trying to sell their homes.”

“After nearly 40 years of memories in a home that is paid off, Larry and Diane Shandor are struggling to sell their house now, because of others in their neighborhood who can’t pay their mortgage.”

“‘How can you compete with a foreclosure home,’ said Larry Shandor. His problem is an unfortunate byproduct of the mortgage crisis; those trying to sell homes in a market flooded with foreclosures.”

“‘This is the worst I’ve ever seen it,’ said Joe Botta from the Prince William County Financial Education Office.”

“New developments in the county continue to bloom. Where sales are soft, homes are still selling.”

“Pable Cava priced his home to compete with the foreclosures and finally sold it after months on the market. ‘I just had to get rid of it. My wife was sick.’”

“The Shandors had to do the same, reduce the selling price of their home. ‘What can you do? It’s just what’s happening right now.’”

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The Monterey County Herald reports from California. “In Monterey County, the numbers are less drastic. But those trying to sell a home face an uphill battle as the inventory of houses on the market continues to climb: The Monterey County Association of Realtors showed 2,732 active home listings in the county last month. That’s up 61 percent from 1,671 in October 2005.”

“Home prices here haven’t dropped as steeply as in many parts of the state and across the U.S., said Monterey County Association of Realtors president Arliene Beesley. ‘I think it’s mostly perception,’ said Beesley. ‘There’s a fear factor: ‘Gosh, will the prices go down more if I buy now?’”

“For qualified buyers, real estate is still a good investment, said Beesley. ‘It’s just getting people to understand not to be afraid, if they buy a good house in a good neighborhood,’ she said. ‘You’ve got to have someplace to live.’”

“While the October median home price in Monterey County declined 10.1 percent from the previous month — down 5.3 percent from the previous year, according to the California Association of Realtors — some of the county’s pricier neighborhoods have a entirely different story to tell.”

“In the third quarter, most of the county saw price declines, from North Monterey County to Pebble Beach, across Salinas and down to the south coast.”

“In East Salinas, median home prices dropped from $528,313 to $395,000, and in South Monterey County, third-quarter sales dropped from $500,000 last year to $385,000. In Marina, third-quarter median home prices slipped from $650,000 last year to $540,000, and Seaside experienced a median price drop from $639,000 to $572,000, according to Monterey County Association of Realtors statistics.”

“Beesley doesn’t sugarcoat the status of the local housing market. It’s been tough on sellers, on real estate agents, on buyers who aren’t sure what move to make.”

“‘It’s a difficult year — we won’t minimize it,’ said Beesley. ‘This real estate downturn has affected the whole country, and that’s every corner of it.’”

The Ventura County Star. “Still stinging from the housing market’s credit woes that have left some potential buyers unable to qualify for financing, Ventura County home sales plunged last month while the median price slid further. Sales tumbled 52.6 percent compared with the same month a year ago.”

“While there’s been ‘a huge falloff in sales’ during the past two years, the median price has held steady, said Bill Watkins, executive director of the UC Santa Barbara Economic Forecast Project.”

“‘It seems the longer sales are weak, the more likely prices will weaken,’ Watkins said. ‘The most likely scenario — we continue to see weak sales and soft prices until developers’ inventories are worked down.’”

“Marcella Poitras, a Realtor in Oxnard, goes door-knocking for up to three hours every day to distribute 100 fliers. Poitras reports her sales have doubled compared with last year. Poitras credits her success to her determination and market conditions, namely the rise in foreclosures.”

“‘The market is saturated with foreclosures, and the buyers are finally ready to buy,’ Poitras said.”

“‘You have to be pretty serious to put your house on the market, because the offers that are out there are not full-price offers,’ said Hope Goss, a Realtor in Ventura.”

“This has been a tough year. October sales at Simi Valley-based Troop Real Estate were off about 30 percent from last year, said Brian Troop, president of the company. ‘Many of my agents are struggling a little bit, and they’ve had to take outside jobs,’ said Troop.”

From ABC 7 News. “That’s where changing locks on homes like this that have gone into foreclosure, has become a bit of a windfall for Joe Grant, the owner of ‘Poppa Joe’s Lock & Key.’ Joe Grant, Locksmith: ‘I’ve done probably 50 houses this year.’”

“With so many houses for sale in Contra Costa, one might think the business of making these signs is booming, but not so. Local sign-makers told ABC7, the demand for signs hasn’t changed much because for every real estate agent who needs a new one, another has gone out of business.”

The Daily News. “Home sales in the San Fernando Valley hit a record low for the second consecutive month in October, plunging 54 percent from a year ago as mortgage industry turmoil continued to roil the market, a trade association said Wednesday.”

“October’s median price slipped an annual 3.3 percent, or $20,000, to $590,000 and was off $33,700, or 5.4 percent, from September, the association said. Sales have now fallen from their year-ago level for a record 25 consecutive months dating back to September 2005. The prior mark was a 23-month decline from April 1989 to March of 1991. The association’s records begin in 1984.”

“From Toluca Lake to Calabasas, Valley home sales took a bigger hit last month than both Los Angeles County and the state.”

“Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., said that the sales numbers are looking like they did in the early 1990s, the last time the market made such a big turndown.”

“‘I think people quickly forget how bleak it was in the early ’90s, but this is going to be a rough period,’ he said of the months ahead.”

“At the end of last month there were 7,730 properties listed for sale in the San Fernando Valley, a 16-month supply, slightly more than three times the stockpile of a year ago.”

“Association president Winnie Davis said…buyers still seem to be betting on big sales price reductions. ‘Waiting may not mean they will get a better deal down the road,’ she said.”

The Tribune. “The housing industry’s credit crunch took a heavy toll on Los Angeles County last month with home sales plummeting 42 percent from a year earlier, the California Association of Realtors reported Wednesday.”

“The region’s median price for October was $533,070, down 6.4 percent from the previous month and off 8.6 percent from October 2006.”

“The biggest local drop in median price occurred in La Puente, which suffered a 13 percent annual decline in October, according to additional information provided by DataQuick.”

“El Monte and La Mirada both posted an 11.4 percent drop in their median price. Other notable declines occurred in Covina (-10.5 percent), Alhambra (-10.3 percent) and Claremont and West Covina, which both saw their median price fall 9.9 percent.”

“‘The decline in sales is a rejection on the part of buyers to the prices that were out there,’ said James Joseph, owner of Century 21 Ambassador in Whittier and Brea. ‘Successful sellers are reducing their prices dramatically.’”

