The Housing Bubble

The Voice of San Diego. “With homes taking longer to sell, and buyers choosing between more homes on the market than just about ever, real estate agents are getting pickier over the clients they’ll take. ‘If you’ve driven somebody around for two or three days, six to eight hours of driving around in a day, and then they decide ‘Oh, I actually don’t want to buy,’ I don’t know — how does that agent make a living?’ said Sharon Crown, a Coronado-based real estate broker.”

“‘You know, these listings, it does cost money to carry them, to advertise them, to work on them,’ said broker Jim Abbott. ‘And the huge, vast majority of them are not going to sell.’”

“Emotion plays out most dramatically for sellers stubbornly married to a lofty price, said broker Adam Rappoport. ‘The common line you always hear is, ‘We think someone will fall in love with this house like we did,’ and pay the price we’re asking,’ he said. ‘That doesn’t happen anymore….In this day and age, at least most Realtors are trying to portray a more accurate view of the market, and sellers are still in denial.’”

“The buyers approaching agents these days are increasingly aware of the market conditions, Rappoport said. ‘What I have now is … a different class of buyer,’ he said. ‘It’s a very savvy group of very smart, intelligent buyers who know the market. They have me write up offers 10 to 20 percent below list. There’s no fear anymore of being insulting to the seller or the lender.’”

“Abbott said he and his colleagues typically spend between $1,500 and $6,000 to market a property. But if the price on that glossy flier makes a buyer laugh out loud? ‘If a listing is overpriced and you never sell it, then you’re just out that money,’ he said.”

“Ron Alpert, (who) coaches real estate agents around North America (said), ‘If you’re overpriced, people are going to look at it, and they’re not going to call. Maybe the market would firm up a little bit if all of these sellers in dreamy-dreamy land would just take their houses off the market.’”

The Times Delta. “Patricia Romer doesn’t remember exactly what the sign said. But it promised that a housing development would rise in a vacant lot near her east Visalia home by fall 2006. It didn’t happen. The lot, a former orchard cleared of trees sometime last year, remains vacant. And the sign, which fell down in January, is gone.”

“Meanwhile, Romer said, the lot has become an eyesore. ‘It was just a terrible mess,’ she said. ‘And [at one point] there were people sleeping in it.”

“Fed up, Romer called the property’s owner around January. She was told the project was delayed and would be completed by spring. It wasn’t. ‘So I said I’m tired fooling with these people,’ Romer said.”

“In August, she called Visalia’s Code Enforcement Division, hoping the city could put pressure on the developer to get something done. The city’s subsequent clean-up efforts improved the situation, she said. But the houses remain on the risers and trailer, which Romer said degrades the neighborhood and affects home prices.”

“‘There’s only so much people can be coerced to do,’ said Tim Burns, city of Visalia neighborhood preservation, code-enforcement manager. And still unresolved: the $632 the developer owes the city for its cleanup efforts.”

“The contractor, Ridgecrest Homes of Stockton, plans to build 149 single-family homes on a 40-acre site, according to Jake Jacobsen, vice president of operations. The subdivision is to be called Eagle Meadow, but the nationwide housing slump has forced the company to scale back its marketing of the homes, Jacobsen said.”

“Ridgecrest has pushed back the construction start date to summer 2008. The houses are no closer to being built, however. No construction permit has been issued.”

The Mercury News. “After years of planning, San Jose is joining the bandwagon of American cities that offer an urban lifestyle for those who are tired of commuting and yearn to walk to work - or at least to a train station.”

“While developers would have picked a more auspicious time to hit the market if they could have, it’s tough to time it right when these towers can take five years or more to plan, design and build.”

“‘The headlines are certainly bad for single-family residential homes in outlying markets,’ said Seth Bland, a partner with Wilson Meany Sullivan, which along with CIM Group is building The 88, scheduled to open in mid-2008. ‘But those headlines do not apply to our buyers. The 88 is a new lifestyle option.’”

“Matt Anderson, a partner in an economics and real estate research firm in Oakland, hedged his bets. It’s a tough call, he said, in a city that has never offered this product.”

“‘I wouldn’t call it a slam-dunk in today’s market. The stock market is unsettled. The economy is doing well, but it’s not an outright boom,’ he said. ‘The big question is whether they hit the demographic the right way. Affordability is not really an issue.’”

“For those who worry the market could be flooded, as were those in Miami, Las Vegas and San Diego, John Weis, of the city’s redevelopment agency, said the market in Northern California is so underserved that San Francisco is planning more than 8,000 units for the area stretching from the Mission District to the Bay Bridge.”

“In San Jose, along with the almost 900 units in four high-rise projects either on the market or about to be, 12 more towers with 3,700 units are in the pipeline. ‘San Jose has a total of 4,500 units coming to market over a five-year period where two years ago, we had none,’ Weis noted. ‘No, I don’t think we’re overbuilt.’”

