The Housing Bubble

The Press Enterprise reports from California. “End-of-the-year deals on a glut of built but unsold homes are in full swing in the Inland counties, as builders slash prices, subsidize mortgage rates and sometimes help to sell their customers’ existing houses. Borre Winckel, executive director of the Riverside County chapter of the Building Industry Association of Southern California, said the price discounting on new homes is the steepest the industry has ever seen.”

“‘Very few (builders) are making money on any of the homes and a lot are taking losses,’ Winckel said.”

“A measure of how deep the housing market has sunk in a year is that builders are now routinely forfeiting profit by cutting prices, often by 20 percent or as much as $100,000 and more per house, industry consultants say.”

“Many builders last year predicted buyer incentives would no longer be needed in the spring, when they expected home sales would rebound. But sales plunged further. So this year, as the holiday slowdown approaches, many builders are including yesterday’s designer upgrades as standard features and concentrating on making their homes more affordable by discounting prices and buying down mortgage interest rates.”

“‘It is more about price and monthly payments than about granite countertops now,’ said John Burns, president of Irvine-based John Burns Real Estate Consulting.”

“Recently there were 5,221 newly built and unsold houses in Riverside and San Bernardino counties and another 7,790 houses under construction, said Steve Johnson, a director with MetroStudy.”

“Winckel said builders slashed prices quickly and aggressively with the aim of pushing the market to a bottom that would draw buyers back. ‘They wanted to create a bottom of the market. But it hasn’t happened yet,’ Winckel said. Instead, he said, price cuts have fueled consumers’ worries that any house they purchase now could decline in value, prompting many to wait for an even better deal.”

“On Sunday afternoon, Brian and Renee Katayama were visiting the model homes at Gavilan Springs Ranch, a community of large single-story homes on 2- to 2 ½-acre lots. The subdivision was part of Century Vintage Homes’ advertised ‘One week only! Huge Inventory Reduction Sale.’”

“It was the last day of the sale offering up to $200,000 in reductions off the original sales prices, but the couple said they were in no hurry to buy.”

“Renee Katayama said they are expecting the Federal Reserve will take further steps that could lead to lower mortgage rates, and that an explosion in foreclosures next year could cause home prices to ‘tank’ even more.”

“‘We are hoping it all comes together,’ she said.”

“At the Main Street townhouses Sunday in Corona’s Dos Lagos development, Dave Corbet said he would buy a home if he could get a deal a bit better than the discounts of up to $102,000 outlined on the price sheet.”

“‘I’m going to negotiate big time, or I’m not going to do it,’ Corbet said.”

“‘Most of us will be flexible,’ said Mike Dwight, VP of marketing for Ontario-based Frontier Homes. ‘When somebody walks into the sales office the first thing they ask is ‘What do you have for incentives?’ Our sales people…respond, ‘What do you need?’”

The Orange County Register. “ResMae Mortgage Corp., a Brea-based subprime lender, stopped funding new loans on Tuesday, citing ‘unprecedented’ market conditions, according to an e-mail sent to mortgage brokers and its Web site. The company, which emerged from bankruptcy in June, said the move is temporary.”

“Lou Pacific, a mortgage broker and consultant in Mission Viejo, said he expects ResMae to ‘lay low,’ cut staff and see if the market rebounds.”

“But the housing market will get worse before it gets better, Pacific said. ‘I honestly feel like with the amount of foreclosures on the market on a daily basis prices are dropping,’ Pacific said.”

“According to a state employment site, ResMae plans to cut 72 jobs in Brea on Nov. 18. That follows 185 cuts in May. ResMae filed for Chapter 11 bankruptcy on Feb. 12 after Merrill Lynch demanded it buy back $308 million in loans.”

“Lennar Corp. is slowing development of two major projects in Irvine and Anaheim, holding some homes back from the market until conditions and prices improve, a company official said Tuesday.”

“The Miami-based company, which has about two dozen developments in Orange County, will halt sales of 259 low-rise condos in its Central Park West development in Irvine, said Emile Haddad, Lennar’s chief investment officer.”

“The company will take orders on the 240 high-rise units there, but won’t offer discounts to encourage sales, he said.”

