The Housing Bubble

It’s Friday desk clearing time for this blogger. “John Davidson re-located to Horry County, South Carolina, a few years ago. ‘We were real excited about the way the area was growing, no way it was going to slow down…how could it possibly slow down?’ Davidson said. ‘It’s amazing how quickly it turned.’”

“‘What’s happened is the people who bought on the high end can’t afford to lower their homes that much because they paid a lot for them,’ said Tom Maeser, a local real estate market analyst. ‘The buyers are sitting here, knowing there’s a lot of inventory, saying, ‘I want the best deal.’”

“Davidson’s had his house on the market since April and now has to sell it just so he can keep his condo. ‘We’ve had a steady flow of people coming through, but the consistent remarks are: love the house, but it’s priced a little too high, and they’re going to wait and see what happens,’ Davidson said.”

“‘There’s only one reason a home doesn’t sell, and that’s price,’ said Maeser, who has been a real estate agent for 15 years. ‘Sellers are going to have to get the 2007 mentality instead of 2005.’”

“Economist Jerry Johnson broke the bad news as home builders and bankers dined on scrambled eggs, hash browns and bacon at the Oregon Convention Center. ‘2008 is going to be a tough year,’ he said.”

“Speaking on housing prices, economist John Mitchell said: ‘There will be increasing affordability. That’s a polite way of saying price declines.’”

“As for a rebound, ‘It’s going to be 2009,’ Mitchell said. ‘You’ve got a lot of inventory to work through.’ So what does this mean for real estate jobs? Mitchell told one story: ‘My daughter’s Realtor is becoming a phlebotomist.’”

“From South Memphis to Southwind, Memphis is losing value. ‘Right now, Memphis is down about as far as I can remember in 30 years,’ auctioneer John Roebuck said.”

“Treasurer’s offices all over the country are bracing for the day when lenders stop paying the taxes on many properties in the worst hit neighborhoods. Many houses in Cleveland’s central city neighborhoods have been so damaged by looting, fires and weather that they are almost total losses. The lenders will eventually walk away from them.”

“‘The lenders will come to us and say, ‘We just can’t hold the properties any longer. We don’t want to pay the demolition costs. Here’s the property,’ said Jim Rokakis, Treasurer of Cuyahoga County, which includes Cleveland.”

“Zoe Cruz, co-president of Morgan Stanley and Wall Street’s highest-paid female executive, was ousted three weeks after the firm disclosed $3.7 billion of losses on mortgage-related securities at the division she oversaw.”

“‘I’m surprised, she’s been a big disciple of John Mack,’ said Douglas Ciocca, who helps manage $1.6 billion, including Morgan Stanley stock. ‘It may well be to satisfy the public’s need for scapegoats.’”

“The Singapore Housing and Development Board is building up the supply of new flats by 10,362 units to meet rising demand. Separately, the HDB plans to build another 6,000 units under its BTO system in the first half of next year. The total number of flats offered under BTO this year is 4,800 units, double that of last year.”

“The National Development minister urged buyers not to be too choosy when offered a new flat.”

“‘Be realistic about the chances of getting a flat. If you need a new flat, please take up the new flat even if it’s not something you like, even if it’s not ideal for you. Take it up and then gradually over time, you may upgrade to the flat that you like,’ said Mr Mah.”

“American Residential Group, a Tulsa real estate development and management company, is now in a ‘pre-marketing evaluation’ of changing the Tribune complex from apartments to condominiums….as a testing ground for a multimillion-dollar expansion.”

“Senior VP Steve Ganzkow said no one has attempted this type of effort since the late 1970s to early ‘80s. ‘We’re dealing here with an asset class in the real estate world that is pretty new and unique to this market,’ he said.”

“Ganzkow suggested prices could range from $175 to $200 per square foot. ‘There’s a lot of people who would say for that kind of money I would go get a house somewhere, and you probably can,’ he said. ‘But then you wouldn’t be downtown.’”

