The Housing Bubble

The Sacramento Bee reports from California. “If you bought a house in the Sacramento area last year, chances are your annual income came to about $80,000. But your loan application said you earned a good deal more. A Bee computer analysis of more than 61,000 Sacramento-area mortgages over two years reveals striking discrepancies – gaps as high as 25 percent – between what homebuyers earned and what was listed on their loan applications.”

“‘Wall Street was looking for (stated income loans) and all of us were working very hard to be competitive in the marketplace,’ said Mark Kemp, Countrywide executive VP for Northern California, Nevada and Hawaii. Kemp said Countrywide has stopped making such loans.”

“‘I don’t want pity,’ said Natomas resident Rose Marie Reyes, who’s losing her home after getting a no-doc refinance loan. ‘I want people to know…they really should watch what they’re getting themselves into.’”

“Reyes said she didn’t realize until later, while meeting with a credit counselor, that her lender had ‘poofed’ up her income.”

“The California Association of Mortgage Brokers defends the industry’s conduct and says borrowers took the lead on pumping up their reported incomes.”

“‘I have turned down many clients who have told me they make ‘this’ amount of money,’ said Jon Kaempfer, a member of the association’s board. ‘Well, I don’t believe them and I turn them down – I don’t believe you’re making $12,000 a month raking leaves.’”

“South Sacramentan O’Lester Williams, who refinanced his Valley Hi home this year, said Caliber Lending inflated his $3,600 monthly income to $6,475 without him realizing it. ‘They boosted up my income, and I didn’t catch it until later,’ said Williams, 79. ‘I had been looking at five dozen papers and you can miss one line. That’s what I did – I missed that line.’”

“Williams is struggling to keep up with his pay-option loan, which lets him choose his monthly payment in a range from $1,486 to $3,724.”

“His credit counselor…said loans of this type typically mean a profit of at least $15,000 for a company. ‘There was a lot of money made on that one,’ Himes said.”

“Reyes stayed afloat the first two years. She even survived six months of unemployment by tapping into savings and getting help from family. But when her loan reset in January and the monthly payments shot up from $2,381 to $3,161, Reyes was sunk. Hit with a default notice and the threat of foreclosure, she started packing.”

“‘It’s a sad thing to say,’ she said, standing in a living room filled with cardboard boxes, ‘but walking away from this home will be a relief.’”

The San Francisco Chronicle. “If you want to see how the housing bust is affecting business in the Bay Area, there’s no better place to look than Fairfield.”

“Housing in this bustling Solano County city is in an outright depression. Home prices are plummeting, buyers are running for cover and, in September and October, not a single home building permit was issued, the first time that’s happened in the memory of city officials.”

“With the mortgage market in crisis and buyers not to be found, housing in Fairfield is flat on its back. The median home price in the city fell to $400,000 in October from $510,250 the year before, a 23.6 percent free-fall, according to DataQuick.”

“The number of sales fell to 83 from 174 in October 2006, down 52.3 percent. And in the months of July, August and September, 129 Fairfield homes were lost to foreclosure, compared with 15 in the third quarter of 2006.”

“In the building industry, ‘the bust came in and it’s rolled over everybody,’ said Kevin Cerkoney, president of Compu-Tech Lumber Products. Compu-Tech’s sales are down about 60 percent from their peak.”

“Developers have moved beyond free stainless steel appliances and granite countertops to lure buyers and are now offering something less trendy but perhaps more welcome - deep discounts.”

“The credit crunch has shrunk the pool of potential buyers in a market that was already struggling with excess inventory and developers are pushing to clear their books by the end of the year. That has sent new home prices in the Bay Area down by as much as 20 percent from their highs two years ago, according to Joseph Perkins, chief executive of the Home Builders Association of Northern California.”

“Builders, from national publicly traded companies to smaller regional players, dangle price cuts of as much as $150,000 on some projects in the far reaches of the Bay Area.”

“‘There is a massive amount of inventory sitting out there that is not being sold, particularly out in the East Bay,’ said Christopher Thornberg, a principal at the consulting firm Beacon Economics. ‘You’re talking total meltdown.’”

“Some are reluctant to commit because they are afraid that after they close, prices could continue to fall, said Ashley Cook, marketing manager for the Shea Homes’s Northern California group. ‘Obviously, one of the concerns about buying right now is what if prices do continue to go down,’ she said.”