The Contra Costa Times. “Erica Baez once figured she had a great gig in the mortgage business. ‘I kind of fell into this,’ said Baez, a Hayward resident who entered the mortgage business in 1995, soon after she graduated from high school. ‘I realized it could be a way to make a lot of money.’”

“The housing crash has erased all that for Baez and many other workers in the industry. In the East Bay in the past year, the home sales and financing quagmire has sucked into oblivion 8,100 jobs in construction, real estate and mortgage activities.”

“‘Everybody is losing their job,’ Baez said. ‘It’s really stressful. A lot of people are going through this.’”

“In more than a few cases, these workers are discovering that their skills do not always transfer readily to new industries. Many in the industry have been forced to scramble for work. Some must ponder whether to return to college to pick up skills for a new career, all while hunting for work or starting a new job.”

“Baez was out of work for a few weeks. She found a job in customer service for a wholesale manufacturer. Her pay plunged 32 percent, from $55,000 a year in the mortgage industry.”

“‘I expect I will have to take a job at Starbucks or something like that at minimum wage,’ Baez said by e-mail.”

“In 2005, Sabrina Wilson, a Hayward resident, made $110,000 in the home-financing business. Like others, she jumped into the working world right out of high school. Before getting into financial services, Wilson had jobs in retail and fast food.”

“Before long, Wilson found a job handling mortgages, and she never looked back, until this year. She loved the jobs she held in the mortgage industry, but she has never witnessed a meltdown so complete as what is going on in 2007.”

“‘I have seen ups and downs, but I have never seen it like this,’ Wilson said. ‘Companies are shutting down. I know loan officers who made $1 million a year, and now they are out of the business.’”

From ABC30.com. “Falling stocks, the mortgage mess and rising oil costs, a combination that has experts warning that a recession is more than a possibility. Economists in the Bay Area are looking into a crystal ball that looks a bit scary.”

“A recession is a bitter pill to swallow, and the Bay Area Council isn’t trying to sugar coat it. The council’s new economic analysis says a recession is almost certain.”

“The housing market is playing a big role, but that’s only part of a complex economic picture. ‘We think a recession is in the offing here,’ said Bay Area Council and CEO Jim Wunderman.”

“And its latest survey is reflecting the most pessimism since the dot com bust seven years ago and it’s tied to the fall in Bay Area home prices. ‘Overall, people are feeling a sense of malaise and dread, and that tends to have impacts in the way people behave, including spending, hiring, and once that happens, you’re in for a pretty strong downward cycle,’ said Wunderman.”

“‘Many people have not gone through a bump in the road, so it’s a new experience for them. Old times like me have, and what you learn is, you hope for the best and plan for the worst,’ said real estate developer Jon Reynolds.”

“Perhaps the most sobering figure mentioned in its report today is that Bay Area home prices could fall 25 to 30 percent.”

The San Francisco Chronicle. “A real estate symposium on Monday - featuring panels titled ‘catastrophic risk,’ ’subprime crisis’ and ‘economy on the edge,’ among others - predicted more gloom in the Bay Area housing market over the next year or so.”

“‘Housing has not really hit the bottom … and we’re not going to hit the bottom for a while yet,’ said Jim Wunderman, CEO of the Bay Area Council.”

“Economist Ken Rosen, a notorious bear on housing who has called for a correction for several years, said home prices in the urban core of the Bay Area could drop 5 to 10 percent - but outlying areas could see tumbles of more than 20 percent.”

“In other regions, such as economically depressed Detroit, or Las Vegas - the land of speculative building - the damage could be far worse next year and beyond. ‘Las Vegas is finally deflating,’ Rosen said. ‘You had all these massage therapists who bought speculative homes that are now losing money.’”

“The Bay Area’s Wunderman is already seeing an effect on his constituents. Survey results show that business leaders in the area are less confident now than at any time in the last several years, and many say the housing downturn will push them to cut hiring plans.”

“Builders say the anemic market is effectively bringing the value of certain ‘C-level’ building sites to $0, while costs for labor and materials - which spiraled higher as prices rose - have not come down.”

“In order to survive to build another day, some builders may be forced to sell off valuable inner core land, shut down unprofitable divisions or merge with larger firms.”

“Michael Ghielmetti, president of Signature Properties of Pleasanton, predicted the market would begin to spring back in 2009. ‘There’s a perfect storm working against us,’ Ghielmetti said.”

The Daily Camera reports from Colorado. “More Boulder County residents defaulted on their home loans in October than they have during any month in the past decade. The 107 foreclosures reported by the Boulder County Public Trustee’s Office even bested August’s 103 filings, which previously held the dubious 10-year high honor. Only 10 months into the year, 2007 already is Boulder County’s worst year in reported foreclosures since the late 1980s.”