“The NAR and Lawrence Yun, its new chief propagandist — er, economist — continued to fiddle and insist that all was well. Take a look at this ridiculous and self-contradictory release, titled ‘Mixed Results for October Existing-Home Sales; Mortgages Improving.’ The NAR follows that front-line fib with what I can only characterize as a big, fat, stinking lie. The first line begins, ‘Single-family existing-home sales were stable in October.’”

“‘Mixed’ results? ‘Stable’ sales? There’s nothing mixed about a nearly 21% drop from October 2006. There’s nothing stable about a housing inventory that has jumped 15.4% year over year, so that the months’-supply number screamed upward by 46%.”

“House prices dropped by an average £65 a day this month, the fastest rate for 12 years. Further fuelling fears of a property slump, mortgage approvals in October also crashed to just 88,000.”

“It was the lowest figure since February 2005 and contrasted to a recent monthly average of 109,000. Nationwide’s chief economist Fionnuala Earley said: ‘This data confirms the market is cooling.’”

“The Council of Mortgage Lenders urged the Bank of England to ‘unblock the funding logjam.’”

“With Arizona ranked eighth in the nation in the number of foreclosures, some advice for people who fall behind on their mortgage payments. Number one, call your lender.”

“Banks don’t want you out on the street, says Chase Bank’s Tom Kelly. ‘What we want to do as mortgage servicers is to work with customers to try to keep them in their houses. We don’t really want to own houses. We would like people to pay us back.’”

“A lot has changed in the real estate market in the past year. Advice that brokers gave clients only a few months ago no longer applies.”

“As far as Johnny Matos is concerned, the prices haven’t come down enough. The Levittown native recently sold his home in Orlando, Fla., and moved back to Long Island. He and his wife are now renting a one-bedroom apartment in a Wantagh house.”

“For the time being, Matos says, he thinks it’s more economical to rent than to own. He is paying $850 a month but figures he would likely pay about $4,000 a month in mortgage payments, taxes and insurance if they bought a home.”

“Still, he expects to purchase a place in the next year because his wife wants to start a family. He says he’s hoping prices will drop more by then. ‘In the last year nothing has enticed me to buy,’ says Matos. ‘For me, it’s just waiting until somebody gets desperate.’”

ABC News reports from California. “Two years ago, Kelley Lowry camped out overnight to buy a four-bedroom home in the upscale community of Fairfield, Calif., northeast of San Francisco. He paid $580,000. ‘We bought at the top of the market,’ Lowry said. Just six weeks later, his house was worth $750,000, but now? The value has plunged to just about $400,000.”

“‘It’s pretty devastating, especially when you owe more than that,’ Lowry said. ‘It’s tough to swallow.’”

“Lowry is sure his home will continue to lose even more value. ‘I know for a fact it will,’ he told ABC News.”

The Orange County Register. “In a week where we’ve been reminded by S&P Case-Shiller, Realtors and federal house trackers that recent months have been painful, DataQuick today tells us that this month won’t likely be any better. Mid-November O.C. home-buying stats show extremely slow sales counts and pricing that’s roughly 8% below a year ago.”

“For the 22 business days ended Nov. 14…three South County ZIPs appear in the top 10 rankings of neighborhoods with the worst yearly declines in sales activity in O.C.: Irvine 92620, sales down 76.0%. Ladera Ranch 92694, down 73.8%. Irvine 92602, down 67.5%.”

From KFSN TV. “In new rankings released Thursday, Merced moved to the top spot in foreclosure rates at nearly seven times the national average. Stockton and Modesto are second and third on the list.”

“‘I think it’s disgraceful,’ said Sean-Pierre Wilson, resident.” “Wilson says he won’t even consider buying a house right now, especially when the center for responsible lending says California can expect to lose 180-k homes.”

“‘Forty or 50 homes open and then no one’s buying. The other side of that is people are also trying to auction homes just to get a return on their investment,’ said Wilson.”

