December 16, 2007

Let The Chips Fall Where They May

The San Francisco Chronicle reports frorm California. “Israel Medina admits he got too gung ho about the idea of getting rich by flipping Bay Area real estate. Medina, a Concord resident who ran a limousine company before wading neck-deep into the housing market, has seen not one, but 11, of his Northern California properties move into foreclosure in the past year, he said. ‘I was a real estate tycoon; I had everything,’ said Medina. ‘Now I have nothing.’”

“More than one-fifth of 6,557 Bay Area properties that fell into foreclosure from January through September this year were owned by investors, according to a Chronicle analysis of public records compiled by DataQuick. Of properties repossessed by lenders, 1 in 6 had been owned by people who had two or more foreclosures in their names. Eighteen Bay Area investors had five or more foreclosures.”

“‘During the frenzied period, you got people rolling the dice and buying as many properties as they could,’ said Andrew LePage, an analyst with DataQuick.”

“What they all had in common was the hope for a payday.”

“A Marin resident invested $1 million in four properties that a construction company owner told her he would fix up and flip; she lost all the money, her good credit and her own home. The Marin resident, Rose Hodges, said she attended Marin investment clubs and met many people like herself who wanted to learn how to invest in real estate.”

“‘All these Baby Boomers started inheriting money from their parents and looking for ways to invest it. And the real estate market was booming,’ said Hodges, who learned the hard way that such investments can have a big downside. ‘It’s crazy out there and people ought to know.’”

“Medina said he dabbled in real estate for years and made some money before gambling too big and buying 11 properties at virtually the same time in early 2006.”

“He said he lost the luxurious, six-bedroom house he was occupying in addition to 10 others he was trying to sell, plus most of the limousine business he had been running for years. He said the financial mess has left him penniless, facing bankruptcy and lawsuits, and saddled with a $3.6 million tax bill.”

“‘It was a really, really bad investment,’ said Medina, who said he lost hundreds of thousands of dollars of his own money that he had invested in the homes. ‘I should have bought fewer homes. I never should have gone so crazy.’”

“Why would investors buy multiple properties in a pricey market where their carrying costs - mortgage payments, taxes, insurance - would certainly eclipse the potential rents? Flipping and fraud appear to be the primary motives.”

“Doug Pollock, whose Florida company, Information Data Services, conducts private investigations of mortgage fraud primarily for title insurance companies, said fraud may be involved in many of the cases of investors facing multiple foreclosures.”

“Pollock said some investors may have tricked lenders into giving them loans on multiple properties by purchasing many properties at the same time, so lenders who saw their multiple loan applications would think they were just shopping around for the best loan.”

“But he said some of the blame should go to the lenders and mortgage brokers, who were so eager for loan origination fees that they gave little scrutiny to their borrowers.”

“‘I think this kind of activity is responsible for more of the subprime lending crisis than what you’re hearing about. And the lenders have a lot to account for in this mess,’ he said.”

“Mario Tellez and Maria De La Vega listened attentively to a foreclosure auction on the steps of the Alameda County Courthouse. With the rapid-fire rattle of a few words, a Livermore duplex the couple had bought to pay for their children’s college education reverted to the lender for the unpaid mortgage of $589,900.”

“Tellez and De La Vega…earn about $5,000 a month. Yet, on paper, they look like big-time real estate investors. They own four houses in Livermore, not counting the one that was foreclosed upon at the auction. Adjustable mortgages on the properties are due to go much higher next year, and Tellez said he doesn’t see how they will be able to keep up.”

“The couple financed their family home in the 1990s with savings from a taqueria and a business cleaning restaurants at night. Over the next few years, as the real estate market soared, the house appreciated so that by 2002 they had almost $300,000 in equity.”

“That’s when a friend convinced them that they could put that money to work by investing in more properties. At first, the investments worked out well. They bought two properties for about $450,000 each and rented them out. Those properties went up in value, too.”

“‘The Realtor said, ‘You’ve got a lot of equity now, why not continue to do this?’ Tellez recalled. So they did, taking out more equity and buying two more investment properties until they had five total - one for each offspring, plus the family home.”

