The Housing Bubble

The San Francisco Chronicle reports from California. “Beaming with pride, Johnnie Pitts stacked up piles of legal documents on his living room floor the Wednesday before Christmas. The San Francisco Muni driver had just returned from having his signature notarized on agreements that permanently modify his once-exorbitant mortgage to a reasonable interest rate, allowing him to keep the three-bedroom bungalow on Oakland’s MacArthur Boulevard.”

“Pitts started off financially unsophisticated, but he now shows a shrewd grasp of how the system works. ‘If you think your house is all yours, just miss a payment or property tax bill, and you’ll find out who it really belongs to,’ he said. ‘We’re not homeowners; we’re renting from the banks and investors.’”

“Earlier this year when he realized his mortgage was slated to reset to well over $4,000 a month - the same as his take-home pay - Pitts started speed-dialing his loan servicer, banking giant Chase, asking for a loan modification.”

“At the same time, he boosted his income by racking up overtime - an extra 10-hour day every week - to catch up on some missed mortgage payments and property taxes. ‘My family and co-workers said, ‘Why don’t you just do a short sale?’ but this is my house. This is the major purchase of my life,’ he said.”

“Pitts’ monthly mortgage will now be just shy of $2,800. Property taxes and insurance add another $700 a month. The $3,500 monthly total is still quite steep for a man whose base income is about $4,000 a month, although he can earn another $1,000 or so through overtime.”

“Does Pitt really want to continue working six days a week to keep a house that is now valued at about $330,000 - $100,000 less than he paid for it? He insists that he does.”

“‘When it comes to renting, it’s just cash in the trash,’ he said. ‘You can’t win no way when you’re renting.’”

“‘I’m going to modify my lifestyle,’ he said. ‘I shop at the dollar store; I buy in bulk and on sale. If push comes to shove, I may have to get a roommate.’”

“How will he celebrate his birthday this year? ‘I’ll be working, the same as on Christmas,’ he said. ‘It’s time and a half on the holidays. I’ll take the money. Renters have a different mentality; they can party.’”

“Jeff Hahn let out a small sigh when a reporter called to tell him that his Fairfield house had been sold at a foreclosure auction two days earlier. ‘So that’s it,’ he said.”

“Hahn and his wife walked away from the house this summer because the $5,000 monthly payments were as much as their take-home pay. They put it on the market and moved to Los Angeles, where Hahn had a good job lined up.”

“They started off listing it for sale at $575,000, then dropped the price steadily over several months without attracting any buyers.”

“‘The last time I talked to our Realtor, her best advice was to try to sell it for around $350,000 to $400,000,’ Hahn said. ‘I’ve talked to friends who still live up there; there are six or seven houses just like mine for sale in my neighborhood from people in foreclosure.’”

“Hahn bought the four-bedroom Colonial in 2004 for $495,000. He later took out a home equity loan to help finance his business of importing high-end auto parts. His adjustable-rate mortgage jumped from $2,200 a month to $3,700 last September.”

“The couple used credit cards to make the mortgage payments while they tried to refinance. In March, the Hahns finally were approved for a refinance at $570,000 with an interest rate of 10.5 percent. But they never made a payment.”

“Jeff Hahn said they accepted the pricey loan because they were desperate to salvage their credit rating and hoped to sell the house quickly. As they rebuild their lives in Southern California, the financial reverberations of losing the house linger, through credit-card debt and lower credit scores.”

“‘We literally are living paycheck to paycheck,’ Hahn said.”

“During the months of struggling to keep up with their mortgage payments, they ran up more than $16,000 in credit-card debt, Hahn said. Once they stopped paying the mortgage, his credit score plummeted from 710 to 490.”

“Tom Kelly, a spokesman for Chase, which was the servicer on Hahn’s loan, said the property reverted to Chase at the Dec. 17 foreclosure auction for $474,750 - far less than the $570,000 loan balance and the unpaid fees and penalties.”

“Lenders generally set minimum bids at foreclosure auctions equal to the amount of outstanding debt. Kelly said he was not certain why it went for a lesser amount, but said he could speculate that ‘given the problems with home prices, now the bank is happy to get less than (is owed) and walk away.’”

“Kelly said the Hahns’ case was straightforward because they made no payments after refinancing and had only minimal contacts with Chase. ‘If a person has never made a mortgage payment, that’s very clear-cut that we’ve seen no good faith effort from that person,’ he said.”

“After his story was told in The Chronicle, Jeff Hahn said he briefly became a ‘poster child’ for foreclosures - appearing on radio shows, getting a call from People magazine. But the couple also was the target of some vitriol by readers on The Chronicle’s Web site. For that reason, they declined to be photographed.”

“‘The number of hate comments we got just floored me,’ Jeff Hahn said. ‘This wasn’t something we chose to have happen to us. I just don’t get how these people can judge me like this and think we completely took advantage of the system. The system took advantage of us. We’re the ones losing our house; we won’t be able to rebound from this.’”

The Lompoc Record. “Arguably the most talked-about issue in 2007 on the Central Coast - indeed, throughout the state and the nation - was housing, particularly the downward spiral of prices and sales.”

“A complex mixture of factors squeezed local real estate, driving home prices down and leaving a glut of new and existing homes on the market as foreclosures rose amid the subprime mortgage debacle.”

“In San Luis Obispo County, a median-priced home cost $454,840 in November. That was down 17.1 percent from the median price in October and 14.6 percent from November 2006, when the price was $532,890, and well below the record $605,158 set in November 2005.”

“The association said November 2007 sales in San Luis Obispo County fell 17.7 percent from October’s level and 28.7 percent from November 2006.”

“In mid-October, a total of 756 existing single-family homes and condominiums were on the market in the Santa Maria-Orcutt area, according to the Santa Maria Association of Realtors. Particularly troubling was the fact that nearly 16 percent of those - or 118 homes - had been lost to foreclosure.”

The Tribune. “The North County median declined to $469,000 from $490,000, a 4.3 percent decrease. In December, the county median was $472,500, down from $529,000 the same month a year ago.”

“‘If you stand back and look at the market, there’s still job growth, attractive interest rates and unemployment is low,’ said Jim Liptak of Country Real Estate in Paso Robles and president-elect of the California Association of Realtors. ‘But you’re still seeing great difficulty in the market, a lot of it caused by the (subprime) mortgage crisis.’”

“Liptak said the housing slump actually started in 2005, the same time record numbers of people jumped into real estate. The oversupply of housing and agents were two things that ‘created almost the perfect storm.’”

“‘Right now, the number of (annual) transactions an agent is doing in California is on average under four. In 2004-05, that figure was 12 to 14,’ Liptak said.”

“There will be winners and losers in the next year, said Kirk Lesh, real estate economist with the UCSB Economic Forecast Project.”

“Renters, for instance, may find that it’s just as costly to rent than to buy, spurring some people to jump into the market, he said. ‘Of course, on the other side of the coin, if you wanted to sell a home now and move, you may not get as much money as you wanted.’”

“Some San Luis Obispo County lenders found that the steady business they enjoyed during the real estate boom had slowed.”

“‘Lenders couldn’t keep doing 100 percent financing and assume that one day (home) values are not going to come down,’ said Leslie VandeWalle, a mortgage broker in San Luis Obispo.”

“‘There are certain people who are doing well, but no one is doing really well in this market,’ said Kyle Allen, a mortgage loan consultant.”

“In November, for example, there were 1,023 trust deeds recorded (includes sales, refinances, home equity loans and construction loans), down from more than an average of 2,000 during the year-earlier period, according to county records.”

“VandeWalle’s firm, which specializes in more traditional loans, started noticing a change when fewer clients sought her services in the latter half of the year. La Casa had been doing about 10 loans every month. Now, they have about four or five, she said.”

“‘We were totally dead for a while,’ she said. ‘We had three months with no escrow closings. Now, now we’re back working again, but loans are harder to make.’”

“In a recent California Association of Mortgage Brokers survey, 41 percent of members said they expected lending standards to further constrict in 2008. In today’s market, potential borrowers with credit scores of less than 680 may find that it’s more difficult or expensive than for borrowers with scores greater than 680.”

“It’s becoming more common for borrowers to provide paychecks, tax returns and bank statements to qualify for a loan. With jumbo loans, potential buyers are asked for 10 percent or more.”

“‘People come to us for loans now that there’s not necessarily a loan product for,’ said Michael Hahlbeck, VP of Mariner Mortgage in Arroyo Grande. ‘I had a client six months ago who could have easily gotten a loan and deserves one. She has good credit and adequate income, but she’s young and has no money for a down payment. She wanted 100 percent financing and would be a success story with it. It bothers me because it would have been a good opportunity for her.’”

The Voice of San Diego. “Where 2006 launched with some optimists downplaying signs of trouble in the county’s housing market, the tenor of real estate shifted to leave such voices in the minority by last New Year’s Eve. And then 2007 proved, from start to finish, a year of slump.”

“‘The problem with the market is, prices got bid up to exceptionally high levels, and this is the back end of that,’ said Chris Thornberg, an economist with Beacon Economics. ‘What we’re seeing is a market in the painful throes of a downturn.’”

“‘I think that basically, this snapshot in time — it’s a real period of unknown,’ said Gary London, a local real estate analyst. ‘We can speculate — ‘this was worse, that was worse’ — but this is just in real uncharted territory.’”