“In California, one in 88 homes is at threat of being foreclosed. In Merced, for sale signs on one side of the street and empty lots on the other side of the street are all too familiar sights.”

The Mercury News. “Lawmakers unveiled five proposed laws and asked Gov. Arnold Schwarzenegger, who also has been vocal about the impact of the mortgage crisis on the state, to call a special legislative session so the measures can be adopted more quickly.”

“But lawmakers conceded there is little that can be done to help those who already have lost their homes to foreclosure - or those facing it - other than to use the bully pulpit.”

“‘We believe we can shine the spotlight on what lenders are doing,’ said Assemblyman Ted Lieu, the chairman of the Assembly Banking and Finance Committee. ‘We can’t rewrite these contracts. It will be through cajoling, shame and persuasion.’”

“‘If we think we’re in trouble now,’ said Assembly Speaker Fabian Núñez, ‘let’s wait to see what happens in the next four or five years. We need to keep this from escalating.’”

“Lenders are sending 2,000 foreclosure notices a week in California, and that number will more than double beginning next year.”

“The California Association of Mortgage Brokers said it applauded the lawmakers for addressing the foreclosures but urged a balanced approach.”

“‘While we strongly support the goal of consumer protection,’ said Pete Ogilvie, president of the group, ‘CAMB urges legislative leadership to work with lenders, brokers and consumer groups to ensure that reform measures preserve the ability for families to obtain suitable financing to purchase the home of their dreams.’”

The San Francisco Chronicle. “The number of foreclosures in San Francisco makes up just 2 percent of foreclosures in the Bay Area, city leaders estimate, and Mayor Gavin Newsom said city residents have ‘been fortunate to date.’”

“But, he warned, ‘It could hit here, and if it does it’s going to hit very acutely and very immediately and that’s why we want to be prepared.’”

“A coalition of city leaders…called on major subprime lenders Thursday to change the way they do business with homeowners on the brink of foreclosure. Dustin Hobbs, a spokesman for the California Mortgage Bankers Association, said today’s deadline isn’t realistic. City leaders mailed letters to banks outlining the requests last week.”

“‘It’s an unreasonable demand. Anything this extensive and far reaching would require a lot of deliberation by any company,’ he said, but also noted that many lenders have already instituted such programs.”

“San Francisco officials conceded Thursday that they can only hope institutions comply with their request.”

“John Eller, head organizer at the Association of Community Organizations for Reform Now in San Francisco, called it ‘a good first step. We know (the agreements are) toothless right now because they’re just calling on the lenders to do the right thing,’ he said.”

The Sacramento Bee. “Not everyone believes that Gov. Arnold Schwarzenegger’s pact with mortgage lenders to help troubled subprime borrowers will dampen the impact of California’s foreclosure crisis. So far, no other major lenders have joined Schwarzenegger, the Governor’s Office confirmed. Four of eight big lenders brought to the table declined to join the pact.”

“One for whom it comes too late is Desiree Reno of Sacramento. She had a loan serviced by HomEq. ‘What really upset me was the day after they auctioned my house, I saw that they were going to help all these people when they could have helped me,’ she said.”

“Last year, subprime borrowers accounted for 27 percent of home loans in El Dorado, Placer, Sacramento and Yolo counties, and 32 percent in Yuba and Sutter counties, according to a Bee analysis.”

“Some doubt that freezing subprime loan rates for those who can’t afford higher payments will make a dent. Thousands of 2006’s subprime borrowers are already defaulting before their loans reset, said economist Chris Thornberg.”

“‘It’s not the mortgage that’s the problem,’ he said. ‘A lot of people bought houses they just can’t afford.’”

“Thornberg said there really isn’t much anyone can do. Falling home values are aggravating a foreclosure problem that’s likely to worsen, he said. Values will fall, he said, until most people can afford homes again.”

“Jeff Tarbell, managing partner of Sacramento-based Comstock Mortgage, also doesn’t see much practical impact from the governor’s announcement. Tarbell said it takes time to verify that a subprime borrower can’t make higher payments – and lenders don’t have the staff.”