“The Boulder area, often countercyclical to national trends, started feeling the pinch before other regions out-of-state, said veteran mortgage lender Lou Barnes, adding he has noticed the supply of ‘bad mortgage ideas’ has been choked off and new construction came to a bit of a halt this year.”

“‘We were early to the party, and with any luck, we’ll be early to leave it,’ he said. ‘But I’m afraid that the Front Range of Colorado is a good predictor for what’s ahead’ in places such as California, New York, Arizona and Washington, D.C.”

“Excessive land subdivision has helped fuel the foreclosure glut in the Front Range, said Barnes, noting this has occurred particularly in the area he calls the ‘foreclosure belt,’ near the Interstate-25 North corridor that includes counties such as Weld, Adams and Arapahoe.”

“The effects from the subdivisions are ‘going to be with us for a long time, and will tend to inhibit future appreciation,’ Barnes said.”

The Tribune from Colorado. “Northern Colorado already is almost two years into a housing slump, and the list of casualties keeps growing. Home construction loans are down 48 percent at one local bank. Building permits for remodels and new construction in the region also are down about 50 percent. Sales taxes for Greeley building permits are down about half.”

“‘This downturn is by far the worst I’ve seen in … 43 years,’ said Jim Pask, northern Colorado Market Manager a lumberyard in Greeley.”

“The feverish pace of home building since 2000 created an oversupply on the market in recent years. That market, however, couldn’t sustain after three years of record numbers of bankruptcies and foreclosures and layoffs. The most recent crash of the sub-prime market put the brakes on a lot of home lending, making loans for first-time buyers hard to come by.”

“Summer 2006 seemed to make the downturn more of a reality when Lennar, a national home builder, left the northern Colorado market. That’s also when the city of Greeley started seeing the building permit numbers plummet. Numbers continue to slide.”

“‘Most everyone pulled their projects in and saw the writing on the wall,’ said Tim Swanson, chief building official for Greeley. ‘Most of the home builders have just not been throwing them in the ground the way they were. We issued 14 single-family dwelling permits in October. We projected that we’d do 175 for the year and we’re still on track. But, in 2005, we did 750.’”

“‘Up here, construction is a big deal,’ said Larry Wood, president of Union Colony Bank in Greeley, where construction loans are down 48 percent.”

“‘Construction lending is something that rolls fairly rapidly,’ Wood explained. ‘Every six months a house is built and paid off. Then you do another one, and you collect loan fees. So that churn helps the income. And the churn isn’t there anymore.’”

“The proverbial storm may be a long one. Industry officials initially looked toward 2008 to be the turn-around year, but now all thoughts are moving to 2009.”

“‘(Next year) is going to be a tougher year,’ Wood added. ‘But I do think it could be a good absorption year, not necessarily bring in a lot of profit, but with the opening of new business and hiring people that will absorb that excess inventory, by 2009, we’ll start building houses again.’”

The Arizona Republic. “The once-sizzling market for high-rise downtown Phoenix condos has cooled. Phoenix leaders have touted condo dwellers as a crucial part of downtown’s resurgence, saying residents would help sustain nearby shops and their foot traffic would inject the neighborhood with 24-7 vitality.”

“Now, plans to attract those condo dwellers have questions marks. Developers say condo sales have slowed to a trickle. Countywide, condos sales are down 37 percent compared with the market peak in 2005, when more than 19,000 condos were sold.”

“The condo market has supply-and-demand problems, experts say. On the supply side, there has been a tide of downtown Phoenix condo projects. Since 2005, city figures show, 383 condos and townhouses have been built in the downtown core. More than 2,000 more are under construction or are in the pipeline.”

“Attorney Marshall Meyer is trying to sell his family’s midtown luxury condo and is considering where to buy his next one. To Meyers, the downtown condos, which range from the high $300,000s to beyond $1 million, seem overpriced.”

“He admitted he may not have to make that decision anytime soon. ‘The market as, you know, is not great,’ Meyers said. ‘I am not expecting a fast sell.’”

“Doug Duncan, the Mortgage Bankers Association’s economist, said he sees the condo market as a bellwether for the overall housing market. His mortgage-bankers group predicted the overall housing slump because of the price trend in condos. Now, the industry is keeping an eye on condos for signs of recovery.”

“‘I always watch condos as the leading edge of where the market is going to go,’ Duncan said.”

Independent Newspapers on Arizona. “Every news source across the nation says the housing market is in the toilet, but an Apache Junction Realtor is beginning to see positive changes in AJ. ‘I think it is crazy to have all this doom and gloom in the media’ concerning the real estate market,’ Dale Gorny, owner of Arizona Prime Estates in Apache Junction, said.”

