The Housing Bubble

The LA Times reports from California. “Few would argue. Southern California home prices have fallen for five straight months, according to data released this month, and are now down 12% from their peak last spring and summer. Jeff Vendley, a Ventura mortgage broker…is trying to sell two Oxnard town houses he bought in 2004 and 2005. Now, he said, people are wondering, ‘How low we can go?’”

“Economists and real estate experts interviewed by The Times, and who were willing to make predictions, said prices could fall 15% to 25% before turning back up. For example, a home that sold for $800,000 in 2006 could fall to $600,000 over the next two years.”

“Eric S. Broida has been eyeing a multimillion-dollar house near his Pacific Palisades home and thinks it might be a bargain. Eventually, that is. The 4,600-square-foot house has languished on the market for six months. The sellers have cut the asking price several times, slashing it from $4.6 million to $3.6 million.”

“When the price falls by an additional $400,000 or so, Broida will be ready to pounce. ‘There is nowhere to go but down from here,’ said Broida. ‘I know it in my gut.’”

“Veterans of the last Southland housing slump know that downturns can take years to hit bottom. Between 1991 and 1997, amid a broad economic downturn, median home values in Southern California tumbled 19%, according to DataQuick.”

“As home sales slow, it creates a snowball effect, triggering job losses at escrow companies, construction firms and other sectors and cutting sales at home improvement stores.”

“All that helps make Broida of Pacific Palisades believe that prices will keep falling. ‘People tell me I’m crazy,’ Broida said, ‘but that’s what they told me in 1992.’”

The Daily News. “Foreclosures in the Greater San Fernando Valley area soared nearly fivefold and home sales plunged to their lowest level in almost 20 years in October, a research center said Monday.”

“As the credit crisis increases its choke hold on residential real estate, the Valley’s median house price slipped under its year-ago level for the first time since 1997, said the San Fernando Valley Economic Research Center at California State University, Northridge.”

“Last month lenders foreclosed on 414 properties, up from 84 in October 2006, as owners could not make monthly loan payments.”

“Foreclosures had been increasing an average of 20 a month this year but in October they jumped 112 from September. Daniel Blake, the research center’s director, called the increase startling and said it’s simply a case of more people bailing out of unaffordable loans.”

“Meanwhile, sales in the Greater Valley area last month plunged an annual 55.3 percent to 738 properties. It’s the lowest in the center’s data base which dates back to 1988.”

“The median price slipped an annual 2.6 percent to $589,000. It’s the first year-over-year price dip since March 1997, when the median declined 6.4 percent to $161,000.”

“However, Blake predicts ‘gently falling prices’ rather than a big plunge. ‘We’re not going back to a $165,000 median but there is simply not the buying power or buyers out there,’ he said. ‘But I think that a person with good credit and means to get what they want to buy can get a loan pretty easily.’”

The San Francisco Chronicle. “The subprime mortgage fiasco stands to cost the Bay Area economy more than $5.4 billion next year, according to the latest report intending to put a dollar figure on the rising wave of real estate foreclosures.”

“The study, titled ‘The Mortgage Crisis: Economic and Fiscal Implications for Metro Areas’ examined the gross metropolitan product (GMP) - the market value of all goods and services produced within a region - for 361 areas.”

“Researchers said GMP in San Jose, Sunnyvale and Santa Clara would lose $1.8 billion, and GMP growth would slow to 2 percent, based on lower consumer spending, weak residential investment and falling income in the construction industries.”

“Combined with estimated losses of $3.6 billion in the San Francisco area, the Bay Area stands to lose at least $5.4 billion, not including losses in close-by Northern California counties such as Napa and Solano.”

“Economist Ken Rosen said, the GMP is inherently an imprecise measure that involves cobbling together varying economic indicators on a local level. Rosen said he believes investors in subprime mortgages - who may be far afield - will likely bear the economic brunt of the subprime meltdown, not local economies.”

“‘Most of the loss is not to the homeowner, but to the owner of the mortgage, and they’re not regionally concentrated in the Bay Area,’ Rosen said. ‘We’ve exported maybe a quarter of this loss to the rest of the world.’”