“Los Angeles County officials are bracing for a round of belt-tightening as property tax revenues fall short of expectations on drooping home values and the state prepares to cut off additional funds.”

“The assessed values of properties in the county rose from $570 billion in 2000 to more than $1 trillion this year. And as some people who recently bought homes watch the values drop, Assessor Rick Auerbach said he’s seen a slight increase in the number of people appealing their assessed values.”

“Two years ago, 12,172 homeowners appealed their valuations - this year that’s expected to hit 13,000 to 14,000.”

“Meanwhile, the number of foreclosures as of Sept. 29 totaled about 8,800 - or 8 percent of reappraised transactions - nearly triple the 3,184 last year that accounted for 1.7 percent of transactions.”

“‘Hopefully by the end of May, we’ll be notifying taxpayers for their 2008 assessment if they deserve a reduction in value,’ Auerbach said. ‘Obviously, for most people, a reduction in value means the actual value of the property has gone down in the last year. That’s the bad news because, for most people, their home is their largest investment.’”

“‘The good news, at least in some small way, is that their property taxes will also go down,’ he said.”

The Orange County Register. “Sales at Skyline at MacArthur Place have been halted through Feb. 1, said Cory Alder, president of Nexus Cos., which is developing Skyline. The home-loan crunch that dampened residential sales nudged Nexus to be the second Orange County developer to halt sales on units under construction.”

“‘With the credit crunch, there’s a lot of instability,’ he said. ‘We’re going into the holiday season, so let’s slow down until next year.’”

“He declined to say how many units are in ‘release 1,’ but the company said in late September it had sold 43 units of its 349 units.”

The North County Times. “More bad news came from RealtyTrac, which released figures today showing that foreclosures in California shot up 213 percent in the month of October from the same time last year.”

“San Diego’s foreclosure rate of one in every 260 homes was on par with the state average. The number of filings increased 165 percent during October when compared from the previous year.”

“Riverside County recorded the fourth-worst rate in the state…an increase of 313 percent from the previous year.”

“Analysts predicted that prices will have to drop further in order to work down historic levels of unsold homes and the slump in housing, already the most severe in more than two decades, could last for another year.”

“‘The light at the end of the housing meltdown tunnel appears to be an oncoming train,’ Joel Naroff, an economist with Naroff Economic Advisors, said in response to the new figures. ‘With so many choices and so few buyers, the median price is cratering.’”

The Press Enterprise. “The state is seeking an emergency federal grant to provide retraining for people laid off in the mortgage and banking industries, according to a statement from the state Employment Development Department.”

“Riverside County is one of the locations being considered because it is one of 12 areas in the state hit hardest by layoffs at companies such as Countrywide Financial and Fremont General, EDD spokesman Paul Feist said in an interview.”

“Other one-stop centers are considered for Los Angeles, Orange and San Diego counties, along with locations in Northern and Central California.”

“Gov. Schwarzenegger was in Riverside on Thursday launching a campaign to alert homeowners living in one of the nation’s most mortgage troubled regions to options that may enable them to save their homes from foreclosure.”

“Schwarzenegger announced the $1.2 million public awareness campaign a week after saying he had reached an agreement with four large mortgage servicing companies.”

“Mike Teer, a Riverside real estate broker who was among those to greet Schwarzenegger, said the governor’s loan freeze option would do no good for the majority of homeowners already headed to foreclosure on mortgages that have escalated beyond their reach.”

The Billings Gazette reports from Montana. “The subprime investment jitters have hit Yellowstone County government. On Tuesday, Yellowstone County Commissioners asked the Montana Board of Investments to return nearly $72 million of its investment funds because of the potential exposure to risky loans and other concerns. Yellowstone County Finance Director Scott Turner said he just got nervous and so did the commissioners.”

“‘All three agreed to redirect the money to the bank for now until we get a better comfort level with what’s going on,’ Turner said. In addition to the subprime risks, Turner said he could no longer get a quote on the daily yield or the investment returns on county funds.”

The Missoulian from Montana. “Production and employment in Montana’s wood products industry continued to decline in the third quarter because of the ongoing U.S. housing slump and related low timber prices.”

“Todd Morgan, director of forest industry research at the University of Montana’s Bureau of Business and Economic Research, said Tuesday it is the second consecutive year with significant declines in Montana’s industry because of national housing issues.”

“Morgan said weak markets, mill curtailments and closures can be expected well into next year. ‘I haven’t seen anything yet indicating a recovery in 2008,’ he said.”

The Idaho Statesman. “Home sellers and real estate agents hoping for a turnaround in the Treasure Valley’s housing slump will have to keep waiting. The latest housing data show prices slipping, with little reduction in the backlog of unsold homes.”

“Throughout the market a common sight has become the real estate sign claiming ‘price reduced.’ ‘Prices are coming down. I’ll guarantee you that,’ said George Tallabas, a Realtor in Nampa who has been concentrating on selling farms and ranches since the residential market tanked in late 2006.”

“The problem is the number of homes for sale in the Treasure Valley. October’s statistics showed 7,411 single-family homes in the Treasure Valley awaiting buyers, compared with 6,595 in October 2006. Sales aren’t making much of a dent in the supply.”

“Don Hubble, owner of Meridian-based Hubble Homes, said there are still buyers at the right price. For example, his recent listing of a home in Caldwell priced at $109,990 drew 2,000 hits on the Intermountain MLS. ‘They called us to see if it was mistake because they had never seen a listing get so many hits,’ Hubble said.”

“He said builders can’t offer the same deal in Meridian, even though land prices have fallen from about $160,000 an acre a year ago to below $80,000 as 2007 nears an end.”

“‘We seriously over-built,’ said Boise State University economics professor Don Holley. ‘I think it’s going to take at least a year to work through all that inventory. Maybe two years.’”

The Oregonian. “Almost every Clackamas County homebuilder sings the same refrain these days: There are lots of buyers out there, but they’re scared. Dire news reports about subprime mortgages, foreclosures and glutted markets elsewhere, especially in Sun Belt, have tarred Portland as well, the builders say.”

“‘What’s killing us is the perception of the market,’ said Tony Marnella, owner of Marnella Homes, which has a 115-lot subdivision in Happy Valley.”

“‘You’ve got all those people sitting on the fence. They think if you buy it today it’s going to be worth less tomorrow,’ Marnella said. ‘We’re just waiting to see what happens.’”

