The Housing Bubble

The North County Times reports from California. “Martin Kolkey’s family has been building homes for more than 50 years. If income doesn’t improve soon, he says the family business will fold within eight months. ‘Every night I worry about it,’ he says. The only other worker on a recent Thursday morning was his father, Aaron, who mans the phones and is the company’s chief financial officer.”

“‘You see all these gray hairs on my head?’Kolkey said. ‘It’s a struggle every month for me to make payroll.’”

“New home permits in San Diego County for November fell 35 percent from the same month in 2006 to 170, according to data from Burbank-based Construction Industry Research Board. The housing recession appears to have shrunk small builders’ revenues even more. Kolkey, who used to average 40 homes a year that sold for a total of about $24 million, said his revenues are down 70 percent.”

“He has downsized his staff from eight to just three and still struggles to break even.”

“Kolkey, as with other builders in trouble, has an inventory of new homes that he is struggling to sell in a market flooded by a meteoric jump in foreclosures. He has two homes in the San Diego area and about 20 lots ready to be built in Arizona.”

“He said he has slashed prices to below the cost of building and cannot cut prices any more because of bank loan obligations.”

“Many lending institutions have cut off loans altogether, creating a ‘credit crunch,’ said Ben Bartolotto, research director for the construction research board. ‘Working capital is hard for a lot of businesses to come by, and that’s because of the credit crunch,’ Bartolotto said. ‘That’s becoming more and more of a problem.’”

“‘I’ve been doing this for 26 years, and it’s never been this bad,’ Kolkey said. ‘The difference is, in (the housing downturn during) the early 1990s, we at least had people looking. … I don’t have a soul going through my models now. Nobody’s looking.’”

“Mario Landini said he expects his 3-year-old business, which builds single custom homes, to go under by the end of February. ‘I cannot survive this any longer,’ said Landini. ‘I’m very worried. I don’t sleep at night. It’s not easy when you have kids and a family. I’m already looking at other work to help feed my family.’”

“Bob Booker, president of Encinitas-based Venture Pacific Development, said he hopes to have the capital to take advantage of cheap bank-owned properties this year, as he did in 1995 toward the end of the previous housing recession.”

“‘Make no mistake, the market will come back, and it will come back sooner than we think,’ Booker said.”

“Kolkey is also struggling to stay afloat: He is worried about being able to pay off bank loans. He won’t build a home without a signed contract, a change from past speculative building,- and will consider offers up to $150,000 below the original listing on his remaining new homes.”

“‘There’s no profit left,’ he says, shaking his head. ‘Surviving the downturn … that’s the business model right now.’”

The Bakersfield Californian. “Homeowners aren’t the only ones defaulting on property loans these days. Developers, too, are popping up on Kern County’s roster of delinquent borrowers. Some properties have even foreclosed.”

“Troubled loans dog large projects, such as SunCal Cos.’ $74 million default to Lennar Corp. for a planned housing development in Shafter, as well as small plans with less than $1 million at stake, county records show.”

“While not unprecedented in California, the sudden crop of developer defaults are apparently a first for the metro area.”

“In the early 1990s, Bakersfield appraiser Gary Crabtree said, the Palmdale-Lancaster real estate market cratered because of layoffs in the aerospace industry. Pinched developers there let ’street upon street’ of partially constructed homes go back to banks, he said.”

“In the northeast, signs of the building bust are everywhere, even impacting developments that haven’t defaulted. New homes in the Four Seasons at Bakersfield retirement community, for example, sit amid a sea of delinquent dirt.”

“Glenn Shellcross, a 72-year-old retiree, knew the housing market had slowed when he bought a $365,000 home in the budding neighborhood last summer. The builder, K. Hovnanian, threw in lots of extras. But last week, K. Hovnanian stopped heating the swimming pool to save money, he said.”

“‘I understand only three people were using it,’ Shellcross said.”

“Tom Cook, general manager of Bakersfield paving and grading firm Burtch Construction, said Burtch is owed money by Dunmore Diamond Ridge LLC for work at a southwest Bakersfield project touched by a complicated November bankruptcy filing. ‘We haven’t been paid anything at all,’ Cook said about a $900,000 bill submitted in mid-May.”

Inside Bay Area. “City leaders are poised to allow another developer to slow down the assembly line of new homes being built. During Monday nights Manteca City Council meeting, Anderson Homes will ask for an extension on sewer allocations for buildout of its Paseo West Development.”

“In October 2007, the City Council authorized staff to negotiate amendments to development agreements, while amending the amount of time allotted for sewer allocations from three to five years.”