The Union Tribune. “The housing downturn and continued foreclosure crisis could erase $1.5 billion of economic activity in San Diego County next year, according to a report from the U.S. Conference of Mayors.”

“Produced by Global Insight, the study said the foreclosure crisis will have a ‘profound economic effects’ in 2008. It predicted widening foreclosures next year and continued declines in property values nationwide. That wave of foreclosures will further depress home prices. In California, the study predicted declines on average of 16 percent.”

“‘I would say there are much more bearish forecasts,’ said James Diffley, managing director for Global Insight. ‘This forecast is relatively benign in that we don’t think there is going to be a big recession.’”

“Diffley added, however, that the housing downturn has been difficult to predict. ‘We know we’re going down,’ Diffley said. ‘We keep thinking we’re near the bottom, but it keeps receding on us. Right now we’re forecasting the bottom in early 2008, but time will tell.’”

“‘I take the same line,’ said Alan Gin, an economist at the University of San Diego. ‘This crisis is going to hurt, but it will not by itself be enough to derail the economy locally or nationally.’”

“Keitaro Matsuda, an economist with Union Bank of California, noted that consumer spending may not fall as dramatically as the study projects. Over the past five years, home values in many California cities have doubled, he said. So even though prices have fallen recently, consumers may still keep shopping because they feel good about their home equity.”

“‘My feeling is consumers view the current drop in housing as moving gradually,’ he said. ‘Unless they hire an appraiser, it’s not really clear what their home is worth.’”

The Voice of San Diego. “In one of the first local cases in a national crackdown on mortgage and real estate fraud, four people connected with a San Marcos realty office have pleaded guilty to charges that they went to great and illegal lengths to secure mortgages for financially unqualified consumers, thereby pocketing more than $1 million in fraudulent commissions.”

“Alejandro and Emilio Lopez, two owners of Century 21 Eldorado in San Marcos, headed the ‘Lopez Team’ of loan officers, loan processors and real estate agents. Ravinderjit Singh Sekhon was a loan officer there and Linda Velasquez was the office manager, acting as translator for Sekhon with Spanish-speaking clients. All four pleaded guilty earlier this month to charges related to the scheme.”

“Obtaining financing from subprime lenders using so-called stated income or ‘no-doc’ loans, the group fudged employment, rental, bank and even citizenship status information for more than 200 unqualified clients, brokering first and second mortgages for an average of $400,000 each, according to court documents.”

“That federal prosecutors are illuminating the scam marks a public acknowledgement of a significant trend of surreptitious real estate-related fraud schemes that have gone unfettered for years, market watchers say.”

“The Lopezes and Velasquez are each charged with one count of conspiracy to commit wire fraud and face maximum penalties of five years in prison and $250,000 fines. Sekhon is charged with one count of wire fraud and faces a maximum penalty of 20 years in prison and a $250,000 fine.”

“And the defendants have agreed to repay their illegal gains, a total of $1,070,000.”

“The fact that the FBI has found this scam out and has brought charges is heartening for local real estate appraiser and mortgage fraud expert Todd Lackner, whose office is stacked with files he says show schemes countywide.”

“‘I haven’t seen much in San Diego; there’s a huge lag,’ Lackner said. ‘This (scam) has probably been going on for a long time. They’ve probably been investigating this for two or three years. But if they [investigated] this, you would think they were doing other ones.’”

Some housing bubble news from Wall Street, Washington and the World. MarketWatch, “U.S. home prices were falling in every region of the country in September. For the first time in this housing cycle, prices in all 20 cities dropped from the previous month, with the biggest declines in the former bubble cities of Miami, Phoenix, San Diego, Las Vegas, Los Angeles and Tampa. Former boom towns in Florida and Southern California have now passed Detroit for the dubious honor of having the largest price declines in the past year.”

“The last time prices fell so much, it took more than eight years for home prices to return to their peak level.”

“‘We judge the recent decline in home prices to be the beginning of an extended decline,” wrote Drew Matus, an economist for Lehman Bros., who said prices would probably fall 15% from peak to trough nationally.”