“Perkins said that this downturn in the new-home market is as bad as anything that members of his group have seen over the last 50 years. ‘This is not a soft landing we’ve had,’ he said. ‘This is a hard landing.’”

“That means developers have to do what it takes to get homes sold, even if it isn’t pretty.”

“‘They’ve got to get that standing inventory off the books,’ Perkins said. ‘Lenders want to see it off the books and, for public companies, investors and Wall Street, want to see it off the books. That pressure is the reason you see those full-page ads offering all sorts of incentives.’”

The Reporter. “Working families and local business owners didn’t need to see sheriff’s deputies and the ‘repo man’ taking everything away from a Vacaville auto dealership on Wednesday to comprehend the down-home impact of the nation’s economic malaise.”

“The busted housing market has taken its toll on real estate agents, mortgage brokers, home furnishers and construction workers who live and ply their trades here. Hundreds of homeowners are in foreclosure, and nearly every owner has seen the value of his or her property decline.”

“This very afternoon in north Vacaville, a builder is auctioning off 18 homes in an upscale neighborhood, a result of its inability to attract buyers for the high-end houses that recently were selling for as much as $900,000.”

“It’s quite possible that today’s bidders won’t go much above $500,000 or $600,000, a situation that infuriates neighbors who were charged top dollar when they bought in a few months ago.”

The Recordnet. “When Jose and Mary Florendo moved to Lathrop, they rented out their three-bedroom, two-bath previous residence in Stockton. The payments they received, however, were not enough to cover the mortgage. And they couldn’t afford to refinance because of the housing downturn. The Florendos’ previous home is in foreclosure.”

“The Florendos’ previous home is in foreclosure. Jose Florendo, a member of St. Gertrude’s Catholic Church, said he has sought God’s solace during this difficult time.”

“‘I’ve kept quiet, because I didn’t want others to know,’ Florendo said. ‘But I’ve kept in touch with God by praying and going to church. Hopefully, soon we’ll be able to start over again.’”

“The situation of the Florendos and hundreds of others in San Joaquin County spurs a healthy debate in religious circles about whether people of faith should have engaged in the housing gamble that has led to a record number of foreclosures in the county.”

From KSBY. “Home foreclosures on the Central Coast have hit their highest number in over a decade. According to Realtytrac.com, over 850 homes in Santa Barbara and San Luis Obispo counties are in pre-foreclosure. 260 homes are up for auction. 760 bank-owned homes are for sale.”

“Potential buyers hopped on a tour bus Saturday and got a glimpse of some of the bank-owned properties available in San Luis Obispo County.”

“Saturday, real estate broker Dick Keenan led a group of about 30 potential buyers on a tour of available foreclosed properties. ‘The benefit of buying a real estate owned home is that it’s not emotional. It’s all dollars and cents and the opportunities we’re seeing now are the best they’ve been in ten years,’ said Keenan.”

“The number of houses selling on the Central Coast is almost half of what it was two years ago. ‘It was so hot before a couple years ago, right now it’s so dead I’m not seeing the houses move like they were before,’ said Paso Robles resident Brian Henninger.”

“According to Keenan, banks are accepting extremely low offers. ‘What they’re taking is sometimes mind-boggling meaning that the market may be drifting down even quicker than some of us realtors expect them to,’ said Keenan.”

“The glut of foreclosed properties is causing problems for those wanting to sell their homes. ‘It’s a good buyer market right now but as far as selling… good luck,’ said Henninger. ”

The Press Enterprise. “Residents of Copper Canyon in Murrieta watched in astonishment as a group of investors snapped up homes in their middle-income community last year, paying $50,000 to $100,000 more than the sellers wanted.”

“Today, the front yards are browning, overgrown with weeds. Many of the houses are empty. Owners have put up for-sale signs to lure buyers before the houses are auctioned on the courthouse steps or seized by lenders. Many are in foreclosure.”

“The U.S. Securities and Exchange Commission and the Riverside County district attorney’s office are investigating Pacific Wealth and the men behind it. Investors who have lost an estimated $200 million in cash and equity have joined in five lawsuits that allege fraud and unfair business practices.”

“Starting in 2004, when home values in the Temecula-Murrieta area were climbing an average of 30 percent compared with a year earlier, Pacific Wealth associates recruited in California, Arizona, Texas, Oregon, Colorado, Illinois and possibly other states.”

“Investors bought houses with the understanding that the homes would be rented out and, when the time was right, sold for a huge profit or refinanced to raise money for other investments. They said they were promised financial independence within three years if they followed investment instructions without question.”