“Ms. Gorny said she is seeing dismal numbers, but ’summer is always a slow (time of year) even in the hottest of markets.’”

“A Nov. 1 study conducted by Dr. Jay Q. Butler, at Arizona State University’s Polytechnic campus, concluded Pinal County’s resale housing market will continue to see a declining trend.”

“According to Dr. Butler’s study, the new home has become a strong competitive and attractive alternative to the resale home in Pinal County due to its attractive long-term investment opportunity. Dr. Butler attributes the decline to ‘higher gasoline prices, more congested highways and limited employment opportunities.’”

“Dr. Butler said the ‘key issue facing Apache Junction is that investors were drawn to the inexpensive housing in Pinal County, (but) higher prices have limited their role in the local housing market.’”

“According to Ms. Gorny, the housing market’s ‘actual dollar amount value has only gone down 8 percent.’ Ms. Gorny said she has ‘a gut feeling that by the end of next year things are going to start recovering.’”

“Ms. Gorny explains ‘Arizona is still the destination (state)’ and ‘what I think is going to happen is sellers (are going to) need to be more flexible. It is definitely a buyers market.’”

The Daily Courier from Arizona. “Prescott Valley: A sharp drop in sales tax revenues has town officials looking into ways to cut expenses. William Kauppi, director of management services, said sales tax revenues are down approximately 16 percent in the first quarter of the 2007-08 fiscal year.”

“The construction sector is down 40.7 percent and Kauppi said that slumping sector is responsible for the lion’s share of the downturn.”

“‘We didn’t anticipate this kind of decrease in construction,’ he said. ‘We’re going to consider this is the fiscal trend for the year.’ Unless the town’s economy suddenly turns around, Kauppi said it means town coffers will accrue about $2 million less.”

“‘It is what it is,’ said Councilwoman Lora Lee Nye. ‘Every economy is adjusting and we’re no different than anyone else.’”

From KVBC in Nevada. “It’s the upside of the slump in housing prices. If you’re ready to buy a new home, this is a really good time. More than 20 new subdivisions in southern Nevada are selling homes for under $200,000.”

“Homes we visited near Nellis and Hacienda at Hacienda Park are going for $230,000, but the prices have been slashed to try to sell the remaining homes in the subdivision.”

“At least 25 new subdivisions in southern Nevada are reportedly selling homes for under $200,000. That’s more than $100,000 less than the median price for a Las Vegas home.”

“‘We have not seen that price point in some time,’ Monica Caruso with Southern Nevada Home Builders Association told News 3. ‘These are brand new homes with all of the other amenities and conveniences.’”

“But these prices may not be around too long. With the opening of major new Strip resorts like The Palazzo later this year, experts say our population and the number of jobs will continue to grow. And that is setting the scene for a housing shortage as early as 2009.”

“And the Southern Nevada Home Builders Association says when you have a housing shortage the immediate impact is rising prices. Experts believe that prices have probably fallen to about as low as they’re going to go.”

The Deseret News from Utah. “Utah’s homebuilders are entering uncertain times. ‘The market is definitely going through some changes,’ said Eric Allen, director Utah/Idaho region for market research firm MetroStudy. ‘We’re getting back into what we consider a more normal market.’”

“He added the area is coming off record years in the number of homes constructed and sold, but now the market has come to a point where those homes need to be absorbed. Along the Wasatch Front, the inventory of newly constructed finished vacant homes is around 32 percent. He said 20-25 percent is typically considered healthy.”

“In response to the notion that many potential homebuyers are waiting to find out if housing prices will fall, homebuilder Paul Magleby said, ‘That’s human nature, they’re going to pull back to see if they can get a better deal.’”

“‘But the best deal might be right now,’ he said because homebuilders can capitalize on lower lumber prices and better rates from their contractors needing work right now.”

The Salt Lake Tribune from Utah. “For years, the positive news has flowed about the Salt Lake City area’s booming residential real estate market. For months, Utah Realtors have been trying to get across the message that the Wasatch Front’s home-sale market is relatively immune to the deep and troublesome downturn plaguing housing nationally.”

“But in recent weeks, reports about the downside of the Wasatch Front market are starting to surface.”

“Mark Zandi, chief economist with Moody’s Economy.com, conducted (an) analysis for Fortune and offers up this sobering forecast: A home in the Salt Lake area worth $464,000 in June 2007 could be worth only $360,000 in five years.”

“‘At the very least, the Salt Lake real estate market will go from boom to something uncomfortable over the next couple of years,’ Zandi said.”

“Zandi’s analysis is based on the fact that home prices and rents historically track each other. But in recent years, home prices have risen much faster than rents in the Salt Lake area, putting that relationship out of whack. The only way to restore that relationship is for rents to rise and home prices to fall.”