“In 2007, buyers were scared, scarce or both. The number of homes sold each month hit decade lows, month after month. ‘If you look at two houses for sale in the same neighborhood, they’re in competition for the same buyer,’ said Mark Goldman, a local mortgage consultant and broker.”

“When sales activity picked up, it was usually due to an increase in the number of homes sold as repossessed properties or as short sales. And where there were buyers, they paid less for homes than they did last year.”

“Local market consultant Dan Holbrook…recently switched his business from focusing mostly on making mortgages to negotiating short sales and bank-owned deals.”

“‘We, in order to get through this, need to get creative,’ he said. ‘The distressed market is the market. And I’m focused on the distress. I’m almost a distressed real estate evangelist.’”

Some housing bubble news from Wall Street and Washington. Associated Press, “The National Association of Realtors reported Monday that…over the last 12 months, however, existing home sales have plunged 20 percent, underscoring the troubles in the housing sector. Home prices continued to sink. The median price of a home sold last month was $210,200. That marked a 3.3 percent drop from a year ago. It was the fifth biggest annual decline on record.”

“The inventory of unsold homes in November was 4.27 million homes. At the current sales pace it would take 10.3 months to exhaust that overhang. ‘Inventory is still high and further reduction in prices may be required in some areas to induce buyers back into the market,’ said the association’s chief economist, Lawrence Yun.”

“Regionally, existing-home sales in the West are 25.0 percent below a year ago. In the Midwest, existing-home salesare 16.9 percent below November 2006. Existing-home sales in the South are 19.4 percent below a year ago. Existing-home sales in the Northeast are 19.4 percent below November 2006.”

From MarketWatch. “Sales of existing homes are down 31% from the peak of 7.21 million two years ago.”

“Homebuilder M/I Homes Inc. said it will take charges of about $80 million in the fourth quarter on the sale of 3,700 lots and expects further impairment charges related to its inventory during the quarter.”

“As part of the sales, M/I Homes also sold all its current lots in the West Palm Beach, Fla. area and is completely exiting development in the market.”

From Bloomberg. “London Scottish Bank Plc, the U.K. lender to customers with poor credit histories, fell the most in a decade in London trading after saying it will take a charge of as much as 22 million pounds ($44 million) to cover losses.”

“London Scottish said in a separate statement it had ’strengthened’ its lending criteria for new mortgage business.”

“Defaults on privately insured U.S. mortgages rose 35 percent in November to a record, an industry report today showed, adding to evidence the U.S. housing slump is deepening.”

“The number of insured borrowers falling more than 60 days late on payments jumped to 61,033 last month from 45,325 in November 2006, according to the Mortgage Insurance Companies of America. The missed payments, often a prelude to foreclosure, represented a 2.9 percent increase from October.”

“Australian mortgage-backed bond sales fell to the lowest in three years as the fallout from the U.S. housing recession cut demand for the assets in the second half of the year.”

“Sales of bonds backed by Australian home loans plunged 87 percent in the last six months to A$5.9 billion ($5.2 billion), from a record high of A$44.4 billion in the first half of the year, according to Deutsche Bank AG.”

“Yield premiums continued to increase, leading Sydney-based Bluestone Group Ltd., a non-bank lender, to pay a record high 108 basis points on A$400 million of top-rated debt Dec. 7, more than five times what it paid to raise funds in March.”

From BBC News. “After previous financial disasters caused by excessive bank lending, regulators developed rules to limit how many loans a bank could have on its balance sheet. But, across America, banks were lending far more than that 10 to 1 ratio.”

“How had they managed to do it? The first technique banks used to circumvent regulators’ rules is known as ’securitisation’ - a way of a bank getting loans it had already made off its balance sheet. They did this by selling their loans off to pension funds, insurance companies, even to other banks around the world.”

“The banks’ loans should have been hard to sell because they were low quality - since they were issued with no questions asked, there was little assurance they could be repaid.”

“But the banks had an answer to that. To make their risky loans appear attractive to buyers, banks used complex financial engineering to repackage them so they looked super-safe and paid returns well above what equivalent super-safe investments offered.”

“Even savvy Wall Street veteran and billionaire Wilbur Ross could not figure out what was happening.”

“‘What they were fundamentally doing was taking a $100 pile of low quality securities and creating something they could sell to investors for $103,’ he says. ‘So there was an alchemy - making more price than there was value.’”

The Orange County Register. “What became a global financial crisis had roots in Orange County. Securitization of mortgages wasn’t invented here. Fannie Mae had been doing that for decades with conventional mortgages. And subprime lending – previously known as ‘hard money’ or C and D lending to people with subprime credit – had a long history.”

“But until the 1990s, subprime lenders like Long Beach Savings could only resell their mortgages to private investors willing to take bigger risks for higher returns. Once Wall Street began issuing public securities, the lenders’ capital grew exponentially.”

“A clear plastic plaque on William Komperda’s desk memorializes a 1990 deal that helped launch the made-in-Orange County subprime lending bonanza. Dated June 28, 1990, the plaque commemorates $70,732,555 of bonds underwritten by Komperda’s Connecticut-based firm, Greenwich Capital.”

“It was the first time his client, Long Beach Savings F.S.B., publicly placed securities backed by subprime mortgages. ‘We thought it was just a niche market,’ Komperda said of the initial securities offering. ‘It grew beyond what we imagined.’”

“By 2005, the peak year of subprime mortgage securities offerings, Wall Street sold $508 billion worth of the issues, according to Inside Mortgage Finance. Investors around the world purchased the securities, a boom that went bust this year.”

The Wall Street Journal. “During the housing boom, the subprime industry succeeded at more than just writing mortgages. It also shot down efforts by some states to curtail risky lending to borrowers with spotty credit.”

“Ameriquest Mortgage Co., until recently one of the nation’s largest subprime lenders, was at the center of those battles. Working with a husband-and-wife team of Washington lobbyists, it handed out more than $20 million in political donations and played a big role in persuading legislators in New Jersey and Georgia to relax tough new laws.”

“Those victories, in turn, helped blunt efforts by other states to crack down on reckless lending, critics of the industry contend.”

“Executives at Ameriquest, based in Orange, Calif., acknowledge that the company lobbied heavily against state lending restrictions, but say that other subprime lenders did so as well. In fact, a host of subprime lenders and banking trade groups, including Citigroup Inc., Wells Fargo & Co., Countrywide Financial Corp. and the Mortgage Bankers Association, spent heavily on lobbying and political giving.”

“Federal lawmakers didn’t pose much of a threat to the subprime industry in recent years. Members of Congress received at least $645,000 in donations from Ameriquest and large sums from other big subprime lenders, Federal Election Commission records indicate. They debated new oversight of the industry, but took no action.”

From Reuters. “Merrill Lynch & Co is in talks with Chinese and Middle Eastern sovereign wealth funds that could lead to the sale of another big stake in the U.S. bank, British newspaper The Observer reported, citing sources in London and New York.”

“New Chief Executive John Thain has been trying to bolster the company’s capital amid huge subprime mortgage losses. ”

“‘The multi-billion cash injection from Singapore’s Temasek TEM.UL was not enough and Thain is taking calls from a host of other potential saviors, which are understood to include sovereign fund investors from the Gulf and China,’ the newspaper quoted a US observer as saying.”

“A source told the Observer: ‘Thain is desperately seeking an additional infusion of foreign capital to bolster Merrill’s balance sheet. It could be done by selling shares or other assets to raise cash.’”

Dow Jones Newswires. “Some of the world’s biggest banks are increasingly turning to governments in Asia and the Middle East for cash to fill gaping holes left by mortgage-related write-downs.”

“The Observer quoted Sanford Bernstein analyst Brad Hintz saying Thain is seeking capital from foreign investors to offset a large fourth-quarter write- down. The newspaper reported Thain and other Merrill executives plan to work through the New Year holiday on strategies to save the bank if the credit crunch worsens further.”

“A possible merger with another banking group has not been ruled out but was seen as an ‘extreme scenario,’ according to the report.”

National Mortgage News. “One question some of you might be asking is this: if subprime volumes have screeched to a halt, what are all those traders on Wall Street doing? Good question. We’re told that come January there will be a wholesale shakeup at several firms.”

“Sources tell us that Deutsche Bank, Lehman Brothers and Merrill Lynch all are conducting reviews (or soon will) of their entire mortgage operations. As for where the most drastic changes might occur, Merrill Lynch might be a good bet.”

“An account executive there told us recently about conditions at Merrill’s First Franklin Financial Corp. He said many offices are not funding loans while awaiting training for Fannie Mae products.”

“‘So far, there’s been no training,’ he told us. The AE, requesting his name not be used, painted a bleak picture, saying business is so slow that employees pass the day playing Scrabble and PlayStation on the conference room projector screen.”

“He said FFFC AEs and executives keep asking Merrill why they can’t just originate loans and put them on the balance sheet of Merrill’s FDIC-insured bank. ‘We’re not getting any answers,’ he said.”

“The last word of the year: Mortgage executives, financial analysts, politicians, consumer advocates and journalists, to name but a few, are now analyzing just what went wrong in subprimeland. Readers of National Mortgage News and our affiliates already know the answer to the blame-game question of ‘Who did it?’”

“Mortgage bankers, brokers, Wall Street financiers, appraisers, underwriters, rating agencies, and yes, consumers, all played a starring role.”