“The company had completed the infrastructure in the A-Town Metro project, west of Angel Stadium, and had planned to start construction in January on 2,681 homes in up to 11 high-rise towers. The size of the A-Town Stadium project…also has been downsized.”

“The delays, in place at least until next spring, and possibly extended after that, are to reduce the number of unsold homes being added to an already sluggish housing market, Haddad said. The company wants to hold out for prices it envisioned for the projects, he said. The delays could stay in place until 2009 if the market doesn’t improve.”

“Haddad said the company also is considering the conversion of A-Town Stadium condos into apartments, or it could sell the project to an apartment developer.”

“‘It’s hard for me to imagine that they’d leave newly built buildings unoccupied,’ Irvine Councilman Larry Agran said when told about the delay.”

The Gazettes. “It’s back to square one for Lennar Homes, the developer seeking to replace SeaPort Marina Hotel with a mixed-use project at the corner of Second Street and Pacific Coast Highway.”

“In a letter dated Oct. 22, Lennar project manager Bea Bea Jiménez formally withdrew the project from the city’s entitlement process. Lennar representatives had been scheduled to go before the City Council next Tuesday, Nov. 5.”

“That hearing was to decide an appeal of a March 15 approval from a split (3-2) Planning Commission for the project to raze the hotel and replace it with 425 for-sale lofts and townhomes, with 170,000 square feet of retail and restaurant space.”

“‘We have decided at this time that we need to continue to refine our proposal. Among the refinements under consideration are integrating a boutique hotel into the mix of uses and reducing the number of condominiums,’ spokesman Glenn Bunting said.”

Inside Bay Area. “The party may be over for those using vacant homes as gathering spots. The Manteca City Council approved a series of ordinances aimed at regulating residential noise at certain times of night and keeping vacant homes secure by fining property owners.”

“City leaders pointed to foreclosures as the major reason for the vacant home ordinance.”

“The foreclosure homes are being used for teen parties, homeless squatting and drug use, according to police reports. ‘(The ordinances) should greatly reduce the locations that are attractive nuisances in our neighborhoods and turn into party houses,’ said Manteca Police Capt. Dave Bricker.”

“The vacant home ordinances give Manteca the ability to dole out civil penalties of $1,000 per violation per day, or up to $100,000 per structure per year. Manteca also now has authority to abate a home by keeping it properly boarded or maintained at the property owners expense.”

“‘It’s been my experience, a good deterrent is hitting someone in their wallet,’ Councilman John Harris said.”

The Desert Sun. “He talked about the ‘R’ word and advised 150 business professionals and academics attending the Urban Land Institute conference on the economy to brace for a long, turbulent ride in the real estate market.”

“‘Worse years in housing are not behind us, but in front of us,’ said Christopher Thornberg, president of Beacon Economics. He predicted it would be 2009 till the tide turns on the housing market.”

The Mail Tribune reports from Oregon. “The median October sales price for an existing home in Jackson County was $245,500, 12 percent below the $279,950 price a year earlier. Going into winter, sales generally fall off, but prices haven’t necessarily declined during the off months during the 2000s. The slumping sales prices are a clear sign of more sellers than buyers at the moment.”

“For Ron Galbreath, a top seller in Medford, that means wrestling with sellers over what they would like to get and what they will likely receive for their property.”

“‘I try to get clients to realize the realities of this market,’ Galbreath said. ‘When you do a market analysis telling you this figure would be the value of your home, in today’s market you have to price it 5 to 10 percent less. I’ve told my clients, if they don’t have to sell right now, then don’t sell.’”

“Galbreath said refinancing appraisals from last year are useless. One Reddy Avenue property in Medford was appraised for $340,000 last year, but it’s on the market for $249,000.”

“‘And it’s still not selling,’ he said.”

“‘I heard about an agent the other day that waited until the last day before closing to give the seller disclosure form to the buyer,’ said Doug Morse, an agent (in) Medford. ‘The buyer backed out. If everything doesn’t get done on time, it can be a real deal buster right now.’”

“‘A lot of people have lowered their prices and some (sellers) are losing money,’ Morse said.”