“Jim Bringhurst, president of the Utah Association of Realtors, doesn’t buy the prediction of falling prices. Utah and Salt Lake City have strong economies, strong employment rates and a steady flow of people moving in from other states. All those factors, along with historically low mortgage rates, bode well for the area’s residential real estate market, Bringhurst said.”

“Zandi…cites the example of Las Vegas, which is suffering through huge inventories of homes for sale and declining prices. ‘Just two years ago, Nevada had one of the top rates of job growth,’ he said. Today, the Las Vegas market is hurting big-time, along with Phoenix, Los Angeles and other Western cities, because bloated inventories are contributing to selling-price declines.”

“Zandi said in the Salt Lake area, higher-priced homes…may be the most vulnerable because ‘it’s part of the market that was most infected by investors and speculation.’ But he believes the downturn probably will be felt in all price ranges.”

“Economist Kelly Matthews of Wells Fargo Bank in Salt Lake City said he wouldn’t be surprised to see selling-price declines. Earlier this year, he examined the disparity between income gains and housing price increases and has been delivering the unpopular message that the Salt Lake area has a real affordability problem, even with strong job growth and low interest rates.”

“He worries that prices of some homes may have to drop by double-digit percentages before demand kicks up yet again. ‘Nobody wants to lose money, but we’re caught in a situation where we can’t sell all these homes on the market without discounting their prices.’”

“‘I don’t think anyone knows how far or fast prices have to fall before we can move some of the homes that are sitting on the market and we can start building homes again. But clearly our market is out of whack,’ Kelly said.”

Some CNN Money news from Wall Street and Washington. CNN Money, “The number of housing permits issued nationwide fell to a 14-year low in October, although housing starts edged up slightly, according to the government’s latest reading. It is seen as a necessary step to work through a record glut of completed new homes available for sale on the market. The report comes a day after the National Association of Home Builders’ survey on its members’ confidence matched a record low level.”

From BBC News. “Doug Roberts, chief investment strategist at Channel Capital Research, said the latest figures from the Commerce Department would not offer much comfort to the struggling housing market.”

“‘There’s a massive over supply, right now the mortgage market is tightening up, and people are running away from a free-fall,’ he said.”

The Associated Press. “All of the strength came in the volatile apartment sector, which jumped by 44.4 percent. Construction of single-family homes fell for a seventh straight month, declining by 7.3 percent in October compared to September.”

“Applications for building permits, seen as a good sign of future activity, fell for the fifth straight month in October…down a sharp 24.5 percent from a year ago.”

From Builder Online. “Builder confidence held at record lows in November due to ‘continuing mortgage market problems and a substantial inventory overhang,’ according to the latest National Association of Home Builders/Wells Fargo Housing Market Index.”

“‘Builders are worried that the national media has tended to report negative housing stories as if there is one real estate market, when, in fact, there is no such thing — all housing markets are local,’ said NAHB President Brian Catalde. ‘As a result, some healthy markets are being unfairly impacted by this negative media coverage.’”

“‘I think that the media coverage is on the top of the list — that’s basically the media talking about all the foreclosures that are coming around the corner or all the inventory that will be available to bid on,’ Jim Brewer, VP of construction with Sherman Oaks, Calif.-based Spiegel Development told BUILDER Online.”

“‘We have buyers that are convinced that if they just sweat it out for a few more months, there will be a lower price or a better deal,’ Brewer continues. ‘Nobody wants to be made out for a fool to have paid more than the next guy.’”

From Reuters. “The index was unchanged at 19 in November, matching last month as the lowest reading since this gauge started in January 1985. Readings below 50 mean more builders view market conditions as poor than favorable.”

“‘The housing recovery is absolutely going to be measured in years, not in months,’ said Sue Woodard, executive VP of Mortgage Market Guide.”

“D.R. Horton Inc. said Tuesday it swung to a loss in the fiscal fourth quarter from a year-ago profit. Chairman Donald R. Horton said he expects the housing environment to ‘remain challenging.’”

“The latest quarter includes pretax charges of $278.3 million for inventory impairments and $40.3 million of write-offs related to land option contracts that the company doesn’t intend to pursue. The latest period also includes a pretax goodwill impairment charge of $48.5 million.”

“Sales declined 35 percent to $3.12 billion from $4.8 billion in the 2006 period.”

“‘Market conditions continued to decline in our September quarter as inventory levels of both new and existing homes remained high while pricing remained very competitive,’ Horton said. ‘We also experienced reduced mortgage availability due to tighter lending standards, and buyers continued to approach the home buying decision cautiously.’”