“Unlike many investors, they made down payments on their properties, so they had equity to start. But once the market slump began, much of their equity was wiped out as prices declined.”

“Last year, payments for the duplex that ended up on the auction block soared to $6,000 a month - double the rents the property generated. The couple tapped their retirement funds to pay the soaring mortgages. After emptying their savings, they fell behind on payments.”

“Tellez tried to reach the lender to see if he could refinance or get a break on the rising loan costs, but he could not get an answer.”

“‘We had almost $200,000 in the bank, but it’s gone,’ Tellez said ruefully. When the mortgages on his other properties reset next year, he won’t be able to make the payments, he said.” “The family’s primary concern now, Tellez said: Make sure they can keep their original home, where they still live.”

The Sacramento Bee. “Even in a region with more than 7,600 foreclosures in just the first 10 months of the year, no place has been hit as hard as Western Avenue in North Sacramento. On the block where Irene Marshall lives, 16 of 45 homes have been foreclosed in 2007 – more than on any other block in the four-county region, according to a Sacramento Bee analysis of thousands of foreclosure records.”

“One block away adds four more foreclosures to the tally. Several houses – such as one next door to Johnson’s – are for rent but can’t find tenants.”

“Western Avenue…has had problems. But, by several accounts, Western Avenue was getting better when multiple new homeowners – most carrying expensive subprime loans given to borrowers with shaky credit – moved into the neighborhood during the past three years. They were chasing bargains and believing the hype about everyone being able to own a home.”

“Now, with the collapse of the housing market and the plunge of home values, Western Avenue’s best chance to escape its past appears to have come – and gone.”

“‘This is like a Third World country,’ says Michael Davis, who grew up in the neighborhood and lives in a rented house on the street. ‘People go by and think, ‘We don’t want to live in this neighborhood.’”

“It’s not at all difficult to pinpoint what happened. Of the 16 homes foreclosed on the street’s hardest hit block, at least 13 had been bought with adjustable rate mortgages, according to a Bee review of property records.”

“Most of the loans carried above-market rates of between 7 percent and 10 percent. Several owners also had piggyback loans that allowed buyers to put hardly any of their own money down.”

“Most of the foreclosed homes changed hands at the tail end of the housing boom, when prices were near or at their peak. At the time, they represented a bargain in the Sacramento area, with half of a duplex selling for as little as $125,000.”

“Jack Poe is among the few who has seen opportunity in Western’s crisis. The ATM repairman and his sister were able to buy half a duplex from US Bank a month ago for $86,000, well below the $125,000 to $200,000 prices similar homes on the street were going for just a few years ago.”

“Poe got a taste of reality right from the start: Someone stole the air conditioner from his new place while it was vacant.”

“‘We don’t have a lot of neighbors right now,’ says Poe, who formerly lived in a rented house in Rancho Cordova. But he’s upbeat about having 800 square feet of his own now. ‘It’s finally nice to say, ‘I’ve got a home.’”

“It’s no secret in Sacramento that two and three years ago, thousands of area residents bought houses bigger than their wallets. Thousands more tapped their equity-rich homes like an ATM machine, buying into the high life of cars, swimming pools and backyard barbecue patios.”

“Those were days without brakes. In the home building industry it’s still widely recalled how little it took then to buy a house. If you had a pulse in 2005 and could prove you were alive, you qualified. Here are your keys.”

“Now, it’s not funny. A growing multitude of those buyers, alongside owners who refinanced and others with their usual troubles of divorce and job losses, are being blown back out of their houses.”

“And recently announced plans by the federal government and the state of California to save some of them in the name of saving the economy are provoking protests from people who say they’ve played by the rules. Their rallying cry is personal responsibility and living within your means.”

“‘My wife and I bought our first house without any first-time buyer tax breaks. We had to live in apartments and delayed having children until we could afford a down payment,’ said Ron Loutzenhiser, a retired state employee in Galt.”

“A homeowner for 33 years, he opposes a mortgage bailout of subprime and other borrowers and pronounced himself ‘infuriated’ by a recent spate of ‘tear jerker’ Bee stories about people in fore- closure. Dozens of others said the same in calls, e-mails and reader comments on the newspaper’s Web site.”