“Andersons Paseo West subdivision garnered national attention when 34 unsold homes were part of a large-scale public auction to reduce standing inventory.”

“‘Were trying to make Paseo West, like all of our other developments, all it can be and were trying to take every step to see that happen,’ said Craig Barton, Anderson Homes chief financial officer.. ‘The way the market is now, it makes sense to wait.’”

“At the time the council voted for the extension, an attorney representing local developers estimated somewhere between 1,000 and 1,200 empty homes or a three-year cumulative inventory of foreclosures, resale homes and brand-new homes exist in Manteca.”

“However, other developers arent exactly banging on the door to build with the housing markets current state, Assistant City Manager Karen McLaughlin said.” “This just gives those who had planned to complete buildout of subdivisions more time, so they dont sit there empty. Because of where the market is, it makes sense, she said.”

The Ventura County Star. “It’s the ideal living situation, planners say — working, shopping and dining within a short distance of your front doorstep. As Ventura County cities run out of developable land, mixed-use development is a model city leaders are eager to implement.”

“The Marketplace, under construction on a portion of Tapo Street, is the city’s first example of ‘village-style’ living. City leaders are looking to similar developments as a way to rev up the city’s economic engine.”

“The 6.16 acres between Tapo and Winifred streets, is in an area long in need of revitalization. The property has sat vacant and fenced since the Northridge earthquake in 1994.”

“The Marketplace is meant to attract young professionals as well as seniors.”

“Right now, a ‘no down payment, no closing costs, no kidding’ banner hangs outside the development. But like most of the surrounding area in this slow market, the units have not been selling well. The model townhome units were completed in November and the builder is looking to sell them from the low $400,000s to the mid-$500,000s.”

The LA Times. “Last month, the Bush administration won voluntary agreement from lenders on a five-year freeze on interest rate hikes for borrowers who are current with payments, live in the mortgage property, face loan increases between now and July 2010 and meet other criteria.”

“Kevin Stein, associate director of the California Reinvestment Coalition, said an October survey of 33 nonprofit groups that counsel borrowers showed that they were having a tough time getting the responses and results from lenders they need for their clients.”

“‘There’s a lot of chaos,’ Stein said. ‘There’s a lot of lost faxes, unreturned phone calls, service representatives changing in the middle.’”

“He said lenders’ responses seem to be: We’ll have someone get back to you.”

“Is any institution doing a fair job of working with customers? ‘From where we stand, it doesn’t look like it,’ Stein said. ‘It’s a morass: People face incredible hold times when they call, the lenders don’t have enough people servicing loans and there’s no public information that drives accountability.’”

“L.A. attorney John Torjesen, who represents people in litigation over such loans and foreclosures, says to start by digging out escrow documents and actually reading them.”

“The most important terms of the loan, the frequency and size of increases, possible prepayment penalties or balloon payments, should be all within the note itself.”

“‘Most people are surprised by their adjustables,’ Torjeson said. ‘Between mobile notaries who brought them the documents at closing and the ease and speed of getting the loans, most people didn’t entirely understand what they were getting into.’”

“‘I’ve seen loan documents that say no prepayment penalty on the first page and on page 8 it establishes a prepayment penalty. Most mortgages require that the property have insurance, but I’ve seen documents that ultimately force the borrower to pay for very expensive insurance selected by the lender,’ he said. ‘People didn’t know what happened until it was too late.’”

“Lawyers such as Torjeson and Dorothy Herrera, senior attorney with the Legal Aid Foundation of Los Angeles, can help some people, those who can show they were misled by a broker or ended up with a loan containing a clear violation of the Truth in Lending Act, including the failure to disclose key information.”

“But many of the consumers contacting Legal Aid don’t qualify for those protections, Herrera said, and are just in over their heads financially.”

“Other borrowers, who have little or no equity, may look at short sales, where the lender allows the borrower to sell the house for less than the debt, as a strategy to protect their credit rating so they can buy another home later.”

“‘We call it a soft landing,’ said Lori Gay, president of a national network of nonprofits that deals with homeownership issues. ‘Sometimes it’s the best we can do.’”

The County Sun. “The sky isn’t falling just yet in San Bernardino County. But the housing meltdown is expected to push several cities into financial balancing acts as they rake in millions less in residential property-tax revenues.”

“‘We’re now looking at growth rates in property-tax revenue statewide going down 4 or 5 percent each year for the next few years,’ said Michael Coleman, fiscal policy adviser for the League of California Cities. ‘For most cities, that’s the top source of revenue these days.’”