From Bloomberg. “Freddie Mac, the mortgage buyer that has helped almost 50 million Americans purchase a home, posted its largest-ever loss and said ’significant deterioration’ in the housing market may force it to cut its dividend and raise capital.”

“The loss was caused by a $2.24 billion decline in the value of derivative contracts and $1.2 billion in credit losses among the $2.7 trillion of mortgage assets Fannie Mae owns or guarantees.”

“Freddie Mac’s $713.1 billion portfolio as of September included $105 billion of securities backed by subprime mortgages.”

“The fourth quarter will also prove ‘difficult,’ CEO Richard Syron told analysts today. ‘There is nothing we see right now to be more optimistic,’ Chief Financial Officer Anthony Piszel said.”

Dow Jones Newswires. “Freddie Mac said its estimated regulatory core capital was just $600 million above regulatory requirements. In order to keep it from falling below that, it has engaged Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc. to help consider ‘very near-term capital raising alternatives.’”

“Freddie Mac is also ’seriously considering’ reducing its fourth-quarter dividend by 50%. If those measures are not sufficient, then the company ‘may consider additional measures in the future such as limiting growth or reducing the size’ its retained portfolio.”

“Freddie also said the fair value of net assets attributable to common stockholders, before capital transactions, fell about $8.1 billion during the quarter. The reduction was largely due to the credit losses.”

The Wall Street Journal. “Chuck Schumer is lucky Congress ignored him. We’re referring to the New York Senator’s idea, which he has loudly promoted for months, that Fannie Mae and Freddie Mac should ride to the rescue of the housing market by buying up unwanted mortgages and guaranteeing them. Now those two mortgage giants are themselves under scrutiny amid concerns that they’ll report big losses.”

“Shares in mortgage lender Paragon Group plummeted 46 percent in early trading Tuesday after it disclosed difficulty securing new financing because of the subprime lending crisis in the United States. Paragon is Britain’s third-largest company specializing in ‘buy-to-let’ mortgages, for buyers who intend to rent rather than occupy a property.”

“‘Whilst terms for renewal have been offered in principle, they are not attractive for a variety of reasons, including the high cost of such facilities in the current market environment,’ the company said.”

The Herald. “Alistair Darling yesterday promised to protect the interests of taxpayers in resolving the Northern Rock crisis, telling MPs that he ‘fully expected’ to get back all the public money loaned by the Bank of England, currently estimated at £24bn.”

“In a statement to MPs, the Chancellor made clear that the vast amounts loaned to the Newcastle-based mortgage lender - put at £900 for every taxpayer - were secured against ‘high quality’ assets it held. ‘The government has a clear duty to protect the public interest and we will do that,’ declared Mr Darling.”

“Vince Cable, the acting Liberal Democrat leader, said taxpayers’ money had been used to prop up the bank and provide a profit opportunity for ’spivs in the City.’ He called for the UK Government to nationalise ‘temporarily’ Northern Rock to provide stability before it could be sold off.”

“However, Jim Cousins, the Labour MP for Newcastle Upon Tyne Central, said nationalisation would mean ‘a slow lingering death’ for the 6000 jobs at Northern Rock, its assets and the reputation of Britain as a major financial services centre with Mr Darling playing the role of undertaker.”

“Northern Rock Plc. slumped for a second day in London trading after saying yesterday that bids are ‘materially below’ its market value. ‘I can hardly believe that someone would come in and offer zero to the shareholders,’ said Christian Stoian, who helps manage 2 billion euros ($3 billion) at (a) Swedish pension fund, including a 1.5 percent stake in Northern Rock. ‘It is not a bankrupt company. They are making money.’”

“The cost of borrowing pounds for three months rose to a two-month high yesterday amid concern that losses linked to U.S. subprime home loans will grow.”

“‘People are making comparisons with Railtrack, where shareholders got nothing,’ said said Simon Maughan, an analyst in London. U.K. rail operator Railtrack Plc operated around 2,500 stations in 2001 when the government asked the High Court to put the company into administration. About 49,000 shareholders lost a three-year legal battle to gain compensation in 2005 after a company partly funded by the government bought Railtrack’s shares.”

“John Gieve, the Bank of England’s deputy governor for financial stability, said that money markets may face renewed ‘tightening’ before the end of the year.”

“‘There still may be more bad news to come,’ he told a conference today on hedge funds in London. ‘There’s still a worry we haven’t yet seen the bottom. Some markets are still very illiquid. As the year end approaches, we may see some tightening in money markets.’”

“Losses on holdings backed by U.S. subprime mortgages are prompting banks to hoard cash, driving up credit costs for companies and consumers. The three-month London interbank offered rate for pounds, or Libor, rose to 6.49 percent today, the highest in two months, suggesting banks are still reluctant to lend to each other.”