“‘For the next 60 to 120 days there are going to be some good values’ as developers clear their backlog of homes, said Ken Hoffman, a north Clackamas County real estate broker. ‘Bankers are saying to builders, ‘You’ve got to move that inventory,’ Hoffman said. ‘Builders are going to have to take it on the chin.’”

“At Oregon City and Canby subdivisions, Sequoia Development is trying to lure buyers by promising to make mortgage payments for six months. Sequoia’s 276-unit condominium and townhouse project just north of Clackamas Town Center has some units available for rent or with a lease-to-own option. Developers and Realtors say that may be a sign a project is struggling.”

“In Canby, Jason Bristol is dabbling in land development as a second career. He is seeking city approval to build 19 townhouses on an acre he owns. He’s currently renting out four houses on the site.”

“Bristol expects a real estate revival. But, he said, ‘every time I check the MLS, I see a lot of the same houses still for sale.’”

“Two years ago, Lori Loen, a real estate broker, knew exactly how she would spend her days, scouring the southwest suburbs, searching for more land to feed an insatiable housing market.”

“A lot has changed since then for Loen and virtually everyone else involved in the region’s housing industry.”

“The scramble to lock up land for new residences is largely on hold as unsold housing inventories have climbed and many potential buyers are clinging to the fence.”

“A smattering of statistics underscores that the suburban housing market, and corollary efforts to buy raw land for new houses, have slowed. The average price of homes sold in Lake Oswego in 2006, for instance, was $596,600, Lake Oswego Realtor Adelle Jenike said, citing monthly data provided by RMLS. So far this year, that number stands at $547,700.”

“‘The prices of homes have dropped, no doubt about it,’ Jenike said. ‘But we’re not seeing anything like the horror stories on television from around the country.’”

“Last month, according to the same information, the Portland area had an 8.4-month inventory of homes for sale. It’s the highest rate of inventory since January 2000, when the figure topped 10 months.”

“In October 2006, by contrast, the inventory was 4.6 months. In 2005, when the area housing market was red-hot, that figure had dropped to 2.2 months, representing one of the lowest inventories in years.”

“‘Two years ago, we all thought things were insane and probably unsustainable,’ said Ken Gertz, owner of Gertz Construction in Tualatin. ‘But by any long-term measures, the Portland market itself is still very strong.’”

“Other parts of the state, he added, aren’t keeping up. Jackson County, for instance, has slowed dramatically in recent months. ‘And Bend is a tomb,’ Gertz said. ‘But we all knew that. There was no way it could sustain the level of growth it had seen the past two or three years.’”

“At the fledgling Villebois master-planned community in Wilsonville, developer Rudy Kadlub is still planning to start construction Jan. 2 on the 73 rowhouses, townhouses and condominiums.”

“‘We’re continuing to take a very aggressive approach,’ said Kadlub, founder of Costa Pacific Communities. ‘The more ‘there’ we create, the more overall traffic there’ll be.’”

“Former Portlander Jacinda Kirk, a 26-year-old renter in suburban Seattle, would like to buy a place outside of Seattle, but she can’t afford it. ‘We left the Portland area thinking it was expensive,’ Kirk said. ‘We moved to Seattle and said, ‘Oh. my gosh. We love Portland prices.’”

“Kirk would like to see prices come down. She keeps clicking through the Internet in search of a deal in Seattle or Portland. Kirk, who’s married with an infant son, recently found a Beaverton home with a yard on a corner cul-de-sac lot. It’s 1,900 square feet, four bedrooms and has 21/2 bathrooms. Price: $350,000.”

“In Issaquah, a Seattle suburb, she found a 1,700-square-foot, four bedroom and 21/2 bathroom townhouse with no grass for her son to play. Price: $440,000.” “‘If we’re going to spend $400,000 for a house,’ she says, ‘we at least want a yard.’”

The News Tribune from Washington. “Though Tacoma’s largest developer, Prium Cos., has yet to make a formal announcement, the company has quietly pulled its eight-story Hanna Heights condominium project off the market.”

“The company, which had not sold one of the 35 units in the building at Sixth Avenue and Fawcett Street despite a recent upgrade to granite countertops and other upscale amenities, is converting the building to apartments.”

“Real Estate agent Julie Sargent, who was attempting to sell the building’s condominiums, said Prium notified her about three weeks ago to halt condominium sales efforts. Hanna Heights is not the only Prium project that has seen the effects of the slowing real estate market and the credit crunch.”

“Near Sixth and St. Helens avenues, Prium’s plans for a 20-story condo tower, Jay Heights, have been put on ice.”

The Seattle Times from Washington. “The housing crunch hit Renton-based First Financial Northwest Wednesday, as the lender said it would set aside $4.5 million because one of its large borrowers, a residential developer, may have trouble repaying $37.3 million in loans.”

“The company…described the unidentified customer as ‘an entry-level builder’ that took out 90 separate loans for projects in King, Pierce and Thurston counties. The single-family homes in those developments sell for an average $300,000 to $400,000.”

“The developer, First Financial said in a statement, ‘has experienced a slowdown in home sales as a result of tightening credit markets, which has [sic] a greater impact on entry-level borrowers.’”

The Seattle PI from Washington. “Seattle’s 12-month reign atop the nation in annual home-value increases came to an end in September, according to a report released Tuesday. Seattle’s annual appreciation has declined for 19 straight months.”

“September’s year increase was the lowest since June 2003, and home values actually dropped from the prior month for two straight months — the first consecutive decline since November 1995 through January 1996.”

“‘That’s really what I’ve been telling folks to expect,’ said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University. ‘Consumers have more choices in the marketplace, and they’re negotiating better deals from sellers.’”

“One of those sitting on the sidelines is Dave Anderson, who moved to Seattle from New York in 2005 for a job. He has been in a position to buy a home for about a year.”

“‘It seems like there’s sort of a euphoria that continues or a denial that the national situation will affect the local market here,’ he said. ‘I think a 5 or 10 percent correction, coupled with sort of a consensus that Seattle is not immune to price declines would make me feel a lot more assured that the bubble is over.’”

The Columbian from Washington. “It’s been four months since Lori and Fred Clark put their Vancouver house up for sale and joined thousands of sellers in pursuit of a shallow pool of buyers.”

“While they haven’t had any offers for their one-story ranch, the Clarks say they’re willing to wait out the market. However, they’ve taken down the ‘For Sale.’ They’ve also cut their price.”

