The Housing Bubble

It’s Friday desk clearing time for this blogger. “Faced with declining demand at current prices, a Lake Oswego home builder said he will put all 230 of his unsold homes and condos on the auction block next month. Though asking prices have ranged from $300,000 to $650,000, bids will start as low as $69,000, The Oregonian newspaper reported.”

“‘We were overaggressive and too slow to react to the changes in the market and that has created an oversupply of finished homes,’ Roger Pollock, owner of Buena Vista Custom Homes, said in a statement.”

“Now that Vegas has slowed, so has its Utah satellite. St. George real estate agent Gail Moore said her experience corroborates the report of a slowdown in Utah’s Dixie. ‘People are having to come down on their prices,’ so that most sales now are in the $200,000 to $300,000, Moore said. ‘It’s not what it used to be.’”

“At Phoenix Mayor Phil Gordon’s recent State of Downtown event, he honored Orpheum Lofts residents Bill and Verdeen Jackson for being one of the first condo residents to move to the city’s core.”

“The speech did not mention that the Jacksons’ $1.3 million loft has been for sale for more than a year. The unit has been on the market for 477 days.”

“‘They deserved to be honored as downtown rock stars,’ said Gordon noting that families move more often these days. ‘They were one of the original owners, and they invested a lot.’”

“Jennifer Edom and her family are among thousands of people in the Treasure Valley of Idaho, indeed, the nation, who are trying to sell their houses in a buyer’s market. ‘The frustration for us is there are just so many. It’s house to house to house,’ Jennifer tells CBS 2 Eyewitness News. ‘It’s very stressful.’”

“So many for sale signs she means. Two signs alone are on houses next door to hers and it seems as far as the eye can see in several subdivisions in Eagle. ‘There’s a lot of open houses every weekend, Saturday and Sunday,’ Jennifer says. ‘And there’s no traffic, there’s no people walking in the houses.’”

“Jennifer’s house has been on the market for a year, they’ve come down $200,000 in price, and are now asking $725,000. Realtor Mike Hummel says the house-selling frenzy was fueled by out-of-state investors and it had to slow down sometime.”

“‘Sellers have to be realistic about pricing their homes. We’re back to what I call a more normal market. We had an anomaly in ‘05 and ‘06,’ Hummel says.”

“After paying people thousands of dollars to stand in line for a week in bone-chilling temperatures, investors finally got a crack at what is arguably the hottest property in Toronto. The demand was so high that developers raised the starting price to their units Tuesday morning to $500,000. Others are priced at more than $8 million.”

“The night before, the price range for the units was from $300,000 to $2 million.”

“‘I have not seen this ever happen before in Toronto,’ said realtor Anna Cass, standing at the front of the line. ‘I’ve never seen a builder raise their prices so quickly, but it’s the law of supply and demand — this is business.’”

“With the number of unsold apartments reaching record-high 90,000 nationwide, innumerable ‘jackpot apartments,’ which had been seized by those lucky housing lottery winners after having had hashed through competition rates as high as hundreds to one, are being left vacant.”

“It was investigated that 40 to 70 percent of bonanza apartments, Yongsan’s ‘City Park,’ Jamsil’s ‘Triseum’ and Daechi’s ‘I-Park’ are yet to receive new tenants. A considerable number of housing lottery winners have already purchased their expensive new apartments but cannot clear partial or remaining payments because their previous homes are unsold.”

“Southern Cyprus has become a ‘victim of its own success,’ causing the property market to slow, an expert has commented. ‘House prices have gone up, more people have bought there but the value isn’t what it once was. The housing stock has been increased which has inevitably affected the price,’ broker and advisor Ewan McGarrie claimed.”

“One piece of Guam real estate, which constitutes about 1.7 percent of the entire island’s civilian land inventory, is for sale. Late businessman Harold Dwight Look donated the 1,146-acre lot to Texas A&M University in 1992.”

“The Texas A&M Foundation is selling the 1,146-acre property for a $25 million asking price, according to the seller’s representatives. The property was valued at $52 million at the time Look donated it to the university, according to Texas A&M’s Web site.”

“Guam’s property values were priced much higher when Look made the donation because of the island’s real estate boom at the time, said Nick Captain, president of Captain Realty Advisors. Between the 1980s and early 1990s, Japanese investors fueled a real estate boom on Guam with land purchases geared toward resort and hotel developments.”