“Tarbell wants a freeze on rate resets – at least temporarily – across the country to allow the real estate market to stabilize.”

“‘We’ve got to stop the pricing decline,’ he said.”

The Bakerfield Californian. “Carl Cole, former managing broker of now-defunct Crisp & Cole Real Estate, counted his first two foreclosures Thursday, trustee’s deeds recorded with the county show.”

“They are so far the only foreclosures in the Cole family, but just a pair among more than 100 defaulted and foreclosed properties associated with the former company’s employees, family members and associates, according to an ongoing Californian tally.”

“Lenders took a hit when the homes were auctioned off last week, records indicate, a situation now common in the current real estate market.”

“Cole borrowed more than $1 million total against the two homes in January 2006, property records show, while banks repossessed them last week for a total $722,325.”

“As of Thursday, 102 troubled properties with more than $62.3 million in total loans can be pegged to former Crisp & Cole associates, according to The Californian’s ongoing tally. Of those, at least 57 have so far foreclosed.”

“On Monday, the Seven Oaks mansion of Cole’s former partner, David Crisp, is scheduled for the auction block. Two previous auctions were postponed.”

“Federal investigators are currently looking into Crisp & Cole operations for possible mortgage fraud after a federal raid of 13 Bakersfield sites Sept. 12.”

The News Press reports from Florida. “The National Credit Union Administration is auctioning $26 million worth of bad debt on houses built in Cape Coral and Lehigh Acres, likely the first in a wave of houses that experts say could drive down the market with fire-sale prices. Current values of the houses weren’t available but since December 2005, when the median price of an existing single-family home in Lee County reached an all-time high of $322,300, the price has fallen 26 percent to $239,300 in October, according to FAR.”

“As a result, bidders will likely demand a deep discount in the price of the debt, Naples-based real estate consultant Michael Timmerman said. ‘Some of them could be 30 to 40 percent off what the construction cost was’ depending on what the houses are worth now at today’s much lower prices.”

“Fort Myers-based real estate broker Ed Bonkowski was even more pessimistic about how much the bad debt will fetch.”

“‘If they get 25 percent, they’ll be in hog heaven,’ said Bonkowski, who helped the federal Resolution Trust Corp. sell thousands of properties in the early ’90s when many savings and loan associations went down because of bad debt. ‘The institutional guys will be in at 10 cents on the dollar.’”

“NCUA spokesman John McKechnie wouldn’t say exactly what his agency would accept in the way of bids, but Bonkowski said he won’t bid on behalf of his clients until later batches are auctioned off.”

“‘They’re going to be shocked at what the public will pay’ for the properties and lower bids likely will be accepted in later auctions, Bonkowski said.”

“Steve Koffman, of Sunbelt Realty, said the homes that will be pouring onto the market ‘are going to make it difficult for us as a county to try to absorb the excess inventory’ with about 15,000 houses already listed for sale.”

“Timmerman said the NCUA will have to be careful not to release too many houses onto the market too fast and crash prices, lengthening an already painful slowdown in housing here.”

“But the results are hard to calculate, he said. Releasing a lot of houses onto the market ‘may spur people to say, ‘Now’s the time to go ahead and buy things,’ and people may jump in,’ he said. ‘The flip side’s that they could say, ‘Let’s just wait’ for even lower prices.’”

The Herald Tribune. “Foreclosure activity in Southwest Florida gathered momentum during October, with month-to-month foreclosure filings rising 93 percent.”

“George Huhn, a Venice real estate agent, knows the foreclosure process intimately: he works with local banks on the process. But Huhn is now losing his own home to a repossession by Sarasota-based Century Bank, one of area banks for which he has worked.”

“‘I got behind in my payments and the bank, a local lender, has not been able to come to an agreement on a workout that would be workable for either one of us,’ Huhn said.”