“Despite slowing Clark County home sales, the Clarks don’t plan to take their 2,000-square-foot house off the market. The retired couple say they’re prepared to hold out through the slump.”

“‘It’s just a waiting game,’ Lori Clark said.” “Lowering the home’s asking price to $325,000, down from $339,900, hasn’t helped, the Clarks say. Back in August, their real estate agent was showing the home about three or four times a week.”

“‘There’s been no interest at all since the end of October,’ Lori Clark said.”

“‘They think it’s better to wait for better deals,’ said Sana Mathews, the Clarks’ Realtor. The Clarks are among plenty of sellers. Their home is counted in an 11.4-month supply of new and existing homes for sale here, according to RMLS. Last month’s inventory was up from a 7.2-month supply during the same month last year.”

“The Clarks’ had hoped to sell their Lincoln-area home in time to escape another cool Vancouver winter. They’re planning a move to the warm climate of Albuquerque, N.M.”

“‘But we’re going to wait and do things step by step,’ said Lori Clark. ‘We’ll sell this house and then go there and pick out a place.’”

Some housing bubble news from Wall Street and Washington. CNN Money, “The biggest plunge in new home prices in 37 years was not enough to revive October sales, according to the government’s latest reading. The Census Bureau’s latest report also sharply cut back on its earlier estimates for sales in August and September. Also depressing sales and prices was a record 191,000 completed new homes on the market that have not yet been sold.”

“The report showed that the median price of a new home sold in October plunged 13 percent from year-earlier levels to $217,800. It was most severe year-over-year drop since September 1970.”

“And the price figure may actually be underestimating how the bottom has fallen out of prices in recent months. Most builders are trying to support prices by offering to cover closing costs or adding free extra features on new homes.”

From MarketWatch. ” Sales rose 1.7% to a seasonally adjusted annual rate of 728,000 last month from a revised 716,000 in September, which was a 11-year low. September’s sales pace had originally been reported as 770,000. August’s sales were also revised sharply lower to 717,000, down from 735,000 estimated a month ago and from 795,000 estimated in the first release.”

“Sales are down 23.5% in the past year, a vivid reflection of the carnage in the home-building industry.”

The New York Times. “E*Trade Financial, the Internet bank and brokerage, said Thursday it would receive a $2.5 billion cash infusion from a group led by Mr. Griffin’s firm, Citadel Investment Group. With Thursday’s deal, Citadel will pick up E*Trade’s collection of asset-backed securities.”

“This portfolio includes collateralized debt obligations, which are complex bundles of debt whose value has slumped because of the recent rise in mortgage defaults.”

“Citadel is getting E*Trade’s portfolio for a cut-rate price: It is paying $800 million for assets that had a book value of $3 billion. E*Trade said Thursday it is taking a $2.2 billion haircut on the transaction.”

From ABC Money UK. “LBBW, Germany’s biggest public sector bank, is faces possible writedowns of more than 800 mln eur related to credit turmoil, Financial Times Deutschland reported.”

From Bloomberg. “KfW Group, which organized the bailout of IKB Deutsche Industriebank AG over subprime losses, said an agreement was reached with German banking associations to cover the lender’s remaining risks of about $520 million.”

“The additional risks stem from guarantees given by IKB to other banks providing cash lines to its affiliate Rhineland Funding Capital Corp., which invested in subprime assets, KfW said today.”

“The agreement brings total possible losses to be covered by KfW and German banking associations at IKB and Rhineland Funding to about 6.15 billion euros ($9.1 billion).”

“Four IKB management board members, including CEO Stefan Ortseifen, were relieved of their duties this year as an audit by PricewaterhouseCoopers found the crisis was a result of ‘flawed’ risk management.”

The Gazette. “The Caisse de dépôt et placement du Québec has $13.2 billion in asset-backed commercial paper, its president revealed yesterday. Of that total, $1 billion is invested in subprime mortgages, Henri-Paul Rousseau told the Quebec National Assembly’s finance committee, and, at the worst, the Caisse could write off $500 million in losses on the investment.”

“‘It is a lot of money,’ Rousseau admitted.”

“François Legault, the Parti Québécois finance critic, suggested Rousseau was low-balling the potential loss, saying the $12.2 billion Rousseau considers safe is not immune to loss. Legault said the commercial paper holdings of the Caisse resemble those of the National Bank of Canada, which has announced a potential loss of 25 per cent, calculating that the Caisse could lose $3.3 billion, not $500 million, as Rousseau projected.”

From Thisismoney. “Insurer Catlin came through the hurricane season unscathed, except for Hurricane Subprime. It is writing 86% off the value of its subprime related securities, slashing them from £41m to £6m.”

“This will heighten fears of hits to other insurers, coming soon after a shock £500m credit crisis loss at reinsurance giant Swiss Re. Catlin has a £2.8bn investment portfolio, of which £51m was hit by the US mortgage meltdown. It sold the best of these for £10m, but thinks the rest are worth only 14p in the pound.”

“Numis analyst Richard Gradidge says: ‘It depends how far this crisis spreads’.”

Caribbean Net News. “Catlin said…most of its subprime-related assets are collateralised debt obligations. The insurer said it did not expect to be hit hard by claims resulting from the subprime crisis, saying it had largely pulled out of providing liability cover for financial institutions and the executives of major firms.”

From Reuters. “French bank Credit Agricole doesn’t expect the full extent of the subprime mortgage crisis to be clear before April, its managing director Georges Pauget told La Tribune newspaper on Thursday.”

“‘We will not have a clear view on the deterioration before April, or the middle of next year, because large packages of risky loans issued in 2006 are expected to mature,’ Pauget said.”

“‘The problems of the crisis are essentially problems of transmission. There is a responsibility of the American public authorities regarding the treatment of the subprime problem,’ he said. ‘In my view, the maturity of the loans needs to be extended, the interest rates need to be stabilized, and there needs to be a mechanism to share the losses between the banks and the authorities,’ he added.”

From The Age. “Reserve Bank assistant governor Guy Debelle has compared the subprime credit crisis with the junk-bond collapse in the 1980s and blamed lazy investors who ignored basic risk management.”

“Dr Debelle told the Australian Securitisation Forum that investors had not asked enough questions about why different products rated with similar risk of default paid substantially different returns.”