The Sydney Morning Herald. “South-west Sydney has been confirmed as Australia’s worst area for mortgage pain. Six of the 10 worst postcodes for late repayments of mortgages are in that area, a study by Fitch Ratings has found. In Guildford almost 6 per cent of loans, by dollar value, are more than 30 days late in their repayments.”

“South-west Sydney has been frequently pinpointed as the centre of mortgage stress following the deflation of the housing bubble late in 2003.”

The Associated Press. “Germany’s state-owned KfW development bank said Tuesday it has nearly doubled its risk shield for IKB Deutsche Industriebank AG, a lender battered by its exposure the U.S. subprime lending crisis.”

“KfW, which is IKB’s biggest shareholder, said it raised the risk shield by 2.3 billion euros, to 4.8 billion euros, ($3.4 billion to $7.1 billion) on the basis of new information regarding the valuation of risks covered by IKB’s Rhineland Funding investment vehicle and because of a ‘dramatic worsening’ of market conditions.”

The BBC News. “Algeria has suspended the first ever privatisation of a bank in the North African nation. The delay is the first sign that the US housing woes have reached Northern Africa. The finance ministry said that the sale would resume when the ‘impact of the mortgage crisis’ became clearer.”

From Bloomberg. “Canadian banks join their global peers in recording costs tied to credit markets. Bank of Montreal, the country’s fourth-biggest bank, said debt writedowns, trading losses and other costs cut profit by C$275 million.”

The Edmonton Sun. “ATB Financial’s CEO Dave Mowat calls it a ‘major bump in the road.’ Alberta Finance Minister Lyle Oberg…is a little less optimistic. He branded the $1.2-billion hole in the government-owned financial institution’s books revealed this week as a ‘liquidity crisis.’ And as such, Alberta finance has quietly pumped in $800 million to paper over the cracks in the people’s bank.”

“‘This is all part of the subprime,’ Oberg said about the U.S. real estate crash and the financial meltdown it’s creating in its wake. Even though the depositors’ losses that ATB are admitting to so far are only 6.9%, Oberg fears Mowat may be low-balling the red ink after some Canadian banks made provision for write-offs of 25%.”

“Alberta NDP leader Brian Mason spat, ‘It smells like we’ve got a number of problems coming home to roost. There’s maybe over a billion dollars of exposure here,’ he continued.”

The Globe and Mail. “The market for non-bank asset-backed commercial paper has been all but frozen since Aug. 16, when issuers of ABCP reached the Montreal Accord, which aimed to shut down the market in order to find a fix. Valuations for paper issued by each of the 22 frozen trusts vary wildly, according to people working on the restructuring.”

“Apsley Trust is saddled with exposure to U.S. subprime and is in much rougher condition. In general, bond traders estimate the trusts vary in value from 60 cents on the dollar to 85 cents, but those estimates are based on skimpy public information.”

The Wall Street Journal. “Norinchukin Bank reported the largest subprime-related balance among Japanese banks, announcing Tuesday that it wrote down ¥38.4 billion, or $355 million, in investments related to U.S. subprime mortgage securities in the six months ended Sept. 30.”

“The bank, known for its huge assets and sophisticated investment strategies, also said the outstanding balance of its investments in subprime-related financial products totaled ¥476.7 billion after the write-down.”

“Norinchukin, which is not traded, said it had unrealized losses of 53.3 billion yen on its subprime loan-related assets as of Sept. 30. The bank had an additional 14 billion yen valuation loss in October on these investments.”

From Reuters. “Sompo Japan Insurance Inc said on Tuesday that its subprime-linked losses could reach 30 billion yen ($280 million). Sompo provides financial insurance guaranteeing payment of principal and interest on collateralised debt obligations (CDOs).”

“The total amount of CDOs that Sompo insures, including any subprime loan exposure, is 240 billion yen.”

“Bank of China’s shares slid on Tuesday after Temasek Holdings sold a $567 million stake amid market worries over the lender’s exposure to the U.S. subprime mortgage crisis.”

“‘I’m sure the whole subprime issue went through the minds of the Temasek officials involved,’ said Warren Blight, banking analyst in Hong Kong. ‘The whole market is expecting (Bank of China’s) provisioning to get worse — as for all the banks with subprime exposure.’”