“‘People nowadays don’t want to sacrifice,’ Loutzenhiser said of the lack of down payments, loans that didn’t verify incomes and use of home equity to pay off credit cards. ‘They want it all, what a lot of us took years and years to accomplish.’”

“Proposals to modify global financial contracts to bring short-term relief to U.S. borrowers risk long-term damage by sparking enduring uncertainty in the mortgage system, said Steven Sheffrin, economist and dean of the division of social sciences at the University of California, Davis.”

“‘For the greater good, you’re talking not just about the immediate future of these borrowers, but the future of their sons and daughters,’ Sheffrin said. ‘It’s really about a small set of today’s homeowners against a whole future set of homeowners.’”

“Talk to someone waiting to buy a home, and you’ll see what Sheffrin is talking about. They’re offended the government is stepping in. They worry that a bailout will artificially prop up home prices that have been fast falling in their direction.”

“There’s a lot of us waiting on the sidelines for prices to come down to an affordable level, says Chris Stafford, in Sacramento. ‘A lot of us were priced out of this market.’”

“There are those who contend they don’t fix a bigger problem: the potential economic fallout of hundreds of thousands of foreclosures across the nation. At a recent home builder gathering in Sacramento, one speaker worried about 2,000 to 2,500 foreclosure properties a month coming onto an already glutted local market next year and really driving down prices.”

“‘We saved our money while our friends and co-workers bragged about how much equity they just cashed out to buy their new boats and cars,’ says a recent post on The Bee’s Web site. ‘Now while they’re on the verge of losing everything we are preparing to buy our first home next year. … Life lesson: Live within your means.’”

“Finally, there is the so-called ‘moral hazard’ argument. It holds that bailing people out of their foreclosure problems will only encourage them to take the same risks in the future. Consequences, goes the argument, are the teacher of lessons.”

“As a reader recently put it, ‘Let the chips fall where they may.’”

“Those who wisely waited to buy a home until the ‘irrational exuberance’ of the recent buying frenzy subsided now find their plans put on hold as this government action works to keep home prices at an artificially inflated level.”

“And while most Americans sympathize with their fellow citizens who may be about to rejoin the ranks of renters, the question must be asked: Should taxpayers be compelled to make good the bad lending and borrowing decisions by others over whom they have no control?”

“The answer by most is a resounding no.”

The Ventura County Star. “The number of people leaving the state exceeds the number entering the state domestically, though it does not outnumber those coming in internationally. In 2005 and 2006, the state was losing people even as it was gaining jobs, the forecast reports.”

“Counselors at Consumer Credit Counseling Service of Santa Clara to Ventura counties are seeing more middle-income earners coming in with financial worries. On average, families are carrying 20 percent more debt than a year ago and those seeking counseling earn 24 percent more. Housing delinquencies also have more than quadrupled among those seeking assistance.”

“More people are considering leaving Ventura County for a place with a stable economy, instead of remaining in an area where they’ve seen wages and home prices fall as the cost of living and gas prices go up.”

“Perhaps the greatest issue that decides who stays and who goes is housing. People still want to own homes, and many are willing to go somewhere with less-desirable weather and lower pay if it means owning a home.”

“Marianne Moise’s sister moved to Las Vegas because it was cheaper to live there. Mark Moise watches guys who retire from the city pack their bags and move out of state.”

“Angela Ulin was raised in Santa Barbara and moved to Ventura about 15 years ago because the rent was cheaper. Now that the 37-year-old and her boyfriend are looking at houses, however, she said it’s more and more likely they’ll have to move to buy a home.”

“‘We’re both making decent wages for what we’re doing in the area,’ she said. But after the rent and other bills are paid, what remains each month leaves a mortgage out of reach.”

“There is some hope that more middle-income earners will be able to stay in the area as housing prices fall. Steve Carrigan of Pinnacle Financial Corp. said he’s hearing that more and more. His company conducts homebuying workshops.”

“‘Families are literally saying, Thank goodness for this housing crisis, because we may actually be able to stay here,’ Carrigan said.”