A report from the Washington Post. “Even for people who have money, coming up with a down payment to buy a house has become a lot more challenging in recent months. Take Peter McGarvey, who in September found a house big enough to accommodate his family of four. A bidding war ensued over the 2,000-square-foot home, in Takoma Park, Md. He offered $710,000 and won.”

“Then came the hard part: making enough of a down payment to get a good rate on a loan and keep the monthly mortgage payments manageable. Because he had not yet sold the house he already owned, he had to cobble together a down payment from other sources.”

“”We have lots of equity in the house, and we have money saved up. Unfortunately, most of it is in retirement funds and mutual fund investments,’ McGarvey said.”

“Even over the summer, borrowers did not have to go to such lengths. That’s because it was easy to get a mortgage that required little or no money down. In fact, four out of 10 first-time buyers used no-money-down mortgages in 2005 and 2006, according to surveys by the National Association of Realtors.”

“The median down payment for first-time buyers in those years was 2 percent of the purchase price. But now that those loans are being blamed for a spike in foreclosures, many lenders are no longer offering them or have become pickier about who gets them.”

“That’s not to say that lenders are requiring down payments of 20 percent or more, which was the norm until the mid-1980s. ‘I don’t think we’re there yet,’ said Franco Terango, consumer real estate executive for the mid-Atlantic branch of Bank of America.”

“If all else fails, there are other creative ways to come up with down payments. Pull out that vintage Gucci purse and sell it on eBay. Sell your bike. Sell your car.”

“Some advisers and lenders said that if a prospective homeowner has to go to great lengths to come up with money, maybe it’s best to wait until he or she can save enough money the old-fashioned way. Or maybe buy a fixer-upper rather than a dream home.”

“‘It doesn’t have to be a McMansion,’ said said Heather Evans, vice president and wealth management adviser at Merrill Lynch in Tysons Corner, Va. ‘Homeownership should be within your budget.’”

The New York Times on New Jersey. “Meghan Werner has learned more than any teenager should about the consequences of the subprime mortgage debacle.”

“Her father, Philip Werner, a contractor, had struggled to find work, and like millions of Americans, he took out a high-interest mortgage that he could not afford.”

“He found the house in 1986. When he and his wife divorced in 2002, Werner sold the house to an investor for $170,000. ‘I had $35,000 left on the mortgage,’ he said.”

“He and his children stayed on as tenants. In 2005, when he was making a decent living, Werner repurchased the house for about $250,000. He said his divorce had left him with bad credit, but he found a loan for about $300,000 through an acquaintance who was a mortgage broker.”

“The loan, through New Century Financial, required no cash down payment and came with an 8 percent interest rate that adjusted to 11 percent, Werner said. Werner could afford the payments, but then lost his job.”

“For this family, a recent proposal by the Federal Reserve to restrict the granting of high-interest or exotic loans to borrowers with weak credit came too late. The proposal by the Federal Reserve would require lenders to verify the income and assets of borrowers.”

“Werner said he negotiated the loan over coffee at a diner, and that he never had to provide proof of his income. ‘It was a no-document loan,’ he said.”

“Meghan visited the sheriff’s office with her father this month. A woman there told them they would have 10 days to buy back their home if it was sold to the bank. None of them believes they will be able to find the money.”

“‘I bought my first home when I was 25,’ Werner said. ‘What I’ve lost is not just the home and my dream. I’ve crushed my kids, and I’ve got (to) start over again. I’m not able to leave them anything.’”

The Boston Globe from Massachusetts. “Justin Moore had done his research when he set out to buy a condo. The 25-year-old said it even seemed easy when he got preapproved for a loan, found the perfect condo in Beacon Hill this fall, and readied for his December move.”

“But just one week before his scheduled closing, the mortgage company that for weeks had assured him he was all set told him there were problems. ‘They said they couldn’t fund a condo where all the units aren’t sold yet,’ said Moore, who was slated to put a 20 percent down payment on the first unit finished in the building. ‘Where is there a situation where all the units are sold?’”

“Those that remain in business are asking buyers to more completely document their incomes. They are charging higher interest rates to those whose credit scores were considered good just weeks ago, and demanding much bigger down payments, especially for homes in areas where property values are dropping.”

“The changes mean that buyers with credit scores below 680 could have to front 30 percent down or more to get market rates on a mortgage.”

“‘The industry has turned around and closed the door,’ said Brian Koss, managing partner at Mortgage Network Inc., headquartered in Danvers. ‘People were getting what they wanted, not what they needed.’”

“Some buyers have been able to get new loans under the old terms because mortgage companies are adopting these new lending standards at different times.”

“‘Most of our customers have been unscathed at this point,’ said Rosemary O’Neil, past president of the Massachusetts Mortgage Association. ‘But after the first of the year, that changes across the board.’”

“In January, most companies will have adopted new standards set by Fannie Mae and Freddie Mac, two government-sponsored enterprises that serve as the largest sources of funding for US home mortgages.”

“The new rules impose surcharges of 0.75 percent to 2 percent for many conventional borrowers who have credit scores below 680, and who don’t have at least 30 percent for a down payment.”

“Those in the industry worry many will be priced out of the market. O’Neil notes that about half her customers have credit scores less than 680. ‘It will definitely affect our business,’ she said.”

“And few buyers ever pay 30 percent down payments. ‘That’s pretty insane…not a lot of buyers will be able to do that,’ said Alex Coon, the Massachusetts market manager for online residential real estate brokerage Redfin. ‘It’s certainly not going to do any favors for the real estate market.’”

“Those changes take effect March 1, but mortgage companies that sell their loans will likely be using them earlier. Multifamily units and condo conversions also face more scrutiny.”

“Just before one recent closing, Coon said, one buyer was asked to track down his tax return from 2004. Another deal fell through the day before closing because the buyer lost the loan. ‘I’ve been doing this eight years and out of the eight years, mortgages had been one of the constants,’ Coon said. ‘It used to be everybody could get a loan for everything.’”

“This all comes at what otherwise should be a great time to be buying a home. Prices throughout the region have dropped, sometimes to below what sellers paid at the height of the Boston area boom. ‘The opportunity to buy right now is enormous,’ said Coon.”

“Left without a loan days before his scheduled move, Moore scrambled to find a new lender with help from his agent.”

“In three days, Moore was able to get a loan through Countrywide Financial and now is finally moving into the new home that at first, had seemed so easy to get.”

The Rutland Herald from Vermont. “Bankruptcies in Vermont are on the rise again, surging 40 percent in 2007, reflecting in part the mortgage crisis that has swept the country with its resulting foreclosures, according to several bankruptcy lawyers in the state.”

“‘We’ve got the wonderful joy of the adjustable rate mortgages and foreclosures having gone crazy,’ said Rebecca Rice of Cohen & Rice in Rutland.”

“White River Junction lawyer Michelle Kainen said she noticed the problem earlier this year. ‘I can tell you in the early part of the year that was almost exclusively driving every bankruptcy I filed,’ Kainen said. ‘I remember in January and February thinking what is going on in the world and why are all these people coming in here and losing their houses.’”

“In Chittenden County, Todd Taylor blames the subprime mortgage fiasco. ‘There’s a tremendous amount of foreclosures all over the place,’ Taylor said.”

“He recounted the story of one client whose adjustable rate mortgage ballooned from $1,000 to $1,400 a month and then jumped another couple of hundred of dollars six months later.”

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The Santa Cruz Sentinel reports from California. “Watsonville farmworker Justino Mendoza Cortez was happy to be a homeowner, proud to be living at 64 College Road with his wife and six children. But he couldn’t afford it. When one of his loan payments jumped in May from $2,722 to $4,054 per month, he didn’t realize he had an adjustable-rate mortgage. The house he bought almost three years ago for $695,000 was sold on the steps of the county building Thursday for $522,750.”

“Now he wonders when his family will have to move and where they will go. He said he can afford about $2,000 a month.”

“More than 240 homeowners in Santa Cruz County have lost their homes this year — five times as many as in 2006 — and hundreds more are in danger of losing homes, all because they can’t afford their mortgages.”

“Vern Johnson, who has handled 900 foreclosure sales in Santa Cruz, Monterey and San Benito counties this year, said 99 percent of the homes have ended up with the lender. Most of those have been homes purchased in 2005 and 2006.”

“‘I don’t think it’s going to get better for a while,’ he said.”

“The Bush administration’s proposal to freeze interest rates for struggling borrowers starting Jan. 1 may not be much help. One of the requirements is for the borrower to live in the home, and Johnson said about half the homes he’s seen are empty. A large number, he added, are occupied by tenants rather than owners.”

“The market fell too fast for Howard Little. He leveraged the equity in his Boulder Creek home to invest in real estate, buying a rental in Sacramento. Instead of producing a steady income, the deal went into foreclosure.”

“In the summer, he put the home where he grew up on the market for $680,000; it sold for $550,000 in September.”

From BBC News. “The city of Stockton in California is at the centre of the mortgage crisis now sweeping America. But Stockton is also a place where you can really get a feel for the staggering amounts of money banks loaned during the boom - with few or no questions asked.”

“In his 25 years as an estate agent in Stockton, Kevin Moran had never seen anything like it as seemingly limitless bank loans sent house prices rocketing.”

