The Housing Bubble

It’s Friday desk clearing time for this blogger. “Along with colored lights and Christmas trees, a sure sign of the holidays are the ‘New Price’ signs decorating thousands of neighborhood lawns. After putting houses on the market in the summer and getting no takers, many sellers are trimming costs in hopes of landing a winter sale. Dallas agent Lydia Player recently put under contract a North Dallas custom home that had been for sale for almost a year.”

“‘It was priced at $1.75 million, which we thought was OK,’ she said. ‘We had to reduce it several times. When we reduced it to $1.395 million, we got three offers immediately.’”

“‘You don’t need to wait around for six months to decide if your price is right,’ said Player. ‘If we don’t get an offer in the first few weeks, we need a price reduction.’”

“Three years ago, real estate agent Diana Cavigliano couldn’t get to new homes for sale, fast enough. ‘When I first started, houses sold in hours,’ Cavigliano says.”

“But the housing market isn’t what it used to be. Cavigliano says now you’ll find homes sitting vacant for months, forcing some homeowners to drop prices by the thousands. Frustrated by the flood of empty homes, Cavigliano started tracking single family homes for sale in Boise and Meridian.”

“With all the lower prices and loan options out there, first time homeowners can afford to be picky. ‘Everybody says well it’s a bad market, well it’s good for somebody, and that somebody could be you,’ says Cavigliano.”

“Thirty-year-old construction engineer Cao Xuan Lam has never imaged he could easily earn so much money after only one year of engaging in realty business in Vietnam’s Hanoi capital. Lam, previously owning two apartments in western-style blocks, has just made a profit of nearly 50,000 U.S. dollars from selling one.”

“‘Nothing can bring about huge benefits like real estate trade. So, I have spent all my savings and loans from relatives and banks investing in it,’ he said while scrubbing his newly-bought apartment’s white-washed wall.”

“For the year to date, Regina has seen total housing starts of 1,377, the highest year-to-date starts since 1983. As records continue to be broken, it appears there won’t be a downturn anytime soon.”

“‘Consumer demand is driving this (boom),’ said Alice Russell, executive director of the Regina and Region Home Builders’ Association. ‘I’ve had a number of calls from people interested in housing from (outside the province). I love it when people call (with inquiries) about this.’”

“Statistics from the Guangzhou and Shenzhen real estate markets are pointing towards a downward trend. Many citizens say they’re still taking a wait and see attitude after a series of government measures aimed at curbing speculation in China’s property market.”

“The average has plummeted by more than more than 20% percent. GM, Real Estate Company, said, As investors become fewer and fewer, the prices are being adjusted accordingly. Many developers are choosing to drop their prices. Another housing project has set its price at 5 thousand per square meter.”

“House Buyer, said, The price now is reasonable for me, but what if it continues to drop?’

“House prices across the UK fell at their fastest rate in more than two years last month as higher interest rates and tighter controls on mortgage lending prevented many buyers from getting on the property ladder, the Royal Institution of Chartered Surveyors says today.”

“Quentin Jackson-Stops, from Jackson-Stops & Staff surveyors in Northampton, said November had been a very poor month. ‘Winter has come early to the property market,’ he said. ‘The number of viewings of properties fell substantially during the month and only properties that are very keenly priced or in the very best condition and location are generating interest.’”

“House prices in Wales fell for the sixth successive month in November and at the fastest pace since May 2005, a survey has revealed.”

“But the RICS Wales director Cathy McLean insisted large falls in house prices still remained unlikely. ‘It is clear that the housing market continues to feel the strain of depressed market conditions,’ she said. ‘However…large falls in prices remain unlikely. Employment would have to fall sharply before enough supply entered the market to create a significant dip.’”

“With real estate figures showing the housing market is cooling off homeowners are taking desperate measures just to sell. Many, like seller Carl Becker, are being forced to cut prices by tens of thousands of dollars just to entice buyers. Becker is so keen he is selling his house for $50,000 less than its registered valuation.”

“ONE News found a three bedroom house in Christchurch going for $20,000 under valuation; a four bedroom home in Papamoa going for $35,000 below valuation; and a three bedroom house in Auckland’s North Shore priced at $65,000 less than its registered value.”

“‘It’s a buyers’ market, it’s a fact, and everybody has to work in the context of the market. So in this context here for me to move it I need to discount it more,’ Becker says.”