“‘They know that (BOC) is involved in subprime mortgage. The question is why are they trimming their holdings now? Maybe the losses are increasing. Temasek knows more information than the average investor. Or maybe they think they’ve had enough profits,’ said Louis Tse, sales director at VC Brokerage.”

“A housing-market meltdown may be wracking the U.S. economy and shaking the financial markets, but in Asia, the question is how to cool things down. Many Chinese families are already deep into speculating on property, a main driver of the surging prices that have Chinese authorities worried that a bubble might be forming.”

“Li Ruoning, 22, in Shanghai…borrowed about $40,000 from her parents in central China for the down payment on a 645-square-feet apartment just five minutes from her job. What’s more, Li, who is single, says she would buy another apartment as an investment if she had the money.”

“‘I’m pretty sure that housing prices will not drop, especially with the best locations,’ she said.”

“Yi Xianrong, a prominent economist at the China Academy of Social Sciences, is one of those sounding the alarm. He contends that China’s housing loans are riskier than those in the U.S., because he said most loan applicants give false information about their assets and income.”

“‘I estimate that the large majority of mortgage holders would not meet the standards for even subprime loans,’ Yi said.”

“‘The Reserve Bank of India has been keeping a tight lid on banks’ exposure to real estate,’ said Ritesh Maheswari, a credit analyst with Standard & Poor’s in Singapore. ‘We don’t foresee large-scale defaults.’”

“‘I found prices rose too fast and I didn’t know why,’ said Sun Chunming, a technician at an online gaming company in Shanghai who bought an apartment in August. ‘But I was worried if I didn’t buy it now, I might not be able to afford one later.’”

“Citigroup Inc is selling up to 4.9 percent of itself for $7.5 billion to the Gulf Arab emirate of Abu Dhabi, giving the largest U.S. bank fresh capital as it wrestles with the subprime mortgage crisis and a search for a new chief executive.”

“Citi is paying a high price for the capital injection, the mandatory convertibles it is selling to Abu Dhabi pay a fixed coupon of 11 percent. That is well above the average yield on U.S. junk bonds of 9.4 percent, according to Merrill Lynch data.”

The Denver Post. “Latest market rumor: Citigroup plans to cut up to 45,000 employees. My guess is that thousands of Citigroup’s 320,000 employees need to go because the world’s biggest bank is steeped in worthless loans.”

“Charles Prince announced his resignation as Citigroup’s chief executive Nov. 4. Prince reportedly leaves Citigroup with more than $60 million in vested stock holdings and a pension. He’d already bagged $53.1 million in salary and bonuses over the last four years.”

“And he keeps all this dough despite the fact that Citigroup stock has lost more than 20 percent since he became CEO in October 2003, and the extent of its subprime losses, though now in the multibillions, has yet to be fully tallied.”

“John Holcomb, a professor at the University of Denver, who studies ethics and executive compensation, blames boards of directors for cutting contracts with executives that can’t be canceled without a lot of money changing hands.”

“Christmas is just around the corner, and thousands of people will be sitting in their cubicles, doing their jobs, praying that the pink slips don’t land on their desks because the honchos were paid handsomely to place big bets on shoddy subprime loans. Loans even a child might question.”

“Doesn’t anybody ever get angry? Yes, said Holcomb. But they don’t know how to direct it. ‘Rather than become energized with outrage, they have become paralyzed with outrage,’ he said.”

“So our nation’s top corporate executives keep bagging big bonuses even as they are losing our billions.”

“Countrywide Financial Corp. shares fell more than 10 percent in New York Stock Exchange trading after Sen. Charles Schumer urged the regulator of the Federal Home Loan Bank system to probe cash advances to the largest U.S. mortgage lender.”

“Schumer said he was alarmed by the volume of advances the system’s Atlanta bank has made to Countrywide, considering ‘the rapid deterioration’ in the credit quality of some of the company’s mortgages. Schumer expressed his concerns in a letter sent Monday to Federal Housing Finance Board Chairman Ronald Rosenfeld.”

“At the end of September, Countrywide had borrowed $51.1 billion from the Federal Home Loan Bank system — a government-sponsored program.”