“Investors received no contracts and no financial statements from Pacific Wealth to verify the nature of the investments or to show what had happened to their money.”

“Some couples bought 10 or more homes, assured that Pacific Wealth would cover the difference if the rent collected fell short of covering monthly payments.”

“Pacific Wealth’s scheme depended on investors with big dreams but little skepticism, appraisers willing to value houses at more than the listed prices, lenders who didn’t check appraisals or verify the accuracy of mortgage applications, and a slow response by the authorities to complaints about suspicious deals.”

“Many investors wonder now how they could have been so gullible.”

“The house at 23876 Cloverleaf Way in Murrieta was among those purchased for more than the asking price. It was listed for sale Aug. 17, 2005, for $630,000. On Jan. 9, 2006, the price was lowered to $620,000 and two days later to $610,000.”

“Then on Feb. 2, 2006, after the house had been listed for more than five months, the price was raised to $715,000 with the notation that a sale was pending. On June 2, 2006, the house sold for $700,000.”

“After discarding all the Stonewood sales in the neighborhood, “Comparable houses in March 2006 were selling for between $560,000 and $570,000. The Stonewood investor who bought the house, currently is trying to sell it for $440,000 to avoid foreclosure.”

“Law enforcement showed little interest in the situation, said Vicki Carpenter, past president of the Inland Valley Association of Realtors. ‘They said they didn’t see anything illegal. They couldn’t identify a victim, and no one else was complaining,’ she said.”

“That the lenders have not sued Pacific Wealth’s real estate arm, Stonewood Consulting Inc., ’says to me the lenders didn’t have a problem with these loans,’ said Scott Grossman, Stonewood’s attorney. ‘We had a very hot real estate market. The market runs wild, loans get made, and a certain amount don’t pan out,’ he said.”

A report from the Arizona Daily Star. “Home builders are working to roll back or delay some Tucson-area impact fees to help the new-home industry weather its slump. The Southern Arizona Home Builders Association has been asking local governments to allow builders to postpone paying impact fees until after houses are sold rather than when construction permits are issued.”

“Home builders have been offering deep discounts and other incentives in recent months to help stimulate buying in a slow market. Lowering fees could help further, said John Strobeck, a local housing market analyst. ‘Anything that can reduce pricing will help the current situation,’ he said.”

The East Valley Tribune from Arizona. “Two East Valley real estate investment firms have joined up to buy more than 6,800 acres of land in Casa Grande from national homebuilder D.R. Horton for $70 million, a deal that could bring 23,000 homes to the community.”

“‘It’ll be larger than the city of Casa Grande itself,’ said Tim Wolff, co-president of The Wolff Co.”

“The sale is the latest in a flurry of recent land deals across the Valley, as publicly-traded builders rush to rid themselves of excess properties. ‘All the big builders are selling,’ said John Fioramonti, senior managing director for Meyers Builder Advisors in Scottsdale.”

“Privately held companies, both builders and real estate investment operations, are swooping in and buying up land at discounts, he said. ‘They’re coming in and taking advantage of the crunch that the national builders are in,’ Fioramonti said.”

The Arizona Republic. “There is not much to give thanks for in Scottsdale’s resale housing market, except for buyers. Home sales were down a third in October from a year ago and condominium transactions fell 16 percent…according to the Arizona State University’s Realty Studies Department.”

“Valleywide, the median resale home price fell from $257,000 last October to $242,000 last month. It was the lowest monthly median home price since May 2005 when it was $235,000, said Jay Butler, Realty Studies director.”

“‘The most evident impact of lower prices is improved affordability,’ Butler said.” “Foreclosures and sales incentives by homebuilders are factors in the declining sales of existing homes, he added.”

“The Ahwatukee housing market continued its slide in October, as the number and price of existing homes sold showed a decline compared with October 2006. The village recorded the sale of 70 existing homes compared with 85. The median price fell to $332,345 from $357,000.”

“In Gilbert the resale home numbers fell to 230 in October from 270 for the same month a year ago. The median price fell to $275,000 from $328,000. In Tempe, the number of resold homes fell to 85 in October from 90 in October 2006 and the median price fell to $261,200 from $296,500.”

“‘The take-home message right now is really he who has the financing gets the home,’ said Butler. ‘In order to reduce inventory and other things, these new developments in areas that aren’t doing very well are offering deals, so your best deal is probably the new home market not the resale market.’”