“The Inland Empire continues to suffer from record foreclosure rates and a sour housing market, which is pushing home values drastically lower. In turn, property assessments by the county are clocking in at values far less than in previous years.”

“‘There are definitely more (taxpayers) who were delinquent by Dec. 20, 2007, than there were in 2005 or 2006,’ said Annette Kerber, assistant treasurer-tax collector/public administrator. About half the amount of property taxes owed for fiscal year 2007 have been paid. Taxpayers have until April to ante up the rest.”

“‘The caution flags are flying,’ said Mel Drown, finance manager for Fontana.”

The LA Daily News. “It’s a new year, how about a new job? Before dusting off that resume, it pays to find out who is hiring and which industries are hot. To answer those questions, the Daily News interviewed professional labor market analysts throughout Southern California.”

“(A) big industry that experienced massive layoffs last year, real estate professionals, shouldn’t expect to see any interest from employers for at least four to six months.”

“Overall, job seekers can expect a mixed bag in terms of job prospects. After all, ‘We’re on recession watch,’ said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp.”

“The banking industry is hobbled by fear amid the mortgage credit meltdown. ‘Everybody is being ultra-cautious,’ Kyser said. ‘One of our people was in an auto accident and went to Enterprise Rent-A-Car, and the clerk had been working at Countrywide.’”

The News Enterprise reports from Kentucky. “Like much of the country, this area does not appear to be exempt from a housing sales slump. Building permits issued in Radcliff and Elizabethtown in 2007 for new houses dwindled from preceding years. Broker John E. Wright Sr. warns developers, especially small contractors, not to get too overzealous. ‘I think some people are getting overextended,’ he said. ‘The people who jumped in and don’t have a background are going to get hurt.’”

“Property manager Jayme Burden said some houses formerly for sale in the area now are being rented, a trend the National Association of Realtors identified in a report last month.”

“The boom in what he called ‘cell-phone contractors’ helped speed up the pace for new construction and, if the lull continues in the housing market, could lead some of them to look for other work. ‘At some point the (residential) growth kind of surpasses the demand,’ he said, ‘and that’s where we are right now.’”

The Courier Journal from Kentucky. “The partners in the massive RiverPark Place condominium and marina development have done little work since November and have greatly reduced the scope of the project’s planned first phase. It may take a decade or more, but ‘the project will get built as designed, absolutely,’ said Steve Poe, the lead partner in the venture.”

“‘We’ve been fighting the sub-prime mortgage crisis,’ Poe said, adding that with an uncertain housing market ‘we and our lenders don’t have an appetite for building a lot of ’spec’ buildings.’”

“Poe said the crisis in the national lending industry affected River Park Place. ‘Everyone, including us, has a higher level of uncertainty’ about building condo towers than ‘we did 12 months ago,’ Poe said.”

The Columbus Dispatch from Ohio. “Ohio’s county auditors take a snapshot of home values every three years to determine the property taxes you pay. Delaware County Auditor Todd Hanks said his staff has only begun reviewing recent sale prices, but a first look indicates that the average property-value increase ‘could be 1 percent, it could be nothing,’ he said.”

“In one of the fastest-growing counties in the country? The place where pricey houses were going up so fast it seemed to exist in a perpetual cloud of construction dust?”

“Hanks said his estimate might be off, but the increase is sure to be modest. After an average 11.25 percent increase in 2002 and a 16.75 percent uptick in 2005, ‘We’re not seeing big changes,’ Hanks said.”

“Madison County Auditor Jim Williamson said values in 2005 rose 15 percent, ‘but that’s quite some time ago, and I’m not sure it’s really indicative of what’s going on in the real-estate market today.’”

The Middletown Journal from Ohio. “Homeowners in 2007 saw property values deflate faster than a New Year’s Eve party balloon. Sheriff’s sales of home foreclosures in Butler County surged from 1,312 in 2006 to 1,672 properties last year, said sheriff’s spokesman Sgt. Monte Mayer.”

“Interest rates are hovering at 6 to 6.5 percent. That’s compared to the 7 percent interest rates available before the real estate bubble burst, said Coyt Rains, outgoing president of the Hamilton-Fairfield-Oxford Board of Realtors.”

“So what’s keeping buyers from entering the market? ‘With all the bad news about the market today, people are afraid. Positive news about the housing industry would help,’ Rains said.”

“It’s already a buyer’s market, but it could get even better for those looking to own a home. There are many incentives for those looking to own a home, including low interest rates and a plentiful home inventory, said Reba Owens, president of the Middletown Board of Realtors.”

“‘You are going to get more house for your money today,’ she said.” “The selection can partly be attributed to Butler County’s high rate of foreclosures, which have hit Hamilton and Middletown hard.”