“The danger of writing contemporary history is that between finishing the manuscript and the book’s publication, something will change that will make you look foolish. Just ask former Federal Reserve Chairman Alan Greenspan, whose memoir hit the stores just as the United States entered one of the most perilous economic periods in decades.”

“Greenspan argues that players in the financial game have huge incentives to identify all the risks they face in each and every transaction and to closely monitor the actions of their counterparts in any deal. They also can move more nimbly than government regulators, hiring brilliant people to develop sophisticated risk evaluation and monitoring systems.”

“Merrill Lynch blew that fantasy right out of the water. Merrill is not a dinky firm run by a couple of Wharton School dropouts. Its executives supposedly are some of the best in the business.”

“They hired hundreds of bright people with advanced degrees in finance and mathematics. They paid these analysts, traders - and themselves - hundreds of millions of dollars in bonuses to reward the great job they all were doing.”

“And they obviously did not have the faintest idea of what the heck they really were doing. Something is rotten when a firm is sailing along in one quarter and then announces asset write-downs of $4.5 billion in the next.”

“Oops, make that $7.9 billion. Or maybe that should be $12 billion, as some analysts have suggested.”

“No one attending this week’s National Association of Realtors annual convention has been able to ignore the anxiety created by the slowest housing market in more than a decade. Stefanie Cruz, a Realtor from Sandy, Utah, was more measured about the market in the suburb of Salt Lake City.”

“Short sales, in which lenders have agreed to let distressed homeowners sell for less than they owe on their loan, are a fact of life this year in Sandy, Cruz said. ‘I tell them that the balance on their mortgage doesn’t necessarily reflect what a buyer is willing to pay.’”

“‘We appreciated ourselves right out of affordability last year, but it’s making itself right this year,’ she said. Sales have slowed, investor buyers are fewer and prices are ‘back to more realistic.’”

The Contra Costa Times reports from California. “Bay Area home sales had their worst October since 1988, with much of the blame placed on a drop in higher-priced loans. It was a record low for all three East Bay counties: Alameda, Contra Costa and Solano, said Andrew LePage, an analyst with Data Quick. DataQuick started collecting data in 1988.”

“‘The Bay Area relies heavily on jumbo loans more than any other part of the country,’ LePage said. ‘Unfortunately, we don’t know how much of this is buyers not liking the rate and waiting for it to slide back versus they just can’t get the loan.’”

“Ed Jeffry, a loan consultant in Walnut Creek, said the shift isn’t all about not being able to qualify for jumbo loans. ‘A lot of buyers are looking for the best deal they can get and get the least expensive home they can,’ he said.”

“Jeffry said the jumbo loan crisis hasn’t done much to stop entry-level or high-end buyers. ‘It’s hit the dead center, so that means in our counties, nobody is moving up,’ he said.”

The San Francisco Chronicle. “Vacaville, in eastern Solano County, was long an affordable alternative for home buyers who didn’t mind a long commute to the inner Bay Area. But that market has changed substantially within months.”

“Larry St. John bought a home for more than $900,000 early this year in a new development on the city’s northwest side. This weekend, St. John said the builder - DeNova Homes - is planning an auction of more than a dozen similar homes, with starting bids about $300,000 less than what recent buyers paid.”

“‘This is huge, this is our biggest investment,’ said St. John. ‘I can understand a corporation taking losses to stay in business, but an individual taking a $300,000 hit is not something I have the capacity to do.’”

“As a homeowner in the Bay Area, ‘every couple of years you have an opportunity to refinance and do some improvements and still have equity,’ St. John added. ‘If you’re starting off from a position of negative $300,000, that takes more than a few years to rectify.’”

“The correction isn’t limited to far-flung suburbs. Last week, 44 properties were repossessed by lenders in Santa Clara County, according to Richard Calhoun, owner of Creekside Realty in San Jose. If that continues, Calhoun estimates half of all real estate transactions in Santa Clara County could soon be made up foreclosure sales.”

“‘If it gets to that point, lenders are going to start controlling the prices,’ Calhoun said. ‘Anyone who says that foreclosures aren’t going to impact the Santa Clara housing market is crazy.’”