The Dalles Chronicle from Oregon. “With winter settling in over a cold residential real estate market, some Central Oregon builders are rolling out the deals to get something — anything — to move. And Woodhill Homes, a builder of multiple subdivisions in the region is, in effect, partially converting itself into a landlord for the winter to keep its cash flows moving.”

“The builder will probably sell 50 homes this year, co-owner Jay Campbell estimated, but that’s only about half of its early year target. Meanwhile, with its construction pace pared to the minimum, the rents and lease-to-owns help keep the bills paid.”

“‘We are in the business of buying and selling homes, but this is what we have to do today in order to see tomorrow,’ Campbell said.”

“Woodhill isn’t the only builder trying to navigate through a frigid sales environment. Sales of single-family homes on an acre or less were down 27 percent through the third quarter of this year in Bend, compared with the same time last year, according to the Central Oregon Association of Realtors. In Redmond, the volume plunged 48.3 percent.”

The News Tribune from Washington. “Pierce County home prices dipped again in October, marking the second consecutive month of year-over-year decreases as sales remained down. At the same time, 33 percent more homes were for sale than in October 2006.”

“Coldwell Banker agent Sharon Benson said Tuesday that she’s not concerned about Pierce County’s price declines, which she attributed to the market normalizing in the post-boom years. Buyers today, she said, are more picky and bring contingencies, such as the need to sell a first home.”

“‘Some buyers are just not making commitments,’ she said. ‘Buyers at some point are going to realize sellers aren’t going to give their houses away.’”

“The median home price in King County dipped to $387,500 while the number of listings was up 44.3 percent, higher than Pierce County’s year-over-year increase. Snohomish County’s listings jumped even more, by 51.6 percent. Its October decline in sales, however, largely mirrored Pierce County’s as they fell 34 percent.”

The Olympian from Washington. “October home sales in Thurston County fell 13 percent from a year ago, but demand for homes was strong enough that the median price rose four percent in the same period, according to the Northwest MLS.”

“Broker Steve Cahill said a drop in home sales, higher levels of inventory and stricter lending standards have contributed to a slower Thurston County housing market compared with last year.”

“‘We could sugarcoat it but that’s the reality,’ Cahill said.”

“Yet those same factors, such as higher levels of inventory, have helped to create a buyer’s market here, one of the best Cahill has seen in 15 years, he said.”

The Columbian from Washington. “Eleven homes to be auctioned by trustee’s sale drew a recent Friday morning crowd of about 40 people to the Clark County Public Service Center.”

“As Clark County’s once booming housing market slows and foreclosures here rise. Data released by RealtyTrac showed 374 foreclosure filings in Clark County during the third quarter, compared with 180 filed during the same period a year ago, and 182 filed during the third quarter in 2005.”

“‘In the future, I would say there are going to be more,’ said Mike Worthy, CEO of the Bank of Clark County.”

“Research is imperative, said Gary Colemansmith, a Vancouver investor. ‘The property owner might owe $240,000 on a first loan and $60,000 on a second (for $300,000 total), and the house is only worth, maybe, $270,000 because prices are down,’ he said.”

“Auctioneer Sam Burton said he’s noticed investors have changed tactics in the three years since he began conducting the sales. ‘I see them buying the lower-end houses instead of those on the high end,’ he said. ‘More higher-end homes are going back to the bank.’”

“Burton said part of his work includes posting notice of an impending trustee’s sale on the door of the home to be auctioned. Burton said he’s been posting more notices lately.”

“‘Last year, we maybe had three or four postings a day. This summer, we were doing between 10 and 30 a day,’ Burton said.”

The Seattle PI from Washington. “Many prospective Seattle home buyers welcome signs that prices are declining. ‘I think (prices) are way out of sight, and I’m glad to see they’re finally coming down,’ said Steve Noah, while outside a Capitol Hill open house in October.”

“The latest evidence came Tuesday, when the Northwest MLS reported that the typical home in Seattle and King County sold for less in October than it did during the same month in 2006. It was the second consecutive year-to-year decline in median price for Seattle and the first for the county after more than five years of monthly price increases, year over year.”

“Meanwhile, the city and county continued to have fewer sales and many more homes languishing on the market than a year earlier.”

