The Housing Bubble

A report from the Oregonian. “Developers carved out thousands of new home lots on the premise that they’d enjoy the same tidy profits produced in recent boom times. But demand for land and homes has plummeted, particularly in Clark County and Happy Valley, where construction was most intense. As a result, developers are left to pay heavy interest on land sometimes worth less than they owe.”

“‘I knew the market was going to correct, but to have it hit this hard, it’s a big shock,’ said Debra Oester, lead real estate lender at the Bank of Clark County in Vancouver. ‘To have it come to a standstill like this, I’ve never seen it before. And I go back to ‘74.’”

“There’s clear evidence that new subdivisions built at the crest of the boom have suffered a swift and painful fall. In the Portland area, sales through November were down 12 percent from the year before. The inventory of unsold homes in November was enough to last more than eight months — up 63 percent from a year before, according to the Regional MLS.”

“The Reserve is the kind of subdivision Happy Valley builders drooled over. Developer Corey Harris said his company, Landmark Development, paid $7.2 million for about 60 acres on the peak in summer 2005. The deal seemed like a safe bet.”

“Harris said he already had a deal to sell the lots for $18.5 million. To pay his contractors, Harris’ company took out a $12.3 million loan with Bay Bank of Longview, Wash., in July 2005.”

“‘We had no idea what was about to come,’ Harris said.”

“The project fell behind schedule in the spring of 2006. The housing market sputtered that summer. And by September 2006, his buyer wasn’t interested.”

“He said his company was stuck with a $140,000 monthly loan payment, and he stopped making the payments last year. The Reserve’s contractors have filed more than $500,000 in liens for unpaid bills.”

“In November, Bay Bank filed papers to foreclose on the subdivision to get its money back. Ed Cameron, Happy Valley’s building official, says it’s the first time in his nine years that he’s seen an entire subdivision fall into foreclosure.”

“Happy Valley’s protracted land rush pushed the city’s population from 4,500 in 2000 to 10,400 in 2007. But the property party has turned into a nasty hangover.”

“North Clackamas County, including Happy Valley, had 12 months’ inventory of unsold homes in November, almost twice the figure from a year earlier. Thinking back, Harris says: ‘Happy Valley was hot. Now, it’s drowning.’”

“Tim Gray, former chief financial officer of national builder D.R. Horton’s Oregon operation, founded the Camas-based Zephyr Communities in 2004. Within a year, Zephyr built 100 homes and developed 350 lots during its run.”

“As the long real estate boom continued, Gray was among developers who bid up land prices. ‘Tim was paying top dollar for the land,’ said Scott Combs, a Vancouver real estate broker. ‘But it made sense. Tim was trying to buy land so that someone else wouldn’t buy it.’”

“In April 2006, seven of eight scheduled home sales fell through within days. From there, things just got worse as demand fell further and Gray slashed prices. As Zephyr struggled to pay its bills, its creditors, owed about $45 million, grew restless.”

“That debt load became crushing. Last June, an unpaid creditor forced Zephyr into bankruptcy.”

“‘It was a fast and steep drop,’ Gray said. ‘I didn’t pick a good time to go out on my own. It was a very emotionally challenging time. Still is. I made a lot of promises that I wanted to keep, but I couldn’t.’”

“The Clark County market, like Happy Valley, was made more volatile by investors who bought homes and tried to flip them for a quick profit. Investors made it appear that demand was so strong that developers kept pushing up supply. But when the market tightened, investors were the first to bail out on sales.”

“The housing troubles aren’t limited to Portland’s suburbs. St. Helens-based Decal Custom Homes, an active Portland-area builder, is scrambling to remain afloat amid dozens of creditors clamoring for money. By early 2007, Decal had completed both Brush College and Timberline and had signed contracts to sell the land to builders for about $25 million, said two lawyers familiar with the case.”

“But the builders backed out, spooked by the sales slowdown. ‘Now it’s a question of whether (Decal) can sell the land for half’ its original asking price, said Al Kennedy, a Portland lawyer representing Schleining.”

From News Channel 8 in Oregon. “For more than a year, Ray Sinclair tried to sell his ocean view home the old-fashioned way.”

“He had a realtor. He drove in from his new place in Waldport five days a week to open the house in Yachats. Nothing worked. The market was a graveyard. People looked and went about their way.”