“New home developers have gotten increasingly creative with incentives, offering everything from free pools and upgrades to gift cards or a free Lexus.”

“Some 3,610 sales were recorded in October, up from 3,050 the month prior but still far below last year’s 4,985 sales, a report by ASU’s Realty Studies department shows. Last month brought year-to-date total sales to 44,410; a 23 percent drop from the same period last year and 54 percent decline from 2005.”

“Sellers are continuing to compete against new home builders, who can offer large incentives, and discounted foreclosure properties. Tighter lending standards are also still making it difficult for some potential buyers to get financing, especially in the move-up market, Butler said.”

“The biggest unknown is what the economic condition of the country will be in the coming months, he said. Talk of a possible recession continues, and gas prices are on the rise. ‘People aren’t certain about what they want to do,’ he said.”

“‘I think buyers have been waiting for good news,’ said Scottsdale real estate agent Carol Dillon. ‘I think everybody’s waiting to say we’ve hit the bottom of the market.’”

“The challenge in today’s market is not buying a home but selling your current home, Dillon said.”

“The labored housing industry is taking a toll on the Valley’s apartment rental market, which faces heavy competition from unsuccessful home sellers who are renting out properties. Valleywide, the rental vacancy rate was 10.3 percent in the third quarter, up from 7.7 percent a year ago, according to a new report by Pete TeKampe , an apartment investment broker.”

“One factor contributing to the increased vacancy is the number of single-family homes now up for rent because homeowners couldn’t sell them. There are ‘more rental homes than we’ve ever seen in this market,’ he said.”

“In one northeast Mesa neighborhood, at least six homes have been converted to rentals in the past two months, said real estate analyst Bob Kammrath, who lives in the area. ‘It’s just a sign of the times,’ Kammrath said.”

“People can’t sell their homes but still have mortgages to pay, so they rent them out, he said. Experts say failed condominium conversion projects that reverted to apartments have also contributed to the growing rental supply.”

“The manufactured-housing industry is suffering its lowest sales in at least 40 years. Loans are hard to get. Would-be buyers can’t sell their existing homes, manufactured or otherwise. Parks have been closing in Arizona at an accelerated rate because the land is more valuable for other uses.”

“Victoria Vargas, co-owner of Mingus Shadow Mobile Home Sales in Clarkdale, said, ‘This year we just sold one. Everywhere it is slow. People don’t come. I don’t know why.’”

The Havasu News from Arizona. “A total of 70 new and resale homes were sold last month in Lake Havasu City, down 23 percent from a year ago when there were 91 recorded sales. ‘We’re still in a buyer’s market,’ said Paula Singleton of the Lake Havasu Association of Realtors.”

“Lake Havasu City appears to have a more inflated inventory than neighboring cities. There were 1,731 homes on the local market at the end of October, according to the Lake Havasu Association of Realtors. As of Monday, there were 658 single-family homes for sale in Bullhead City and 913 in Kingman, according to the MLS.”

“Inventories are ’starting to dwindle, but there’s still an oversupply. The market in general is stable, but there are problems,’ Sam Wercinski, commissioner of the Arizona Department of Real Estate said.”

The Pahrump Valley Times from Nevada. “The women reading off the trustee sales weren’t hard to find. They were standing under the flagpole in front of the Nye County Courthouse promptly at 11 a.m. After this action, their property is either sold to a high bidder or it reverts back to a beneficiary, a finance company.”

“Mostly they’re talking to themselves, no one usually shows up to buy them.”

“Business is picking up lately for Penny Strickland. ‘The majority of them have been daily within the last two years,’ Strickland said. ‘I posted nine (sales) last week and I’m not the only one.’ She estimated 90 percent of the properties being auctioned are from Pahrump, 165 miles south.”

From Reuters on Nevada. “Las Vegas realtor Devin Reiss said agents in his market no longer expect business to fall into their laps as it did during the recent boom. ‘At that point it was absolutely crazy,’ Reiss said, noting it was not unusual to receive up to 15 telephone calls on properties the same day he listed them for sale. ‘Properties were just flying off the shelf.’”

“Investors who gambled hot growth and relatively inexpensive home prices would fuel ever-stronger demand now must contend with a glut of homes pulling prices down. Local realtors are working to convince sellers the market has turned decisively in favor of buyers, said Reiss, president of the Greater Las Vegas Association of Realtors.”