“Potential home buyers have far fewer choices when applying for a loan these days. Largely gone are the subprime, jumbo and other exotic options that were readily available during the housing boom.”

“‘The mortgage industry will not ever again be the way it was in the last four years,’ says Ajay Rajakhyaksha, head of U.S. fixed income strategy at Barclays Capital.”

“The political class’ infatuation with interfering in the mortgage lending marketplace has played a large role in the current so-called ‘crisis’ of sub-prime lending. Political pressure nonetheless mounted, and when compliant interest rates appeared on the horizon, the industry responded with myriad, sometimes even exotic, loan products.”

“What we have here, really, is the downside of risks assumed by borrowers, lenders and secondary market investors who bought securities backed by sub-prime mortgages. Everyone involved was a willing, if in hindsight foolish, party.”

“The best thing the Bush administration and Congress could do is nothing at all. Yes, nothing. Both borrowers and lenders who took untoward risks should now pay the financial consequences. Any government interference in the process would extend the pain and raise its cost in the long run.”

“Recently, a columnist from one of the California dailies posited an interesting premise on the subprime mortgage and housing crisis.”

“He wondered why do we consistently laud a drop in the prices of such things as food, electronics and transportation, but cringe when the price tags on homes fall?”

“Instead of being bombarded with 30-point type headlines about the pending disaster of falling home prices, he asked shouldn’t we be seeing stories of how low and middle-income families, who were formerly priced out of the market, are ‘finally getting their chance at the American Dream?’”

“This in fact may be one of the rare cases where there was far too little discrimination practiced by the lenders who accepted applicants with credit scores lower than my SATs coupled with an ability to manage money like a sailor on shore leave.”

“I would expect more sense however from people like Fed Chair Ben Bernanke and Treasury Secretary Hank Paulson. Both have sort of floated strategies that in my mind, and others’ as well, in essence reward people with bad credit histories.”

“At this juncture it won’t do much good to finger point, as there aren’t enough digits on both hands to include everyone who’s contributed to this mess, and, of course, lenders included.”

“But those who made their mortgage payments and worked to maintain decent credit histories shouldn’t be the ones to suffer as part of the solution.”

The Denver Post reports from Colorado. “More Colorado homeowners have gone into foreclosure in the first nine months of this year than in all of 2006, which was a record year. And in a sign of how tough times are, about two of every three Colorado homeowners who enter foreclosure are losing their homes at auction, compared with about one of every two last year. ‘We don’t think we have bottomed out yet,’ said Kathi Williams, director of the Colorado Division of Real Estate.”

“Public trustees in the state reported 28,960 foreclosures from January through September, versus 28,509 through all of last year. The state recorded 19,025 foreclosure sales at auction through the first nine months versus 15,112 in all of last year, according to the report.”

“‘We had 28 foreclosure sales today (Wednesday), and they all went back to the lender,’ said Debby Morgan, public trustee for Larimer County.”

“Mortgage lenders and servicers, buried under a rising mountain of delinquent loans, are taking three weeks to a month to approve ‘workout’ plans designed to keep borrowers in their homes or allow them to arrange a voluntary sale. ‘We were driving more people to the hotline. And those counselors weren’t able to get answers out of lenders,’ Wil liams said. ‘The value of the property continues to deteriorate, so the workout doesn’t work anymore.’”

The Rocky Mountain News from Colorado. “‘Last year, we had a small-city worth of foreclosures,’ said Zach Urban, who runs the Colorado Foreclosure Hotline. ‘It’s a crisis without end, it seems like.’”

“On Thursday, ForeclosureS.com reported that in the first 11 months of the year, Colorado had 16.3 real estate owned, or REO, filings per 1,000 households, down more than 22 percent from the same period in 2006.”

“But if that number is correct, it is because lenders are so swamped with foreclosures they can’t process them in a timely manner, said Urban and other experts.”

“‘I don’t think any dip in those numbers indicates a relief of the crisis,’ Urban said. ‘It’s an indication of how bad the crisis is. The scariest part is that if the mortgage lenders were more efficient, we would have even more people losing their homes.’”

The Coloradoan. “‘I don’t think anyone is prepared for what’s to come in the next year,’ said Urban. ‘This is something that’s a slow moving storm; it’s taking a lot of time to see the damage uncovered.’”