“‘In theory, securitisation has allowed risk to be packaged and sold to meet the preferences of investors,’ De Debelle said. ‘However, the true nature and correlation of some of those risks has only become apparent to investors in recent months.’”

“Ira Kalish, director of global economics at Deloitte Research, said the worst was yet to come. He predicted that next March would have the most resets on variable-rate mortgages and, subsequently, the most defaults with securities that were backed by the mortgages.”

“‘Unfortunately, we are going to see more resets in adjustable-rate mortgages, likely more defaults on these mortgages and more problems for the securities that are backed up by these mortgages,’ Dr Kalish said.”

“‘The credit crunch is not over, there’s still trouble ahead. We don’t even know where that trouble lies. We don’t know who is holding that stuff (the adjustable-rate mortgages),’ Kalish said. ‘We keep hearing surprises from banks that on a weekly basis increase by billions of dollars the amount that they have to write off.’”

“Dr Debelle said fallout from the failing loans had created a ‘lemon’ effect, with all securitised products — regardless of quality — being sold at cut rates.”

The San Francisco Chronicle. “Here’s more evidence that you can’t call the mortgage crisis a subprime problem. On Tuesday, Wells Fargo said it will set aside $1.4 billion for home-equity loans it expects to go bad in 2008 and 2009. What it didn’t say in its news release was that these are not loans to borrowers with subprime credit scores.”

“‘This was a prime portfolio,’ Wells Fargo spokesman Chris Hammond says.”

“The average FICO credit score for all Wells Fargo home-equity loans is 750, well into prime territory. What probably made these loans risky was not the credit score, but other features, such as no income documentation and high loan-to-value ratios.”

“One mortgage broker forwarded a flyer he received from Wells Fargo, ‘A Guaranteed Home Run With Your Borrowers.’ The flyer, dated February 2006, promoted ‘newly enhanced’ guidelines for stated-income/stated-asset borrowers, who are people unable or unwilling to document their income or assets.”

“Wells says these loans ‘reflect a combination of the most recently originated vintages, with the highest combined loan-to-value ratios, that do not have the added protection of being behind a Wells Fargo first mortgage.’”

“Wells said Tuesday that it will no longer originate home-equity loans through brokers with combined loan-to-value ratios of 90 percent or higher or that are not behind a Wells Fargo first mortgage.”

“‘This is, of course, akin to saying that the barn door will be closed now that the horse is in the pasture and over the hill,’ writes Dick Bove, an analyst with Punk Ziegel & Co. ‘What is particularly disappointing about this incident is that observers of this company never expected Wells to be making these types of loans in the first place. The most damaging part of the company’s revelation is that this company’s underwriting standards may be weaker than thought.’”

“Trading in a benchmark credit derivatives index suggests eight of the 125 companies in the index may default, a situation that ‘is certainly conceivable’ if the economy deteriorates significantly, Wachovia Corp. analysts said.”

“The Markit CDX North America Investment Grade Index, used to speculate on the creditworthiness of companies including mortgage lender Countrywide Financial Corp. and homebuilder Lennar Corp., is trading at levels that imply at least eight defaults in the next five years, Wachovia Securities analysts led by Richard Gordon, wrote in a report yesterday.”

“‘Out of those 125 credits, there are four homebuilders and a number of lenders and insurers with significant mortgage exposure,’ the analysts wrote.”

“Securities firms and banks sold ‘too many lottery tickets’ tied to U.S. mortgages and failed to look closely enough at their growing risks, the head of the Securities and Exchange Commission’s market regulation division said Wednesday.”

“Financial companies had ‘a significant risk-management failure’ on so-called super-senior classes of collateralized debt obligations made up of asset-backed bonds, according to the text of remarks Erik R. Sirri made at a conference.”

“The CDO classes were ‘a perfect structure to lull even sophisticated traders and risk managers into a state approaching complacency,’ Sirri said.”

“The cost of borrowing in euros for a month rose by a record and loans in dollars climbed the most in more than a decade as banks sought funds to cover their commitments through to the start of 2008 amid a credit squeeze.”

“The London interbank offered rate that banks charge each other for euro loans due after the end of the year jumped 64 basis points to 4.81 percent, the highest since May 2001, the British Bankers’ Association said.”

“The rate for dollars jumped 40 basis points to 5.23 percent, the highest since Sept. 18, when the Federal Reserve cut the target rate for overnight loans for the first time in 4 1/2 years.”

“‘The increases we’ve seen in borrowing costs cannot be simply explained away by year-end pressures; this is a full-on credit crisis,’ said Stuart Thomson, who helps oversee $46 billion in bonds in Glasgow, Scotland. ‘There’s no end in sight either. It’s a really unpleasant picture.’”

“The money market liquidity crunch, which began in August after the U.S. subprime mortgage fallout, is deepening further as banks pay a higher premium for cash to meet funding requirements around the Christmas and New Year period, typically the time banks close their books.”

“That rise of around 65 basis points marked the biggest jump at the daily fixing since early 1995, according to Reuters charts, and higher than any increase seen in the run-up to the ‘Y2K’ scramble for liquidity at the 1999-2000 millennium crossover.”

“UBS said liquidity tensions, which have been apparent in unsecured interbank lending, are reaching the secured, collateralised market as the spread widened between rates in euro repo and the European Central Bank’s long term financing operation.”

“Goldman Sachs said money market tensions stemmed from banks aiming to shore up their balance sheets before year-end in the face of pressure on capital ratios.”

“‘While a year-end effect in the money market is typical, it is exacerbated this year due to deterioration in capital ratios arising from U.S. subprime and other credit market losses,’ the bank said in a note to clients.”

“The liquidity squeeze persists even as central banks pledge to inject more liquidity to prevent a financial system seizure.”

“‘Money market pressures are likely to escalate towards year-end…Central bank actions are less likely to alter these trends before year-end. Liquidity operations can help smooth out spikes in spreads, but it is doubtful this will stop long-dated money spreads from trending wider,’ Goldman said.”

The Union Network International. “The global economy is just at the beginning of a financial crisis, UNI General Secretary Philip Jennings told a meeting of the UNI-Europa Finance Committee, meeting in Nyon, Switzerland.”

“‘We have a crisis of confidence, supervision and regulation,’ he told representatives of Europe’s finance trade unions. ‘We have to raise question marks against the financial markets and the global economy.’”