“Yet many sellers have not accepted the shift and are holding out for top dollar even if they must leave properties vacant — a vestige of the boom mentality. ‘I’ve seen a lot of properties sitting out there for a year,’ Reiss said.”

The Review Journal from Nevada. “As the local housing market took off in 2004 and 2005, new construction led the way, with freshly built single-family homes surging toward a median price of $350,000. Local real estate research companies could find virtually no new single-family construction below $200,000 by 2005, said Dennis Smith, president of Home Builders Research.”

“Now, 25 new-home subdivisions in Southern Nevada are selling single-family houses with starting prices below $200,000, according to an analysis of reports.”

“That’s as little as $110 per square foot in some communities. Compare that cost to expenses at the market’s apex in 2004 and 2005, when roughly $185 per square foot would have been the least-expensive price in the Las Vegas market, Smith said.”

“‘Builders are recognizing that buyers are struggling with the price points in the marketplace, and they’re struggling with lending requirements,’ said Ken Perlman, VP of Sullivan Group Real Estate Advisors. ‘This is an attempt by builders to create product that’s a little more attainable.’”

In Business Las Vegas. “In a deal believed to have been driven by a developer’s cash crunch, Station Casinos has acquired nearly 45 acres in Henderson’s Inspirada development…being developed by Focus Property Group. Several local builders said Focus has been hurt by the residential real estate slump, particularly by homebuilders who’ve walked away from deals to buy land from Focus.”

“Wayne Krygier, Amland Development president, said financial problems are common for any builder and developer these days. When home sales are down more than 40 percent, adjustments must be made, he said.”

“Speaking about another troubled developer, Lake Las Vegas, Krygier said that some builders just can’t afford to pour money into land when their existing homes aren’t selling. ‘Focus Property Group has the same situation with builders who had options and walked away from them,’ Krygier noted.”

“The developer of Lake Las Vegas in Henderson is in default on a $560 million loan and has until the end of the year to find buyers for its remaining undeveloped land or the development could face foreclosure, a Lake Las Vegas official said.”

“The latest financial woes center on buyers of the third phase of Lake Las Vegas dropping their plans to acquire land as expected, Cox said. Lake Las Vegas, although it took sizable deposits, was counting on $100 million in option payments from builders that fell through, said David Cox, the chief financial officer of Lake Las Vegas.”

“‘We had some option payments that came due, and they were not met,’ Cox said. ‘Those guys are doing their best to find funding sources, but they are in turmoil right now. Sales have dried up (in the industry).’”

“‘We are pursuing and continue to pursue large sales,’ Cox added. ‘They are just not U.S. buyers. That is dead as we see it. We are trying with Korean buyers. They have a different perspective. They see it as a discount.’”

“‘It is beautiful property. It is not going to become a trailer park,’ Krygier said. ‘It is a luxury property, and people are going to buy it for sure.’”

“Dennis Smith, the president of HomeBuilders Research, said land at Lake Las Vegas will sell but it has to be priced right. Land in Lake Las Vegas, depending on its location, has sold for more than $1 million an acre to as much as $3.5 million an acre, Krukowski said.”

“‘No one is selling land right now,’ Smith said. ‘If you are going to sell land, it is going to be discounted. Just ask the BLM (Bureau of Land Management). That is how it works. It is called supply and demand. No builders are buying land because they have got enough land in inventory to handle current absorption.’”

“When completed, Lake Las Vegas will have about 9,000 homes.”

“The Bureau of Land Management’s decision to consider abandoning its practice of not selling land for less than appraised value has sparked a lot of interest in the homebuilding and development community. It already has prompted speculation on what impact it will have on the land market and whether it would reduce prices of homes.”

“For now, the BLM is researching whether it has the authority to allow bidding to start below appraised value. The appraised value would be the reserve price, meaning that at the April auction it would simply be an exercise of how far below the appraised value the bidding will start.”

“The BLM would use that information to decide if it wants to change its policy that was developed out of congressional legislation in 1998 that required the BLM to sell land at fair market value. There was only one parcel sold at a BLM auction earlier this month.”

“Monica Caurso, spokeswoman of the Southern Nevada Home Builders Association, said changes in the auctioning process, however, would be welcome. ‘They are not auctioning land for its fair-market value,’ Caruso said. ‘They are auctioning land based on its historical information. It is not a viable form of auctioning.’”