From Arizona State University. “In an environment of heightened economic uncertainty and continuous financial issues, the local resale housing market remained anemic at 3,280 sales, in comparison to 3,610 recorded sales in October 2007 and last year’s 5,040 sales.”

“The month of November brought the year-to-date total to 47,690 sales, which is well below the 62,415 for 2006 year to date and 104,360 sales for 2005 year to date.”

“‘Although there is a large inventory of available homes, buyers appear reluctant to take advantage of the market,’ said Jay Q. Butler, director of Realty Studies. ‘Many of the vacant homes are in submarkets that current buyers do not want…Thus, the 2007 resale housing market continues to show signs of increasing weaknesses that are well below the expectations of even a few months ago.’”

“The Scottsdale resale home market declined from 400 to 240 recorded sales, the median sales price decreased from last year’s $630,000 to $544,645. Glendale decreased from 350 to 235 sales, and the median sales price decreased from $247,000 to $215,000.”

The Arizona Republic. “Median prices fell to their lowest level in 2½ years as the number of housing resales slowed to a crawl in November.”

“The median price in the Phoenix area fell 7 percent to $240,000 in November, compared with $259,000 a year earlier. That’s the lowest median since $235,000 in May 2005, according to ASU.”

“‘When there is a lot of uncertainty, people become reluctant to make major commitments,’ said Butler. Would-be buyers fear they can’t sell their homes. They are waiting for prices to drop or can’t get financing, he said.”

“One bright spot is that homes continue to get more affordable, and the market for houses priced at $200,000 continues to increase. The percentage of homes sold at $200,000 or less increased from last year’s 16 percent to 29 percent in November.”

“Not under the Christmas tree this year for Southeast Valley homeowners: a deal to sell their homes.”

“November resale numbers show…sale prices also continued to fall throughout the Southeast Valley, except south Tempe. December is expected to be equally slow.”

“Butler said he wasn’t surprised by the ongoing market weakness but that most economists had thought that 2007 would be a better year at its outset. ‘It’s continuing to be a lot lower than we thought at the beginning of the year,’ he said. ‘We thought the year would end up a little bit better than it is.’”

“‘It’s the growing economic uncertainty, all the talk about ‘Are we in a recession or aren’t we in recession?’ Butler said.”

“Hub Blanchette saw this coming in July. Blanchette, Chronic Car Audio’s CFO, was walking out of an East Valley box store in the middle of the morning this summer and noticed the parking lot was deserted, save the employees’ cars.”

“It was a sign to Blanchette that the state’s surging economy was about to hit the skids. ‘The next day, we cut payroll by $100,000,’ Blanchette said. ‘If we hadn’t done that, we’d be under right now.’”

“The company has cut payroll twice since then, and plans another 25 percent payroll cut before the end of the month, Blanchette said. ‘If you don’t cut costs, you’re not going to have a job anyway,’ Blanchette said. ‘That’s the reality of the situation right now.’”

“It’s a reality born out each month in Mesa, as the city releases statistics that show sales tax revenue continuing to slip.”

“‘It started out with the housing mortgage thing,’ Blanchette said of the off-cited root of Arizona’s economic problems. ‘With the pay cuts and a lot of the ‘re-fis,’ their payments are up.’”

The Havasu Sun News from Arizona. “The already grim housing market suffered yet another setback Tuesday as officials announced that home construction plunged even further last month, sinking to its lowest level in nearly three decades. Officials says the downturn in building activity has begun to seep into other parts of the economy.”

“The latest snapshot of the city’s building activity, released Tuesday by the Development Services Department, showed that only three single-family building permits were issued in November, the lowest monthly total in at least 27 years.”

“Officials said city permit records only stretch back to 1980, making it difficult to pinpoint the last time construction was this stagnant.”

“‘I don’t even need to say anything,’ said Bud Schulz, executive director of the Colorado River Building Industry Association. ‘The numbers speak for themselves.’”

“Nonresidential construction, the lone bright spot for builders the past several months, fell dramatically in November. Commercial projects totaled about $1.4 million last month, down from $12 million in October.”

“Home construction has been in a tailspin since 2006, with single-family building permits hitting a 25-year low this past fiscal year. Those figures have tumbled even more in recent months, falling from 17 to 7 to 3 since September.”

“‘If this trend continues, then it will affect the entire economy of the city,’ Schulz said.”