“‘Countrywide is treating the Federal Home Loan Bank system like its personal ATM,’ Schumer, who heads the housing panel of the Senate Banking Committee, said in the letter. ‘At a time when Countrywide’s mortgage portfolio is deteriorating drastically, FHLB’s exposure to Countrywide poses an unreasonable risk.’”

“Countrywide has been aggressive in seeking to raise cash through deposits, partly because the company can’t rely solely on Home Loan Bank advances and partly because deposits can offer cheaper funding, CEO Angelo Mozilo said in a telephone interview on Nov. 19.”

“‘You can’t just get a charter and go in and borrow from the bank, and that’s it, that’s your franchise,’ Mozilo said. ‘You have to have a reliable source of deposits.’”

“Countrywide, which has announced plans to add 70 banking branches, will ‘do what we have to do to make sure the company is going to be OK’ when it comes to the rates it offers on certificates of deposits and other savings products, Mozilo said.”

“Fannie Mae and Freddie Mac will have to operate under the same federally mandated loan limit in 2008 as the mortgage giants did this year, the companies’ regulator said Tuesday.”

“‘While the house price survey data used in determining the conforming loan limit show a decline over the past year, as previously announced and consistent with the proposed new conforming loan-limit guidance, the level will remain at $417,000 for the third straight year,’ said James Lockhart, director of the Office of Federal Housing Enterprise Oversight.”

“On Tuesday, Stephen Blumenthal, a former deputy director of Ofheo, predicted that the agency will hold both Freddie and Fannie to 30% capital surpluses above the minimum level. Lockhart, he said, is ‘going to continue to stay the course.’”

“During a conference call, Blumenthal also said any hope for allowing either Fannie or Freddie to buy more loans to prop up the sagging mortgage market is ‘gone.’”

The Manchester Journal reports from Vermont. “The real estate market has seen a decline in the number of sales nationwide and Manchester is no exception to the rule. Building contractor Peter Keelan said the market is slower than it has been in previous years. Keelan said this is because many of the second homebuyers, who are mainly from New York, Connecticut and New Jersey, often have difficulty selling their primary homes.”

“‘Next year will be the interesting year, but the bottom line is that the real estate market needs to be corrected. It’s too overpriced and it needs to be corrected,’ he said.”

The Telegram from Massachusetts. “Through August, lenders have filed 2,673 foreclosure petitions on residential properties in Central Massachusetts. It’s more than double the 1,064 foreclosure petitions filed during the same period in 2005, according to a Telegram & Gazette analysis.”

“Worcester is trying to fight the potential foreclosure blight in the city, which has seen foreclosure petitions more than triple to nearly 700 through August of this year, by keeping an eye on foreclosure notices as they’re filed, said Dennis E. Hennessy, director of Neighborhood and Housing Development.”

“The foreclosure process typically takes about six months to complete after the petition is filed, usually in the Land Court in Boston. Although an auction is scheduled at the end of the process, the lender typically takes ownership of the property, said Alan Pasnik, a data analyst for The Warren Group.”

“‘It’s a bad outcome because there’s no guarantee the current owner is not going to trash the place or if he’s even going to move out,’ Mr. Pasnik said. ‘There are so many foreclosures happening now, there are huge inventories of 3,000 or 4,000 homes being held by lenders.’”

The Boston Globe from Massachusetts. “Barbara Pennucci’s landlady had an interesting proposition: If she decided to sell, the landlady asked, might Pennucci be interested in buying the two-bedroom Medford town house she has been renting since April?”

“A few years ago, the ever-rising real estate market might have pushed the 49-year-old single mother to act quickly to buy.”

“Back then, the popular wisdom was that buying trumped renting, providing a way to benefit from any appreciation in the housing market. But in today’s world of foreclosures and falling property values, the argument for home ownership is far less compelling.”

“The Tufts University Web designer wasn’t new to home ownership. In fact, she had purchased a condo in Malden back in 2001, buying the apartment she was renting when that owner put the unit on the market. ‘I did it once, and I felt like I did everything wrong,’ she said, explaining she’d felt pressured to buy by the red-hot real estate market. She ended up selling the condo to help pay the bills after she lost her high-tech job when the technology sector tanked.”