The Sacramento Bee. “A persistent housing slump that has relentlessly driven down home prices has now wiped out at least three years of home equity gains across much of the Sacramento region, Dataquick reported Thursday.”

“‘I’ve got two sets of buyers looking at property in Lincoln, 2,943 square feet listed for $325,000,’ said real estate agent Viki Benbow. ‘It’s like $106 or $107 a square foot. Those houses three years ago were selling in the mid-$500,000s.’”

“Among buyers reaping a bonanza of falling prices was Joanne Higginbotham, who moved to Sacramento a year ago from Oregon. She closed last month on a two-bedroom, one-bath 1916 bungalow in Sacramento’s Curtis Park. She moves in next week.”

“‘The budget was a big factor. It was a bank-owned property,’ she said. ‘I got it for $90,000 less than the prior owner paid for it two years ago.’”

“October ended with 15,716 homes still on the market in El Dorado, Placer, Sacramento and Yolo counties, according to TrendGraphix. The number does not include foreclosures that have taken place but aren’t yet on the market. In the first nine months of 2007, more than 6,500 homeowners have lost their residences to foreclosure in the eight-county region.”

“‘No one has seen this before,’ Lyon Real Estate’s Michael Lyon. told a gathering of area home builders earlier this month.” “DataQuick said 65 percent of homes that went into foreclosure between Aug. 1, 2006, and July 31 have not been sold yet.”

“Reports continue to come in about Sacramento-area home builders cutting back on overhead, mothballing projects and, now, selling land. One reason is that banks, with their growing numbers of repossessed homes, are becoming one of the builders’ fiercest competitors for buyers in this market.”

“When the struggling housing market is blamed for the drop in sales of Sacramento Kings tickets, you know this is serious. Home Front was amused to read in The Bee that the Kings’ Danette Leighton, VP of marketing and branding, says a decline in tickets sales is more about the region’s housing market than the poor win-loss record of last year’s team.”

“What next will subprime lending and the housing slump do? Will it make Christmas trees catch fire and children talk back to their parents?”

The Camarillo Acorn. “A slumping housing market continues to hurt Camarillo’s otherwise healthy economy, according to a recent report released by the University of California, Santa Barbara Economic Forecast Project.”

“Economist Bill Watkins told the 150 attendees the nationwide decline in home sales is ‘hammering California’ and having an impact on Ventura County, as well as Camarillo.”

“In September 2005, 800 homes were sold in Ventura County. That number dropped to a little over 600 homes in 2006 and then dipped to 300 in 2007, the economist said.”

“Watkins said 30 homes in Camarillo were sold in September 2007, an 80 percent drop from the 150 homes sold during the same month last year. Camarillo median home prices dropped from $625,600 in 2006 to $555,000 this year. Median home values are expected to drop again in 2008 to about $525,000, according to the report.”

“‘The decline in real median home prices combined with an increase in average salary will help make Camarillo a more affordable place to live,’ Watkins said.”

The Tribune. “San Luis Obispo County home sales in October declined to their lowest level in nearly 20 years, a Dataquick reported. Sales last month dipped 20.6 percent from October 2006 with 212 homes sold.”

“‘Octobers over the past 20 years have averaged 407 sales (all homes combined), so that’s nearly double last month’s total,’ said Andrew LePage, a spokesman for the firm. ‘So, sales are very slow by your own standards.’”

“Jumbo loan sales have fallen 73 percent on a year-over-year basis, according to LePage. Many buyers are sitting on the sidelines waiting for prices to drop, he said.”

“‘Lots of buyers see an advantage in waiting—waiting in hopes that prices will erode further,’ LePage said.”

The Malibu Times. “The perception is that the market is horrible. In some ways, it is. The number of homes selling in Malibu is very low. This year will see the same paltry total as last year-only about 170 to 180 deals. The reality, contrarily, is that more high-priced Malibu beach homes and estates are selling than ever before. And, at much higher prices.”

“How about this for a headline: ‘MALIBU AVERAGE HOME SALE PRICE UP 20% IN 2007.’ But is it a fair representation of the whole market? Not at all. This is a market with such drastically mixed signals, it is unfair to use any one statistical measurement such as the one above.”

“Also true is that just about every listing below $3,050,000 languishes unsold and price reductions by the truckload are a daily feature of the market. Some home sellers feel they can’t give their house away. Market periods are expanding.”