“‘A nonperforming loan older than 90 days goes from being an asset on the bank’s balance sheet to a liability that has to be charged against earnings,’ Huhn said. ‘Banks are preparing to file year-end financial statements and are facing disclosures about foreclosures ‘that have unpleasant consequences for their stockholders,’ Huhn said.”

“Also pushing the foreclosures now is the holiday season. ‘Banks won’t foreclose during the Christmas season,’ he said. ‘It’s bad publicity. No one wants to be seen dragging Christmas trees onto the curb after a family has been foreclosed upon in December. But after New Year’s, the gloves come off again.’”

“Until recently, lenders were ‘dragging their feet’ when a Horizon Realty agent made a presentation on why the bank should accept an offer at less than the loan amount, said Matthew Augustyniak, Horizon’s CEO. ‘Now they are realizing, the offers that are on the table, they better start taking them,’ Augustyniak said. ‘They’ve got to get it off their desks.’”

The Orlando Sentinel. “Homes throughout Central Florida continued to lose value in the third quarter, including the best homes in good neighborhoods, according to federal survey.”

“Beth Goldstein, a former top sales agent, is now running a Nature’s Table cafe in her church. She said Thursday that she got out of real estate, after seven years in the leading Coldwell Banker sales office in Florida, because sales were so slow, relative to previous years, that she decided to gamble on a restaurant franchise as a better revenue producer.”

“‘I think we’re going to see this [local] correction run for another three to five years,’ Goldstein said. ‘I tell my friends, ‘I don’t think we’ve hit bottom.’ I hate to say it, but I tell them if they are thinking of buying, to wait. There’s such a glut.’”

“Active Realtors contend that economists who repeat their statistics of declining sales and journalists who disseminate those reports are a major factor in the ongoing slump, said Ken Bennett, Central Florida regional manager for Watson Realty Corp.”

“‘Not too many economists know what’s going on,’ he said. ‘They just tend to focus on the gloomers and doomers.’”

“Bennett, who oversees a sales area from Walt Disney World to Daytona Beach, concedes that housing prices are lower than they were earlier this year, and in many cases are down by 15 to 25 percent from a year ago in parts of Central Florida.”

“‘That is a phenomenon. I’ve never seen it,’ Bennett said. ‘But all that means is, it’s a good time to buy, a good time to invest. You can buy for less.’”

“Goldstein, who was among the top 14 percent of agents for three straight years, said she also thought investor psychology was the main problem. She said she and other Realtors were told repeatedly by their managers to ‘focus on the positive,’ regardless of the market. ‘But you could see it crumbling around you.’”

The Palm Beach Post. “Gov. Charlie Crist and other state leaders Thursday temporarily halted all further withdrawals from a state-run investment pool in hopes of keeping the fund from becoming the latest casualty of the ever-expanding maw of the subprime mortgage meltdown.”

“Local governments…had pulled nearly $13.5 billion from the pool in the past two weeks, including $3.7 billion on Thursday morning. The withdrawals were a reaction to news that a fraction of the fund’s investment portfolio was downgraded because of the mortgage crisis.”

“If the pace of recent withdrawals had continued, the state board could have been forced to sell the pool’s troubled securities at a deep discount and left some governments with the losses. ‘What happens to the participants who have the last $2 billion in the pool?’ said state Chief Financial Officer Alex Sink . ‘They get zero.’”

“Sink, who requested the emergency board meeting Thursday, said the remaining investors should help decide the next step so ‘the pain can be shared. The people who got their 31/2 billion today are lucky,’ she said. ‘Is that fair?’”

“‘I’ve been told to pull all my money from SBA as soon as I can and to never use them again,’ said Port St. Lucie Finance Director Marcie Dedert. Port St. Lucie has $426 million remaining in the investment fund, the largest balance of any Florida city.”

“Dedert, whose most recent deposit into the pool was Wednesday, said she has only about $30 million on hand to pay the city’s bills and is liquidating all available accounts. She said she hoped the state would let the city make some withdrawals to pay employees and make debt payments.”