“Time for a fresh approach, Sinclair reasoned. An essay contest for a $200 fee that could result in the full transfer of title to the home, which sits on a 10,000-square-foot lot.”

“Sinclair’s situation reflects an increasingly desperate housing bust in Yachats, which has relied on cash-flush California buyers for years, buyers who are nowhere to be found now that their homes south of the border are also stuck with indelible ‘For sale’ signs.”

“The supply of home listings in Yachats is a whopping 27 months, triple that of Lane County’s, said Tawfik Adhab, a real estate appraiser and expert on the central coast housing market.”

“‘As the California markets have dried up, people who wanted to come to Yachats can no longer do so,’ Adhab said.”

“Sinclair and his wife decided two years ago to sell the sprawling one-story ranch house originally built as a one-room beach cabin in 1964. The couple spent $250,000 renovating the place after buying it for $173,000 in 1995. Sinclair, who lowered his asking price from $600,000 to the current $539,000 after a year and still didn’t get any bites.”

“Sinclair plans to extend the contest deadline by 30 days if he doesn’t get enough entries, and there’s language in the rules that reserves the right for him to scrap the plan altogether.”

“Kitty Telles, gaming registrar of the charitable activities section at the Oregon Department of Justice, said she gets calls about once a month from desperate sellers such as the Sinclairs and their real estate agents, wondering about their options. Those calls have increased in recent months as the nationwide housing market continues its freefall.”

“‘It’s getting to be more and more of an issue,’ Telles said.”

“She hasn’t heard many success stories from essay contests. ‘It can work, but I ask every one of them I send information to, ‘If you make this work, please let me know,’ Telles said. ‘Nobody has ever come back and said ‘Kitty, I did it.’”

The Keizer Times from Oregon. “Luckily for Keizer homeowners, homes here are maintaining their market value, according to realtor Amy McLeod. But the hopping, skipping and jumping seen in home values in recent years, the average home value increased 18.82 percent in Keizer from 2005 to 2006, has slowed down.”

“Average home values from 2006 to 2007 increased only 1 percent in Keizer. But lower-priced housing is not necessarily a bad thing when it comes to attracting growth, McLeod said.”

“And despite a lack of new construction…available home inventory in Keizer is actually up, according to broker Rich Ford. As of Dec. 16, 2007, 528 houses had been listed in 2007 as opposed to 421 to that same date in 2006, a 25 percent increase in inventory.”

“Sales activity also declined, Ford noted, with 371 homes sold as of Dec. 16, 2007 versus 425 houses sold at the same time in 2006. ‘Inventory is up, sales activity is down and that is pressuring prices downward,’ Ford said.”

The Daily News from Washington. “A long-delayed, 200-unit housing project is hoping to get a boost from the massive flooding that drenched the Pacific Northwest in December. Landscapers are finishing up the first three homes in the 49-acre Grand Prairie subdivision, located on the south side of State Route 505 entering Winlock.”

“When the Winlock City Council approved Grand Prairie in late 2005, Tacoma-based Rockmann Development Group officials promised that the first stage of 20 homes would be near completion by the end of 2006.”

“Rockmann had contracted with another construction company that ran into financial problems halfway through the project, said project team leader Ron Jarvis. Also, the home prices, $280,000 to $350,000, were also too high for the area, he said.”

“The homes will now be built by the Tacoma-based Stanbrooke Custom Homes, with an expected price range between $210,000 and $280,000, Jarvis said.”

“Rockmann now plans to build the homes as they are sold, not in larger groups, Jarvis said. The homes will likely be filled by families, but Jarvis said he thinks the higher-end homes will become more attractive as more retirees leave the workforce and look for somewhere to settle down.”

“‘Long term, we’ll probably end up filling the development up with baby boomers from all over the country,’ he said.”

The Columbian from Washington. “Home building in Clark County slowed last year to its lowest level in more than 20 years. ‘Every person involved (in building a home) - the engineers, surveyors, banks, building contractors, the suppliers, all of that horizontal string of people - all of their business has slowed down,’ said Mike Worthy, CEO of the Bank of Clark County.”

“David Roewe, executive director of the local Building Industry Association, blamed the 2007 slowdown on a rising supply of existing homes listed for sale.”

“‘There’s just too much inventory on the market so builders have tightened their belts,’ Roewe said.”