“Yet, week after week, the list of sales in the MLS is a trickle; maybe two to three homes. Almost as many sell in private transactions.”

“At the low end, things are awful: In August 2005, no homes in Malibu were listed for under $1 million. Now there are many. Only seven homes have sold in Malibu for less than $1.5 million. That could sound like a good thing until you realize that 44 such homes have been listed. It has been practically impossible to find buyers under $1.5 million.”

“For $1.5 - $2.5 million listings, it is hardly less of a struggle. forty-seven such listings have sold all this year; about that many are on the market now. That equates to a 10 month inventory of homes available. Almost every single one of those listed for more than two months has seen at least one price reduction already. (In a further sign of a slowing market, only seven of those sales closed since Aug. 1).”

“For homeowners who can’t wait, however, it is a buyer’s market. Only the seller that offers the best price gets the precious buyer. A new reality of lower comparable sales will likely take hold in months to come. Future sellers will have to adjust their hopes accordingly.”

The Bakersfield Californian. “The Seven Oaks mansion of real estate agent David Crisp is set for public auction today on City Hall’s front steps, according to an automated sales hot line listing upcoming trustee’s sales.”

“Crisp borrowed $2 million against the property earlier this year. The house is now in default, with $1,846,897 owed, according to The Daily Report, a local publication that prints county legal notices. The starting bid for today’s 10 a.m. sale was not available, according to the sales hot line.”

Some housing bubble news from Wall Street and Washington. “Fannie Mae executives on Friday defended a change in the way the mortgage finance company calculates losses on home loans, responding to analysts’ concerns. Using the new method, it reported, on an annual basis, a credit-loss ratio of 4 basis points for the first nine months of this year — meaning the company lost money on four of every 1,000 mortgages it holds on its $2.4 trillion book.”

“Yet the Fortune article points out that if the old method were retained, the credit-loss ratio for that period would be 7.5 basis points — far exceeding Fannie Mae’s forecasts.”

“Several analysts asked the executives in the conference call why the company couldn’t disclose what proportion of high-risk mortgages it is able to refinance into fixed-rate loans and save from default. ‘The problem is that we don’t have the underlying information,’ said Credit Suisse analyst Moshe Orenbuch.”

From Dow Jones Newswires. “When Fannie Mae released its earnings last week for the first three quarters of the year, it reported an additional unrealized loss of $955 million in the value of private-label securities backed by subprime and Alt-A mortgages through the end of the third quarter. This was in addition to $376 million the company had previously accounted as a loss for these securities this year.”

“The company said it hadn’t recorded ‘any impairment’ on the $955 million in securities, “as they continue to be investment-grade and we have the intent to hold these securities until the realized loss is recovered or the securities mature.”

From Bloomberg. “Freddie Mac, the second-largest source of money for U.S. home loans, joined Fannie Mae in introducing or raising fees on mortgages the company buys from lenders because of the increased risks in slumping housing and mortgage markets.”

“Freddie Mac is primarily setting new fees for mortgages made to borrowers with credit scores below 680, whose loans exceed 70 percent of their property’s value. The changes take effect March 1.”

“Freddie Mac’s changes are ‘in response to continuing volatility and turmoil in the mortgage market, including the deteriorating performance of higher-risk mortgage products,’ the company said in a letter on its Web site.”

“It also said mortgages from markets with falling prices must now have loan-to-value ratios at least five percentage points below normal requirements for mortgages with the same attributes.”

The Financial Times. “Residential Capital, the beleaguered mortgage lending arm of GMAC, said it was close to breaching its bank loan covenants, sending the price of its debt tumbling.”

“ResCap’s bonds were among the most frequently traded in the debt market on Thursday, tumbling to nearly 60 cents on the dollar, down from about 64 cents on Wednesday and about 80 cents a month ago, according to MarketAxess.”

“Kathleen Shanley, analyst at GimmeCredit, said: ‘If credit conditions in subprime continue to deteriorate, ResCap may have trouble staying in compliance with its bank debt covenants.’”

“She said the company’s non-performing construction loans had jumped to $324 million in the third quarter, up from just $20.9 million a year ago.”