“One unnamed homebuilder executive blames the BLM more for its practice of limiting the supply of land for the unintended consequence of raising the price of land. He said that if the BLM would have made more land available in the past, it would have helped accommodate growth and kept home prices down.”

“He said the BLM should be releasing more land in addition to allowing buyers to set the market price. ‘What holds down prices is more supply,’ the executive said.”

The Sun Journal reports from Maine. “When New Hampshire developer Jerry Bowes came up with the idea for an 11-acre, 14-unit condo development for people 55 years old and older, the market was hot and real estate agents and townspeople told him the project would sell out fast. That was in the summer of 2006. Today, the model home for Poland Place is finished and two others are under construction. Everything’s ready for the onslaught of buyers predicted last year.”

“The problem? ‘Nobody’s bought anything yet,’ Bowes said.”

“So he’s cut his prices more than $20,000, passing on savings he got when lumber prices dropped. He’s offered to waive buyers’ condo fees for a year. He’s including the appliances in any unit sold during the next six months, and he’s giving away $5,000 to $7,000 worth of upgrades to anyone who buys the model.”

“Such incentives were unheard of last year when houses were snapped up in bidding wars. Now, with Maine and the nation in a housing slowdown, some developers say they need to get creative just to get people in the door.”

“‘We’re thinking outside the box,’ Bowes said.”

“Lewiston and Auburn have approved hundreds of new homes in recent years. At least 10 condo developments and subdivisions are now under construction in Lewiston and Auburn, representing more than 270 new homes in the Twin Cities. ‘We’ve probably had more subdivisions in the last three years than we’ve had in 10 years previous,’ said David Galbraith, director of planning and permitting for Auburn.”

“Kelly Wentworth, a real estate agent in Yarmouth, represents Whispering Pines, a $300,000- to $500,000-a-home subdivision in Durham. Whispering Pines provides new home allowances, but it isn’t offering any free extras.”

“‘I don’t think anybody can give a good enough incentive to bring the buyers out,’ Wentworth said. ‘It all comes down to location and price.’”

“Wentworth is relying on promotion. A lot of promotion. But there’s a lot of competition to overcome. Not only does Whispering Pines have to contend with other new developments, but it also has to compete with older homes for sale in well-established neighborhoods.”

“Only three of the subdivision’s 13 to 15 homes have been sold so far. And only four serious buyers have shown interest in the project since August. ‘There aren’t people out there. They’re not looking, Wentworth said. ‘They may do a drive-by. They’re not calling the office.’”

The Boston Globe from Massachusetts. “The selling points are still there for the 140-year-old Colonial in Southborough that Rachid Mansour bought seven years ago. Yet a year after the house went on the market, Mansour hasn’t closed a deal. That’s because one thing has changed: The once-hot Worcester County housing market has cooled.”

“‘Most buyers are waiting for prices to drop, and sellers are waiting for prices to come up,’ said Mansour, who is asking $410,000 for the three-bedroom house - about $30,000 less than his initial price.”

“‘If I didn’t have an immediate reason to leave, I might not want to sell,’ he said.”

“Few Massachusetts towns illustrate the housing bubble’s bursting as vividly as Southborough and its neighbors in Worcester County. It was long the western frontier of Boston’s expanding metropolitan area, where inexpensive houses, plentiful undeveloped land, and good road and rail links made it one of the fastest-growing parts of the state in the past decade.”

“But the real estate market in the exurbs between Framingham and Worcester is now in the doldrums. ‘We were overinflated,’ said Randy DeVries, VP of Prudential Prime Properties in Westborough. ‘The market just went wild, and now we’ve got a correction.’”

“Realtors and others say sky-high prices in the suburbs closer to Boston during the mid-1990s and early 2000s sparked a building frenzy in Worcester County as first-time home buyers looked for cheaper options, especially in towns straddling Route 9, including Shrewsbury, Northborough, Southborough, and Westborough.”

“Now, conditions have changed. With prices closer to Boston also down, Worcester County is less attractive to buyers who want to live closer to the big city.”

“‘A lot of buyers who might have gone to Westborough will now go to Natick,’ said Leif Rosseland, sales manager at Coldwell Banker in Shrewsbury. ‘It’s just like a wave at the ocean. It’s starting to pull back out to the Boston market.’”

“As those would-be buyers head east, they leave behind a glutted housing market. The eastern end of Worcester County is close to being built out, with homes that are now worth less just a few years after they were first purchased.”