“‘All our excess cash is there,’ she said. ‘I’m robbing Peter to pay Paul.’”

The Sun Sentinel. “In an effort to halt what one official called ‘an investment world version of a run on the bank,’ state officials froze withdrawals Thursday from a $27 billion investment fund that local governments drained by almost half during the past two weeks.”

“‘It is certainly unprecedented, and there is a nervousness out there that we’ve never seen before,’ Broward County Commissioner John Rodstrom said.”

“The Broward County School District began withdrawing money on Nov. 15 and removed more than $384 million from the fund, district treasurer Henry Robinson said.”

“‘We smelled a rat,’ Robinson said.”

“‘We’re fiduciaries, we’re investment professionals and we know what we’re doing,’ said SBA Executive Director Coleman Stipanovich. ‘We do not have direct exposure to sub-prime mortgages.’”

“Though the state may not have direct exposure to sub-prime mortgages, its own Nov. 9 report describes how the commercial paper into which it placed some public revenues was backed by residential mortgages that were downgraded by Standard and Poor’s, which said it had not rated the fund.”

“The state’s action to freeze public revenues was a surprise to some South Florida finance managers. ‘Folks have always thought the SBA was a safe investment. Some thought it was backed by the state, but that’s not the case and they are subject to market risk,’ Broward County Commissioner Rodstrom said.”

The News Journal. “The Volusia County school district withdrew $265 million for deposit into U.S. Treasury secured money-market accounts, according to a statement from Robert Moll, deputy superintendent for financial services.”

“‘We can make payroll, but the fact is the purpose of that system is to help us move our money in and out and at any given time — 24 hours a day,’ said Wayne Blanton, executive director of the Florida School Boards Association. ‘Right now they have frozen that ability.’”

“‘We’ve got every dime of our cash in that pool,’ said Hal Wilson, chief financial officer for Jefferson County schools. ‘What were they thinking?’”

“He is now short $850,000 for today’s payroll and spent Thursday afternoon alternately pleading with state officials for relief and negotiating with a local bank to cover the overdraft. Wilson’s only other option: leave the small county’s 220 teachers and staff without money to pay their own bills.”

“Cape Coral took out $120 million a month ago, leaving only $200.99 still in the fund. ‘I already knew that something like this was going to happen,’ said Cape Coral finances director Mark Mason.”

The Daily Business Review. “PB Capital has come to the rescue of South Florida real estate investor Morris Stoltz II on a Boca Raton condo conversion that got caught up in the housing recession.”

“PB Capital, part of Germany’s Deutsche Postbank, bought overdue loans from two lenders Nov. 20 and filed a $107 million foreclosure suit against Stoltz’s Mizner Court on Nov. 21.”

“Both sides went to Palm Beach Circuit Court on Tuesday asking for permission to transfer the 30-acre property to PB Capital by year-end in one of the South Florida’s largest foreclosures of the residential downturn.”

“‘In a market like this a lot of times holding the mortgage is more valuable than holding the real estate,’ said David Dabby, president of Coral Gables-based real estate research firm Dabby Group. ‘With the agreement, the developer gets his chance to get out, the previous lenders probably took a loss to get out and PB becomes the new owner,’ he said.”

The Sun Journal reports from Maine. “Golf course owner Gard Craw is an old hand at reading the green. So, despite the softness in the local housing market, he’s ready to commit upward of $20 million in a new residential subdivision across from his Apple Valley Golf Course. ‘You do it when the times are bad,’ he said, noting that contractors are very competitive when the housing industry slows. ‘Besides, it took me three years to get to the point where I’m at.’”

“When Craw purchased the golf course four years ago, he had hoped to build another nine holes across Pinewoods Road, financed by a smaller residential complex. ‘When I looked at it from a return on investment, the (larger) residential development won out,’ he said.”

“Once the first phase is sold, the next phase will begin. Craw said he knows there are plenty of unsold homes on the market right now, but he’s pretty sure Apple Valley Estates will move.”