From MarketWatch. “Huntington Bancshares said Friday that it would take up to a $300 million charge in the fourth quarter, becoming the latest financial institution to report the impact of mortgage loan losses. The Columbus, Ohio-based group is feeling pain not through loans made directly to customers but rather from lending to another institution.”

“The charges are related to loans made by Huntington’s Sky Financial unit, a Pittsburgh-based bank that Huntington bought in July for $3.6 billion. Sky had lent to New York-based Franklin Credit Management, a firm that specializes in investing in the riskiest of mortgages.”

“Franklin invests in mortgages for multifamily homes that don’t meet Fannie Mae and Freddie Mac standards. Most of Franklin’s loans are so called ‘no-doc’ loans, where the borrower is not required to document income.”

“Also Thursday, Franklin delayed its third quarter earnings report and said it would stop originating loans after Huntington, its main source of bank funding, cut off credit.”

The Canadian Press. “The Bank of Montreal is booking $320 million in writedowns arising from disorder in world credit markets, joining the array of big banks hurt by the U.S. subprime mortgage crash.”

“Analyst Michael Goldberg of Desjardins Securities noted that BMO’s decision to support the SIVs with up to $1.6 billion is ‘an indication that there are no other willing buyers and BMO feels that it has an obligation as sponsor to support these two SIVs.’”

“The net asset value of structured investment vehicles, companies that borrow short term to buy higher yielding securities, has fallen to 69.7 percent as the credit slump erodes their holdings, Fitch Ratings reported.”

From Reuters. “A wave of recent ratings cuts may mark the start of nearly half a trillion dollars in losses for banks and pension funds, as complex securities bring the U.S. subprime mortgage crisis crashing back to Wall Street.”

“Derivatives once heralded for spreading risk and underpinning the resilience of financial institutions are rapidly deteriorating, threatening to choke lending. In the past two weeks ago, more than a dozen collateralized debt obligations have suffered a technical default. Standard & Poor’s on Wednesday said it may cut four more CDOs, due to even more ‘Event of Default’ notices as write-downs increased for what was perceived to be the safest part of the bonds.”

“‘Despite their high initial ratings, even AAA rated securities can be at risk of losing some or their entire principal,’ according to Jeffrey Rosenberg, head of credit strategy at Bank of America in New York. Write-downs of CDO positions are ‘increasing fears of the expanding implications of subprime losses to the financial system.’”

“Banking auditors are watching carefully to ensure bank valuations based on in-house mathematical models are not, in the phrase coined by Warren Buffett, ‘mark to myth.’”

“‘You are definitely seeing an environment in which the audit firms are being more rigid and conservative in their approach to valuation,’ said Alex Willmot-Sitwell, co-head of global investment banking at UBS. ‘I think that’s inevitable in an environment where there is bound to be a greater degree of scrutiny and where we are all aware of the potential risks vis-a-vis litigation etc.’”

“For some CDOs, the only buyer, and a reluctant one at that, has been the bank that created and sold it in the first place. ‘Banks are not in the business of holding these products for ourselves,’ said a senior European banker. ‘What is the value of a tennis racket for a rugby player?’”

“That means the few market prices available for comparison for many CDOs are based on fire-sale conditions. Nevertheless, ‘if there is a price out there, it cannot be ignored,’ said Colin Martin, a partner at KMPG’s FS Technical Advisory. It is extremely difficult to prove that prices are the result of a fire sale, he added.”

“If a hedge fund sells at 35 cents on the dollar when a bank sees the value at 65, or if the last comparable trade took place weeks ago, ‘you can’t ignore that a trade has happened,’ said an accountant at a major European bank.”

“For the first in at least a decade, the world’s biggest financial institutions are paying more to borrow in the corporate bond market than industrial companies.”

“Bonds of banks, brokerages and insurance companies yield 1.49 percentage points more than U.S. Treasuries, matching a record high set in October 2002, according to indexes compiled by Merrill Lynch & Co.”

“Investors are demanding extra compensation for the risk of owning Citigroup Inc., Merrill Lynch and Barclays Plc on concern that the $50 billion in losses already reported from subprime mortgages will increase.”

The Wall Street Journal. “Even the Trump name isn’t bigger than the calamitous condo market. Donald Trump’s reputation as a real-estate developer could take a hit as some condominium projects emblazoned with his famous name run into trouble.”