“The Committee agreed to set up a study to look at how regulations and supervision can be improved to help restore confidence in a global financial system that has been shaken by a subprime crisis, a credit crisis, fears of a recession in the USA, and a growing number of job losses in the finance sector.”

The Bradenton Herald reports from Florida. “The Florida Association of Realtors cited disruptions in the mortgage market and tightening credit as factors affecting Florida’s housing market. Statewide, sales of existing single-family homes fell 29 percent in the year-to-year comparison. The median price of homes statewide was $222,100, compared to $242,700 a year earlier.”

“While those numbers showed the local housing market continuing to struggle, things were worse in many parts of the state.”

“The picture was somewhat brighter in the local condominium market. Barry Gould of Island Vacation Properties attributes the falling condo prices and the increased number of sales to the same thing: investors.”

“‘Part of the reason is there were a lot more condos purchased as speculation houses and some of these people have to sell,’ Gould said.”

The Naples News from Florida. “Home sales continued their unsettling trend downward October both locally and around the state. ‘I know as an owner/broker I should be looking at those numbers every month when they come out, but it’s gotten to the point that I sometimes feel like I don’t want to hear it,’ said broker Joe Pavich. ‘I always try to stay upbeat, and I think we’re near the bottom, but the numbers can be discouraging.’”

“Figures for Lee County condos were bleak, with the median price and the number of sales both down 28 percent. Lee Clerk of Courts Charlie Green said there were 1,809 foreclosures in Lee County in October, up from 1,326 in September.”

“Pavich said sales prices today resemble what they were in 2002 and 2003, and serious sellers need to remember keep that in mind. ‘Nobody cares what you paid for your house and nobody cares what you owe on your house,’ he said. ‘It’s a buyers market and that’s what the price needs to reflect.’”

The News Press. “The number of sales of existing homes in Lee County was 405, down 36 percent from 630 in October 2006. With about 15,000 houses for sale in the county, selling a house can be tough.”

“‘In January it’ll be a year I’ve had it up for sale,’ said Rob Ross, who’s trying on his own to sell his three-bedroom, two-bath home in the Silver Lakes community in Gateway for $277,000. ‘The irony is I listed it myself thinking I could pass the savings on to a potential buyer but I’ve just been chasing the market down.’”

“Ross started out with an asking price in the mid $290,000s before cutting the price, and expects he’ll have to cut his price again because there are so many houses for sale in Silver Lakes.”

“‘I don’t like taking any listings in Cape Coral — I don’t believe I can sell those,’ said Alva-based real estate broker Cindi Infiesto. ‘The Cape is saturated with (speculatively built) homes and investor-related homes that are going into foreclosure. I didn’t see anything moving.’”

“The Bonita Bay Group eliminated 14 jobs Tuesday, bringing the cuts to 74 since the beginning of the year. ‘It’s basically because of the current real estate market,’ said spokeswoman Meredith Parsons.”

“Lee County has bigger problems than just foreclosures to contend with — the economy is already contracting sharply as the construction and real estate markets collapse, said Ray Kest, an economics professor at Hodges University who tracks local economic indicators.”

“‘I was shocked,’ Kest said, when he analyzed state sales tax figures for 2007. Since May, revenues collected have been lower than 2006 levels each month. ‘Our economy is hurting a lot more than people realize, and it’s hurting in all sectors.’”

“The bad numbers are a result of higher unemployment, Kest said — 5.3 percent in October compared to 2.8 percent a year earlier. ‘Those construction people were making a lot of money and spending a lot of money. The real estate people were buying Mercedeses and Lexuses; they’re not buying those anymore.’”

The Miami Herald in Florida. “House hunters looking for a bargain may want to consider a condo in Broward County. After falling for five straight months, the median price for Broward condominiums hit $159,300 in October, down 24 percent from a year ago.”

“Broward’s condo price drop was a singular dramatic move in a market characterized for more than a year by a standoff between sellers who don’t want to lower prices and buyers who refuse to pay up.”

“Of course, some sellers have been dropping their price, just not enough to entice buyers. Take Scott Parsons, a restaurant franchisee wishing to leave South Florida. He lowered the price on his three-bedroom, two-story town house in Pembroke Pines’ Villas Lake from $312,000 to $290,000.”

“‘We weren’t getting close to what we needed,’ Parsons said. ‘The offers were outrageous, $240,000, $250,000, on a town house that appraised for $330,000 eight months ago. The market is so terrible.’”

“After listing the town house for six months, Parsons said he has decided to keep it and tough it out until the market rebounds. ‘We’re willing to stay another two years,’ he said.”

From TC Palm in Florida. “The Martin County median home sales price in October was $225,000 down from $269,000 last year.”

“‘The numbers continue to show what appears to be a leveling off of the market for Martin County,’ said Dave Derrenbacker, president of the Realtor Association of Martin County.”

The Sun Sentinel from Florida. “Palm Beach County’s median price for existing homes fell in October for the 15th consecutive month, and analysts say sellers should brace for more hardship ahead as the housing slump intensifies.”

“‘It’s uncomfortable, but it makes sense,’ said David Levin, a housing consultant in Delray Beach. ‘We have to undo the excesses of our recent buying binge.’”

“The county’s median now has slid 17 percent since peaking at $421,500 in November 2005. The median price for existing condos plummeted 30 percent to $158,900 from $225,500 a year ago.”

“‘There’s no way we could sustain that,’ said Gus Pasquale, co-founder of Element Funding, a residential lender in West Palm Beach. ‘What we’re going through is a correction to a more affordable plateau.’”

“Candy Pritchard has been trying to sell her five-bedroom home west of Palm Beach Gardens since the summer. She originally listed the property on an acre lot for $649,000 but has since dropped the asking price to $599,000.”

“Unable to maintain the expensive property, she realizes she may have to come down even more before prospective buyers make an offer. ‘It’s a great market to buy, just not to sell,’ said Pritchard. ‘It’s very slow, very frustrating. If I didn’t have to sell, I wouldn’t.’”

The Palm Beach Post from Florida. “Condominium sellers blinked first. Prices of existing condos in Palm Beach County plunged in October - the sharpest annual decline since the Florida Association of Realtors started tracking them in January 2006.”

“‘Individual sellers are becoming more realistic and lowering prices,’ said Jack McCabe, a Deerfield Beach real estate consultant specializing in the condo market. Seller incentives have failed, he said, and appraisers have ‘returned to fundamentals.’”

“Palm Beach County has a 35-month supply of existing condo units, McCabe noted.”