Most People Don’t Even Realize That This Is Happening

A report from the Idaho Statesman. “The Treasure Valley residential housing market declined again in November, with prices falling and sales sharply below year-earlier levels. The MLS said 580 homes sold in the valley last month, 40 percent fewer than the same month a year ago. November’s totals were 46 percent fewer than the 1,068 homes sold in November 2004, a year industry members say reflects more-normal sales in the area.”

“In Ada County, the median price was $215,000, a 7 percent decline from the same month a year ago. Industry experts say they are encouraged that building lots selling for six figures a year ago have in some places fallen below $50,000.”

The Oregonian. “This weekend, and this weekend only, home builder Roger Pollock is auctioning off more than 200 homes he couldn’t sell in the slowing housing market. Real Estate Disposition Corp. attracted more than 1,200 people with a Web site and newspaper and TV ads that promoted prices as much as 50 percent off the previous list price.”

“‘It’s kind of crazy,’ says contractor Will Davis as the auctioneer’s next sale booms out of speakers at rock concert decibels. ‘I think it’s fun. Usually the noise gets people bidding much higher than they would.’”

“‘Our idea is to expose these properties to people who may not be aware of them,’ said Joe Joffrion, executiveVP of Real Estate Disposition Corp. ‘Then bring a bunch of people into a room to create the market value.’”

“Later on, organizers would hand out coffee and candy. Sugar, one person said, to get them excited to bid more.”

“The Davises knew about the unpublished ‘reserve price’ that represents the lowest price the builder is obligated to accept. They picked out 10 homes they wanted after visiting 90 and creating a detailed spreadsheet to rank parts of the homes.”

“In front of the Davises, a few ‘ringmen’ — including one woman — wave their arms and scream to signal bidders to the auctioneer. They visit people whose bid got bypassed by a higher one, wiggling their fingers to draw a higher bid.”

“Davis passes on most homes. He likes No. 43, a five-bedroom, 3,500-square-foot place in Happy Valley. He raises his bidding sheet for $350,000, his top limit. Not bad for a home once valued at $530,000.”

“Davis had it for about 10 seconds before he was passed by. The woman ‘ringman’ comes by. ‘Is it still too much?’ she asks. ‘Is it $350?’ he jokes. ‘$395,’ she replies. Her sales pitch doesn’t work.”

“Loc Hoang was among those who got just what he wanted. He’s always wanted to move to Happy Valley, where his friends live. ‘The prices have been too high,’ he said.”

“Not any longer. Hoang left after buying a three-bedroom, 4,400-square-foot place. The builder said he once had advertised it for $620,000. Hoang said he paid $450,000.”

From KATU 2 in Oregon. “It certainly sounds like an incredible opportunity - the chance to buy a home at 40 percent of the original asking price. But like anything that sounds too good to be true, we learned you have to look at the fine print.”

“‘We built too many houses when the times were good,’ said Pollock. ‘And we have an … excess of inventory and we want to sell it.’”

“His brochure advertises bids starting as low as $149,000 for homes previously listed at prices up to $688,000.”

“But some real estate experts say you should be wary of such opportunities. ‘Whenever a situation arises where something sounds a bit too good to be true, I think there usually is a reason for that,’ said Mike Hasson, president of Hasson Realtors. ‘And I’ve seen a lot of fallout in those situations.’”

“He and his managing principle broker, Dennis Kelly, point to the fine print on the auction rules as reasons for concern. One line states that an inspection after the auction cannot be used as a condition of the sale. It says: ‘No sale will be contingent upon inspection of the property after the auction unless otherwise specifically permitted under the purchase agreement.’”

“But that purchase agreement isn’t available until the day of the auction, which Kelly said raises another red flag.”

“‘There’s a lot of gray areas that haven’t been … worked out, and unfortunately you’re not going to be able to work those out until you’re sitting down there and trying to sign this paperwork,’ he said.”

“Also, the auctioneer himself is allowed to bid up the price on behalf of the seller, and they ‘have the right to postpone or cancel the auction … and to change any terms … or particular conditions of sale …’ just by announcing it during the event, the rules state.”

“Finally, there’s this point: bidders must bring cash or a cashier’s check in the amount of $5,000 as an earnest money deposit.”