“At Trump Tower Tampa, which began its marketing in 2005, sales initially soared. The local development company, SimDag LLC, sold all 192 units and then, as the market skyrocketed, returned buyers’ deposits, raised the units’ prices and sold out again.”

“Many of the buyers feel that they were led to believe that he had a much larger stake. ‘The only reason we bought into this was because of Trump,’ says Don Wallace, whose wife has interests in two units. ‘He’s bashing Rosie O’Donnell, and we’re twisting in the wind.’”

“Joseph Stiglitz, a Nobel-prize winning economist, said the U.S. economy risks tumbling into recession because of the subprime crisis and a ‘mess’ left by former Federal Reserve Chairman Alan Greenspan.”

“‘Alan Greenspan really made a mess of all this. He pushed out too much liquidity at the wrong time… He encouraged people to take out variable-rate mortgages,’ Stiglitz said in an interview in London today.”

“Stiglitz, who stepped down as the World Bank’s chief economist in 2000, and now works as professor of economics at Columbia University, estimated U.S. consumers borrowed up to $950 billion last year against the value of their homes to finance spending.”

“‘That game is over,’ Stiglitz said. ‘As house prices are going down, people are not going to be able to take more money. We are looking at a major slowdown.’”

From Marketplace. “In an effort to make sure the subprime mortgage meltdown doesn’t happen again, the House was set to vote today on a bill that would lay down rules for lending. Stacey Vanek-Smith reports.”

“STACEY VANEK-SMITH: Three years ago, Lucy Hadley was looking for a condo. She’d been saving up and the market was going gangbusters. But it wasn’t easy to buy in super-expensive Los Angeles. Hadley had excellent credit, but her salary was on the low side, so her bank wouldn’t offer her the roughly 400 grand she needed to buy a one-bedroom apartment.”

“LUCY HADLEY: ‘I didn’t owe any credit cards or anything, cause I’m kind of sticky about that kind of stuff. I couldn’t understand why I couldn’t get a loan.’ So Hadley turned to a small, subprime lender. She says she started getting uncomfortable when she saw how the lender was trying to qualify her for the loan she wanted.”

“HADLEY: ‘They find money that you don’t even know you have. They looked at my savings, my 401K and all that. They include all of that and they consider that part of your income. And they would say stuff like, you know, you’re in a prime area and property is going to keep going up and up and up, and you’ll be building up equity.’”

“The interest on Hadley’s loan will soon triple to more than 11 percent, and her condo has gone down in value.”

“The thing is, a lot of the organizations doling out the shadiest loans were not banks, and they won’t have to follow federal rules. David Lereah is the former chief economist for the National Association of Realtors.”

“DAVID LEREAH: ‘It was the mortgage brokerage companies that were out there trying to sell a lot of these irresponsible type loans.’”

“Still, Lereah says reigning in the banks will make a big difference. That’s because there won’t be many organizations left to buy up risky loans from lenders like Countrywide. Lereah says the bill is also an important feel-good measure.”

“Meanwhile, homeowner Lucy Hadley needs to take out another loan to cover her new mortgage payments. But she’s scared she’ll end up in an even deeper hole. HADLEY: ‘I don’t know how high my loan could go. I really don’t. With all that paperwork, I don’t understand. I know it’s going to be difficult, so…’”

The Daily Democrat reports from New Hampshire. “Strafford County has seen a significant increase in the amount of property foreclosures in the last three years, and there may be more to come. Numbers released by the Registrar of Deeds show 167 foreclosures through Nov. 1. At the same time in 2005 and 2006 there were a total of 33 and 92, respectively.”

“State officials say this problem isn’t limited to the county but is widespread across the state and country. ‘The numbers aside, there’s no secret there’s some sort of mortgage and foreclosure crisis going on,’ said New Hampshire Banking Commissioner Peter Hildreth.”

From WCVB TV in Massachusetts. “NewsCenter 5’s Janet Wu said that experts on Beacon Hill are predicting a $1.3 billion deficit next year, as local cities and towns are getting worse news from the other end of their revenue base: The sales of homes.”

“Numbers are so bad, that many town officials said that they don’t see any relief in the near future.”

“Lynn Silva, who’s been selling real estate for over a decade, said she’s selling about half the number of houses she sold last year. ‘Home sales have been sitting a year for some people, more than a year for other people. Prices have been coming down. Slower and still nothing selling,’ Silva said.”