“But what could happen if things don’t start turning around? ‘The housing market is one of the biggest engines that drives the economy. It affects everything. If this continues, the country would be in a deep recession,’ said Rains.”

“‘I don’t think the government can allow that to happen. It would have to pump some money into the economy to jump-start things,’ he said.”

The Toledo Blade from Ohio. “Very little subprime mortgage lending is taking place in the Toledo area anymore, but loans made in the last several years led to a glut of foreclosed homes and a struggling real estate market, two local real-estate experts said.”

“Al Green, president of the Toledo Board of Realtors, said that with nearly 7,000 more homes on the market than a year ago, sellers should expect houses to sit 180 to 300 days. ‘We’re pushing a year to sell a house.’”

“Sellers who do not adjust their prices to the middle or low end of the market will have an even harder time selling, he added.”

“As for buyers, those hoping to purchase without providing a down payment or by using a loan with a low ‘teaser’ interest rate are out of luck, said David Seeger, CEO of Great Lakes Credit Union. ‘Subprime loans have dried up,’ he said. If someone cannot qualify for a conventional loan, “there’s really not a lot of avenues left for us to place them into a … loan.’”

“Mr. Green pointed out that real estate crises are cyclical and housing downturns occurred in the area in the mid 1970s, in 1980-81, and in 1989. ‘I was frankly expecting a slowdown a few years ago,’ he said.”

The Canton Repository from Ohio. “Angela Hammond no longer believes her Canton home was worth the $75,000 sale price. The doorbell should have been the first hint. It never worked. Evergreen Homes, which sold her the home, said it was easy enough for her to fix.”

“Then, water began to leak in the basement. And she found water dripping from the ceiling in her children’s bedroom and warping the ceiling in her master bedroom, even though the roof was supposed to be new.”

“‘Wouldn’t you think they would complete the whole house and not leave certain things undone?’ asked Hammond, a first-time homebuyer. ‘They said it was inspected.’”

“Assistant Summit County Prosecutor Richard Hoenigman explained how the scheme worked: Evergreen bought the Summit County properties at foreclosure, made cosmetic upgrades to the homes, obtained inflated appraisals, and then sold them at the overly inflated value.”

“‘They would take overinflated appraisal and use it to secure a legitimate loan for the inflated amount,’ Hoenigman said. ‘Since most lenders only lend 80 percent of the value, Evergreen would take the second mortgage to make up the difference so that the unsuspecting homeowner would be able to buy the house with no money down.’”

“‘They all were in over their heads to begin with,’ Hoenigman said. ‘A lot of them just barely, if at all, qualified for the initial loan. After two years, most of these loans were adjustible-rate mortgages, and the mortgage payments would go up.’”

“More than 40 percent of the properties Evergreen sold in Summit County went to foreclosure, he said. About 47 percent of the roughly 100 properties Evergreen sold between 2005 and 2007 in Stark County have gone to foreclosure, a Repository analysis of county auditor and court records show.”

The IndyStar from Indiana. “Flaherty & Collins has taken over a stalled condo project on Morse Reservoir and plans to begin closing on homes this month. When the property was purchased in 2005, John Kretchmar, a Chicago-based developer, expected to have the first three buildings done by 2010 with three more to come but said the timeline was scaled back due to the slow housing market.”

“Despite the slow market, Kretchmar said, demand is still there for condos. ‘Noblesville is one of the fastest growing cities in Hamilton County and the Indianapolis area,’ he said. ‘Of course, the location on the reservoir is very attractive.’”

The Chicago Tribune from Illinois. “Kimball Hill Inc., a major Chicago-area builder with operations in eight states, said Friday that it was forced to delay its 2007 financial statement as its debt was downgraded by Standard & Poor’s.”

“Along with many other builders, Rolling Meadows-based Kimball Hill has seen its sales wither in the face of the worst housing recession in decades. Sales for some builders have fallen by 40 percent or more over the last two years. Housing consultant Steve Hovany said one major builder, Orleans Homes, recently sold land it had acquired in this area and at least one national builder is thinking of abandoning the Chicago market.”

“‘Just about all the major builders are trying to conserve cash, instituting layoffs or reducing the size of their offices,’ said Hovany. He said builders ‘are struggling with overhead costs that are too high and projects that no longer are profitable.’”

“S&P said ‘Kimball Hill will have no access to additional borrowings’ under its senior credit facility, which had just over $100 million available at the end of June.”

The Sun Times from Illinois. “Countrywide Financial Corp. will cut 127 jobs at its Rolling Meadows office starting Jan. 18.”