“‘When people hear that prices are going down or there is a tendency to go down, people wait,’ DeVries said.”

“Mickey Skarr recently sold her Shrewsbury house for $515,000, after four months on the market. She originally asked for $600,000 but felt comfortable dropping the price because she and her husband are moving to Florida, where houses are significantly cheaper than in the Northeast.”

“‘It seemed like forever, primarily because of all the bad news about the housing market every day,’ she said. ‘Five years ago people would have been standing on the doorstep fighting each other over it.’”

From Newsday in New York. “Through a friend, they met Aaron Wider, a Garden City mortgage banker who also owned several homes in the Massapequa area. They settled on a two-family high ranch in North Massapequa at a sales price of $805,000.”

“Because Wider also was a mortgage banker, he said he could approve a loan that other banks wouldn’t, the Fitzgeralds recalled. ‘It was like he was giving us an opportunity for us to fulfill our dream,’ Robin Fitzgerald said.”

“From then on, the Fitzgeralds were willing to overlook almost anything in the pursuit of that dream, a common scenario seen across the country, experts say. The couple didn’t say anything when they noticed their credit scores were too high on documents they said Wider had filled out. They didn’t look at what other homes in the area were selling for.”

“After a year of struggling with mortgage payments that — minus rent from tenants — were $3,400 a month, the Fitzgeralds fell behind. Last March, Pennsylvania-based GMAC Bank, which had bought their loans from Wider’s bank, began foreclosure proceedings.”

“Only then, after hiring their own appraiser, did the Fitzgeralds learn that their home was valued at $545,000 when they bought it.”

“The Fitzgeralds are not the only Wider customers facing foreclosure. Banks have begun legal proceedings against at least 11 other Long Island homes connected to Wider, Nassau and Suffolk county property records show.”

“George Cornielle was living in Elmhurst with his wife and grown daughter in 2005, when a friend who did construction work for Wider asked Cornielle if he was interested in buying a home.”

“‘I wasn’t even thinking about a house,’ Cornielle said. ‘I said ‘I don’t think I qualify.’”

“But the friend assured Cornielle that Wider could arrange a loan and soon Cornielle was in contract to buy a high ranch in East Massapequa for $812,500. Cornielle said he paid a down payment of $17,000 and didn’t ask questions when lawyers placed dozens of documents before him to sign. Cornielle said he used a lawyer Wider provided him.”

“Cornielle said he did not notice that personal information in his loan application was incorrect. The papers say…that he earns $14,500 a month — more than triple what he said he actually makes.”

“Inside Wider’s conference room, the mood was chaotic and Cornielle said he felt rushed. ‘It was a lot of people, making deals on the cell phone,’ he said. ‘There were so many papers.’”

“Although Cornielle is not in foreclosure, he said he is one month behind on his mortgage payments and has borrowed up to $60,000 from family and friends in order to avoid defaulting.”

“Cornielle eventually obtained copies of the appraisals, which showed the house was worth $830,000 and $825,000 in 2005. Cornielle paid for a new appraisal in July, which showed the house was valued last summer at $484,000.”

“The Fitzgeralds have staved off foreclosure, for now. After they hired a lawyer to challenge the action, a judge canceled an auction of their house scheduled for Oct. 23.”

“Wider said he considers the Fitzgeralds personal friends. Robin Fitzgerald tells a different story.”

“‘I said Aaron, ‘You’re like a walking angel.’ That’s how I felt about him,’ Fitzgerald said. ‘We felt like he was the answer to our prayers.’ Now, she said, she often cries herself to sleep.”

The Centre Daily Times from Pennsylvania. “End-of-year clearance efforts — markdowns of more than $50,000, offers of no closing costs or no payments until 2009 — by some local builders are translating into big potential savings for home buyers.”

“The number of homes sold in Centre County actually increased slightly in October and is up substantially in some parts of the county when compared with 2006. But an abundance of spec homes, a desire to move that inventory off the books in what is typically a slower time of the year, and a soft market for higher-priced homes is driving some builders to offer discounts.”

“Barry Begoumian, CEO of Sunrise Homes, has taken an aggressive approach to move properties. Sunrise has launched a ’super sale’ through November, cutting prices between $14,000 and $55,000 on about a dozen homes.”

“The sale is an opportunity to start 2008 with a clean slate, he said. It’s also a onetime offer. ‘It’s our first time doing this,’ he said. ‘We’re basically moving it at our cost. We’re basically moving it below cost in some cases.’”