“Compounding the problem for homeowners trying to sell is predictions from economists that housing prices in Massachusetts will drop another 5 percent through the middle of next year. ‘Because it will make people wait a little longer. There are a lot of people out there looking. They’re just not buying,’ Silva said.”

“Last week, owners of some homes dropped their asking price yet again, but Silva fears there is no more room for compromise for some sellers. ‘Because then she’s not going to get what she paid for it,’ Silva said.”

From Newsday in New York. “There’s a 15.2-month supply of properties for sale on Long Island and in Queens, up from 11.6 a year ago, according to the October data released Tuesday by the MLS of Long Island.”

“October’s median price for closed deals was $429,500, a 2.4 percent drop from the $439,900 median of October 2006.”

“‘There’s about a three-month delay between the time that you make a contract to sell a house and the time it actually results in a closing,’ said Robert Campbell, professor of real estate finance at Hofstra University. He said the gap between the current market and the closing prices exists because the subprime collapse only occurred in August.”

“Overall, the median price that sellers wanted for their homes went down 3 percent from $510,000 in October 2006 to $495,000 last month. In Suffolk, it went from $449,000 last year to $424,900 in October. In Nassau, it dropped from $550,000 to $516,000. In Queens, the desired median was $575,000 a year ago and $570,000 last month.”

“Some agents say that’s not enough of a decrease. But their homeowner clients insist on getting their money back on renovations. ‘I don’t care if you lined your walls with 20-karat gold. You’re not going to get your money back,’ said Renie Vloutely, an agent in Lake Ronkonkoma.”

The New York Sun. “With international buyers helping to buoy the New York market and isolate it from the nationwide drop in prices, the city’s real estate brokerage firms are joining international broker networks, exhibiting properties at property shows abroad, and advertising in publications in other countries to lure even more foreign money.”

“‘America is on sale for now,’ the CEO of Coldwell Banker Hunt Kennedy, David Michonski, said. ‘It doesn’t look like that’s changing for at least another year.’”

“‘There is a lot of hysteria about real estate right now, but the foreigners come at this with a better perspective,’ Mr. Michonski said. ‘They know that the time to buy a straw hat is in January, not June.’”

The Philadelphia Daily News from Pennsylvania. “Housing prices dropped citywide in Philadelphia for the first time in five years in this year’s third quarter, according to a study. The study also said home foreclosures in Philadelphia rose to more than 900 in July, August and September, about 50 percent higher than in 2005, while nearly 3 percent of households were delinquent in mortgage payments.”

“Philly still has a big inventory to sell down, said Kevin Gillen, author of the study and a professor at the University of Pennsylvania. Fewer than 6,000 homes were sold in the third quarter, the fewest since the same period in 2003, leaving nearly 12,000 units still for sale.”

“‘Until we work out all that inventory, house-price appreciation doesn’t look to resume anytime soon,’ Gillen said.”

“‘The national trends have finally caught up with us,’ Gillen said. ‘If history is any guide, then just as the recent boom market lasted several years, then so too should the bust.’”

“Heather Petrone, president of the Greater Philadelphia Association of Realtors, said that homes in the $250,000 range in the northwest part of the city, where she is based, have been moving steadily, but that buyers have been insisting on concessions, and sellers have been more willing to sit down and talk.”

“‘This is a normalizing market, where you have give and take,’ she said.”

“In the third quarter, mortgage foreclosures in Philadelphia rose to more than 900 homes, about 50 percent higher than in 2005, Gillen said. He said the steepness of the decline in University City was in part explained by the fact that the price appreciation there over the last five years was the highest in the city.”

“‘We were late to the boom, and now we are late to the bust,’ Gillen said. ‘I consider this more symbolically important. Housing prices [in Philadelphia] have doubled over the past five years.’”

From Metro Philadelphia. “The bubble isn’t exploding in Philadelphia’s real estate market like it has elsewhere, but it’s starting to deflate. Home prices in the city are on the decline for the first time in five years, according to a quarterly report released this week by Wharton economist Kevin Gillen.”