“Newton-based financial adviser Michael Broad walked Pennucci through a series of calculations, starting with the cost of home ownership. Since the landlady neither set a price nor provided information about condo association fees, cost of purchase calculations had to be based on estimates.”

“Given the current $1,200 monthly rent, which Pennucci said accurately reflected the Medford rental market, ownership would increase monthly housing expenses 45 percent, costing an additional $538 a month. ‘No matter how wonderful owning the place might be, right now renting is the better deal,’ Broad said.”

The Boston Globe from Massachusetts. “A number of major Boston condo projects are going rental as developers face the daunting task of selling new units in a market mired in a downturn. At least three major condo projects have rolled out for-rent signs, and other developers, stuck with unsold units in a tough market, are likely to follow suit, industry experts say.”

“The conversions are expected to add several hundred rental units to a Boston market that, until recently, suffered a decades-long drought in new rental construction.”

“‘It is easier to rent something now than to sell something,’ said Michael Carucci, CEO of ERA Boston Real Estate Group.”

“One of the most notable conversions is Charlestown’s Mezzo Design Lofts, whose backers include former Lakers great Earvin ‘Magic’ Johnson’s Canyon-Johnson Fund. Johnson flew into town in September to pull the wraps off the $54 million project, which was to feature 156 loft-style units. Prices ranged from $330,000 to nearly $600,000.”

“But a soft real estate market and a credit crunch forced project executives to rethink the format. Still, the project’s target market remains the same - young Gen X and Gen Y professionals looking to buy for the first time, said Jim Goldenberg, one of the project’s backers.”

“‘When the credit market gets tough and the housing market gets soft, they choose to rent rather than buy,’ Goldenberg said.”

The Times Union from New York. “George and Rebecca Weiss were thrilled to be buying their dream home. ‘This house offered everything — and then some,’ Rebecca recalled as she described the spacious white four-bedroom Colonial.”

“Ultimately, it wasn’t to be. With the contents of their Clifton Park apartment packed up and their three children anticipating their first night in their new house, the deal fell apart at the closing table when mortgage terms they originally agreed to appeared far different.”

“Now, as the scope of the national subprime mortgage debacle grows and home foreclosures in the Capital Region climb, the Weisses realize they narrowly escaped financial disaster.”

“The documents they confronted when they arrived for the closing on Jan. 3 surprised them. Their mortgage loan would have an adjustable rate instead of fixed. The initial interest rate was about 3 points higher than they had expected, and the listed fees were higher than they had understood they would be.”

“The 30-year mortgage included monthly payments on principal and interest of $1,767.37 the first two years, climbing to $2,377.48 for another half year, before rising to $2,387.81. The final monthly payment, however, would be a doozy: $229,955.67, nearly as much as the $246,081.29 they were to be financing.”

“In all, the Weisses would have paid $1,072,226.92 over 30 years for their Colonial, not including property and school taxes. Still, the Weisses say, they might have signed on if last-minute problems with the bank involved hadn’t scuttled their purchase.”

“The prospect of losing the house at that point — when it seemed so close to being theirs — seemed almost unbearable. ‘Going to the closing and having the keys in your hand and losing the house, it was very tough on both of us,’ said George.”

“Just over a year after their offer on the house in Brunswick was accepted, the Weisses have moved on. They purchased a spacious five-bedroom house in Lansingburgh. Real estate records show a sale price of $139,200.”

“They say they’re very happy with their new place and have begun to view the loss of the Brunswick house with relief.”

“‘I think that having the experience of now actually making a mortgage payment has made us realize that had we closed that day, we likely would have been in trouble from the first month,’ George said.”

The Cay Compass on New York. “Susan and John Harriman normally spend about $500 on holiday gifts. But this season, the couple has a wrenching choice to make: celebrate Christmas or keep their home out of foreclosure. ‘We’re just sending out Christmas cards, with us standing in front of the house – the house that cost us,’ says Ms. Harriman.”