“Countrywide is the focus of an investigation by Illinois Attorney General Lisa Madigan. Madigan’s office subpoened documents from the company last fall. It is probing how homeowners were approved for mortgages far beyond their means.”

The Leelanau News from Michigan. “The just-concluded year will go down as one in which some cracks became visible in the plans of developers to step up the creation of housing stocks in Leelanau County. Three of the largest developments ever proposed for Leelanau County are taking a more cautious approach, showing signs of financial stress — or both.”

“The obvious example can be found at the BayView development in the Village of Suttons Bay, which just a couple years ago touted plans to double the size of the village when fully built. But sales of waterfront condominiums never did take off, and stagnated amid a downturned housing industry and publicity of a trail of unpaid construction subcontractors and claims of shoddy workmanship.”

“Consultant Chuck Kalchik and Timber Shores primary owner Fred Gordon, a Royal Oak attorney who has created housing developments from California to Florida, are convinced Timber Shores will be embraced by a growing number of new retirees — eventually.”

“‘You’ve just got to look at it in the long-term. It’s a 10-year build-out. We’re hitting the baby boomer market, and that is the group that is starting to retire,’ he said.”

“Timber Shores will seek to provide housing in a wide range of prices, from $175,000 to over $1 million.”

“One of the problems that beset BayView condominium sales may have been their prices, said Shelly Brunette, a real estate agent in Suttons Bay. She said…there is a two-year supply of units in the $250,000 to $550,000 range. BayView units were selling for just above that mark, in the $700,000 range.”

“And she added that developments such as BayView unveiled their plans several years ago, long before the market took a downturn. ‘Those developments that are on the bubble didn’t start last year — they started years ago before that market went haywire,’ said Brunette.”

“County planner Trudy Galla said Leelanau County had plenty of empty lots available long before developers sought permission from local units of government to create large-scale developments. She pointed to a Leelanau County Planning Department study in the 1990s.”

“‘What we found was that every (township) had vacant lots. What we were able to show was there were a lot of vacant lots out there, and so why do we need subdivisions?’ she asked. ‘No one wants to have another development out there sitting vacant. If the market studies aren’t there to support it, why are they proposing 150 to 200 more units?’”

The Lansing State Journal from Michigan. “More than 1,700 Ingham County homes were sold in sheriff’s auctions in 2007, more than triple the number of homes lost through foreclosure in 2000.”

“Approximately 95 percent of homes at that stage of foreclosure are eventually lost by the homeowner, while owners of the remaining 5 percent save their homes in the following six-month redemption period.”

“In 2007, the county saw 1,757 homes reach a sheriff’s sale, up 33.9 percent from 1,312 homes in 2006 and up 362.4 percent from 380 homes in 2000.’

The Grand Haven Tribune from Michigan. “The county’s Register of Deeds documented 850 foreclosures last year, compared with 540 in 2006 and 333 in 2005 — while only a total of 423 foreclosures occurred in Ottawa County during a five-year span from 1996 to 2000.”

“Relative to some counties on the east side of the state, Ottawa County’s foreclosure numbers aren’t bad. Default Research found foreclosures increased in 2007 from the previous year by 108 percent in the Detroit area. Last month alone, 2,069 foreclosures took place in Wayne County.”

“The situation in Ottawa County and the rest of the state doesn’t seem to be getting better. In the first six months of 2007, the county had 388 foreclosures. It had 462 in the second half of the year.”

“‘This bubble started to pop up a couple of years ago, and each year since then we’ve thought it’s got to bottom out,’ said Ottawa County Sheriff’s Deputy Steven Cotton, who posts foreclosure notices for the county. ‘And it will. But it’s gone on a lot longer than any of us out in the real world would have thought.’”

The Ann Arbor News from Michigan. “A record number of homes in Washtenaw and Livingston counties were foreclosed upon in 2007, statistics show. Combined, 2,180 homes were sold at sheriff’s auction in the two counties last year, a 90 percent jump from 2006, according to the counties’ respective Register of Deeds offices, and quintuple the number of auctions just five years ago.”

“‘When you look at a bell curve, we have not yet reached the top,’ said Washtenaw County Treasurer Catherine McClary, who estimates that in Washtenaw alone, 2,200 homes entered some state of foreclosure in 2007. ‘We will probably see that in late 2008 or 2009. This is still the beginning.’”

“The rise in foreclosures is blamed largely on this year’s swell in adjustable rate mortgage resets. Falling home prices have made it hard for homeowners to sell or refinance into fixed-rate mortgages.”