“‘I wouldn’t want to overpay for a house right now,’ said Jessica Bora, who has been looking at homes with her husband for about a year.”

“Noah, who has been looking at homes for about two years, thinks prices are still too high. ‘I think in the next year that we’ll see some serious readjustments,’ he said. ‘I probably wouldn’t buy right now.’”

“The number of homes on the market was up by nearly 53 percent in Seattle, more than 44 percent in King County and nearly 31 percent in the region from October 2006.”

“Closed sales declined by nearly 9 percent in Seattle, 25 percent in King County and 26 percent in the region, while pending sales, which can be a better indication of the most recent activity, dropped by nearly 21 percent in the city and 29 percent in the county and region.”

“Many agents…say things really slowed in August, because many buyers had a hard time getting financing. ‘I think what happened in August moved us into fall early,’ said Jim Paddleford of Windermere Real Estate. ‘A lot of loan programs disappeared overnight.’”

“Some agents complain that buyers have unrealistic expectations for bargains in Seattle based on stories about the national housing downturn. But Gene Seguin of Windermere Real Estate sees another problem.”

“‘Sellers don’t want to let go of controlling the market,’ he said.”

“Many sellers think about listing their home for six months before actually doing it, meaning the price they can get now is 3 percent to 5 percent lower than what they could have when they first considered selling, Seguin said. ‘That’s a very tough pill to swallow.’”

The Seattle Times from Washington. “The switch to a buyer’s market, with prices dropping, has caught some sellers by surprise. In the last month and a half, Debbie and Carl Sweetland have bought a home and tried to sell one.”

“Their 2,000-square-foot home in West Seattle has been on the market 46 days and they’ve lowered the price $50,000, to $539,000. By comparison, the Sweetlands bought their new house for $610,000 within a day of it going on the market. They closed in no time on the 3,400-square-foot home, which is near their old one.”

“‘I knew the market had slowed down some,’ said Debbie Sweetland. ‘But I thought we’d have an offer by now.’”

“According to an analysis of loan data by The Wall Street Journal, 31 percent of all mortgages originated in the Tacoma market in 2006 were the high-rate loans. That compares with 21.5 percent in Seattle-Bellevue-Everett and 24.3 percent statewide.”

“Tacoma-area foreclosures rose 36 percent to 209 in the third quarter, according to DataQuick. That compares with 154 in the second quarter.”

“The Sweetlands have twice lowered the price on their home and are thinking about taking it off the market to rent out, or also putting their new home up for sale as well to see which one goes first.”

“‘I think by January we’re going to really be biting our fingernails and figuring we better make a decision,’ Debbie Sweetland said. ‘Hopefully it’s going to sell before then.’”

Some housing bubble news from Wall Street and Washington. MarketWatch, “Washington Mutual Inc. said Wednesday that 2007 credit losses could amount to between $2.7 billion to $2.9 billion, almost double the estimates it made in July when the subprime meltdown was starting in U.S. mortgage markets. In materials for a presentation, Washington Mutual cited Fannie Mae data that suggest U.S. mortgage origination in 2008 likely will total $1.5 trillion for the industry.”

“That would be a substantial decrease from $2.8 trillion in 2006 by all lenders. Earlier projections were that new mortgage loan volumes would slump to around $2.4 trillion.”

From Reuters. “‘The soft landing we were anticipating quickly transitioned to a severe downturn,’ WaMu CEO Kerry Killinger said in a presentation to investors in New York. ‘This process is painful.’”

“The market for ‘nonconforming’ loans is ‘illiquid,’ Chief Financial Officer Tom Casey said.”

“WaMu shares have fallen by about half this year through Tuesday, wiping out more than $18 billion of market value. ‘This environment is unlike anything I have seen in my career,’ said David Schneider, president of home loans.”

“Killinger said home prices in California, Arizona, Florida and Nevada will face ‘above-average pressure’ through 2008. California is WaMu’s largest home-lending market.”

From Bloomberg. “Societe Generale SA, France’s second- biggest bank by market value, had 375 million euros of writedowns and trading losses after record foreclosures on U.S. home loans to borrowers with poor credit histories rattled debt markets.”