“‘You can’t do something conventional,’ he said. ‘There’s too much inventory out there.’”

The Boston Globe from Massachusetts. “The median price for a single-family house in Massachusetts slumped 6.5 percent in October, the biggest percentage decline this year, according to a report on the state’s housing market.”

“The Warren Group said the median house price last month was $290,000, down from $310,000 in October 2006. House sales plunged 17.1 percent, to 3,646 in October compared with a year ago.”

“As for the Massachusetts Association of Realtors, it said the October median selling price for a Bay State condo was $279,950, up 7.3 percent from October 2006, and the volume of Bay State condos sold in October was 1,309 units, down 13.2 percent from October 2006.”

“‘While sales were down last month, it is important to note that year-to-date residential sales activity is off only 2 percent from this time last year,’ Doug Azarian, president of the Massachusetts Association of Realtors, said in a statement. ‘For qualified buyers, this remains a good time to buy.’”

The Wall Street Journal on New York. “Even as the national housing market has been hit by slow sales and falling prices, Manhattan has continued to shine. But now its light may be dimming. Fewer apartments are being sold, 858 went into contract in September, a 9.9% drop from a year ago and the lowest total in two years, according to Corcoran Group, and the inventory of unsold apartments is increasing.”

“Prices The median price of a Manhattan apartment fell 3.4% in the third quarter from the previous one, according to Radar Logic. The firm says properties are sitting on the market longer, too, an average of 123 days, up from 94 days at the peak of the market in 2005.”

“Developers used to seeing yet-to-be-built apartments get snapped up sight-unseen are increasingly offering incentives, from help with closing costs to museum memberships, to jump-start sales. ‘Buyers are more hesitant,’ says Hall Willkie, president of brokerage Brown Harris Stevens.”

“One big factor is how much money New York’s army of financial executives will make this year, given the wild swings on Wall Street. ‘Right now, everyone’s waiting for bonus time,’ says Stephen Kliegerman, executive director of development marketing for brokerage Halstead Property. ‘No one knows what to expect.’”

“In recent months, the continuing strength of its real-estate market has…led many local real-estate professionals to contend that Manhattan is immune to the forces that have battered much of the rest of the country.”

“But few independent experts buy that argument. Christopher Mayer, a Columbia University professor and director of the school’s Paul Milstein Center for Real Estate, says the idea that Manhattan will continue to boom amid a nationwide housing bust is ‘wishful thinking.’”

“‘I certainly don’t think Manhattan is recession-proof,’ Prof. Mayer says. ‘History just says that’s a wrong argument.’”

“Some buyers are already finding bargains. When hedge-fund executive Jerry Lavish and his wife, Stanka, started looking at apartments earlier this fall, they liked a three-bedroom co-op on East 72nd Street, but not its $1,775,000 price tag.”

“Two weeks later, however, the sellers cut the price to $1,575,000, and the Lavishes jumped; they’re expecting to sign a contract today. Mr. Lavish, who says he did extensive online research before making an offer, believes the same property might have gone for $1.9 million a year ago.”

“‘We’re getting this apartment for probably 2004 pricing,’ he says. (The downside: The Lavishes are listing their current apartment for $475,000, nearly 10% below their original asking price.)”

“Sellers and local brokers point to August or September as the start of the shift. Sean Connell and his wife listed their pied-à-terre on East 28th Street for $495,000 in May. They quickly accepted an offer for $480,000, but their co-op board rejected the buyer.”

“By the time the apartment went back on the market in August, the market had changed and the price was too high; earlier this month, the couple cut the price to $450,000. ‘Since the summer, [buyers have] been a little more cautious,’ says their broker, Carlos Saavedra.”

“Supply, however, is increasing. The city approved the building or conversion of 14,748 condo and co-op units in Manhattan in 2006; citywide, such approvals were up 75.8% from 2005. And more are in the pipeline. ‘I would not want to be owning a project that’s coming on the market in the next year or two,’ Prof. Mayer says.”