“‘It was crazy,’ he says. ‘People felt that if they didn’t make a high enough offer on a house, it would be gone. Instead of saying ‘What do you want to do on a Saturday? Let’s go to the park’, they’d say ‘Let’s go buy a house.’”

“At the height of the buying frenzy, in 2006, Will Trawick was selling new homes for a Stockton developer. Faced with crowds of a hundred buyers, bank loans in hand, all chasing the 20 houses he might have on offer, he organised bingo-style lotteries.”

“‘We had ping-pong balls with numbers, just like you’d see on a TV show,’ Mr Trawick recalls. ‘Everybody would have a number. We’d put the ping-pong balls in, spin it and, you know ‘Number 22! Yoo-hoo!’ They’d jump up and yell, come on up and pick which home they wanted, and leave a deposit cheque.’”

“With house prices soaring, pretty well anyone who owned a home in Stockton suddenly found they had plenty of equity in their property - equity the banks were eager to convert into cash.”

“Steve Carrigan is in charge of economic development for Stockton. He says bank loans made it a party every day. ‘People went to the bank and got a loan on the increase in the price of their home. They went out and spent all that money,’ he explains.”

‘”Price of the home went up again, they went back to the bank and got another loan. They went out again and spent that money on cars and jewellery and furniture - whatever they wanted.’ With the help of the banks, Mr Carrigan says, people in Stockton ’spent their house.’”

The Record Searchlight. “The effects of a housing slump are rippling through Shasta County’s economy, with decreased retail sales, spikes in home foreclosures and bankruptcy filings, and a drop in charitable giving.”

“‘Housing is certainly the primary thing,’ said bankruptcy attorney Dennis Cowan, whose office has been swamped with financially distressed clients. He’s booked six weeks out.”

“Bankruptcy filings in Shasta County through November are up to 370, a 60 percent increase over a year ago. Homes lost to foreclosure in Shasta County increased 372 percent — from 64 to 302 — through November, county records show.”

“Debbie Groce had worked 20 years in mortgage lending before she lost her job in Redding in December 2006. At the peak of the market, Groce said she was making more than $40 an hour as a senior mortgage underwriter.”

“But Groce has been unable to find work. She said there isn’t a great need for mortgage underwriters in Redding. ‘I have always had a great job and worked all my life. … It has been a whole year, and I am losing faith,’ Groce said.”

“Jobless numbers in Shasta County have been trending up all year. In November and October, the county unemployment rate reached nine-year highs for those months.”

“Redding’s sales tax haul in the third quarter (July through September) of 2007 was down 8.26 percent. The drop extends the city’s sales tax downturn to five straight quarters, the longest slump since the early 1990s.”

“Redding real estate agent Chris Young is working with a developer who has a small subdivision in Redding that is ready to go, but the client will sit out 2008.”

“‘He doesn’t want to put up with the low-ball offers,’ Young said.”

“Redding home builder Jerry Wagar of Ochoa & Shehan expects 2008 to be a lot like 2007. ‘I don’t see any indication. To me, there are no apparent signs there will be change,’ Wagar said. ‘A lot of people are still sitting on the sidelines, waiting to see what the bottom is.’”

The Desert Sun. “The number of homes sold in November was a 2.2 percent increase over October, according to the California Association of Realtors. It’s the second month in a row where sales have gone up. But other market indicators aren’t as optimistic. The median price is down 14.2 percent from a year ago. Almost 9,200 desert homes are on the market.”

“DataQuick reported 564 homes sold in October…43 percent below last year’s numbers. DataQuick has not released November figures yet.”

“While sales increased between October and November, sales overall are down 16.8 percent from a year ago.”

“‘Two months of improvement after five months of decreases is good news,’ California Desert Association of Realtors executive VP Greg Berkemer said of the housing sales. ‘But this bottom is a bumpy trough and we don’t know if if this is a just a spike.’”

“Berkemer’s advice: ‘Sellers should remain realistic and only be in the market if they need to sell their home.’”

The Press Enterprise. “For 2008, forecasts indicate a drastic slowdown in new housing construction, says Fred Bell, executive director of the Desert Chapter of the Building Industry Association of Southern California.”

“Housing starts in the desert for next year are estimated at 1,500 to 1,800 — down from a peak of about 8,000 new starts in 2005, Bell said. ‘It kind of gives you an idea about our outlook,’ he said. ‘We’ve got to figure out a way to keep some of these builders in the game and set the stage for more robust growth in 2009.’”

“The Coachella Valley will begin 2008 with a glut of homes, both new and resale, on the market: about 8,000 to 10,000 homes instead of the 3,500 to 5,000 typically seen in a healthy market, Bell said.”

“Land prices are down about 30 percent and in some cases, finished lots are selling for about ‘50 cents on the dollar,’ Bell added.”

The San Francisco Chronicle. “It became clear this year that the real estate boom of the first part of the decade had officially gone bust as lenders tightened standards, sending sales volume skidding and squelching price appreciation. The number of homes sold fell 23 percent through November in the Bay Area’s nine counties compared with the same period in 2006, according to DataQuick.”

“‘It was the beginning of the end of the great real estate boom of the (two thousand) zeros,’ said Christopher Thornberg, a founding partner of the consulting firm Beacon Economics. ‘What you’re looking at is a meltdown in the housing market that is completely unprecedented, but completely understandable when you look at the abuses in the market in the last few years.’”

“Experts say that nowhere has the shift from boom to bust been more dramatic than in the new-home market. Developers who were dangling upgrades like free hardwood floors and fancier appliances changed their tune and instead began slashing prices by as much as $150,000 in parts of the Bay Area in 2007.”

“Markets such as Brentwood, Oakley, Antioch and Pittsburg are particularly suffering, according to Greg Paquin, who runs a consulting company that advises home builders. ‘There is an abundance of product available and prices were unsustainable and continue to be,’ Paquin said. ‘The credit situation has made it more of a challenge.’”

“While new-home developers pointed to statistics about the state’s perpetual shortage of housing as they built, the homes that went up don’t necessarily meet the region’s needs, said Beacon’s Thornberg.”

“‘Don’t confuse apples and oranges,’ he said. ‘We heard lots about the housing shortage during the boom and that had little to do with high-cost new houses and everything to do with low-rent apartments for immigrants.’”

“While 2007 slides into the record books as a real estate industry train wreck, few are predicting that 2008 will be much better.”

“‘A real recovery in the housing market is probably at least a year off,’ said Robert Kleinhenz, deputy chief economist for the California Association of Realtors. ‘The murkiest part of my crystal ball has to do with the liquidity crunch.’”

“‘People think it’s not going to hit their neighborhood, not going to hit their price point,’ said Thornberg. ‘But the reality is that it is only going to get worse in 2008.’”

The Union Tribune. “For San Diego County, 2007 was a horrible year for the real estate market, when it seemed that everything that could possibly go wrong did. As 2008 dawns, even the most optimistic economists say the housing market will continue to decline over the next six months.”

“In the past year, the median home price in San Diego County has fallen more than 11 percent. Home sales are down 26 percent. Defaults on mortgages have risen 150 percent. Residential construction permits fell more than 30 percent last year. That has put a dent in employment.”

“Between November 2006 and November 2007, 5,500 construction workers, 1,300 real estate workers and 500 mortgage and finance workers lost their jobs.”

“Many economists say that in the long run, the downturn will be good for the economy, since the high price of housing has made life unaffordable for many Californians and forced many people to look for jobs and housing elsewhere.”

“‘The quicker we have a downturn, the quicker we can get imbalances out of the system,’ said economist Christopher Thornberg.”

The Gazette Times reports from Oregon. “For years in Corvallis, the housing market was booming, with new construction in subdivisions such as Timberhill and Willamette Landing keeping developers and real estate agents busy. New housing permits were down 60 percent this year compared to 2006 and — thanks to tighter lending policies and a generally slower housing market — homes ranging from $300,000 to $500,000 make up 75 percent of what’s available to homebuyers in town.”

“At the upper range of the residential real estate market, a few sellers have even started to slash prices, a move unheard of in Corvallis just a few months ago. In high-end homes priced at more than $500,000, real estate agents now have a 14-month supply.”

“‘For the most part, you’re looking at home buyers who are seeing wild swings in the market and they’re sitting on the sidelines right now,’ said Mike Goodrich, who runs Legend Homes’ Corvallis office.”

The Bend Bulletin from Oregon. “After nearly a quarter of a century without a serious downturn, history finally caught up with the Central Oregon housing market in 2007. Swooning like an oxygen-starved sprinter at the end of a too-long run, the region’s residential real estate market struggled by nearly every measure throughout the year.”

“High sales prices were cold comfort to would-be home sellers who found it difficult to move their homes at any price.”

“Bend started the year with more than 1,100 unsold homes on the market, according to MLS data reported by Bratton Appraisal Group’s Mike Caba. That number quickly soared to more than 1,600 by June as speculators and other homeowners tried to sell at the same time.”

“The number of listings gradually shrank to around 1,300 by early this month, as some homes sold and some would-be sellers opted to pull their homes off the market to wait for another season.”

“Still, at the year’s average monthly sales rate, it would take more than a year to sell off even that reduced year-end inventory level.”

“The region’s other local markets had similar stories to tell in 2007. More than 572 unsold homes on urban lots were on the market in Redmond by the middle of December, according to Caba’s numbers — a 13-month supply at the year’s average sales rates.”