“Societe Generale based its writedowns on a ‘worse-case forward-looking scenario’ that total industry losses from subprime mortgages will reach $200 billion.”

The Financial Times. “The risk of fire sales of mortgage-backed securities was rising on Tuesday after rating downgrades pushed a clutch of complex debt vehicles into default, threatening a further escalation of the turmoil caused by the subprime mortgage meltdown.”

“The prospect of forced sales comes as a US Treasury-backed plan for a ’superfund’ to buy up distressed mortgage securities appears to have stalled.”

“Rating agencies Standard & Poor’s and Moody’s have received default notices for $5bn worth of the vehicles, known as collateralised debt obligations, giving holders of senior debt the right to sell assets.”

“‘The senior controlling class will typically want to get the hell out and pay themselves back, even if that means selling the underlying securities at a discount,’ said Arturo Cifuentes, (a) fixed-income broker and a former Moody’s analyst.”

“Executives at other banks believe the plan has been hurt by the turmoil at Citigroup, after admitting it faced further mortgage-related writedowns of up to $11bn. ‘As far as we can see, it appears dead in the water right now,’ said one senior Wall Street banker.”

“Investors also have been worried about the health of US bond insurers, such as MBIA and Ambac, whose central role in the capital markets depends on their high credit ratings.”

“Bond insurers including MBIA Inc., Ambac Financial Group Inc. and ACA Capital Holdings Inc. face ‘massive losses’ over the next few quarters that could test their ability to raise new capital, Egan-Jones Ratings Co. said.”

“MBIA may lose $20.2 billion on guarantees and securities holdings, Sean Egan, managing director of Egan-Jones, said on a conference call today. ACA Capital may take losses of at least $10 billion; New York-based Ambac may reach $4.3 billion; mortgage insurers MGIC Investment Corp. and Radian Group Inc. may see losses of $7.25 billion and $7.2 billion, respectively, Egan said.”

“Some of the debt, largely home loans issued in 2006 and early 2007, has been defaulting at record paces. The losses are threatening the AAA ratings of some of the companies’ assurance units.”

“‘The refrain that there is little risk because a security has a high rating is no longer valid,’ Egan said.”

“Moody’s Investors Service and Standard & Poor’s will downgrade the ratings only after problems have become more obvious, Egan said. He dismissed the argument made by insurers that mark-to-market losses won’t turn into realized losses.”

“‘You can’t say that the whole market is stupid,’ said Egan. ‘In my opinion you can assume a slight discount for market dislocations, but it has gone far beyond that.’”

“Barclays Plc and Royal Bank of Scotland Group Plc may have to write down a combined 2.1 billion pounds ($4.4 billion) linked to subprime-mortgage securities, analysts at Sanford C. Bernstein & Co. wrote today.”

“‘The rumors about who has to write down how much will continue until someone has written down all the losses, at least those which are directly linked to the subprime market,’ said Jochen Felsenheimer, head of credit derivatives strategy at UniCredit SpA in Munich.”

“Citigroup Inc. says it isn’t sure how much its subprime-related assets have fallen in value this quarter. Maybe it’s $8 billion. Maybe it’s $11 billion. On one point, though, Citigroup isn’t budging: It says none of these declines began until after last quarter ended.”

“The news from the nation’s biggest bank evokes memories of the scene from the 1984 hit comedy ‘Beverly Hills Cop’ where Eddie Murphy’s character, detective Axel Foley, hands a valet the keys to his beat-up Chevy Nova at a pricey country club he’d never visited before.”

“‘Can you put this in a good spot? ‘Cause all of this $#@& happened the last time I parked here,’ Foley said, straight-faced.”

“The amount of home equity ‘cashed-out’ in loan refinancings plunged to its lowest level since early 2005 as tighter lending requirements and the weak housing market hampered borrowers, Freddie Mac said in a report.”

“Legislation proposed by House Democrats to help about half a million homeowners avoid foreclosure could also result in 500,000 additional personal bankruptcy filings over the next two years, some experts say.”

“‘Why wouldn’t anyone file then if they are facing foreclosure?’ said Sam Gerdano, executive director of the American Bankruptcy Institute. ‘I’m sure most people would consider it, and do it if legislation is passed.’”