“‘It’s already happened,’ said George Buckley, chief U.K. economist at Deutsche Bank AG in London. ‘That’s telling you something about what the market thinks about the subprime risk.’”

“‘In the last few weeks we’ve seen another lurch. There’s been more pain than people anticipated,’ Gieve said. ‘Hedge funds have not been blown away yet by the first real market stress,’ he said.”

“The Bank of England ‘identified that the most likely course of instability was the low risk premia, particularly in structured credit markets,’ Gieve said.”

“The risk that banks and brokerages from Citigroup Inc. to Bear Stearns Cos. will default on their debt is accelerating as analysts increase their estimates of losses from subprime mortgages, credit-default swaps show.”

“Contracts on New York-based Citigroup, the largest U.S. bank by assets, rose 16 basis points to 95 basis points over the past two days, according to broker Phoenix Partners Group, setting a record today for the seventh time this month.”

“Contracts on New York-based Bear Stearns have climbed 24 basis points the past two days to 174 basis points, about a six-year high. A rise signals investors are less confident in a company’s creditworthiness.”

“They dubbed it ‘The Survivors’ Conference.’ In early November, 2,000 people who handle asset- backed securities for a living crowded into a ballroom to hear speaker after speaker explain why 2008 may be their worst year ever.”

“‘These events tend to become deeper and play out longer than most people initially expect,’ says Michael Mayo, an analyst who covers securities firms at Deutsche Bank AG in New York. ‘This is one of the slowest-moving train wrecks we’ve seen.’”

“The tumbling U.S. housing market will continue to inflict the damage. Mortgage-backed securities and collateralized debt obligations containing those securities are falling in price and won’t find their footing anytime soon.”

“That’s because most of the subprime mortgages, which provide collateral for $800 billion in securities, have yet to go bad, says Christopher Whalen of Institutional Risk Analytics.”

“‘The collateral is not yet problematic,’ Whalen says. ‘That’s the next big shoe to drop.’”

“‘Until housing prices bottom out, the writedowns won’t stop,’ says Peter Kovalski, who helps manage more than $12 billion. ‘The Street wants things right away, but it doesn’t work that way.’”

“Wall Street profits are also plunging in the fourth quarter. Lower profits mean more firings. Bank of America Corp., JPMorgan Chase & Co., Bear Stearns, Citigroup, Lehman Brothers and Morgan Stanley announced more than 24,000 job cuts in the first 10 months of 2007.”

“New York law firms are cutting associates for the first time since 2001 as the collapse of the subprime mortgage and credit markets causes private equity deal volume and structured finance work to slow.”

“McKee Nelson is asking associates to take sabbaticals with 40 percent pay for campaign or charity work, unpaid sabbaticals that last as long as a year or severance packages that include four months pay and benefits, Nelson said.”

“‘When we realized this wasn’t a transient event, we decided to size our staff to what we anticipate demand being,’ Nelson said. ‘It’s nobody’s fault that the market has caved in.’”

The Journal News reports from West Virginia. “Amid the backdrop of continuing gloomy forecasts for the housing market, a group of more than 25 local realtors, builders and financial institutions gathered Sunday in Martinsburg and Shepherdstown for potential homebuyers to take advantage of a one-day super sale. The event showcased homes, townhomes, land and foreclosures priced to move.”

“Those properties real estate agents showed Sunday were set at the absolute lowest prices. For example, one deal saw up to $100,000 off of a lot in Shepherdstown, while some houses listed in the $225,000 range were being offered for as as low as $169,000.”

“‘I think anything you do is better than doing nothing. In this market, you’ve just got to do something. You’ve got to make it happen,’ said Realtor Tim Hafer, who works in Martinsburg.”

The News Herald from Ohio. “The housing market is hurting from foreclosures in suburban and rural Geauga, Lake and eastern Cuyahoga counties, but not as overwhelmingly as in urban and inner-city areas like Cleveland.”

“Cuyahoga County has recorded 10,000-plus foreclosures so far this year. About 5,300 of those were in Cleveland and 3,800 in its inner suburbs, including Euclid. The Sheriff’s Office said such sales reached 7,461 in 2005 and 10,216 in 2006.”

“‘In 2002, 2003, 2004 and some of 2005, when the housing market was really booming, people were put into a house that they really couldn’t afford,’ said County Auditor Tracy Jemison. ‘Lending institutions were coming up with loans that were easy to make. The housing market stalled, and now, people are stuck with homes and loans they can’t afford.’”

“‘These people were literally afforded more loans than they could afford. That’s had a lot to do with it. It’s really sad,’ said Clerk of Courts Denise Kaminski. ‘We created monsters who wanted only what they want. Unfortunately, the banks were going too far.’”

“When it comes to building a new house, timing can be everything. Just ask Grayson Alexy, who last year started construction on his third new home - this one in Kirtland.”