“Sales in La Pine were off 52 percent from 2006 through the third quarter, according to the Central Oregon Association of Realtors. The same was true in Jefferson County. In Crook County, sales numbers slipped by more than 46 percent.”

“The chill in local home sales, which actually started in summer 2006, found its roots in a number of factors, including the virtual disappearance of speculators and investors. Mortgage defaults in Deschutes County rose to their highest level in more than 10 years, with more than 560 mortgages falling far enough into arrears to enter the first stages of foreclosure by Dec. 20, according to county records.”

“Buena Vista Custom Homes, who moved into the Bend market in early 2006, tried to pull out with an auction of 29 empty homes in its inaugural northeast Bend subdivision in mid-December, but the auction was a bust. Not a single Bend home moved at a price that Buena Vista President Roger Pollock would accept.”

“In the long term, said Mark Kramer, general manager of the region’s largest custom cabinetmaker, optimism still reigns.”

“‘No one expected it to continue at the pace it was going at,’ Kramer said, ‘But the thing about Central Oregon is, it’s still a great place to be, and everybody I talk to still feels comfortable about making an investment in a home here. Maybe there’s going to be a little bit of a lull in the market, but nobody feels there is going to be a decline in the long term.’”

“The remodeling market remains relatively strong despite — and in some ways, because of — the downturn in production home building, said Pacwest Homes’ director of sales, Gary May. That’s partly…because the price of labor and materials has plunged since the general housing market cooled down.”

“The price of framing, for example, has plunged from $20 to $25 per foot at the peak of the labor-short housing boom to around $10 to $11 per foot now, May said. Some materials, like concrete and tile, have retained the prices they hit at the peak of the boom, but others, like framing timber and cedar, have come down.”

“Pacwest laid off its in-house tile setters and drywallers at the beginning of the year, reacting, along with most home builders, to the slide in new-home construction, May said. But it has kept its project managers, finish crews and painters working, and it’s hiring subcontractors to fill in the gaps as work comes in.”

“Which is apparently keeping at least some of them working, despite the drawdown in new- home construction, albeit at lower prices.”

“‘Our subs provide great service to us, especially now that they are a little slower as well,’ May said. ‘They jump through hoops for us. And if it means the difference between working for a couple of weeks or being idle for a couple of weeks, for the sake of a couple of hundred dollars in price, we’re finding that the subs are being a little more flexible in that. So, at the end of the day, it’s the consumer who wins.’”

The Olympian from Washington. “About 2,000 homeowners in Thurston County are trying to sell their homes, according to the Northwest MLS, and it’s taking longer than many had expected.”

“Price reductions have become commonplace to stimulate sales, but it doesn’t stop there, real estate agent Eric Hjelm said.”

“Two summers ago, all most sellers had to do was put a ‘For Sale’ sign in their yard and ’start packing,’ Hjelm said. Today, the seller has a ‘laundry list’ of things to consider before marketing a home, he said.”

“Homeowner Frank Burnham of Olympia, a Hjelm client, has been putting his list to work. It includes installing new carpets, painting and making sure his 2,400-square-foot house is clean and uncluttered before it is put on the market. Burnham had planned to ask $350,000 for his house, but has lowered the price to about $329,000.

“‘Buyers are the ones that are driving this train,’ Burnham said about the current housing market.”

“Burnham, who has taken a job in Astoria, Ore., is willing to wait until the end of year to sell his house. If it doesn’t sell, he plans to turn it into a rental, even though that probably won’t cover his mortgage payments.”

“‘Some sellers are overreaching on price, but those who expect something more reasonable are selling their homes,’ said broker Ken Anderson.”

“Dan Presley of Olympia, who invests in property with a partner, has been trying to sell a 2,000-square-foot house in Lacey for about six months. After working with a real estate agent, they decided to try to sell the house themselves. They have dropped the price several times from $284,000 to $259,900, Presley said.”

“‘A year ago (the house) would have received three or four full-price offers,’ he said.”

“But with so many homes to choose from, the house has received only a couple of nibbles, Presley said. ‘It will pick back up,’ he said about the housing market. ‘It’s just kind of slowing down, and you have to roll with it.’”

“Patti Furu of Tumwater did just about all she could to sell her 1,800-square-foot house. Furu painted it, staged it, upgraded the kitchen, held open houses for nine weeks and dropped the price $20,000. After 10 weeks, Furu finally sold her house last month for about $274,000.”

“‘People are just waiting for an amazing deal,’ she said.”

“When staging and painting didn’t work, Furu began to offer an unusual incentive to buyers: free baked cookies once a month for the first year. ‘It was something to separate myself from the pack,’ she said.’”

“Today, Furu is living in a 1,300-square-foot duplex on a month-to-month lease. After working hard to sell her home, she is now going to take her time looking for the next house to buy.”

“‘I’m waiting to see what the market does,’ she said.”

The News Tribune from Washington. “This was the year Tacoma said goodbye to gonzo development. Goodbye to weekly near-weekly announcements of condo projects. Goodbye to big plans to rescue historic landmarks and goodbye to ambitious schemes for blocks-long mixed-use developments.”

“‘I think the market is taking a breather,’ said Tacoma real estate consultant J.J. McCament. ‘And that’s not necessarily a bad thing.’”

“Give credit – or blame, if you will – to a national cinching up of credit standards that washed over even a relatively strong Puget Sound-area market. And credit, too, a growing unsold inventory of high-end and midmarket condos that it will take the market months to absorb.”

“On the Foss’ east side north of the 11th Street Bridge, developer Mike Cohen earlier this year abandoned plans to build the Crosswater condo project and sold the land. At Tacoma’s Old City Hall, developers abandoned a plan for luxury condominiums. The building is now being renovated into class A office space.”

“At the old Spring Air mattress factory site, North Carolina developer Landmark Group has switched gears. Now Landmark is planning a two-phase, 300-unit apartment project for the former factory site instead of an affordably priced condo project.”

“Landmark executive Jim Sari said the group adjusted its plans after taking a second look at the Tacoma market. Sari maintains that bankers, burned by some markets where prices have collapsed, are unfairly applying tougher standards to the Puget Sound market. ‘Bankers are basically herd animals,’ he said. ‘Where one goes, the others follow.’”

“Even with the slowdowns and changes to apartments, there was ample choice of condos in Tacoma, especially in downtown or nearby areas.”

“‘There were about 3,700 units on the table when I did the analysis last spring,’ said real estate consultant McCament. ‘Now that’s down 3,500.’”

The Seattle Times. “Three Decembers ago, Vulcan Real Estate erected a tent in Seattle’s long-unfashionable South Lake Union neighborhood and invited the public to see plans for 2200, a luxury condominium project to be built there. Within days, 2200 was nearly sold out.”

“So Paul Kelly, the owner of a 17th-floor unit in 2200, should be sitting on top of the world. But it didn’t quite work out that way.”

“What looked like a surefire winner — homeownership in Seattle — has taken on a tinge of uncertainty. Trying since September, Kelly has been unable to sell his one-bedroom unit with its unobstructed view. Hardly anyone has come to see it, he says.”

“As thousands of other sellers have also found out, the Seattle area’s formerly stellar real-estate market has finally, slowly joined in the national downturn.”

“It could be good news for buyers. Negligible price increases, rather than being bad news, could actually be good by allowing wages time to catch up. That, however, is probably not what owners want to hear. But Sam Pace, an agent with Bellevue’s Executive Real Estate, says it’s realistic.”

“‘We’ve had double-digit appreciation for years in a row, and if you think you can’t handle a little bit of a dip, you have a pretty special view of what your return should be,’ Pace says.”

“So the word for next year is patience. That’s the approach Paul Kelly, the condominium owner, is taking.”

“Although he’d like to sell it now (and has reduced his price from $624,000 to $599,000 for buyers who purchase directly from him), he says that realistically it may be spring before he lists it again with a real-estate company.”

“‘I think things should hopefully settle down by then; that’s my plan anyway,’ Kelly says. ‘I know my buyer is out there. They just have to come see it.’”

The Tampa Tribune reports from Florida. “If you’re trying to sell your home, recent real estate news is likely getting you down. There are more homes for sale than buyers, empty houses sit on the market for months, and some homes aren’t selling. Tampa ranks second in the nation for falling prices, and economists say it will get worse. It’s hard to ignore how long it’s taking to make deals. October’s 1,700 sales are still down 30 percent from the same month last year when 2,419 homes sold. In October 2005, 3,735 homes sold.”

“Real estate agent Nick Davis in Wesley Chapel, said he is seeing an uptick in sales, as long as clients are willing to drop their asking prices. Part of the reason homes are taking longer to sell, he said, is that homeowners don’t want to accept that homes aren’t appreciating like they did during the housing boom.”

“‘People have to be realistic,’ Davis said.”

“David and Jeanine Blake find themselves on both sides of the selling fence. The couple just bought a house in Belleair and feel they got a good deal because of the slow market. Now, though, they have to sell their old home and fear it will take a while. They worry, too, whether they’ll get a price they can live with.”

“‘We’re prepared for it to take 90 to 120 days,’ David Blake said. ‘We have equity, but we’re not going to give it away just because we have equity in the home.’”

The Naples News from Florida. “The real estate boom that peaked in 2005 contributed to Southwest Florida’s unprecedented foreclosure rates in 2007, say real estate professionals and county officials.”