“Federal Reserve Bank of Richmond President Jeffrey Lacker said assessing the credit market turmoil that started this summer may take more time and that the Fed did the right thing in making funds available, albeit at a cost.”

“‘It may be some time before we have a full understanding of this summer’s events,’ he said, referring to a seizing up in credit markets stemming from losses in the U.S. mortgage market.”

“‘My reading of the evidence is that the episode was less about liquidity than it was simply about a dramatic change in the valuation of a class of credit exposures,’ he added.”

“On the Fed’s response to the credit market turmoil, Lacker said: ‘We stood ready to lend — on good collateral at a penalty rate — but did not interfere with the market’s assessment of risks.’”

Dow Jones Newswire. “To move inventory, Ryland is offering savings as high as 25% from Friday through Sunday. Sale markets include Las Vegas, Phoenix, Baltimore, Northern and Southern California, Denver, and Chicago. In Las Vegas, the three-bedroom ‘Shasta’ model is now $368,823, down from $533,823, according to Ryland’s Web site.”

“Florida homebuilder WCI Communities Inc. will cut another 21 percent of its work force and streamline operations as the national housing slump continues to worsen, the company said Wednesday.”

“The housing sector is in the third year of a drastic slump that has left builders with a glut of unsold homes, forcing them to cut prices and take massive balance-sheet charges.”

“‘This prolonged downturn requires that we continue to assess our overhead and make reductions in order to remain viable through the trough of this cycle,’ said CEO Jerry Starkey.”

“New York Attorney General Andrew Cuomo expanded his investigation of the mortgage industry to include Fannie Mae and Freddie Mac, the two biggest U.S. providers of mortgage financing.”

“Cuomo said in a statement that he plans a news conference today in New York to announce ‘a significant new development in his expanding investigation into the mortgage industry involving Fannie Mae and Freddie Mac.’”

“He last week sued the real estate appraisal unit of First American Corp., the biggest U.S. title insurer, accusing it of inflating home values under pressure from Washington Mutual Inc.”

“A probe by Cuomo would add to the scrutiny the companies have faced beginning in 2003 when accounting misstatements totaling $11.3 billion were revealed.”

“Cuomo will on Wednesday announce that he is examining what role Fannie Mae and Freddie Mac might have played in a possible scheme to inflate appraisals of home values, said sources familiar with the investigation.”

“Cuomo has subpoenaed records at the two government-sponsored mortgage finance enterprises but is not expected to name them as defendants in the suit on Wednesday, the sources said.”

“Mortgage finance giant Fannie Mae, which is recovering from a $6.3 billion accounting scandal, plans to catch up on its financial reporting this week. The government-sponsored company said Monday it will release earnings reports for the first three quarters of the year on Friday — making it current for the first time since 2004.”

“Fannie Mae cautioned, however, that given the time, effort and complexity involved in preparing the financial statements, and ongoing changes in the mortgage market, ‘there is no assurance” that it will file the reports on that day.’”

The Baltimore Sun reports from Maryland. “For a man with about $175 million riding on an unconventional condominium project set to open in the spring, Patrick Turner seems remarkably unworried. Never mind that the real estate market is in the dumps. Never mind that no one has ever put condos in a converted grain elevator or really knows how many people want to live in one. And never mind that not one unit at Silo Point has sold.”

“‘Everyone said when I bought [the old grain elevator], we were crazy,’ Turner said. ‘They said we’ll never get it done, we’ll never get it zoned. It’s impossible to do. I think in April of next year, the market will be in a better position. It will start to level off.’”

“Eliminating pre-sales, ‘does seem somewhat risky, given the current real estate market,’ said Daraius Irani, at Towson University. ‘However, they’re not making any more water views.’”

The Daily Times from Maryland. “It would be a last resort, but the proposed 500 Riverside condominium community on the downtown waterfront could turn to a renters market for occupants if home sales remain in a slump, says Tom Wentz of Prudential Carruthers Real Estate.”

“‘The market is not improved dramatically; there is still a ton of new housing on the market and resells are slow,’ Wentz said. ‘We’re not clear on a plan yet.’”