“The inventory of new and existing homes for sale peaked in September with a 12-month supply before retreating to 11 months in November. The inventory would take 11 months to sell if no homes were added to the market.”

“Builders who are holding undeveloped residential land are hurting the most, Worthy said. ‘They still have to pay interest and carry the costs. And while they’re tangled in the current projects that they haven’t sold yet, they’re not thinking about the next project,’ he said.”

The Anchorage Daily News from Alaska. “The financial turmoil in the mortgage industry and falling home prices nationwide have created anxiety for buyers and sellers in the Anchorage market, some local real-estate experts say.”

“Another problem, according to Anchorage real-estate agents and lenders: Sellers are trying to sell their houses for more money than buyers will pay.”

“Sales of single-family houses in Anchorage declined 10 percent last year, said Niel Thomas, an Anchorage real estate agent who tracks the MLS statistics. The number of houses listed for sale last month — 944 — was the highest since the late 1990s.”

“‘A portion of the total inventory is just sitting there,’ Thomas said during a speech at a recent Anchorage Board of Realtors luncheon.”

“What’s happened instead is the ‘go-go’ real-estate market of the previous few years, which included some years when home prices increased their value by 10 percent or greater, has ended, he said.”

The Daily News-Miner from Alaska. “Shoppers bought fewer homes in Fairbanks in the second half of 2007, a change analysts said could correct an inflated housing market seen in recent years.”

“The number of single-family homes reported sold late last summer in the Fairbanks North Star Borough dropped from the summer prior, according to the Greater Fairbanks Board of Realtors. The slide continued into the fourth quarter of 2007, when home sales were 12 percent lower than the fourth quarter of 2006.”

“The slowdown, along with a corresponding increase in number of available homes for sale, gives buyers some time to breathe following a hectic year for real estate, said associate broker Mike VanSickle.”

”It’s a bit of a buyers’ market,’ he said.”

“As of the end of December, listing services showed 39 percent more homes posted for sale than a year earlier.”

“Longtime home builder Steve Bee said he sensed early this summer that less-experienced builders were gearing up for heavy seasons…and that the market could become flooded with new homes as a result.”

“He decided not to build the three or four homes on the speculation that they would sell, a practice he usually incorporates into a season’s work, out of fear he could watch them sit unsold for months.”

“‘I think (this) is a slowdown that needs to happen,’ he said.”

The International Herald Tribune reports on Texas. “Cinnamon Shores, a 250-home ‘new urbanism’ development, is one of several new projects along the Gulf Coast stretching south from Houston, where there is little evidence of the problems gripping the U.S. housing industry. Values are up in many areas and investor money continues to flow to waterfront projects.”

“The upbeat mood is due, in part, to international buyers, who are bypassing traditional markets like Florida, New York and California to invest in the Lone Star State.”

“‘I think it’s keeping the market alive,’ said Richard Miranda, a broker in Houston.”

“The coast of Texas, including vacation spots like South Padre Island and Galveston, is seen as a bargain spot compared with other areas. ‘We didn’t have the big blow up, the bubble,’ said Jim Gaines, research economist at Texas A&M University.”

“Although it is hard to quantify the number of international buyers in the Houston area, Gaines estimates that they account for 5 to 10 percent of the market. ‘For some segments, like high-end condos, it might be close to 20 percent,’ he said.”

“On South Padre Island, Mike Masso, a partner in a property agency, says he believes that affluent buyers from Mexico represent more than 40 percent of transactions, in terms of dollar value. His company is opening an office in Monterrey, Mexico, to help woo more Mexican buyers.”

“‘It seems like every week I’m working with a different group from Mexico trying to track down developable land,’ Masso said.”

“Many are like Enrique Castilla, a banker in Monterrey, who views the United States as a safe investment. At first he bought a condo on South Padre as a vacation getaway for his family, but recently he has helped form partnerships to buy land on the island to build condominiums.”

“‘They feel they will be protected with the dollar,’ Castilla said of his partners.”

The Houston Chronicle. “Home construction in 2008 is expected to fall for the second year in a row, but consumers aren’t likely to see prices this low for years to come, according to Metrostudy.”

“‘The irony is, with all the scary stuff that’s going on, it’s a really good time to be a home buyer,’ said Metrostudy president Mike Inselmann. Developers are expected to build about 35,000 homes, down more than 11 percent from the 39,500 constructed in 2007.”