“The impact of the increased supply is already being felt. A handful of new developments have begun to offer incentives to attract buyers, something nearly unheard of at the height of the boom. Several projects are offering beefed-up commissions, or even gift cards, to brokers who sell units.”

“Blair MacInnes is handling the sale of her 85-year-old mother’s Upper East Side apartment; she listed the two-bedroom co-op in September for $2,095,000, the price recommended by her broker.”

“‘We were very worried about putting the apartment on the market,’ Ms. MacInnes says, ‘but we had been told by any number of people that the exception to the housing crisis had been Manhattan.’”

“The apartment drew little interest, however, and Ms. MacInnes and her mother agreed to cut the price, first to $1,995,000 and then again a few days later to $1,779,000, a total cut of more than 15%.”

“Although the new price has generated more interest but no solid offers, Ms. MacInnes says she and her mother aren’t in a rush to sell. ‘But do we want to wait until the market bounces back?’ she asks. ‘Who knows when that will be?’”

The Times News from Maryland. “The numbers of foreclosures are reaching those of divorce rates. At Allegany County Circuit Court, a civil clerk who is charged with various duties spends nearly 50 percent of her time on them.”

“A court spokesman said he’s seen the number of foreclosures increase over the last five years to the point where attorneys from the metropolitan areas are paying couriers to drive here with paperwork rather than risk sending it through the mail.”

“‘It’s catching up with divorces,’ he said of the foreclosure rate.”

“As the new president of the Historic Highlands Association of REALTORS, Melanie Pratt Dimaio, a real estate agent for 14 years, is well aware of the issue but finds it to be much better here compared to other areas.”

“‘We are very fortunate in our area to only be experiencing a slight increase in foreclosures, mainly in the low- to mid-price ranges,’ she said in a prepared statement. ‘Our local foreclosure rate is not nearly as high as in the rest of the state of Maryland.’”

“‘Local lenders are to be given much of this credit for their conservative lending and appraisal procedures versus Internet lenders who give consumers enough rope to hang themselves with by using over-inflated appraisals from out-of-town appraisers and crazy loan programs,’ she continued.”

“A report issued in October by the Maryland Department of Housing and Community Development, said the ‘growth in mortgage loan delinquency and foreclosures’ actually began in the second quarter of 2005 when the housing boom slowed not only in Maryland, but also across the country.”

“A National Delinquency Survey by the Mortgage Bankers Association found the number of delinquencies in the state reached an all-time high in the second quarter of 2007, which runs from April through June. At 43,980, that’s an increase of 19.8 percent from the first quarter of the year and 30.8 percent more than 2006.”

“Baltimore City along with Prince George’s, Montgomery, Baltimore and Anne Arundel counties have the majority of all foreclosures in Maryland at 75.2 percent.”

“The story is much worse in nearby Washington County, which ranks third in the state for the number of foreclosures. With 125 in the second quarter, that’s a 12,400 percent change from the first part of this year and 6,150 percent change from the second quarter of ‘06.”

From ABC News 7 in Virginia. “One of the communities hardest hit by the foreclosure problem, Prince William county, isn’t just having an impact on those who default on their mortgages, but those trying to sell their homes.”

“After nearly 40 years of memories in a home that is paid off, Larry and Diane Shandor are struggling to sell their house now, because of others in their neighborhood who can’t pay their mortgage.”

“‘How can you compete with a foreclosure home,’ said Larry Shandor. His problem is an unfortunate byproduct of the mortgage crisis; those trying to sell homes in a market flooded with foreclosures.”

“‘This is the worst I’ve ever seen it,’ said Joe Botta from the Prince William County Financial Education Office.”

“New developments in the county continue to bloom. Where sales are soft, homes are still selling.”

“Pable Cava priced his home to compete with the foreclosures and finally sold it after months on the market. ‘I just had to get rid of it. My wife was sick.’”

“The Shandors had to do the same, reduce the selling price of their home. ‘What can you do? It’s just what’s happening right now.’”

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