“In a good year, he said, Sunrise will build and sell 40 to 45 luxury homes and town houses. This year, he said, he’ll be happy selling 22. ‘We’re off by 50 to 60 percent,’ he said, adding that this is seen mainly among prospective buyers of homes in the $250,000 to $450,000 range. ‘It’s been slow for the last two years.’”

“Begoumian said too much speculation has resulted in a flood of available spec homes. ‘That sort of cluttered the market,’ Begoumian said.”

“Throw in the negative publicity about the downturn in the real estate in markets such as Florida and California, and the situation is magnified, Begoumian said. ‘We never really did have that bubble burst that they did,’ he said.”

What do you see in your housing market this weekend? Overbuilding? “‘The Southeast region of the United States ‘recently has begun to suffer from too much of a good thing when it comes to housing,’ Atlanta Federal Reserve Bank President Dennis Lockhart said today.”

“Builders, lenders and others didn’t see the end of the 2001-2005 housing boom coming, he said, and ‘in the aftermath of residential overbuilding, a painful adjustment is taking place with house prices stagnant or declining and housing starts dropping sharply in many areas in the region.’

Industry changes? “A growing number of agents – spurred in part by current market conditions – are crossing the street to work exclusively for the buyer. ‘It has always been very important, in my opinion, for a buyer to have his own representation,’ said Dallas real estate agent Sally Snyder. ‘But now that the market has turned, it is even more important.’”

“‘Since I’ve been an exclusive buyer’s agent for over 10 years, this is the first time it has really been a buyer’s market,’ she said.”

More defaults? “Foreclosure filings in Delaware continued their upward climb in October, increasing 53 percent overall compared with the same period last year, county court records show. Sussex County had a record-breaking 72 filings, up 80 percent from a year ago.”

“Gerry Kelly, deputy bank commissioner for consumer affairs, said he expected foreclosures to continue to rise in 2008 as interest rates for Delaware’s subprime mortgages begin to reset.”

“‘It’s starting to hit the trend, which is a 50 percent increase. I would expect to see that over the next few months,’ Kelly said. ‘We’ll be peaking in April or May of next year.’”

Related layoffs? “Rheem Heating and Cooling Division announced late Thursday that it will lay off 125 workers at its Fort Smith plant effective Nov. 26. The layoff comes on the heels of a previously announced temporary layoff that will affect nearly all of the 1,225 workers at the plant.”

“The housing market slump has caused low sales figures for the company’s heating and cooling division, which has caused inventory to build up.”

Signs of speculation? “If the inevitable real-estate cycle had any sense of drama - or farce - it would designate this week as the top of the wheel and the height of folly.”

“First came the money-mad ‘launch’ of 1 Bloor East, the epitome of a frenzy. One man who held a place for a real-estate agent in the ruly mob that camped for days beneath the hoarding told The Globe and Mail he earned $2,000 for the service. Given the way prices rose throughout Tuesday’s launch, that payment was likely a ’sound investment,’ to use a phrase often heard in this market.”

“But the 80-storey, Kazakh-financed Bloor Street tower had less than a week to shine as the city’s tallest theoretical residential building before a usurper appeared. Yesterday, a competing developer unveiled an equally dramatic and potentially taller condominium tower, called Aura.”

“After the shocking events in October 2007, when thousands of people jostled to buy apartments at The Vista and Sky Garden III at abnormally high prices, the HCM City Construction Department made an inspection tour of the projects and found out that the projects’ investors had violated Article 39 of the Housing Law.”

“According to Nguyen Van Dung, Director of the HCM City Construction Department, Article 39 stipulates that investors of projects can only mobilise capital from the public to serve the projects’ construction after the housing designs have been approved by state management authorities and the buildings foundations have been completed.”

“In the cases of the three projects, the investors raised funds for the projects’ implementations when they only had idle land.”

“Major sales by the rival auctioneers Christie’s and Sotheby’s this week are under scrutiny, as the art world wonders and waits to see if the inflated market stays high, or follows shares and property prices into a global decline.”

“Last week, Sotheby’s sale of Impressionist and modern art in New York took a damaging turn when a Van Gogh painting failed to sell, along with works by Picasso, Renoir, Gauguin and Matisse.”

“‘It’s very similar to the housing market and the same people buying property are buying paintings, the people who’ve made money from finance. Prices are high, really high,’ said The Art Newspaper’s art market editor, Melanie Gerlis.”

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