“In Lee County, 11,698 foreclosure cases were filed with the Clerk of Courts this year before Dec. 1, more than tripling the number of all 2006 filings. In Collier, 3,225 foreclosures had been filed as of Friday morning, an increase of more than 400 percent over 2006.”

“Single-month totals for November 2007 were greater in both counties than yearly totals in 2005.”

“‘It just gags you,’ said Lee Clerk of Courts Charlie Green. ‘I have seen the market go down before, but we have never seen this large of an increase in foreclosures.’”

“Green said a variety of factors particular to the area’s booming 2004 and 2005 real estate market ultimately led to this year’s dreary statistics. ‘A home worth $200,000 had a market value of $400,000 in a very short time, which any reasonable person knows shouldn’t happen. There was a tremendous spike in value and people bought like drunken sailors,’ he said.”

“Foreclosures might continue to increase at a rapid rate because increased payments from adjustable rate mortgages sold during the boom’s height are just now kicking in, said Ross McIntosh, a Naples real estate broker.”

“While housing prices have been falling, they have not decreased enough to match income levels in those areas yet, he added. ‘Cape Coral and Lehigh have not yet felt the brunt of the foreclosures. I don’t see a bottom, literally, for years to come. Everybody’s hurting but we’re hurting most in Southwest Florida because we had the farthest to fall, and an undiversified economy.’”

The Bradenton Herald from Florida. “Local builders might not be getting as much money per home as they did during the real estate boom, but some say sales numbers are up slightly from last year.”

“Neal Communities sold 14 homes last month, resulting in a total sales volume of about $5.3 million. In November 2006, Neal sold 12 homes, but the sales volume was nearly $2 million higher at $7.2 million. The higher sales number with lower sales volume is an indication on how far home prices have fallen.”

“Even in places like The Country Club at Lakewood Ranch, prices have been drastically reduced. A banner outside one of the gates tells prospective buyers they can get into Neal’s Wexford community for $330,000. During the boom years, prices in that development were nearly twice that.”

The Times Free Press. “After years of steady increases, housing starts in Northwest Georgia and Bradley County dropped by double digits through the third quarter of this year compared to the same period in 2006, records show.”

“But in several Southeast Tennessee counties, many of which do not require building permits for houses, officials say they are seeing an upward trend.”

“‘Right now, we are not (seeing any new construction starting),’ said Ray Brackett, building official for Marion County. ‘But we have several million dollars’ worth of new homes being built. I’ve got one (building plan) in my office right now for new condos on the river.’”

“In the greater Chattanooga area, which includes Bradley County, the number of permits dropped from 2,127 through Sept. 30, 2006, to 1,668 for the same period in 2007. In Bradley County, building permits dropped from 502 to 382 for the same comparison period, records show. That compares with double-digit increases before 2006, according to The Market Edge.”

“Bradley County posted a 14.6 percent increase from 2003 to 2004. Since then, ‘it is off some,’ said Greg Thomas, Cleveland city building inspector. ‘It seems to be a nationwide phenomenon from what I can tell. But I don’t think panic buttons are being pushed. People are still bringing housing products to the market, and I think that will continue.’”

“Mr. Brackett said the area is attractive for its low cost of living and scenic beauty. ‘We have it all, the mountains and the river,’ he said. ‘And it’s cheaper to live here.’”

“The cost of living may be low, but a lot of the new homes coming out of the ground are not.”

“The Cumberlands at Sewanee and Timberlake at Sewanee are upscale developments on 12,000 acres on South Pittsburg Mountain. The Rarity Club at Nickajack, which will have an 18-hole golf course, is slated to have nearly 1,000 homes. Rarity officials said last month that about half of the 160 lots have sold. Many of those lots are selling from $300,000 to close to $1 million, Mr. Brackett said.”

“The rural Tennessee counties have room for new developments. In Marion County, for example, nearly 2,700 acres are being converted to residential subdivisions, according to Marion County Mayor Howell Moss. In Meigs County, officials said three developments are expected to attract as many as 6,000 new residents.”

MSN Real Estate on South Carolina. “The view from Mari Kunz’s new house in Murrells Inlet, S.C., is far from what she pictured when she and her husband, Larry, bought into this Levitt and Sons retirement community last summer.”

“Instead of tropical landscaping, lush green lawns and a steady stream of other active seniors on bikes, she sees street after street of empty lots, framed unfinished houses and streetlights that don’t work.”

“Levitt filed for Chapter 11 bankruptcy in November, putting the brakes on construction at the couple’s development, Seasons at Prince Creek West. The move left them and the rest of the residents without the lifestyle, amenities or services promised them. The posh Grand Clubhouse was never built, and the fitness center consists of little more than a gaping hole for the indoor pool and a couple of walls.”

“‘We are the only house in Phase 2,’ Kunz says. ‘We are kind of out here by ourselves.’”

The Charlotte Observer from North Carolina. “If you need a house near Houston, Rhonda Dupras wants to talk to you. She isn’t a real estate agent but a frustrated Charlotte newcomer caught up in the nation’s housing crisis.”

“She’s desperate to buy in Charlotte, one of the few places where homes continue to appreciate. But she can’t sell her property in Texas, where the real estate market is tanking. So she rents and waits.”

“‘I moved to Charlotte because I wanted a better lifestyle,’ said the 41-year-old, who works in the mortgage lending industry and has had her Katy, Texas, home on the market for 22 months. ‘I have to eat the mortgage every month. It’s why I haven’t bought a house here.’”

“Local real estate professionals say too many clients are simply blocked from buying because they can’t unload properties elsewhere. That’s becoming a drag on Charlotte’s real estate market.”

“It’s a market that has thrived this decade with transplants — about 80,000 a year — buying homes. But the local numbers now are telling a different story: Average days for a home to sell increased to 124 days in October from 118 the same month last year, according to Carolina MLS. And contracts, the most current snapshot of sales, were down 21 percent last month, compared with the same period last year.”

“Terri Wade, a Charlotte mortgage broker, started a social group of newcomers. Of the 89 newcomers in her group, about 15 are stuck with mortgages in soured markets elsewhere.”

“In her mortgage business, corporate clients relocating to the region have been spending more than a year in temporary quarters, compared with less than six months in 2006 and prior years, she said. ‘This is touching so many different people.’”

“Among the frustrated newcomers is Christopher Dobrosky, who moved to Charlotte for a new job and better pay with a construction materials company. He can’t sell his condominium in Philadelphia. He says he could afford to buy in Charlotte and make payments on two properties in two states but wouldn’t feel comfortable doing it.”

“The condominium is worth less than when he bought it four years ago. And he took out a home equity loan to pay off debt. ‘It’s crazy. I would have to choose to lose money,’ said the 34-year-old. ‘I’m kind of stuck.’”

“On the other side of the sales equation are local homeowners like Keith and Sara Sykes, who say they hear the same tale from prospective buyers who are interested but can’t close deals. The Sykeses have been trying since September to sell their condominium in located in south Charlotte.”

“The two want a bigger house with a backyard. They closed Friday on that new house, also in south Charlotte near Sedgefield. But Keith Sykes takes a deep breath when considering the local market for condominiums.”

“‘A lot of people who have looked can’t sell houses where they used to live,’ he said. ‘I think the economy is still strong here; it’s just a tough time to sell.’”

“Fortunately for the couple, Keith Sykes took some big profits from selling a Dilworth condominium almost three years ago that he owned for two years during the heart of that area’s appreciation. They have savings in case the condominium doesn’t sell by the spring but believe interest will pick quickly after the holiday season.”

“‘My real concern would be if it didn’t start selling by the end of January,’ he said.”

“Sheila Harman has experienced the slowing market. To her it feels like a complete stall.”

“She tested the market in June to gauge interest in her sprawling brick house on 12 acres in Union County. Harman and her husband listed the property at $598,000 with an agent, who brought only a few window-shoppers, she said.”

“She also listed the house on a real estate Web site that guarantees hits. And she posted signs in her neighborhood directing potential buyers to the property. Then she waited. She’s still waiting.”

“Unwilling to lower her price, Harman let the agent contract expire. And she said the listing” on the real estate Web site hasn’t produced any phone calls.”

“‘We will just hang in there,’ she said. ‘It’s very unusual to list a house like that and get no response.’”

What do you see in your local housing market this weekend? Price reductions? “The number of homes for sale on the Jackson market reached a two- year high on Nov. 30, when houses reached an 8.5 month supply at the current rate of sales. That data comes from the Central West Tennessee Association of Realtors MLS. Investors from California and other states have helped prop up Jackson’s mid-priced housing market, said Ben Roberts of Crye-Leike Blue Skies Real Estate.”

“‘I have some (San Jose,) California investors who are buying houses from $110,000 to $130,000,’ he said. ‘They have done their homework and like the property appreciation.’”

“The number of Madison County homes entered into foreclosure doubled this year from 2006, said Linda Waldon, Madison County Register of Deeds. ‘We have never seen this rate of foreclosures since I have been in here since 1990,’ she said. ‘This is pretty bad for this county.’”

“Effects of the nation’s housing decline can be seen in the Memphis real estate market. ‘I inspected a house (in Memphis) that sold for $127,000 last week,’ said Jim Callicutt of Accurate Home Inspection in Memphis. ‘The same plan sold one subdivision over for $165,000 earlier this summer.’”