“Despite falling condo prices, sales continued to decline. In Palm Beach County, sales of existing condos fell 12 percent, and on the Treasure Coast they fell 13 percent.”

“There’s a record four-year supply of condos and single-family homes for sale in Palm Beach County, according to Illustrated Properties Real Estate. ‘The high inventory shows that there is still a gap between buyer and seller expectations regarding price,’ said Mike Pappas, CEO of The Keyes Co.”

“The Seasons at Tradition was to be a gem of a 55-and-over community: Celebrity mansion-size clubhouse. Ten tennis courts. Indoor-outdoor pool. An activities director.”

“Now, the guard gate is guardless. The clubhouse, tennis courts and pool were never built. The activities director is being laid off today. And the fate of more than 1,000 unfinished lots in the community is unknown.”

“The Seasons’ builder, Levitt and Sons, got the go-ahead Tuesday in bankruptcy court to abandon its incomplete lots at the Seasons, plus about 3,000 others across the state.”

“‘It really is like living in a ghost town,’ said Phyllis Visakowitz, a retired nurse who moved in May from Great Neck, N.Y., into a $457,000 home at the Seasons. Among the seven homes on her cul-de-sac, hers is the only one occupied.”

“Other residents are living between denuded lots and half-finished homes with tiles stacked on the roofs. ‘It’s very scary when you feel totally abandoned,’ said Visakowitz.”

“The builder stopped construction in October, but not before it managed to close on about 90 homes at the Seasons, the largest of its 11 active-adult communities under development in Florida, Georgia and South Carolina.”

“In a sense, the Visakowitzes are among the lucky ones: buyers whose homes were finished. Sixty-four other buyers at the Seasons put down deposits on homes that Levitt and Sons never finished, court records show.”

“West Palm Beach residents Jerome and Marlene Greenfield shelled out a 10 percent deposit on a house at the Seasons in May. Now they have no idea whether their home will be completed or they will get their money back. ‘We were fortunate that we hadn’t sold our present home,’ said Marlene, who declined to reveal the amount of the deposit.”

“Residents, including Bill Quattrocchi feel that their home values have taken a hit. Quattrocchi thinks the builder duped him with a phony sales lottery that increased his home price by more than $27,000. ‘I saw this here as a promising community,’ Quattrocchi said. ‘A lot of pluses here, but we were deceived.’”

The Atlanta Journal Constitution from Georgia. “‘We were never a bubble market,’ insists Eugene James, director of the Atlanta regional office of Metrostudy.”

“Yet somehow, that nonexistent Atlanta bubble seems to have popped. New-home construction has taken a real blow, with ramifications that will ripple through the region and could significantly alter how Atlanta grows.”

“For example, the crunch is hitting hardest in exurban areas where thousands of lots sit vacant. Overall, it would take 40 months to build homes on all the vacant lots in the Atlanta region, according to James — twice the normal inventory.”

“That’s consistent with a report from the Atlanta Regional Commission that development of open land in the metro area has fallen 70 percent in the last two years.”

“The decline has even become apparent in our school systems, where classroom trailers have long been needed to handle the overflow of students. This year, when metro schools opened, enrollment fell 10,000 students short of projections.”

“‘Anybody tied to residential development — the carpet industry, the building supply industry, real estate attorneys — is feeling the impact of this,’ James says.”

“The strain is being felt particularly in local banking, which has made handsome profits for years by financing developers and land speculation. Now, with lots sitting unsold, developers have a hard time making payments.”

“‘I understand there are quite a few banks in the metro area, and some in the rest of the state, that got too much into land development,’ says state Sen. Tommie Williams, a member of the Senate banking and finance committees. ‘Auditors are specifically asking banks what percentage of their loans are in speculative land development.’”

“That warning is echoed by a federal bank regulator, who told me that they’ve already seen ’severe asset-quality problems emerge at several metro-area banks. If the real estate market does not turn around soon,’ he says, ‘I think the problems could get really big.’”

“According to James, the hesitancy of would-be Atlanta home buyers can be blamed in part on media coverage of collapsing prices in California and Florida. ‘Prices weren’t tumbling here, but all the news in the national media started artificially forcing prices down [for new-home construction],’ James says.”

The Sun News from South Carolina. “Shaken investors along the Grand Strand are being extra cautious, experts say. Many are shying away from real estate and finding other investment vehicles - or not investing at all.”

“‘There’s money on the sidelines right now, waiting for the bottom of the market,’ said William Harrison, director of the Center for Real Estate at the University of South Carolina. ‘Once that money has perceived the bottom, you’ll see that money moving into the residential market to take advantage of those rates.’”

“But nobody is sure when that will be, he said. Some predict there may be an uptick in the market as early as the spring, but Harrison doubts it will be that soon.”

“‘A lot of us tend to want to believe good news that there is a solution to this around the corner, but there’s not, and I’m one of the believers that it is going to get worse before it gets better,’ Harrison said.”

“Local real estate analyst Tom Maeser said he sees a rebound in the residential market sooner rather than later. ‘The main reason buyers aren’t buying right now is because they’re being told by the financial media to hold on, prices are going to go down. I think our buyers are going to start realizing that the prices are not going to come down a whole lot,’ Maeser said.”

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The Used House Salespeople report on October results in California. “Home sales decreased 40.2 percent in October in California compared with the same period a year ago, while the median price of an existing home fell 9.9 percent, C.A.R. reported today. ‘Financing issues have dogged entry-level buyers since early 2007, but they spilled over into the middle and upper-tier markets in the last few months,’ said C.A.R. President William E. Brown. ‘The decline in sales at the upper end of the market contributed to a significant decline in the statewide median price as even well-qualified borrowers had difficulty securing financing.’”

“The median price of an existing, single-family detached home in California during October 2007 was $497,110, a 9.9 percent decrease from the revised $552,020 median for October 2006, C.A.R. reported.”

“C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in October 2007 was 16.3 months, compared with 6.4 months (revised) for the same period a year ago. In a separate report covering more localized statistics generated by C.A.R. and DataQuick, 13.9 percent, or 41 out of 296 cities and communities, showed an increase in their respective median home prices from a year ago.”

The Ventura County Star. “On Sunday, Kennedy Wilson Auction Group will offer the homes for sale, beginning with minimum bids of $295,000 to $375,000. The homes this summer were priced from $537,000 to $619,000.”