“However that money is non-refundable on site if the winning bidder uses the auction’s financing but for some reason the deal doesn’t go through and the buyer wants to pull out, Pollock said.”

The Daily News from Washington. “November marked only the second time over two years in which the monthly median price fell below the level of a year earlier in Cowlitz County. The other was in May 2007, when the price tumbled 7.36 percent from May 2006.”

“Although the once-superheated local housing market is cooling a bit, the new numbers don’t necessarily indicate a downward spiral in housing prices, said Scott Bailey, regional economist for state’s Employment Security Department.”

“‘It sounds like it’s pretty steady (upward) and happened to dip this month,’ Bailey said. A three-month decline, he said, would create a trend.”

“The number of homes on the market last month soared to 751, up by about 190 over a year earlier. Eighty-two houses sold last month, 18 fewer than in November 2006. And so far this year, the number of homes sold is down 24 percent.”

“Jerry Flaskerud, a broker in Longview, said he’s expected the median price to come back down to around $185,000. ‘I don’t think that’s a signal of decline. I think it’s a signal of the market plateauing,’ Flaskerud said.”

The Seattle PI from Washington. “Three months after he and other soldiers received a welcome home from their 15 months in Iraq, Sgt. Marcus Barton and his family might soon be losing theirs.”

“Their small part of the American dream is a wood-frame $152,000 house bought three years ago for nothing down but with plans of fixing it up and reselling it. In the three months since he’s returned home, the Bartons have been treading water while debt mounts and their credit rating plummets.”

“Their mortgage payments went from $850 to $1,350 a month in the summer. The family’s expenses on its total debts are more than $4,000 a month. The Bartons have maxed out their credit cards but have managed to keep up with their house payments.”

“Some of the kids’ toys are being returned. Barton is selling off banisters, countertops and other bargains he shopped for to renovate his house. He has swapped his car for a beater, and he eyes his television and computer as barter bait.”

“‘I’m Craigslisting everything,’ Barton said.”

“‘When I call lenders, they say, ‘no problem’ and thank me for my service. Then in 20 minutes they say there is nothing they can do when they see my credit score,’ he said.”

“One company offered a loan that would reduce the family’s payments from the current $4,600 a month to around $2,700. ‘I need a co-signer,’ Barton said. ‘The problem is I don’t have anybody. I’m the success story in my family.’”

“He also could go take his family back to post housing and has signed up to do so if he loses his house. But the Tacoma house is home.”

“It snowballed with payments on a second mortgage, utilities, a car and other expenses. Credit cards haven’t been paid in four months.”

“‘Before this, we were always on time with all my bills; we had a great credit score. I never missed a mortgage payment, car payment, credit payment,’ Barton said. Sarah finds occasional work. Barton, who is on leave until January, said he wanted to take a second job but his wife discouraged him, noting he needs to needs to rest and relax after 15 months in a combat zone.”

The Heraldnet from Washington. “Question: We are thinking about refinancing our home and pulling out some cash. But with the holidays coming up…we are planning to wait until after the first of the year….But we are concerned about your predictions that home values will fall. Are prices already starting to come down? If so, should we refinance now?”

“Answer: You should refinance as soon as possible because the longer you wait, the more equity you are likely to lose.”

“As I said before, I expect home prices to drop about 10 percent to 20 percent over the next year or so, and then the housing market will flatten out with very little appreciation or depreciation for a few years.”

“And it’s already happening in several areas of the Puget Sound region.”

“One of the top local appraisers that we often use at my mortgage company says that about 75 percent of the homes that he is appraising today have comparable home sales in their neighborhood with depreciating prices.”

“A house in West Seattle that was purchased for $499,000 on May 23 recently appraised for $470,000. That’s a price drop of 6 percent in only six months. A three-bedroom condo in Renton that sold for $360,000 on Sept. 29, 2006, recently appraised for $335,000. That’s a decline of almost 7 percent.”

“And the sad part is that most people don’t even realize that this is happening. They still have the idea that their home is worth what it was at the peak of the housing market.”

“If you currently owed $300,000 on a $400,000 home. You would have no problem refinancing and pulling cash out because you have $100,000 worth of equity in your home. But what happens if the value of your home drops 20 percent?”