“The slump has created a national buyers market that has forced builders to push down asking prices. Developers of unsold condo units, though, can attempt to cash in on a market of renters who, by default, could land a trendy or upscale apartment-style accommodation, said James Shaw, a principle in Shaw Development LLC.”

“‘In the future, more would try to put a rental program together; developers would want to establish a market for people who want to rent,’ Shaw said Monday.”

The Star Exponrnet from Virginia. “In Culpeper County, 117 homes went into foreclosure so far this year, through Oct. 23, compared to 33 homes last year. That’s a 355 percent increase.”

“Not surprisingly, most of the foreclosures happened, and are still happening, in the newer developments that went up at the height of the housing frenzy of a few years ago.”

“Carlos Garcia, a resident in the Meadows of Culpeper is living that reality. ‘I’ll be next,’ he said.”

“In 2005, Garcia said, he purchased his three-bedroom house on a cul-de-sac for $389,000…and took out two adjustable rate mortgages. The 30-year-old meat cutter started out paying $2,700 a month and said he did not fully understand the implications of an adjustable rate. Two years later, Garcia says he’s facing a 30 percent increase over the next few months to his mortgage payment - to $3,500.”

“‘I already told them I couldn’t afford it. If they want the house, they can keep the house,’ said the husband and father of three.”

“A house that went for $300,000 two years ago is now priced to sell in the $200,000-range, said Norma Mayo, a longtime real-estate agent in Culpeper.”

“‘Everybody complained two years ago there was no affordability here,’ she said, ‘well, OK, we’re right back where you wanted to be. We are weeding all of those lenders that need to be let out, all the Realtors that came in, they’re out. House prices have come down where people can afford. We’re where we need to be.’”

The Times Democrat from Virginia. “Warrenton-based Realtor Joe Allen considers the current housing slump the worst in his 34 years as real estate broker.”

“On when strong home prices may return: ‘It probably takes four to five years to get back to the high prices again. The sellers now have got to realize that 20 percent (increases price sales a couple years ago) was never really there, except for those that cashed out. It’s a very hard thing to swallow if your neighbor got $800,000 two years ago (and) your house is now worth $625,000.’”

“‘It’s like the dot-com days. If you cashed out before the Nasdaq crashed in April of ‘01, then you did wonderfully. After that, you took gas, because all of your wealth prior to that was on paper. It didn’t really exist,’ he said.”

The Virginia Pilot. “Will Kirby’s rented out his Norfolk house since he was transferred to California in 2005. His tenants will move out this month. The place has been listed for nearly three weeks. Kirby has already knocked the rent down $50, to $1,300. He’s braced to go lower.”

“If it stays vacant through winter, ‘we wouldn’t be eating Ramen noodles,’ he said, ‘but it would definitely put a ding in what we do.’”

“Kirby has plenty of company these days. ‘There are an awful lot more rentals on the market,’ said Laura Wenslaff, owner of Home Rental Realty in Virginia Beach, ‘and they’re not renting as fast as they normally would.’”

“Realtors confirm a significant upsurge in house rentals. And the ‘for rent’ signs are popping up in upscale neighborhoods, such as Bay Colony and Witchduck Point in Virginia Beach.”

“‘I’ve been in the business for 23 years, and these are the most rental vacancies that I’ve had,’ said John Hanson, broker in Virginia Beach.”

“And it may not be so bad for the renters themselves, said Old Dominion University’s recently released State of the Region report. ‘Over the past few years,’ the study said, ‘it has become relatively more attractive for households to rent rather than to own in Hampton Roads.’”

“Kirby has no thoughts of selling his Norfolk house: He sees it as a long-term investment.”

The Daily Press. “It continues to be a difficult time to sell a house and a great time to buy one in Hampton Roads and Williamsburg.”

“Sellers suffered through a median price drop of 15 percent to $269,450, and the number of homes sold declined by 39 percent. An oversupply led to a 22 percent sales decline as homes sat on the market 33 percent longer than in September 2006, according to data from the Virginia Association of Realtors.”

“The Williamsburg area real estate market, which includes James City County and upper York County, saw its prices fall all year and was down 15 percent in September. The number of homes sold has been erratic there all year, but the drop was a brutal 39 percent in September.”