“‘When it first started, the first (foreclosed homes) were east of US-23 and now it appears that it’s an equal number east and west of 23,’ said Washtenaw County Special Deputy Sheriff Jimmy Moore, director of the civil division, who auctions foreclosed homes in downtown Ann Arbor. ‘Now, it’s the whole county.’”

“Moore said most of the foreclosed homes he auctions range in price between $200,000 and $700,000. He estimated that more than 50 percent of people vacate their house before the end of the redemption period following a sheriff’s sale here, which can be between six and 12 months.”

“The rest are evicted by the mortgage company or bank with the help of sheriff’s deputies.”

“Ralph Newkirk runs the foreclosure division for Real Estate One. Newkirk’s office deals exclusively with banks selling foreclosed properties. His listings doubled in 2006 across southeast Michigan.”

“‘Sometimes I go into these vacant homes and I see all these letters from the bank that have never been opened. They figure if they don’t look at it, it doesn’t exist,’ Newkirk said. ‘These letters are the banks pleading with people to please call me and maybe we can work something out.’”

“Barry Kenyon is a local agent who sells foreclosed homes. Kenyon said in Washtenaw County, most of the foreclosed homes he’s dealt with are in Ypsilanti Township, typically in a subdivision. Foreclosed homes are impacting the price of neighboring houses in some areas because there are simply too many for appraisers to ignore.”

“One bright sign is that mortgage lenders and banks are more aggressively trying to negotiate with homeowners to prevent foreclosure now. Moore said he has more than 100 homes on ‘adjournment’ which means the bank has asked the county to hold off on the sheriff’s auction while it tries to resolve the matter with the homeowner.”

The Courier News reports from New Jersey. “Business is brisk these days at the Somerset County Sheriff’s Office. Somerset Court Sheriff Frank Provenzano said the number of foreclosures increased by close to 500 in Somerset County from 2006 to 2007. The number of foreclosures recorded in the first nine months of 2007 exceeded the total number of foreclosures for 2006 in Middlesex and Union counties.”

“Lee Caprarola, a sales manager with Wells Fargo Home Mortgage in Somerville, said the spike in foreclosures was widely scattered across different economic strata. ‘Some number of foreclosures are going to occur, good times and bad, but it’s many, many more now than in the past several years,’ Caprarola said.”

“Much of the trend was caused by people taking mortgages that they could not afford after payment adjustments, he said. ‘There are people with equity in their homes who we could have done a loan two years ago that we can’t anymore, and I don’t mean just Wells Fargo — I mean any lender,’ Caprarola said.”

“A small group of regulars attends the auctions, Provenzano said. Most of the buyers are representatives of banks and mortgage companies that hold the loans and can obtain the property for a minimum bid of $100.”

“For example, on Nov. 27 U.S. Bank Association, the parent company of U.S. Bank, the sixth largest commercial bank in the United States, bought a 0.56-acre property in Green Brook at a sheriff’s sale for the minimum bid of $100.”

“U.S. Bank Association had a $982,225.81 mortgage on the property, which was bought in 1998 for $396,889 and was assessed in 2006 at $716,200 according to Gannett NJ figures. To get clear title to the property, U.S. Bank Association must satisfy any liens on the property, plus back property taxes of $7,753.”

“On Nov. 7, Commerce Bank bought a one-acre property on Old York Road in Branchburg for $100. The single-family home was bought in 1995 for $235,000 and had a 2006 assessment of $513,700. The defaulted loan from Commerce Bank was for $1,564,165.”

From Newsday in New York. “When Allan Press started looking for a new home in the spring, he was approved for a $561,000 mortgage at a 6 percent interest rate. In late June, he and his wife found a five-bedroom home in Miller Place that they liked. But as they waited to close, they saw interest rates on the kind of mortgage they needed - a jumbo loan, which is for more than $417,000 - soar as the mortgage crisis unfolded.”

“It wasn’t long before jumbo rates reached 8 percent, which would have translated into a $4,600 monthly payment, far above the $3,000 the couple thought they’d be paying.”

“In August, fearing rates would continue to rise, the couple locked in a 67/8 percent rate, which required them to pay points totaling $10,000. ‘I didn’t want to put that much of our salaries to the mortgage,’ said Press, an operations manager for a Wall Street brokerage firm. ‘After paying insurance and bills, I’d have nothing left to live on.’”

“After making a 5 percent down payment, the couple is paying $3,900 a month.”

“Since Long Island home prices are among the highest in the nation, borrowers here are feeling the fallout - especially in Nassau, where the median closing price of $461,500 is in jumbo territory, experts said.”