“‘Basically, it’s driven by the market,’ said Rhett Winchell, president of the Beverly Hills-based auction firm. ‘Sales have slowed over the last year, so builders are looking for other options.’”

“In early November, the company sold all 45 condos remaining in a Benicia development and the remaining seven homes in a Pinole project. Some of those Northern California properties sold for $100,000 less than what they’d sold for in the summer.”

“The sagging market has also been dogged by tighter lending rules, making it difficult for those who are ready to buy, said Gustavo Ramirez, owner of Realty World/Adelante Mortgage in Oxnard. ‘In years past, all you needed is a pulse to get a loan,’ said Ramirez, who has been in the industry for 20 years. ‘That’s changed.’”

“Mark Schneipp, of California Economic Forecast in Goleta, said done right, the auction is the purest distillation of what the true market value of the homes is at this time.” “In essence the auction could ‘establish the new market value’ for homes in that part of Oxnard, he said.”

The Orange County Register. “Orange County foreclosures are rising at a faster rate than they did during the last significant housing slump, in the 1990s, according to an Orange County Register analysis of DataQuick numbers.”

“For example, last month there were more than 500 foreclosures in the county; 12 months earlier there were about 100 foreclosures in a single month.”

“In the 1990s, the growth to more than 500 foreclosures a month from more than 100 a month took 55 months.”

“Walter Hahn, a real estate economist in Irvine who has analyzed several housing cycles, said the loose lending of the boom that preceded the bust far outpaced anything in the ’90s.”

“This time around ‘anyone with a pulse’ could get a home loan, and lenders pushed low teaser rates offered for one year to five years, he said.”

“‘There is no point in fooling around with historical data, because we have never seen anything like this,’ Hahn said.”

The Voice of San Diego. “In the San Diego County breakdown of the Case-Shiller index, data shows that the lowest of the three price tiers appreciated the most during the boom, and has fallen the furthest over the last year.”

“Economists aren’t surprised. The easy financing that swung open the homeownership gate for unqualified buyers fueled a speculative market that sent the region’s house values soaring. ‘Subprime is what drove prices up so high, and what subprime has giveth, subprime has taketh away,’ Thornberg said. ‘Overall, the upper echelons of prices have to come down just as much.’”

“Bob Wilson, a real estate agent who’s been in the business since 1990. He has a condo listing in the Mid-City area in San Diego where his seller owes more than $180,000. The condo won’t likely sell for more than $107,000, he said.”

“‘It doesn’t surprise me that the bottom is going out of the bottom,’ he said. ‘They’re the people who can afford it the least.’”

“Looking at data on the region’s MLS on Tuesday afternoon, Wilson said the listings that have closed escrow in November represent just 5 percent of the total properties listed for sale. ‘That number is beyond scary,’ he said. ‘When you have such low (sales) numbers, prices can only drop.’”

“Thornberg said a region’s markets are inextricably linked. Dropping prices in an inland market pulls demand from the subsequent markets all the way to the coast. And decreased demand will lower those other markets’ prices.”

“‘[Realtors] were telling us everything was fine, but now they’re telling us all real estate is local,’ Thornberg said. ‘But when are you going to stop believing the [expletive]? The reality is your house is not worth as much as you think it is.’”

The Bakersfield Californian. “Kern County’s economy slowed between July and September as the housing market continued to slide and business and consumer confidence waned, according to a report released Tuesday by Cal State Bakersfield.”

“Despite the journal’s publisher, Abbas Grammy’s confidence that the recent spike in local home foreclosures is part of a normal cycle, he conceded that he had underestimated the severity of the downturn.”

“County records indicate that, between January and October, 2,174 Kern homes were foreclosed on. During the same period last year, the total was 255.”

“‘I did not expect the housing market to be in such a prolonged recession,’ he said, ‘and that is perhaps the only soft side of our economy — that the housing market is not going to recover perhaps until 2009.’”

The Press Enterprise. “The meltdown of Inland Southern California’s housing market and the dramatic increase in foreclosures could mean an economic hit of more than $2.3 billion next year, a study released Tuesday found.”

“The weak housing market means less construction work and fewer jobs processing loan applications and homeowner’s insurance. It also means fewer people going on spending sprees for furniture, appliances and other additions.”

“‘The last few months has been kind of slow,’ said Erick Ceniceros, general manager of Macias Furniture in Riverside. ‘People are just not buying like they used to. It’s a problem for everybody.’”

“‘All of that is probably from the decline in construction activity, residential and, to some degree, nonresidential, said ‘Chapman University economist Esmael Adibi. ‘If you cut the number of building permits, it will create some vacuum in spending. All of that construction activity generates quite a few dollars.’”

“Regional economist John Husing said the area could be hit harder than most if gas prices stay high because Inland residents earn less than those Orange and Los Angeles counties and are less able to handle a spike. That could make the economic growth Global Insight predicts harder to achieve.”

“‘That level of growth could be optimistic,’ Husing said.”

“A recession is defined as a decline in growth for two consecutive quarters. The report predicts only Pascagoula, Miss., will produce less growth.”

The Appeal Democrat. “From the lead of a sinking home market, a Yuba City real estate brokerage hopes to spin a bit of gold for some would-be house buyers.”

“Some 25 people are expected to visit houses in north and west Yuba City during a unique tour Saturday; a tour of homes whose previous owners defaulted on their payments, caught in a wave of home-loan defaults that has drastically slowed housing sales starts in the Mid-Valley and nationwide.”

“‘This is something that’s already happened and is beyond everybody’s control,’ said Margo McLeskey, the broker organizing the tour series. ‘We’re trying to help people who couldn’t afford a house two or three years ago to get into the market in a healthy, strong way.’”

“Saturday’s tour will be the second organized by ERA Showcase in the Mid-Valley since mid-October, and the brokerage plans six more events by the end of March.”

“A bus will take hopeful buyers – along with Realtors and mortgage-firm officials – on a four-hour circuit of about 10 houses in north and west Yuba City, ranging in price from $200,000 to about $450,000.”

“Third-quarter foreclosures in Yuba, Sutter and Colusa counties, for example, totaled 436 this year, compared to 161 in the same quarter in 2006, DataQuick reported last month. Statewide, home defaults jumped from 27,218 to 72,571 from the third quarter of last year to the same period this year.”

“‘There’s nothing we can do about the past, but we can hopefully help people in the future,’ said McLeskey. ‘It’s the reality of what has happened across the nation.’”