“The down housing market is a result of ‘a mismanaged mortgage industry’ that made loans to unqualified borrowers who couldn’t keep up with their payments and went into default, Inselmann said.”

“Some builders are offering discounts of up to $40,000, as well as decorator allowances and other perks to unload their unsold inventory, said Jim Holcomb of Holcomb Properties, a subdivision developer.”

“‘There are tremendous values on housing right now that probably won’t be seen this time next year,’ he said.”

“That is if the national economy holds up. ‘The big variable here is going to be a recession and whether or not we have one,’ said Gaines. ‘It might be 2010 before we start seeing much improvement.’”

The American Statesman. “The Austin area’s booming job market has slowed to a three-year low, and its once sizzling real estate market is cooling fast.”

“‘When you’ve got a national economy with very weak legs, it’s a given that Austin will slow down right along with everyone else,’ said Bud Weinstein, director for the Center for Economic Development at the University of North Texas. ‘Austin has gotten used to having a supercharged economy and a very low unemployment rate, and when things slow down a bit, you think you’re having a depression.’”

“What could trip Austin up? A weakening housing market is high on the list, and that appears to be happening. Builders are pulling back in the Austin area as the national housing market continues to struggle, according to recent reports.”

“New home starts in 2007 were down nearly 20 percent compared with 2006, according to Residential Strategies Inc. Starts for new homes haven’t been that low since 2004.”

“The resale market has been softening for months. October was the fifth straight month of declining home sales. Sales of single-family homes were down 15.4 percent compared with October 2006, according to the latest figures from the Austin Board of Realtors.”

“Home starts are expected to bottom out in 2008, said Mark Sprague, Austin partner for Residential Strategies. ‘What’s happening is the rest of the national market is pulling us down,’ he said.”

From Keye TV. “The smell of plywood hangs over Downtown. It means more places to live, that most Austinites can’t afford. Consultants working on a downtown plan say only seven percent of Austin residents can afford property in the Downtown area.”

“Consultants suggest a fee on new residential development downtown — high enough to make a difference, low enough so as to not discourage development. Casey Wallace, who would love to live downtown, thinks fee or not, prices will drop.”

“‘People are paying for [Downtown living spaces] now, but I really feel like there aren’t going to be enough people who want to pay half a million dollars or more for a loft, and the prices are eventually going to come down, naturally,’ says Wallace.”

“A growing number of Texans struggling with delinquent property taxes are turning to risky tax loans even as the state attempts to crack down on the lenders.”

“Consumers who use property tax loans risk losing their homes if they default on even a small loan. Fees can run into thousands of dollars, and interest rates top out at 18 percent.”

“‘They are the payday lenders for property taxes,’ said Robert Doggett, an attorney with the Texas Low Income Housing Information Service.”

“An indication of the growth of property tax loans is reflected in the increase in the number of tax lien transfers…in the state’s largest counties, according to the Center for Public Policy Priorities.”

“The jump was most remarkable in Travis County, where tax lien transfers went from about 50 in 2005 to an estimated 1,250 in 2007, after lending companies increased their marketing in the state capital.”

“In Harris County, loans jumped from about 650 in 2005 to an estimated 1,500 last year. And Bexar County saw an increase from about 600 to 800 in the same period.”

The Star Telegram. “North Texas new-home sales fell by the largest amount in 18 years in 2007, according to figures released Friday by the housing-tracking firm Residential Strategies.”

“A glut of inventory, tougher requirements for loans in the last half of the year and a fiercely competitive market all contributed to the worst nose dive since the real estate crash of the late 1980s.”

“‘I think it was pretty evident to us during the third and fourth quarters that the market had slowed,’ said Ted Wilson, principal of the Dallas-based real estate consulting company.”

“This fall, builders saw about 40 percent of prospective buyers cancel contracts, twice the usual rate, according to Residential Strategies.”

“December was a particularly brutal month for the 29-county area that stretches from the Red River to just north of Waco, with sales down 25 percent compared with December 2006. Only 5,257 homes sold in the region in December, compared with 6,990 existing-homes sold in December 2006.”

“The year was the second in a row with falling sales. Home sales here fell 5 percent from 2005 to 2006. Still, the declining sales figures come after years of an off-the-chart, record-setting pace.”