“‘There are a lot of people who are holding back on purchases,’ said Paul Schwartz, a certified mortgage planning specialist in Woodbury. ‘People are waiting to accumulate bigger down payments.’”

The Times Union from New York. “The cost of buying a house in the Capital Region has outpaced income growth during much of the decade, making homeownership a struggle for many first-time buyers.”

“In Albany County, for example, median household income grew by 19 percent from 1999 to 2006, according to the U.S. Census Bureau. During the same period, the median sale price of a single-family home in the county jumped 76 percent.”

“The trend was more severe in Saratoga County, where median income grew 16 percent while the median home price rose 98 percent.”

“Economists had warned the trend could not hold. And it hasn’t. ‘We knew that you couldn’t support the rates of appreciation we’ve seen for the last three or four years,’ said James Ader, president of GCAR, a Colonie-based trade group. ‘Or pretty soon, nobody could afford to buy a house.’”

“But even if home prices stabilized last year, the effects of the earlier price run-up may have been manifest: RealtyTrac says the 1,125 foreclosure filings in the Capital Region through the first nine months of the year were more than double the number for all of 2006.”

“Kirsten Keefe, the Albany-based executive director of Americans for Fairness in Lending, said it’s unclear if people borrowed under exotic mortgages because rising housing costs left them no choice or if housing costs rose dramatically because such mortgages became widely available.”

“‘It’s the age-old chicken-or-the-egg question,’ she said.”

The Connecticut Post. “Connecticut homes kept their value in 2007. Prices dropped for many Connecticut homes in 2007. Prices were stable, except for pockets of the market. It took longer to sell a home in 2007. Some homes flew off the market. Sales are languishing.”

“Pick whichever statement strikes a chord with you, because they’re all part of the picture that is the Connecticut housing market these days.”

“In cities and towns in which prices are off the peaks, the median is still generally higher than 2004 levels. A lack of sales at the lower end of the spectrum can drive up the median, even if fewer houses are selling, said Vincent Valvo, group publisher at The Warren Group.”

“Nationally, the housing market started heating up in the late 1990s and early 2000, thanks in part to the high-tech boom, Valvo said. Realtor Bob Stone in Fairfield remembers the market heating up around here in the mid-to-late 1990s.”

“‘The prices really went crazy I would say 2004, 2005 and 2006,’ Stone said.”

“A lot of people — and not just retirees — cashed out, he said, and moved south. There’s still plenty of money to be made, especially for people who have owned their houses for more than a couple of years.”

“‘The prices now are basically 2004 prices,’ Stone said. But, ‘the time on market has definitely increased.’”

“Valvo cautions against believing everything that is said about the state of the housing market. ‘Some of it is real,’ he said of the downturn. However, ’some is a massive perception [of a] market in freefall.’”

“But around here, some bought duplexes and triplexes in hopes of flipping, Valvo said. ‘In particular, the people who were investing in the small multifamilies are getting burned.’”

“There’s also the possibility homebuyers will believe the bargains should be better than they are, Valvo said. Buyers putting off purchases could drive prices down, he said.”

The Cape Cod Times from Massachusetts. “The Cape Cod real estate market ended 2007 on a negative note, with sales volume in December down sharply from the previous year and foreclosures continuing at levels unseen in more than a decade, according to numbers from the Barnstable County Registry of Deeds.”

“‘(Volume) was off significantly from a year ago and I am not entirely sure why,’ said Register John Meade. ‘Hopefully it’s an aberration.’”

“The registry report offers the first snapshot of the region’s real estate market at the end of a year in which slumping sales, sagging pricing and soaring foreclosure were headline news. Last month, 428 property transactions were recorded by the registry, down more than 20 percent when compared with the December 2006 total of 538 sales.”

“The median sales price was also down last month, falling to $329,000, the lowest value in seven months. In December 2006, the median price was $350,000.”

“The 29 foreclosures recorded in December brought the year’s total to 272, more than three times as many foreclosures as were completed in 2006.”

“Median sales value for 2007 was $345,000, down 5.5 percent from the previous year’s median of $365,000. These values, however, may not fully represent the state of the market, said Bill Ryan, a real estate agent in Hyannis. The registry numbers reflect all commercial and residential property sales valued above $50,000, including foreclosures, which generally have lower sales values than traditional sales.”

“In addition, many homeowners had to sell their property for far less than they bought it to avoid foreclosure. ‘Those are forced sales — they are not people who wanted to sell, they are not people who chose to sell,’ Ryan said.”

“Overall, the sales volume on the Cape and Islands in 2007 is approximately equivalent to the number of units sold in the region in 2002, which was, at the time, a record-breaking year for sales, several real estate agents noted.”