“‘I made the decision to build a home in Lake County probably 18 months ago, and the economy 18 months ago isn’t the same as it is today, Alexy said.”

“Alexy could have decided to purchase an existing home, but based on timing, he decided to build instead of buy. ‘Would I build a new house right now? Of course not,’ Alexy said. ‘There’s a surplus, and I could probably buy a home cheaper than I could build one.’”

“The dip in housing starts can be attributed to an oversaturated market, said David Payne, VP of Chardon-based Payne & Payne Builders Inc. ‘I think that the market got ahead of itself for a couple of years in terms of new buildings,’ he said, referring to 2003 through 2006. ‘There was an increased level of activity locally, apparently beyond what might have been needed.’”

“‘Much of it is attributed to overbuilding - it was easier to obtain funding a few years ago, said Dan Tasman, principle planner for the Lake County Planning Commission.”

“Houses were being built, and bought, which led to prices going up - but not any longer. ‘It fell like a house of cards, and now you’re seeing home prices fall dramatically in those areas,’ Tasman said, ‘but Cleveland never got that high.’”

From WBKO in Kentucky. “The collapse of risky loans has set the housing market on its ear in some parts of the country. The ripple effect can even be felt here in South-Central Kentucky.”

“‘Guidelines are changing daily. Programs available yesterday will not be available tomorrow, explained Mark Vaughn is a mortgage lender at Citizens First Bank.”

“Realtor Jennifer Misener admits buyers are aware of the turmoil. ‘We do find that buyers are a little more apprehensive now due to the national media attributing this to a sub-prime market, but honestly our market is still very good,’ Misener assured.”

“Economists caution against overweighting the importance of the housing sector on the overall economy. ‘I would argue this is more of a correction than a catastrophe,’ said Dennis Wilson, a WKU Economy professor.”

“The biggest problem is concentrated in seven states–Michigan, Ohio, Indiana, California, Florida, Arizona and Nevada. ‘Over the last eight years you’ve seen real estate prices go through the roof. So to get people qualified to get in those houses, they had to force them into these huge mortgages,’ Wilson explained.”

From KFVS 12 in Missouri. “If you’re trying to sell a house right now you know the market is in a slump and according the the National Association of Realtors, things are expected to get worse in 2008.”

“Record numbers of people are losing their homes to foreclosure because they simply can’t afford to make the payments, but there are some things you can do to avoid foreclosure and to get back on track after one.”

“‘Lenders started getting creative in the last few years because the housing market was so strong,’ said Tammie Goodson, a VP of First Missouri State Bank in Cape Girardeau. ‘Do you ever remember seeing this many foreclosures in your career? No. And we bankers blame it on the sub-prime lending markets.’”

“It’s everywhere. California, Florida and Ohio have the highest foreclosure rates. Stockton, California is the worst top 100 city in the United States for foreclosures with 7000 filings, up 465 percent from last year. Memphis is 14th on the list, St. Louis is number 56.”

The Wichita Eagle from Kansas. “A once-hot corner of the local real estate market has grown chillier than the prairie wind in November.”

“Investors from California, Florida and other warm states used to love Wichita’s duplexes, condominiums, fourplexes and small apartment projects as low-risk, steady-return investments.”

“But with the popping of the housing bubble — most notably in California and Florida…small-time investors from out of state can no longer afford investment property in Wichita. ‘Mom and pop are out of the market,’ said Wichita real estate broker Rod Stewart.”

“Stewart said he did as many deals in the spring as he has ever done. Then the phone stopped ringing. ‘Since May 17, I haven’t made a nickel,’ he said. ‘The market has cratered and burned.’”

“The number of building permits for duplexes has fallen from 36 in the first 10 months of 2006 to 27 through October of this year. As a comparison, nearly 1,400 new single-family homes were placed on the market in the first nine months of 2007.”

“Broker Kirk Short specializes in channeling California investment money into Wichita projects. He said the biggest hurdle is that banks have sharply tightened credit requirements on California investors. Seasoned investors now have to put down 20 to 30 percent of the purchase price or have higher mortgage insurance.”

“Short said that in one twin-home project in Junction City he has marketed, half the units are unsold because the buyers couldn’t get financing. ‘They can’t close,’ he said with disgust. ‘Half the sales in that project are gone because they can’t close.’”

“Agent Brandon Tidemann specializes in matching investors in search of stable cash flow and steady appreciation with small projects. Most are people who have sold out of riskier markets and want to protect their gains with property that won’t fall in value.”

“There aren’t just a lack of buyers, he said, there also is a lack of good properties to sell. ‘There’s a lack of buyers and a lack of sellers,’ he said. ‘For the last six months I haven’t seen any good, quality product out there to buy.’”

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