In Business Las Vegas. “It was not a happy day. Mark Stark, CEO of Prudential Americana Group, one of the largest real estate brokerages in Las Vegas, said he was discouraged when he realized he had no alternative but to file Chapter 11 bankruptcy if he wanted to save his firm, which continues to operate while it reorganizes it debt.”

“‘I was bummed,’ Stark said. ‘I was bummed.’”

“When he took over 100 percent of the ownership of the brokerage in 2004 from his 25 percent stake, Stark said he never envisioned the Las Vegas housing market tanking like it did and making it impossible to make payments on one of the two loans totaling $22.5 million he took out to buy out his partners.”

“That’s quite a contrast from three years ago when Prudential Americana had an offer from Warren Buffett’s HomeServices of America to buy the firm. Stark matched the offer.”

“‘I would have gotten a huge check and with bonuses — it would have been $12 million to $15 million at the time,’ Stark said. ‘I said no, and the reason being is I had a belief as I do today. That is why we have done well in a tough environment, and we have hung in there.’”

“When he acquired the firm, Stark said he had a plan that if the market adjusted 30 percent, the brokerage would still be fine.”

“‘The market adjusted more dramatically than we anticipated,’ Stark said. ‘If you would have told me, this market would have gotten hit 67 percent in two years, I would have said you have no idea of what you’re saying. No one expected two-thirds of the market to go away.’”

“‘I don’t see what if anything we could have done differently to protect the company,’ Stark said. ‘We didn’t add a lot of bricks and mortar. We didn’t waste dollars. We were healthy. We were very profitable until the market went away.’”

“‘We have a core economy that is healthy, but we now have a timing issue,’ Stark said. ‘We have to work through this slop that has created challenges. This inventory will be eaten up because we have a core economy. This is not Detroit, Michigan.’”

“The No. 1 problem to deal with is perception, Stark said. There are great deals to be had in the market, but the perception of many is that prices will keep falling.”

“‘If you are waiting until the market gets better, then sellers have the idea of things getting better and they can hold more firm,’ Stark said. ‘Today, you can go out there and sellers aren’t so sure. If you wait, you are going to pay higher prices.’”

Some housing bubble news from Wall Street and Washington. Bloomberg, “Citigroup Inc. will take over seven troubled investment funds and assume $58 billion of debt to avoid forced asset sales that would further erode confidence in capital markets. The biggest U.S. bank by assets will rescue the so-called structured investment vehicles, or SIVs, taking responsibility for their $49 billion of assets, the New York-based company said in a statement.”

“The decision to bring the SIVs onto the balance sheet marks a turnaround for Citigroup. In a Nov. 5 regulatory filing, the company said it ‘will not take actions that will require the company to consolidate the SIVs.’”

“‘After considering a full range of funding options, this commitment is the best outcome for Citi and the SIVs,’ Vikram Pandit, who was named CEO on Dec. 11, said in the statement.” “Citigroup said its decision was independent of the Treasury plan to create the $80 billion so-called SuperSIV that would buy assets from other funds that couldn’t finance their investments.”

“‘The need now has completely gone away,’ said Joseph Mason, associate professor of business at Drexel University and a former financial economist at the Office of the Comptroller of the Currency. ‘They were the only ones keeping it alive.’”

“Citigroup follows HSBC Holdings Plc, Societe Generale SA and WestLB AG in bailing out SIVs to avert fire sales of assets. ‘That was really the last major outstanding piece of the SIV problem,’ said Peter Crane, founder of Crane Data LLC. ‘The SIV problem is very close to resolution.’”

From Reuters. “‘It says the super SIV is dead in the water. That shows it was a bad idea in the first place and as with (British bank) HSBC they have realized they have to sort their own problems and not seek help from someone else,’ said Alan Webborn at SG Securities in London.”

From MarketWatch. “Interest in the fund has waned as several banks concluded they couldn’t wait for it to become operational, and decided to bail out their own SIVs.”

“SIVs are funds that use money borrowed under short-term agreements — typically commercial paper — to buy longer-term, higher yielding debt investments, which have included subprime mortgage-related assets.”

“As the credit markets have tightened in response to growing instability in the subprime mortgage market, SIVs have struggled to secure financing, which in turn has sparked concerns that they may have to sell their assets into a weak market.”