The Rock Town Weekly on Virginia. “Area home sales plunged 35.4 percent in September, while home prices softened 4.3 percent that month, according to the Virginia Association of Realtors.”

“Real estate markets around the state are experiencing an ‘adjustment,’ according to Virginia Association of Realtors President Melanie Thompson. ‘The past three years were extraordinary for real estate markets,’ Thompson said. ‘It’s somewhat misleading to compare this year’s more normal markets to the historic highs of the past three years.’”

“And, she said, the housing slump has created opportunities for some — namely, buyers. ‘There’s substantial inventory,’ Thompson said. ‘And sellers are having to face reality in their pricing.’”

From My Fox Washington, DC. “The town of Herndon is worried they might loose 1 of 6 homes to foreclosure! Homeowners in Herndon are in need of help. More than 200 homes are in foreclosure. The community is worried that number could increase to 1000 if something isn’t done soon.”

“The Dulles Regional Chamber of Commerce is teaming up with the TPI Mortgage Group and several banks in Herndon offering free one-on-one counseling and seminars all week for homeowners struggling to make payments.”

“The company is even trying to draw people in off the street, anyone, even those who are close to throwing in the towel.”

The Washington Post. “Everyone talks about finding alternatives to foreclosure. What people don’t talk about is how difficult they can be to pull off.”

“Take, for example, the ’short sale,’ which can happen when a home’s value has fallen below what the seller owes on the mortgage. In theory, everyone wins, at least compared with a foreclosure.”

“However, buyers thinking about acquiring a home this way should understand that it can be a long road to a short sale. Negotiations are far more complicated than with a typical purchase. You may have to attempt several deals before one goes through.”

“There will be weeks, if not months, of delay. The home you get could need lots of work. And you could lose several hundred dollars in upfront fees on each failed attempt.”

“Why volunteer for such a hassle when the local market is glutted with similar homes that you could purchase more easily? It’s about money, of course.”

“‘I wouldn’t bother unless the price is way lower than the market,’ said Bobby Samson, an agent who focuses on the Route 28 corridor around Dulles Airport. He said the price would have to be 10 to 15 percent below market value just to catch buyers’ interest.”

“The local MLS doesn’t compile statistics on how frequently short sales are happening, but real estate agents and lenders say they’re seeing them more often, and plenty of thwarted attempts.”

“‘It’s been pretty prevalent in our market, that’s for sure,’ said Laura Triplett, branch manager for SunTrust Mortgage in Woodbridge. We can expect to see more as long as home prices fall and as more adjustable-rate mortgages reset to higher rates that borrowers can’t afford.”

“Not only will the lender need to be convinced it’s the best deal it can get, but a title insurance company may have to sign off on the deal as well. Title insurers decide case by case, according to Wesley Justice, assistant VP for loss management at United Guaranty Residential Insurance, which sells private mortgage insurance to borrowers with low down payments.”

“They’re more inclined to do it when borrowers can demonstrate a financial hardship, such as a job loss or illness. Even then, they’re skeptical.”

“‘Quite frankly,’ he said, ’sometimes some of the hardships they’re going to be [deceiving] us about.’”

From CNBC. “A little over a year ago, mid-September 2006, there was a little blurb in the Washington Post about the then-president of the National Association of Realtors, Tom Stevens, not being able to sell his Virginia home.”

“It was really the beginning of our coverage of the housing downturn, and so we found it marvelously ironic.”

“The house had been on the market for a year, with an unchanged price of $1.45 million. Being the annoying reporter that I am (see video clip), I cornered him after a hearing on the Hill, just to needle him a bit and see what he’d say.”

“‘I didn’t listen to my agent. That’s what consumers need to do. They need to listen to their agent. If the agent says you need to adjust the price, then you need to adjust that price, we’re in a different market today,’ Mr. Stevens admitted politely.”

“And it’s an even more different market today. Stevens, who is a Senior VP of the nation’s largest residential real estate brokerage, still can’t sell the house.”

“Mr. Stevens pulled the house off the market in early 2007, and now it’s back for $1.285 million. So if you start from the top, that’s approximately 766 days on the market, $165,000 price cut, and still no bites.”

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