“Your $400,000 house would then be worth only $320,000 and you would have only $20,000 worth of equity in the home. That’s a loan-to-value ratio of almost 94 percent, which means you could no longer pull our any cash, and you barely have enough equity to do a ‘rate and term’ refinance to get a lower interest rate if mortgage rates come down.”

“And what if you owed $350,000 instead of $300,000 at the start of this example? If your home value dropped 20 percent to $320,000, you would find yourself in the very uncomfortable position of owing more on the home than it’s currently worth. So if you’re thinking about refinancing, don’t delay.”

The Bloom Goes Up And It Does Come Down

The News Journal reports from Delaware. “Joyce Gwyn hoped to get $115,000 for her two-bedroom Wilmington home when she put it up for sale — 14 months ago. Today, it’s on the market for just under $80,000. ‘I keep lowering and lowering and lowering the price,’ said Gwyn, who paid $62,500 for the home in 1998. ‘Now I feel like I’m giving it away. I don’t want to keep lowering it, but it’s been a long time. Right now, people aren’t really buying houses.’”

“Real estate agents, whose livelihood depends on optimism, admit the Delaware market is slower than they’ve ever seen. ‘This is probably the slowest,’ said Bill Lucks, a Realtor for 28 years and president-elect of the Sussex County Association of Realtors.”

“Some sellers have to face the fact that their homes are worth less than what they paid. ‘After the crying is over, I can finish talking,’ said Melinda Proctor, (an) agent who has been selling homes for 15 years.”

“One couple paid $399,000 for their home about four years ago, Proctor said. They put it on the market earlier this year for $509,900 but had to reduce it six times to $385,000. It finally sold for $360,000 when the couple agreed to contribute $18,000 toward the buyers’ settlement costs, she said.”

“The bottom line: The sale put the couple about $60,000 in the hole. They pleaded with their mortgage company to write off that debt, which it did to avoid the time-consuming and expensive process of foreclosure.”

“Alfred Epps was putting some work into his four-bedroom Rutledge home last week. He just put it on the market and has an open house scheduled for this afternoon. Looking out his front door, though, Epps has a vivid picture of the housing market he faces: Besides his own for-sale sign, he can see one next door, one across the street and a third one down the block.”

“‘It’s a tough time to sell,’ Epps said. ‘But if it doesn’t sell for what I want, I’ll just ride it out.’”

The Capital from Maryland. “The number of homes sold in Anne Arundel County plunged 42 percent in November, the biggest drop in nearly a decade. The Metropolitan Regional Information Systems Inc. reported buyers bought only 346 county homes last month. According to MRIS, the number of active listings last month stood at 4,243, up from 3,796 in November 2006.”

“Dr. Joe Cater, president of Market-Economics in Annapolis. Dr. Cater said while the market may have hit the bottom, consumers are having a hard time adjusting. ‘It’s hard for them to come back and say life was different before this,’ he said. ‘The bloom goes up and it does come down. And that’s where we are with the market.’”

The Herald Mail from Maryland. “The news was grim Wednesday at the monthly staff meeting of one of Washington County’s smaller real estate firms. House sales by companies throughout the county were down again. The average sale price was down again.”

“SuZanne Glocker, of The Glocker Group Realty Results got her 10 sales agents together and gave them a pep talk. ‘Growth is inevitable. We have a bright future and it’s all coming back eventually,’ Glocker said. ‘The market is correcting itself and the pendulum will swing back. It’s just this time, the pendulum has swung so far and so wide, a lot of people got hurt.’”

“For now, the picture still is mostly dark. In Washington County, the market so far this year is not even half what it was during the same period just two years ago.”

“‘The one thing in my estimation that’s had a bigger impact on the Franklin County market than anything else is, we’ve had a number of builders come in here from York (Pa.), or Fairfax, Va., or other places … and they started slapping up prices as if they were in Fairfax, Va., or Maryland,’ said Steve Spray, a past president of the Pen-Mar Regional Association of Realtors.”

“‘The typical new house is anywhere from $225 (thousand) to $325,000. The problem with that is, based on local wages, the median family income, according to Fannie Mae in 2006, was $57,200,’ said Spray, stressing that as ‘family,’ not each wage-earner.”