“The biggest concerted effort by central banks in six years to restore confidence in global money markets is showing little sign of success. Policy makers are reacting to more than $70 billion of losses announced by financial institutions this year and estimates of about $300 billion more on securities linked to subprime mortgages, collateralized-debt obligations and structured investment vehicles, or SIVs.”

“The rates banks charge each other for three-month loans held at seven-year highs for a second day after policy makers in the U.S., U.K., Canada, Switzerland and the euro region agreed to ease the logjam in short-term credit markets.”

“‘The market clearly doesn’t believe central banks can do anything about this crisis,’ said Nathalie Fillet, senior interest-rate strategist at BNP Paribas SA in London. ‘This is not going to be a magical solution to the problem.’”

“The concerted central bank effort to ease the liquidity crisis may do no more than shine a spotlight on the other problems faced by the financial markets — including a growing concern about fundamental asset quality.”

“While the move has undoubtedly eased tensions into year-end and will allow frazzled nerves some respite over the Christmas and New Year period, bankers and investors will return in January to face largely the same problems.”

“The central banks may have raised more questions than they answered. ‘The next leg of bad headlines will be real losses,’ credit analysts at Royal Bank of Scotland warned on Thursday. ‘Forget mark-to-market on CDOs, CDO of ABS, RMBS and the like, 2008 will see real losses.’”

“‘You have a slowing U.S. consumer,’ Jeffrey Immelt, CEO of General Electric said this week. ‘I’m not going to put a happy face on this…clearly consumer delinquencies in the United States are increasing.’”

“Analysts at UniCredit asked whether central banks had a realistic chance of fighting the crisis with the measures announced.”

“‘It is becoming more and more apparent that this is not the case,’ they wrote. ‘The stressed liquidity situation is not the reason for the crisis, it is just one symptom. The liquidity the central banks provide is absorbed quickly by banks that pile up cash on their balance sheets.’”

“This does remove pressure from the market to provide funding, and is highly welcome in stabilising those institutions that might face liquidity risk. ‘But funding a bank’s balance sheet is truly not the business of a central bank,’ they said.”

The Financial Post. “With the deadline for a restructuring proposal for $33-billion of asset-backed commercial paper hours away, a roomful of investment bankers and lawyers are still struggling to come out with a document that will enable investors to put a value on their holdings for the first time since the market melted down in early August.”

“Sources close to the investor committee overseeing the negotiations said that while some noteholders might get most of their money back, others will likely see losses of more than 50%.”

“‘There are some pretty bad trusts,’ said one source, adding that the worst of the losses are focused on just three or four trusts, including the now infamous Apsley, whose assets include nearly $1-billion of investments linked to subprime mortgages in the United States.”

The Associated Press. “The phones don’t ring off the hook any more at Spanish real estate offices, once the giddy beneficiaries of a sizzling property market. In fact, they hardly ring at all. And the revolving-door flow of customers has vanished.”

“Sharply higher interest rates, a glut of homes and newly jittery banks have come together to stall the engine that has driven one of Europe’s top-performing economies for more than a decade.”

“Promoters who just a few years ago could sell new homes just by showing crude blueprints, they didn’t even bother to build pilot houses or apartments, are now desperate. ‘The market has become paralyzed. Things are just paralyzed,’ said Javier Martinez de los Santos, manager of a realtor’s group.”

“Banks used to trip over each other competing to throw low-interest rate mortgage money at anything that moved. Interest rates have jumped nearly three points in as many years, however, which means much heftier monthly payments for homeowners because the vast majority of mortgages in Spain are adjustable-rate.”

“So banks worried over the prospect of defaults are now much more miserly, ending the once-common practice of financing 100 percent or even more of a home purchase, and raising the threshold for what people need to earn in order to qualify for a loan.”

“‘There is still demand. There are more people looking for a house now than before. The problem is the banks have turned off the spigot,’ said Jesus Duque, vice president of a Spanish real estate chain with 600 offices around the country.”

“Malena Garcia Mexia, a dance instructor in Torrelodones, 30 kilometers (20 miles) northwest of Madrid, knows all about it. She and her husband put their 3-bedroom apartment up for sale in November 2006 and have got nibbles but nothing serious.”

“‘People try to take advantage of the situation,’ she said, recounting how they’ve lowered their price three times only to have prospective buyers now ask them to come down as much as 20 percent more.”