“This comparison, they said, demonstrates that 2007, though slower than the previous few years, was still a reasonably healthy one for the market.”

“‘It’s definitely down from the prior couple of years, but how do you sustain what was happening then?’ said Linda Collins, president of the Cape Cod and Islands MLS.”

“Lower home prices, modest interest rates and a glut of inventory are now creating great opportunities for buyers, said real estate agents. This dynamic, they said, could mean that a revival of the market is in store for 2008.”

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

What do you see in your local housing market this weekend? Failed developments? “The developer of a luxury housing complex in Asbury Park has bailed out of the project and sold the unfinished building and surrounding property to a new investment firm. The sale comes just three weeks after Hoboken-based Metro Homes LLC stopped work on another upscale oceanfront complex in the city”

“Councilman James Keady said Kushner most likely backed out of the deal because poor sales of the units are cutting into the company’s profits.”

“‘I think what’s happening now is that reality is catching up with the hype — the hype being from the developers’ side of things that you can get rich quick in Asbury Park, and from the real estate side that this bubble is going to last forever,’ Keady said.”

Lending trends? “When talking mortgages, 40 is the new 25. Less than two years ago, the longest amortization period for mortgages was 25 years. And that’s what most first-time buyers in British Columbia were opting for, as skyrocketing real estate prices translated into hefty monthly payments, even when spread over 25 years.”

“Feisal Panjwani, a senior mortgage consultant in Cloverdale, estimates that 95 per cent of his first-time clients are going long-term with 40. There are also zero-down mortgages and an interest-only mortgage that help them get into the market, he said.”

“According to statistics released by the Bank of Canada, British Columbians carry 19 per cent of the country’s mortgage debt, yet represent only 13 per cent of the population and 13 per cent of the country’s disposable income, said Doug Porter, deputy chief economist with BMO Capital Markets.”

“‘When people talk about the potential risk of outsized household debt it’s probably most acute in B.C.,’ Porter said.”

“And if problems arise in the housing market as they have in the United States, the large mortgages could be a problem, he said.”

“Fears have been expressed over possible closures and job loses in sections of Northampton’s estate agency industry. They come on the back of one of the country’s largest estate agents, Your Move, shutting offices and axing 315 full-time jobs nationally.”

“The cuts are the first large-scale redundancies in the sector, which employs 50,000 people, since the property slowdown began late last year.”

“But Simon Bond, joint managing director of O’Riordan Bond, said he was confident that current market conditions would see established estate agencies, such as his, standing out from the crowd and increasing market share.”

“‘It is now a genuine market. House prices will remain steady, but the number of transactions will fall slightly. This is because banks are less likely to lend money to people who cannot afford it, and because there are less people who are buying houses to make a quick profit, rather than buying them as a home,’ he said.”

Lower prices? “The owner of one of Williamsburg’s biggest brokerage firms said that the Corcoran Group’s 2007 market report was ‘wrong’ in estimating that the average price of a condo in the neighborhood had increased 8 percent since 2006.”

“David Maundrell told The Observer that ‘there was no way’ that the average price of a condo in the Williamsburg market had risen from $817,000 in 2006 to $880,000 in 2007, as the Corcoran report concludes.”

“‘Their data is wrong. We’ve seen the market come down 10 to 12 percent across the board since it peaked in the beggining of 2006,’ he said.”

“‘Prices were astronomically high, even inflated so they had to come down,’ Mr. Maundrell explained of the causes for the slump. ‘Plus there has been a lot more development and competition.’”

More foreclosures? “Westchester County closed 2007 with foreclosure activity up 40.1 percent over the previous year, the county clerk’s office said yesterday. There were 2,166 new foreclosure actions started in the county, up from 1,546 in 2006. The 2006 level itself was up 42.8 percent over 2005.”

“The number of foreclosure judgments by courts in 2007 also was up sharply. There were 707 judgments, up 60.7 percent from 2006. The figure was more than double the 300 foreclosure judgments in 2005.”

“Industry observers said the increase in subprime mortgage problems has contributed to higher foreclosures in the Lower Hudson Valley.”

Insider moves? “The worsening state of the housing sector hit home for one Lennar executive last week when he sold shares purchased in August at a $300,000 loss.”

“Vice president and head of investor relations Marshall Ames sold 30,000 class A shares for $540,174. On Aug. 16, when stock of the Miami-based home builder hit a low of $27.76, Ames had purchased 30,000 shares for $845,100, or $28.17. The stock has continued to fall and when Ames sold the 30,000 shares they were worth $304,926 less than the purchase.”