“With all their might, the couple is trying to hold on to their modest 1,100–square–foot ranch house in Central Islip, N.Y. In the six and half years since they bought their home on Long Island, Susan and John have watched their monthly mortgage payments skyrocket 66 percent to $2,454 due to home–equity loans for repairs, delinquent fees, and an adjustable–rate mortgage that has risen twice in the past six months.”

“‘I think people pay less a month on mansions in the Hamptons than we do,’ Ms. Harriman says with a bitter laugh.”

“Ms. Harriman, who revels in decorating for the holidays, has three inflatable lawn ornaments, but will put up only one this year, a Charlie Brown Christmas globe, to save on the electric bill.”

“For the same reason, she won’t string multicolored lights on the outside of her house, nor put up the tiny white lights along the interior hallways. In their place, she will plant some cardboard candy canes along the front walk. To save money on the Christmas dinner, she’ll serve turkey or lasagna, but not both.”

“‘Everything is being halved,’ she says.”

The Staten Island Advance from New York. “Attorney Steve Soren was set to start a foreclosure auction in Supreme Court one morning recently, but he needed bidders.”

“Soren, the court-appointed referee for the public sale of a house at 237 Clove Rd., stood alone in a hallway alcove on the bottom floor of Supreme Court. When an out-of-breath bank representative showed up shortly after the scheduled sale start time, the auction could finally begin.”

“But in the absence of other buyers, the sale was merely perfunctory. The only bid came from Downey Savings, which already held the bad debt on the property. The starting bid, also known as the upset price, was $296,406.”

“‘Going once, going twice, sold to the bank,’ Soren, a real estate attorney, told an imaginary audience.”

“Motivated investors who might be able to turn over properties more quickly than banks are not coming out for foreclosures forged by the subprime lending crisis here. ‘It’s usually troublesome because now you have this property and there is no equity in it. Now what’s going to happen with it?’ said Jessica Davies, publisher of Profiles Publications Inc.”

“‘The smart investors look at everything before they make a decision. If these investors didn’t show up to bid on these three properties, there was for a reason it,’ she added.”

“John Brancato, a specialist with U.S. Loss Mitigation Services, rarely sees investors at sales he attends these days. ‘For the last six months, I can count on my hand how many times a property has sold to an investor,’ he said.”

“His company recently had an investor willing to buy a house before the expensive foreclosure auction could begin, but because the sale could not be completed until just a few days after the scheduled auction, the bank declined.”

“‘I think it’s a poor business decision,’ he said of the banks’ inability to prevent more foreclosures. ‘In this market, (banks) have not been bloodied enough, yet.’”

The New York Post. “If you build it they will come - at least that’s how it used to be in the residential New York real estate market. Developers that once had lines out their sales door are pursuing foreigners by attending property shows around the world, setting up private presentations for buyers in their offices, and including amenities that are specific for the international audience.”

“‘New York purchasers are starting to dry up, so you always go to where the money is,’ said Luigi Rosabianca, a real estate-lawyer, who just returned from Ireland. ‘No one was doing it about a year ago, but now it is the thing to do.’”

The Tribune Review from Pennsylvania. “Don’t mention a real estate bust in Lawrenceville. People probably won’t know what you’re talking about.”

“Frank Novak, a retired truck driver who reared six children in his brick, three-story rowhouse on Main Street, said he can hardly believe his next-door neighbors have listed their place, almost identical to his from the sidewalk, for $189,900.”

“‘These prices are terrible now. They’re ridiculous, the way they’re going up,’ said Novak.”

“Median prices fell last year in almost half of the 223 municipalities and Pittsburgh wards the Trib analyzed, compared to prices declining in one-third of those places in each of the previous two years.”

“In 48 areas, median prices are lower than they were three years ago. ‘Houses are still selling, but they’re taking longer,’ said Georgie Smigel, a Coldwell Banker agent whose territory includes the North Hills and Butler County.”

“‘There haven’t been booms and busts in Pittsburgh in the way there have been in Florida, California and New England,’ said Andrew Leventis, senior economist for the Office of Federal Housing Enterprise Oversight.”

“‘To the extent that you may have a lower appreciation rate than other places in Pennsylvania, that may not necessarily be a bad thing. It’s certainly not a bad thing for people who are looking to buy a house over the next year or two,’ Leventis said.”

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