“For U.S. homeowners, builders, bankers and realtors, the crash of 2007 will only get worse in 2008. Everyone from mortgage-finance company Fannie Mae to Lehman Brothers Holdings Inc. expects declines next year.”

“The housing market collapse has been anything but the ’soft landing’ that Federal Reserve Bank of San Francisco President Janet Yellen and David Lereah, former chief economist at the National Association of Realtors in Chicago, predicted for real estate at the start of 2007.”

“Median home prices declined in the U.S. this year, the first annual drop since the Great Depression, according to forecasts from the National Association of Realtors.”

“‘I’m not going to sit here and tell you it’s going to turn real strong next year,’ said Jim Gillespie, CEO of Coldwell Banker Real Estate LLC, the largest U.S. residential brokerage, according to Franchise Times. ‘It’s not going to turn real strong next year.’”

“Moody’s Economy.com Inc. says home sales will hit bottom next year, declining 40 percent from their peak.”

“‘I know we weren’t predicting things would get this bad,” said Frank Liantonio, executive VP for global capital markets at New York-based Cushman & Wakefield Inc., the largest closely held real estate services provider. ‘There were some signs there, but I don’t think anyone anticipated the level of dislocation that was actually created.’”

The Daily Herald reports from Illinois. “Andy Starck thinks it’s time to bust some real estate myths. Starck is CEO of Palatine-based Starck Realtors and has been in the industry in the suburbs almost 40 years. Here’s the way he sees things. Home prices might have dropped a little, but not precipitously. Anyone who buys a home now has little chance of suffering a loss. Sellers are becoming realistic and are dropping their asking prices. Buyers are not going to ’steal’ homes.”

“While trying to sell a house for a quick profit in a year or so would be a real gamble in this market, anyone who thinks they will be in a home for a few years should go ahead and buy, Starck said. ‘There are values out there,’ he said. ‘Be smart, find them. Let your Realtor help you find them.’”

“Starck offers all the usual reasons: The economy is broad based and expanding, Chicago is a transportation hub and there isn’t enough housing for the continuing demand. ‘It is not that Chicago is bulletproof, but we do have an overall lack of housing stock over time,’ Starck said.”

“Sellers are not going to take crazy offers, he said. Starck has seen offers $250,000 below the asking price on a $500,000 home.”

“‘It’s just not going to happen,’ he said. ‘Sellers are not desperate. They are reasonable and want to sell their homes and move on to the next ones.’”

“Starck said it is important to realize that what people say about the real estate market could be true in one area like Florida, but might not apply to Chicago. ‘It’s a great time to get a good value,’ he said. ‘And there are plenty of them and you can get the house you want. Three years ago, you had to take what was available and had to move real fast.’”

The Chicago Journal from Illinois. “The number of housing foreclosures in Chicago is steadily increasing and financial experts say the situation will get worse before it gets better.”

“The Chicago Department of Housing reports that foreclosures in the city in the first half of 2007 are up 35 percent from the same time period last year, increasing from 4,695 to 6,329.”

“Molly Sullivan, director of communications for the Chicago Department of Housing said foreclosures are most common in low-income communities with those who face catastrophic financial problems.”

“‘However, we’re also seeing in some of the higher end communities where people have just overextended themselves,’ she said. ‘They’re either purchasing investment properties, thought they could take advantage of the hot market, which is now cooling and they are no longer able to leverage everything they have and keep all the balls in the air.’”

“Michael vanZalingen, with the Neighborhood Housing Services of Chicago, said that while neighborhoods like the South and West Loops are not being hard-hit by foreclosures now, they could be in the future. In the those neighborhoods, he said, many condo and townhome owners purchased their units with adjustable rate mortgages, interest only mortgages and payment option arms.”

“He said many came in thinking they would sell their property within a few years of purchasing it and make when the principal came due. Many thought the market would continue to go up, he said.”

“‘And as we’ve seen over the last six months in Chicago, and I think we’re going to see over the next few years, housing appreciation is flatly declining and the markets are very soft,’ he said. ‘For those who had expected to sell or refinance … there is going to be a shortage of qualified buyers for their condos at the price they are looking for.’”

“He said because of the cooling market and so many defaults on loans, lenders also are tightening their underwriting standards. ‘Even if someone wanted to buy a condo, they are going to have trouble getting a loan even if they have very good credit,’ he said.”