“Like most other parts of the country, Rhode Island’s housing market has been in decline. When it will rebound is anyone’s guess. ‘I wish I had a crystal ball,’ said Roger Warren, executive director of the Rhode Island Builder’s Association.”

“In Rhode Island, the inventory of unsold single-family houses listed with real estate agents in September rose to 6,883, a 10-month supply, up from a 9.2-month supply in September of last year, according to the Rhode Island Association of Realtors. For the first nine months of this year, the median price was $276,000, down 3.2 percent from the first nine months of last year and the first decline in the January-through-September period in a dozen years.”

Or property tax problems? “Valley homeowners upset about the fast rise in their property-tax assessments may feel some relief this year as the latest valuation notices hit their mailboxes. The Maricopa County Assessor’s Office says the new round of valuations to be mailed around Feb. 1 will reflect the slump in the housing market.”

“Paul Petersen, an assessor’s spokesman, said appeals have increased 25 to 30 percent during the housing boom. The combined median prices of new and existing homes increased 55 percent in the Valley from 2004 through 2006, according to Arizona State University.”

“But the market turned locally and nationally, and home prices fell in more than half of the Valley’s ZIP codes in the first eight months of this year, according to The Republic’s latest Valley Home Values study.”

Markets related to housing? “The commercial real estate market follows the residential market by 12 to 18 months, according to conventional wisdom. Those 12 to 18 months ended in early 2007. And like the residential market, Southwest Florida’s commercial real estate market has begun to slide.”

“Both the total number of deals and the total dollar volume in the three-county region were down 30 percent over the 12 months ended Nov. 30 compared with the same period a year earlier, according to county property appraiser data.”

“‘This summer was dreadful,’ said John Swart, VP of commercial sales for Schroeder-Manatee Ranch.”

“‘The market really fell off late this summer,’ said Mark Vitner, senior economist with Wachovia Bank. ‘A lot of buyers couldn’t raise capital, and that situation hasn’t gotten any better. We’re not going to see a lot of volume. Prices will continue to come down, and construction will slow.’”

Please post off-topic ideas, links and Craigslist finds here.

A weekend topic on the past year. “We have just experienced a historic year. What was the biggest housing bubble event of 2007?”

One posted, “Containment didn’t happen.”

Another added, “The housing bubble was renamed the ‘Subprime this’ or the ‘Subprime that.’ Mentally containing it, just a little, to loans (and only ‘dodgy loans’ at that). Thus the concern for how loans perform, rather than overpriced houses. And all the interest in propping up housing prices because the problem we have is with bad loans.”

One agreed. “Yet another attempt to pin this fiasco on poor people, aka ’subprime borrowers.’ The problem was not with the borrowers. The problem was with the collateral. Lenders were making loans which far exceeded the fundamental valuation of the property based on income, i.e. rents.”

“That’s the real problem, it extended across all loan classes, and all types of property from Compton to West LA. And all of these properties are going to be experiencing defaults.”

To which was said, “The collapse in collateral prices was just the fan on the house of cards that was the entire lending/borrowing/investing in housing during this period.”

“The (inevitable) collapse in prices just happened to be the first step in knocking the whole thing down.”

Another said, “In a way, the biggest story was the dog that didn’t bark.”

“Consider all that has happened — the media realizing the bubble was a bubble, the media realizing the bubble had popped, financial organizations admitting huge losses, soaring energy prices, a credit crunch, a dollar collapse, etc. These are the worst economic conditions I can recall since the 1970s and early 1980s, worse than the early 1990s.”

“And yet employment and the stock market (in total) are up. Was 2007 the year the sea suddenly pulled away from the shore after an earthquake, drawing onlookers to the beach?”

One was specific. “The article (in April I think) in the New York Times that it is better to rent than buy, and stating exactly why accurately. MSM coverage changed after that.”

“Another watershed event might be the credit freeze that began around November that had central banks of the world scrambling in unison to restore liquidity.” A local opinion.

“Regionally, the big event in the northeast was the dramatic decline in sales in Sept/Oct. The notion that nothing has changed and the status quo still holds among RE believers is still very strong.”

“Few if any of them make the fundamental connection between sales volume and pricing and none are willing to admit that sales volume is the lifeblood of the entire market. Their perspective is something like ‘I don’t have to sell, therefore, I haven’t lost anything.’”

“My point is that the last 5-6 years haven’t put a nickel in their pocket. Not one red cent.”

One pointed to the past summer. “The Funds of August…”

One had a HBB reference, “What was the biggest housing bubble event of 2007? The introduction of the Joshua tree as a WMD.”

The Motley Fool. “In January 2007, the chief economist at the National Association of Realtors said, about the housing market, ‘The steady improvement in [home] sales will support price appreciation … [despite] all the wild projections by academics, Wall Street analysts, and others in the media.’”

“‘We do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system,’ Federal Reserve Chairman Ben Bernanke said in May.”

“Months later, a global credit crunch of widespread proportions set in and affected the likes of Citigroup, and just about everyone else with exposure to credit products.”

From Bloomberg. “If you didn’t know what subprime meant at the start of the year, it was hard to avoid its meaning by year end.”

“The big question now is what will the subprime crisis and ensuing credit crunch cost. In mid-July, Federal Reserve Chairman Ben Bernanke told the Senate Banking Committee that estimates of losses associated with subprime-credit products were $50 billion to $100 billion.”

“Those numbers ‘are far too low,’ Jan Hatzius, chief U.S. economist at Goldman Sachs Group Inc., said in a mid-November report. Based ‘on historical default and loss patterns in different home-price environments,’ he estimates U.S. losses will be roughly $400 billion.”

The Chicago Tribune. “When Morgan Stanley credit strategist Gregory Peters sat down to write his 2008 outlook, he was delighted to bid 2007 farewell. ‘Good riddance to 2007,’ he wrote. ‘It was one of the most grueling, volatile and taxing years in credit market history.’”

“In an unusual twist, which defied typical bond behavior, a blood bath occurred in some bonds that investors would have assumed were the safest of the safe — mortgage-related bonds rated AAA or AA by firms such as Standard & Poor’s and Moody’s.”

“It turned out that neither Wall Street nor the rating agencies understood the risks, so the safety labels were misapplied and continue to undermine lending confidence.”

The Palm Beach Post. “Broker Douglas Rill asked me to recap my top stories of the year…so here they are. What many hoped was only a brief breather for Palm Beach County and the Treasure Coast turned into an outright correction. In October 2007, Palm Beach County’s median home price was down 17 percent from the late 2005 peak, while Martin-St. Lucie prices fell 23 percent.”

“Daredevil builders like Standard Pacific and Tarragon got burned. Both recently sold Palm Beach County properties for less than they paid during the boom. Even old stalwart DiVosta laid off hundreds of workers.”

“Record-low mortgage rates helped inflate the housing bubble. But the subprime meltdown and the housing crash were bad news for mortgage companies. HomeBanc went broke, and companies such as First NLC and First Magnus laid off hundreds in Palm Beach County.”

“Housing-related layoffs caused Palm Beach County’s once-microscopic unemployment rate to jump. Publicly traded companies such as Office Depot blamed the slowdown for dwindling profits.”

“Even the state’s supersafe investment fund for municipal governments suffered a run after it gave off the whiff of mortgage taint.”

The Sacramento Bee reports from California. “ResMAE Mortgage Corp.’s job posting, widely advertised just a year and a half ago, promised account executives with experience selling subprime home loans and a high school degree ‘7-FIGURE POTENTIAL.’ Those were the heady days of the real estate boom, and account executives at Orange County-based ResMAE and five other lenders identified by The Bee were getting paid big bucks to do something that seems a little crazy outside that context:”

“Issue subprime loans to almost everyone who wanted one, turning down fewer than 15 percent of Sacramento-region applicants.”

“Property owners who took out their loans were up to seven times as likely to face foreclosure during the past year as the rest of the region’s owners, according to a Bee comparison of property records and data from Foreclosures.com.”

“Most of these six liberal lenders now are history, killed or severely maimed by the housing market plunge.”

“Those miserable with their loans typically had held on a little too long and gotten burned. Many felt they had been suckered into a bad deal. The out-of-the-blue personal letters, the unsolicited phone calls – all were full of breathless promises and muted caveats, they said.”

“‘They betrayed me,’ said Morris Abee, who refinanced with ResMAE in 2005.”

“A 79-year-old veteran, Abee’s most valuable financial holding was the house near Auburn he has owned for almost three decades. Lenders seemed to know that, too. ‘Every day, I got about 20 calls from different mortgage companies,’ he said.”

“One broker made a pitch and Abee bit. It took only about two weeks for the $566,000 refinancing at 6.25 percent with ResMAE to go through, Abee said. Most of the transaction, he recalls, happened through the mail.”

“After a few months, ResMAE sold the loan to another lender. Abee kept up his payments. Then, in October, his rate adjusted, boosting his payments from $3,500 to $4,100 a month. Though Abee knew the adjustment was coming, ‘it surprised me how much of a jump it was.’”

“The statistical fallout from ResMAE’s business practices speaks for itself. At least 14 percent of Sacramento-area properties financed with ResMAE loans during 2005 and 2006 fell into foreclosure during the past year, about seven times the region’s average, according to a Bee analysis.”