“Q: Why is Philly’s market finally starting to catch up to the national slowdown? A: As far as housing cycles go, prices are usually the last thing to change. As I say, ‘trying to figure out where the housing market is going by looking at price trends is kind of like driving your car by only looking in the rearview mirror.’”

“‘You have to look at sales volume. … The thing that really started to indicate things were slowing down is the number of homes waiting to be sold started to bloom.’”

“Q: What about people that bought their homes during the boom expecting to be able to sell them at a profit a few years later? A: ‘I don’t like to give anyone bad news. I can tell you the next few years don’t look like they’ll be anything like the last few years. I would not expect the market to rescue you. People have to realize that the past few years were a real anomaly in terms of market conditions. We’ve now reverted to reality.’”

The Cape Gazette from Delaware. “Prime, luxury-housing developments along the Atlantic Ocean seem little affected so far by the housing market downturn, but state officials say home foreclosures are slowly creeping toward the beach.”

“‘It’s starting to move toward the beach. People are suffering all over with the same problems. The assets are not as liquid as they once were,’ said state Banking Commissioner for Consumer Affairs Gerry Kelly. ‘Overall prices are still high, but the inventory is also high unless you’re in a prime market. Whether it’s investor-driven foreclosures or homeowner-driven, we’re looking into that.’”

“‘Some investors may be overextended, but that may become clear over the next year or so. They’re not seeing the profits,’ he said.”

“Association President Rob Harman said the growth in the Cape Region is a double-edged sword. ‘Sussex County growth is like it’s never been, but we’re suffering from our own success. Income has not kept pace with real estate prices,’ said Harman.”

“The median-priced home is about $260,000, but local residents with dual incomes only make about $50,000 a year, he said. ‘We need to put resources together to bring those two ends together,’ said Harman.”

The News Post from Maryland. “The promise of stilling the hammers and preserving open space swept this slow-growth board into office, but some residents question why they keep hearing the steady bang, bang, bang of residential building. Especially when the housing market has dipped to a 12-year low.”

“‘Why are they still building more new homes in Frederick County at the same time there is a high of 20+ foreclosures in the FNP?’ asked one reader this week.”

“About 2,400 homes are for re-sale in the county, while another 26,319 are in the wings at various stages of the development process. Of those, 11,534 must still pass the APFO test.”

“Areas facing the largest influx of new homes include Frederick (8,392), New Market (7,735) and Urbana (5,545,) while Middletown, Thurmont and Walkersville have the fewest units planned in the county.”

“Left up to Commissioner Lennie Thompson, dozers would be rusting in their tracks. ‘Give me three solid votes and we can place a moratorium on all major residential subdivisions in the entire county, including within municipalities,’ he says.”

“A more cautious Commissioner Jan Gardner tempers Thompson’s pronouncement by pointing out the legal challenges inherent in stopping projects in progress, and the fact that the county has limited ability to intervene in municipal decisions.”

“Moratoriums, she says, which are temporary, can only be enacted when there is a justifiable risk to the public health, safety and welfare. Some might argue that there is justification, but the debate hasn’t really picked up any steam.”

“‘The last board did leave us with a big mess and a lot of zoned land that we cannot support with infrastructure or services,’ she says.”

The Baltimore Sun from Maryland. “A controversial proposed 23-story condominium tower at the heart of redevelopment planned for downtown Columbia may be in jeopardy as its developer struggles in a challenging condo-building market.”

“Florida-based WCI Communities Inc. insists that the project is solid despite financial problems that caused it last week to announce 575 job cuts — about a quarter of its work force. ‘We’re going to move ahead and are moving ahead with the project,’ said James P. Dietz, WCI’s chief financial officer.”

“But fresh questions about the feasibility of the Plaza Residences project near the downtown lakefront have come as WCI said more people are backing out of commitments to move into its existing condo towers and the company reported third-quarter losses.”

“‘I would be shocked if WCI could actually go forward with that tower in Columbia, Md.,’ said Susan Berliner, an analyst at Bear Stearns Co. who follows the company and the homebuilding sector. ‘To me, there’s no way it’s going to get built.’”

“Berliner said that WCI did not mention the Columbia Plaza Residences project as one of the towers it has in the works during recent conference calls with stock analysts to discuss the company’s performance.”

“‘Everyone is just waiting to see what’s going to happen with them,’ she said. ‘WCI can’t continue to exist in their current form.’”

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