“Doing the math, that means a Franklin County resident could be expected to afford a $200,000 house - not more, Spray said. ‘You’re in a price range where you haven’t taken into consideration buying power based on local wages,’ he said.”

“In Washington County, it was in the spring of 2005 that Glocker first sensed the economic slowdown that since has ravaged the market.”

“‘May of ‘05 is when the market turned,’ she said. ‘The multiple offers stopped. The list price-and-over (offers) stopped. In May of ‘05, we really felt that go down. Then, offers came in under the asking price. Then, throughout ‘05 and into ‘06, you really knew something was going on.’”

The Washington Post. “Meet Pollyanna, your real estate agent. She has stuck with the real estate business through two tough years, and she’ll spend the winter convincing herself that the only problem with the market is that headline-hungry oafs in the news media have talked buyers into hiding.”

“At a year-end briefing on the state of the local real estate market Tuesday, real estate executives took turns explaining why, as always, ‘it’s a great time to buy a home.’”

“Linda Simpson, 2008 president of the Prince George’s County Association of Realtors, said, ‘From a bust perspective, we’re not doing all that bad.’ That’s even though the average time a home stays on the market has increased to more than three months, and the unsold inventory has doubled since 2006. ‘Prices have stabilized; they will begin to increase soon,’ Simpson said.”

“The Center for Regional Analysis reported that the Washington-area foreclosure rate in the third quarter had increased significantly over the past year. Locally, 79 homes per 10,000 were in foreclosure, compared with 11 per 10,000 in the corresponding quarter last year.”

“Also, officials in Loudoun and Fairfax counties warned that their budgets would each fall short by $200 million or more next year, thanks largely to declining home prices.”

“‘Some parts of our region, such as Loudoun and Prince William counties, will take a lot longer to recover,’ said John McClain, deputy director of the Center. ‘There’s so much inventory.’ How much longer will it be until they recover? ‘Not 2008.’”

The Free Lance Star from Virginia. “October housing prices in the Fredericksburg area fell to their lowest levels since February 2005, according to the Virginia Association of Realtors.”

“The median sales price for a home in the Fredericksburg area was $292,000 in October. That was an 8.6 percent drop from October 2006. It was only the third time since April 2005 in which median monthly prices have slipped below $300,000.”

“The number of area homes sold through October dropped 16.5 percent from the year-ago period.”

“Median monthly sales prices were below $200,000 in the Fredericksburg area as recently as April 2003, according to Virginia Association of Realtors data. Go back to October 2000 and you’ll find median sales prices of $134,700.”

“‘We went up so high in this area, and that’s why we’re experiencing the fall,’ said Suzy Stone, president of the Fredericksburg Area Association of Realtors.”

The Morning Call from Pennsylvania. “When the Eastonian opened in 2006, the fanfare reached a feverish pitch, with state and local politicians touting the $14 million project as the savior of the downtown and a symbol of greater things to come.”

“The developers, Koehler-Kheel Realty, said the renovation of the old Hotel Easton would prove to skeptics that buyers would be willing to pay up to $795,000 to live downtown, in large part due to the building’s Manhattan-style amenities and river views.”

“Thus far, the Eastonian has failed to meet these lofty expectations, as only nine of the building’s 30 units have sold, according to Northampton County real estate records.”

“In fact, records show that only one unit has sold during the past 17 months, despite buyer incentives such as reduced prices, breaks on maintenance fees and temporary tax savings from the state.”

“Eastonian developer Peter Koehler blamed the economy and the sluggish real estate market for the slow sales.”

“‘It is just this tremendous downturn in the economy,’ he said, adding that other condominium developers in the city may have delayed their projects based on the low level of sales at the Eastonian.”

“Ashley Development Corp., which owns three of the four uncertain condominium projects, received city approval in February to build the $40 million Majestic project, a nine-story, 143-unit residential building. But Ashley President Lou Pektor told city officials in September that the project is ‘on hold until market conditions are better for condominium financing.’”