“Abee says there is a strong chance he will lose his home, too. ‘If they don’t reduce the payments, I’m going to,’ he said. ‘I’ve got no choices.’”

“In one Flexpoint Funding commercial still viewable on YouTube, cameras pan across snowy hills, sandy beaches and rugged trails while an enthusiastic narrator offers a three-day, two-night vacation simply for calling to discuss refinancing.”

“‘A $100,000 loan, only $253 per month,’ he urges. ‘A $200,000 loan, only $506 per month; a $400,000 loan, only $1,011 per month; a $500,000 loan, only $1,264 a month.’”

“And, Flexpoint’s ad assures, neither bad credit nor no credit rating at all would get in the way of loans issued after as little as ‘a 17-minute application process.’”

“Bill Brashear, 79, needed extra cash after a hospital stay, so he decided to refinance his Del Paso Heights home last year. He lives off $2,259 in monthly pension and Social Security; his house payment is now $2,037.”

The Merced Sun Star. “Not many new homes are being built in the Merced area these days, a trend also seen throughout the state, according to California Building Industry Association figures. The builders’ group said building permits were pulled for only 3,151 single-family homes statewide in November.”

“Total housing starts in California, as measured by building permits issued, dropped 45 percent in November compared to the same month a year ago to 5,498, according to the Construction Industry Research Board.”

“Last month in Merced County 35 building permits were issued for new homes, four more than October but 48 fewer than in November 2006.”

“Don Gray, president of the Merced chapter of the Building Industry Association, said homebuilders have recognized the lack of demand for new housing and won’t build new dwellings unless there is a demand for them.”

“‘Builders are pulling in their horns. There is a glut of excess inventory, mostly used homes. It will be some time until the market comes back,’ Gray said.”

“The standing inventory of new homes in the Merced area is around 70 units, some of which may be display models. Most of the glut in existing inventory includes used homes. Merced City Manager Jim Marshall said new building starts have been affected by vacancies in existing housing and available stock that hasn’t been sold. He estimated there are about 800 vacancies in existing houses.”

“The city of Merced issued 10 building permits for single-family homes last month; from January through November of this year 168 permits were issued for single-family homes. In the same period last year, 937 single-family home permits issued, Marshall said.”

“Gray, a land-acquisition specialist with Summerton Homes, said in a boom market, homes were sold as fast as they were built. Even with homes built on speculation, most were bought before they were even finished.”

The Recordnet. “Joseph Anfuso, president of Stockton-based Florsheim Homes, said he’s been seeing slow sales and increasingly scarce buyers all year. ‘With new home building, it’s tough in this market,’ he said.”

“Developers also don’t want to build homes to risk having the completed projects sit empty in a slow market. ‘You really have to watch your construction very closely to make sure you’re not over extending,’ he said.”

“New home sales were flat in San Joaquin County, too, with 82 transactions in October sales a tick up from September sales of 81. It was off nearly 55 percent from October 2006, when the county registered 182 sales.”

“Long gone are the days of the first half of this decade when builders quickly sold every home they built as well as many they hadn’t built yet. ‘To get somebody to sign a contract to wait out construction is very difficult in this market,’ Anfuso said.”

The North County Times. “New home sales nationally in November dropped to their lowest level in 12 years, a trend mirrored locally. Local new home sales numbers were not available, but the number of building permits for new homes issued through November in San Diego County has fallen by 25.9 percent from last year to 3,290, according to the Construction Industry Research Board.”

“Building permits for new condominiums have tumbled even more, dropping 40.1 percent this year to 3,474, according to the group.”

“Builders said they have already lowered prices on new homes to the point where they lose money on the price of construction. Some said they would rather hold onto the properties than slash prices further.”

“‘If you’re in a position where you have to lose even more money just to get cash, you’re not going to do that,’ said Paul Tryon, president of San Diego’s chapter of the Building Industry Association.”

The Chicago Tribune reports from Illinois. “The number of homes sold in Illinois dropped dramatically in November while prices slid outside of the nine-county Chicago market, according to the monthly report by the Illinois Association of Realtors. Statewide, the median sale price was $193,000 for the month, down 3 percent from $199,000 a year ago, with a 20 percent drop in sales from last November.”

“Geoffrey J.D. Hewings of the University of Illinois, said slow job growth rate in Illinois is dragging on the economy and housing market. ‘It is hoped that the recent declines in interest rates may help stimulate the housing market. In the interim, consumer sentiment is moving to a cautious mode,’ he said.”

“With prices predicted to keep falling through the coming year or even longer, one might question the wisdom — even the sanity — of buying a home now when even better bargains probably await.”

“But people are buying. Armed with attractive mortgage interest rates and a bountiful supply of houses to choose from, some bargain-hunters say it is the time to act.”

“‘If you think there is blood in the streets, you want to be buying,’ said Vince Allegra, who in late November swooped in on a west suburban house that had languished on the market since spring.”

“Dickering with the relocation company that owned the house, he snagged it for $860,000 — less than the original list price of $1.1 million and even below the $950,000 it sold for in 2005, he said.”

“‘I still think the market will get worse before it will get better,’ said Allegra, a money manager for high-net-worth clients. Still, he said he believed the market was near enough to a bottom to make a deal worthwhile.”

The Gazette Extra from Wisconsin. “Darrell Pelikan knew his home value would go up in the town of Janesville’s reassessment this year. After all, the town hadn’t assessed the home in nine years. But he wasn’t expecting a 77 percent increase.”

“Pelikan was shocked to see the assessor, Associated Appraisal Consultants of Appleton, valued his 1,300-square-foot home at $193,000, up $84,000 from its assessed value in 1998 and up $82,000 from the price he paid for it in 2001.”

“‘It was outrageous, even at the prices real estate was going two or three years ago,’ Pelikan said.”

“Pelikan wasn’t the only one angry. Town clerk Andrea Peabody estimated a couple hundred residents showed up for the town’s open book session in November, and about 60 appeared before the town’s board of review a few weeks later.”

“Bruce Gurney was one of them. He went to the open book session to complain about his assessment rising 90 percent since it was built in 2000. His 1,092-square-foot home was assessed at $223,000. ‘That place was packed,’ he said of his trip to town hall. ‘I had to wait two hours.’”

“After the open book session, Associated Appraisal lowered the assessment to $188,000, Gurney said. The board of review declined to lower the assessment further.”

“Pelikan hired a private appraiser, Robert Kagel, who valued his home at $164,000. ‘There’s no way that I’m going to be able to sell this property at $193,000 or—anytime in the next few years—$177,000,’ Pelikan said.”

“Pelikan believes the assessor made his decision based on the inflated sale prices of homes in the last few years and didn’t take into account the current nationwide housing crisis. ‘Now with this subprime (mortgage collapse) and all this, things have to come down,’ he said.”

“But assessors can look only at sale prices from before Jan. 1 of the year of the assessment, said Joe Griesbach, president of Associated Appraisal. That means the company couldn’t look at any home sales after Jan. 1, 2007.”

The St Cloud Times from Minnesota. “It may not be as bad as it is on the coasts, but St. Cloud’s economy and housing market have taken a hit this year.”

“About 70 mortgage brokers are no longer operating. Foreclosures in area counties have dramatically increased in the last year. Builders’ and real estate agents’ business has slowed. Local financial counselors are twice as busy this year compared with last year.”

“At least one bankruptcy attorney has seen a 50 percent spike in business in the last year. And getting a loan is much harder than it used to be.”

“Rich MacDonald, an economics professor at St. Cloud State University, said markets need time to untie the knots. Another local economist, King Banaian, chairman of the economics department at St. Cloud State University, agreed.”

“‘The credit crisis has continued and will continue to rise over the next several months,’ he said.”

“Despite the gloomy prediction, local business leaders are keeping a positive outlook. Bankers and real estate agents say this is the best time to buy a home: prices and interest rates are low, and buyers have plenty of homes to choose from.”

“‘It’s like Christmastime out there for buyers,’ said John Pearson, an agent in St. Cloud.”

“Foreclosures are up 36 percent in Stearns and Benton counties — from 39 in November 2006 to 53 in November 2007. From November 2005 to November 2006, foreclosures more than doubled, from 14 to 39.”

“Housing starts in the six-city area are down 39 percent from November 2006 to November 2007. That slump followed a major hit from November 2005 to November 2006, when housing starts dropped 42 percent, from 893 to 522.”

“But that could reflect a correction in the market. Bonnie Moeller said it’s like the housing market was going 100 miles an hour, but now it’s going the speed limit. Moeller is the executive director of the Central Minnesota Builders Association.”

“Because of the downturn in the housing market, and because of the new requirements, many brokers or mortgage companies stopped operating. In St. Cloud, 70 mortgage brokers who had licenses before August no longer do. Now just 33 have active licenses, according to the Minnesota Department of Commerce. Before August, Minnesota had 4,000 licensed mortgage brokers, and now there are just over 1,200.”

“At Munson Mortgage, subprime mortgages — once 20 percent of its business — are no longer part of its portfolio. Stricter federal lending standards have affected his ability to make such loans.”

“‘I can’t make up my own rules,’ John Munson said.”

“At some local banks — such as Bremer, Liberty Savings Bank and ING Direct — leaders said they haven’t been hit hard by the crisis because they did not make subprime loans. ‘We make loans to people that can pay them back,’ said Brian Myres, head of Midwest operations for ING.”