The Sun Times from Illinois. “In what authorities say is a symptom of the excesses in the subprime mortgage market, 15 people are charged with fraud involving at least nine homes valued at more than $4 million.”

“The scam — led by a mortgage broker and a real-estate agent — involved ’straw buyers’ taking out mortgages on homes for more than the asking price, officials said.”

“Lenders offered the loans for 100 percent of a home’s price. To get the high-interest loans, borrowers only had to verify they had a job, but did not have to verify their income. Straw buyers…falsified their incomes and employment on loan applications, officials said.”

“The victims were the lenders and neighbors, whose property taxes could rise because of the inflated values, officials said. Most of the homes were in the South Loop, and many have fallen into foreclosure.”

The Evening News from Michigan. “Although the Eastern Upper Peninsula is viewed as a ’stable’ housing market, Chippewa County Register of Deeds Sharon Kennedy indicated there is no denying that times are less than good in real estate these days.”

“Kennedy said foreclosure filings so far in 2007 are about twice the average from recent years, with 81 on record so far this year. That is up dramatically from the 67 registered all last year and a recent average of about 40 repossessions per year dating back to 2001.”

“Foreclosures are just one side of an overall real estate market that has seen better days, according to realtor Garth MacMaster. He accounted for an apparent glut in properties for sale as the product of several factors.”

“MacMaster acknowledged the so-called ’sub-par mortgage crisis’ afflicting most of the country has rippled through the EUP as well. But a dramatically tighter credit market for real estate is just one of several trends he sees in the local market.”

“‘Different ones want to move up, but there are more people selling than buying,’ he said of the local situation.”

“A specialist in property both in Sault Ste. Marie and the Paradise area, MacMaster sees other trends making for a blizzard of ‘For Sale’ signs. One of those is a glut of seasonal property, caused in part by hard times downstate.’

“Speaking of the Paradise area, he said that advancing age has also inspired other part-time owners to sell. The upshot is a local glut in available properties and a drop in overall value. ‘Property values in the Paradise area have gone down because of the glut,’ he said.”

“The realtor said the local market is not immune to nationwide trends. He noted the ballooning of easy credit loans made a few years ago has come back to roost here, as it has across the country.”

“He said especially young new homeowners fell heavily for the 100-percent financing offered by lenders a few years ago. Heavily invested in adjustable rate loans, many of those new owners found the uptick in interest rates and job losses left them unable to make payments.”

“He said new owners with essentially no equity in a property have little incentive to hold onto the property. ‘They treat the house like a rental and walk away from it,’ he said. ‘They have no equity at stake.’”

“He said that nowadays, one to three people show interest in an average property. Not long ago, that number of 20-30 per available house, he said. ‘Prices have leveled off or dropped. They’re not appreciating, that’s for sure,’ MacMaster said.”

The Oakland Press from Michigan. “There is more bad news for Oakland County homeowners - but good news for those looking to buy. The median price of homes sold in November fell from $184,000 a year ago to $167,500.”

“RealComp reported 845 homes sold in Oakland County for the month of November, down from the 995 homes sold in November, 2006.”

“‘My position is that there has never ever been a better time to buy a home,’ said Marcia Dyer, presidentelect of the North Oakland County Board of Realtors in Waterford Township. ‘Michigan has always been a strong market, and what goes down will indeed come up.’”

“University of Michigan Professor Don Grimes annually contributes to a study on Oakland County’s economic outlook released each spring. ‘It’s taken a little bigger hit than we expected, at least in terms of sales,’ Grimes said of housing sales for the year.”

“‘My gut says it has gotten worse than we were expecting last spring,’ Grimes said. ‘We knew it was going to be bad; we just didn’t know how bad it would get. The big question is when will it turn around. I don’t know.’”

“‘Brokers may stabilize in 2009, but construction will go down because they have to get rid of the inventory of unsold homes,’ he said.”

The Journal Sentinel from Wisconsin. “Foreclosures were up 28.7% in Wisconsin during the first 11 months of the year as the resetting of adjustable-rate mortgages pushed increasing numbers of homeowners over a financial cliff, according to a report.”

“Many of those in foreclosure ‘bought a home they probably shouldn’t have bought,’ said Michael Holloway, owner of a real estate agency in Milwaukee that represents only purchasers. ‘I remember writing a newsletter three years ago that if you can’t afford a house on a 30-year mortgage, you shouldn’t be buying a house.’”