“‘We can’t just keep approving projects and have them sit idle,’ City Councilman Ken Brown said at a recent City Council meeting. ‘The Pomeroy looks like an eyesore, and it’s a key piece to the revitalization of the downtown, and it needs to be completed.’”

“Since 2000, real estate records show that 61 properties designated as condos have been sold at an average price of roughly $138,000, substantially lower than the prices offered at the Eastonian, where condos range from the low $300,000s to nearly $800,000, according to published reports.”

“Homes in the Easton Area School District, which covers parts of the suburbs, sell for about $237,000 on average, county records show.”

“‘I don’t know if the price point [at the Eastonian] was appropriate for that location,’ Councilman Dan Corpora said.”

“Easton Mayor-elect Sal Panto Jr., who is chief administrative officer of developer Strausser Enterprises, Palmer Township, said he doesn’t want to see developers cut their prices. ‘With the type of people we want to attract, the buildings should be of high caliber,’ Panto said. ‘I don’t want to lower the pricing and the quality.’”

“‘The prices are surely not to blame — it’s the market, and it will turn around,’ he added.”

“Owners of the Eastonian condos say that while they are concerned about the lack of sales, they believe it’s just the vicious cycle of the real estate market.”

“‘Yes, we’re concerned,’ said Marie Tipton, who purchased one of the units. ‘It may be a couple years before we realize the financial benefits from investing in a unit, but we are happy with the benefits of living in the building, and I think history will show that we are pioneers.’”

Local Market Observations!

What do you see in your local housing market this weekend? Builder incentives? “It’s the time of year for gifts, and home builders are ready to give, in order to receive. It’s no secret that 2007 has not been a good year for home builders. It is predicted that 18,000 single-family and townhouses have been started in the Chicago area this year, almost a 50 percent decrease from 2005, said Chris Huecksteadt, Chicago director for Metrostudy. To encourage buyers, home incentives are abundant — from very first homes to dream houses.”

“In Elgin at West Point Gardens, both townhouses and single-family homes ready for occupancy come with price breaks. For example, a four-bedroom Templeton with a porte-cochere, 9-foot ceilings and a home site on a pond is available at $412,275, down $40,000.”

Or auctions? “It’s a buyer’s market for those looking to buy a home. One bit of evidence: this Sunday, some Colorado homes will be auctioned off. They are homes that have been through foreclosure. In an effort to unload them, the banks have decided they will go to the highest bidder.”

“One hundred Colorado homes will be auctioned in one day, from Arvada to Westminster, and from Greeley to Colorado Springs.”

“And some could go for bargain basement prices. ‘Well, this particular home was previously listed at $203,900, and on Sunday the starting bid price is $85,000. So it will be up to the bidders to decide the price,’ said Martin Clouser, the Director of Auction Operations.”

More foreclosures? “South Dakota continues to rank 49th in the country for foreclosures. RealtyTrac, admits that the company only bases it’s report on three South Dakota counties, Minnehaha, Meade and Brown.”

“But there are many more counties in the state that are seeing the rise of foreclosures hit their area of the South Dakota and are watching people lose their homes. Davison County Civil Deputy Kathy Fouberg says, ‘It’s just been amazing, the amount of sales that we have.’”

“Dozens of homes in Davison county have been sold this year, but not by local realtors, by the sheriff’s department. Fouberg says, ‘This is a case where I’d just assume we were in the bottom of the barrel but I don’t think that is correct.’”

“Fouberg is seeing the foreclosure trend hit her county this year. The county has seen 34 homes foreclosed on in 2007, that’s more homes than the county has had in the last three years combined.”

Industry changes? “Nearly a year ago, NABOR quit sending its monthly sales numbers to the Florida Association of Realtors, the voice of Florida real estate. That meant they were no longer visible to the public, or the media. But that’s about to change.”

“NABOR’s decision to keep itself out of the state association’s monthly reports came after they began to show sharp drops in home sales and prices in the Naples area. Some questioned the group’s motives, though leaders insisted they weren’t trying to hide anything.”

“‘Our idea is to give the market what it wants. The numbers are the numbers,’ said Joe Ballarino, a former NABOR president.”

Bits Bucket And Craigslist Finds For December 16, 2007

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