“Holloway said that he is as busy now as he has ever been in 23 years representing buyers. Sellers are willing to negotiate prices, he said.”

“‘What I see is a terrific time to buy if you don’t have to sell a house,’ Holloway said. Mortgage ‘rates are still low. You can buy a house for a fair value, but I don’t see people grabbing on to that. If you have to sell to buy it is a little tougher.’”

The Star Tribune from Minnesota. “Winter came early to the Twin Cities housing market. Closed and pending sales were both down about 20 percent for November, while prices posted their deepest year-over-year decline of 2007.”

“The number of closed home sales in the metro area was 19.3 percent lower than in November 2006, according to the Minneapolis Area Association of Realtors. The number of pending sales was down 21 percent. The median price of closed sales was $216,500, down 5.1 percent from November 2006.”

“At the end of the month, a record 30,126 homes were for sale, 32.6 percent more than two years ago.”

“With so many sellers competing for buyers, prices are dropping at an accelerated pace. In November, sellers on average received 92.4 percent of their original list price, down from 95.2 percent in 2006 and 97.2 percent in 2005.”

“The only encouraging signs for sellers are that affordability continues to improve and that certain segments and locations of the housing market are doing much better than others. A family with the median income for the area now has 141 percent of the income necessary to buy a median-priced home, assuming a 30-year fixed mortgage and a 20 percent down payment.”

“Steve Hyland, president of the Saint Paul Area Association of Realtors, said that he’s hopeful that falling prices will mean a stronger market come spring. ‘The market is slowing and will continue to slow down a little more during the winter months,’ he said.”

The Pioneer Press from Minnesota. “The selection is huge, the interest rates are low and eager sellers are paring their asking prices. And still, would-be homebuyers are about as enthusiastic as 10-year-olds at a gallery opening.”

“Would-be buyers are a little less willing to strike when they see their purchase might lose value in the short run.”

“Homes continue to sell, of course, as any agent will tell you. Take one gem on Lake Como. It sold last week after just 40 days - and after the $1.1 million asking price was dropped to $899,900. Realtors Mary and Jim Sommerfeld, who sold the house, won’t say what the Twin Cities couple who bought the home paid.”

“‘People have the feeling from looking at the headlines that homes aren’t selling. That’s really not true. If houses are priced according to the market, well prepared and decluttered, they’re selling,’ Mary Sommerfeld said.”

“Additionally, tighter financing hasn’t choked off sales. The jumbo loan is far from dead, mortgage lenders just aren’t able to bundle them for sale as mortgage-backed securities to investors as they used to, and the terms are less generous.”

From Minnesota Public Radio. “Bob and Joan Campbell love their cozy two-bedroom townhome near the Mississippi River on the south side of Brainerd. But for all this home’s charm, the Campbell’s needed more space to better accommodate their visiting children, grandchildren and great grandchildren.”

“They bought a four-bedroom condo in the spring in the nearby town of Baxter and put this place on the market.”

“‘When we bought the place over there we thought things were fairly good. And about the time we concluded the deal everything went to pot, so our timing was not good,’ Bob Campbell says.”

“At first the Campbell’s listed their home for nearly $180,000. After a few months they dropped the price to $169,000. Just a few days ago, their townhome finally sold after six months on the market. The winning offer came up short of what the Campbells asked for, but they’re happy with how things turned out.”

“Rona Karasik (who) heads up the gerontology program at St. Cloud State University…says even if a retiree’s house sells for tens of thousands of dollars less than it would have two years ago, it is still worth many times more than they paid.”

“‘If they’ve owned a home for a very long time, it’s probably still appreciated even in this softening market. But how much it’s appreciated has probably shifted downward in the last few years. So if they were planning to have $300,000 they may have less than that,’ Karasik says.”

“Karasik agrees with real estate officials who say older folks ready to sell their home should probably wait a year or so while the market sorts itself out.”

“Local real estate broker Kevin Goedker has dealt with more retirees selling their homes over the last year. He thinks one reason they feel pressure to sell now is because no one is sure how low the market will actually go. ‘If you’ve got a stock that’s going down, it’s probably better to get rid of it sooner rather than later. Because you never know when the bottom is,’ Goedker says.”

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