“‘These numbers, relative to the ‘04 numbers are great — even ‘05,’ said Jim Gaines, a real estate economist at Texas A&M, who predicts that 2008 will be slower than 2007. ‘It’s hard to see that ‘08 would be better than ‘07. But we don’t think the market is falling off a cliff.’”

“In every month of 2007 except January, fewer homes were sold than the same month the year before. ‘I think that probably starting in March 2007, the economy began to slow,’ said Mike Bowman, founder of Century 21 Mike Bowman, in Grapevine.”

“The real estate market nationwide has struggled in recent months as lenders adopt stricter requirements, mortgage lenders have said. That has constricted the flow of eligible buyers into the market from previous years, when almost anyone could get a loan.”

“‘It was a false economy,’ said Lonny Coffey of First Advantage Mortgage in Arlington.”

“At the same time, sellers are seeing more competition from others who are putting homes on the market, Gaines said. Sellers are also seeing competition from home builders, who can afford to throw in perks to close a deal.”

The Dallas Morning News. “Dallas-Fort Worth homebuilders slashed construction almost 50 percent in the fourth quarter as the housing slowdown deepened. New home sales during the period fell almost 30 percent, according to Residential Strategies.”

“‘This is the lowest amount of homes under construction in over 10 years,’ said Residential Strategies’ Ted Wilson. ‘The mid-1990s were the last time construction was so low.’”

“‘Looking around the area, it’s evident that many fewer houses are being started,’ he said. ‘And this is the time of year you usually see a lot of construction.’”

“For the first time in years, builders started fewer homes than they sold in 2007. At the market’s peak in mid-2006, area builders were starting about 5,000 houses a year more than they were selling.”

“‘That’s what led to the buildup in inventory,’ Mr. Wilson said. It’s been more than a decade since builders started fewer homes than they sold.”

“Even with the cutbacks, there is a surplus of new houses. At the end of the year, there were almost 10,000 vacant, finished new homes sitting on the market in North Texas. Builders are offering a wide range of incentives to move unsold houses, and, with starts slowing, the inventory should decline, Mr. Wilson said.”

“The D-FW area has been hard hit by foreclosures. And the shakeout in the mortgage market has significantly reduced the number of buyers who can get a loan. ‘The discipline in the market with regard to qualifying buyers is as extreme as I’ve ever seen it,’ Mr. Wilson said.”

“Dallas artist Tomás Bustos was hoping to pay off some bills and renovate his home a couple of years ago. And a plethora of companies were willing to help him refinance. So he took out a $60,000 equity loan on the Oak Cliff home he had paid off and been living in for almost 28 years.”

“Then came the shocker. The fine print in the loan allowed the mortgage payment to balloon quickly. His mortgage payment has nearly tripled – from more than $500 to more than $1,400 – since then. And he’s in danger of losing his home and his business space.”

“Monica Gonzales, senior legislative representative for AARP, said lack of knowledge about the mortgage process and regulations make Latinos an easy target for lenders’ aggressive marketing. Many simply don’t expect to be deceived, she said.”

“‘Culturally, we have a trust that ‘this guy’s not going to do me wrong, he’s my compadre,’ she said. ‘In reality, the guy’s only looking out for himself.’”

“During the last decade, thousands of renters have bid adieu to the ‘burbs and headed downtown for a taste of urban living. The trendy new loft apartments and growing base of restaurants and retailers in Dallas’ core marks a comeback for a center city that until recently was one of the most lifeless in the country.”

“High-dollar homes have replaced empty office space, and a series of planned downtown parks will soon give core dwellers new places to walk the dog and chew the fat. But alas, all is not sweetness and lattes in the lives of downtown renters.”

“Take a gander at some of the comments you’ll find on Internet sites that rate downtown Dallas loft buildings. To hear some of those folk talk, it’s an urban hell presided over by shoddy management and noisy neighbors.”

“‘I could tolerate the noise because I lived on the 14th floor, but the lack of customer service is absolutely pathetic,’ laments one loft renter. ‘When you consider the amount of money that we pay in monthly rent, you would expect some sort of accountability on their end.’”

“And I loved the parting shot: ‘Oh yeah, my sink fell through the counter, and it took a month to get someone up to repair it.’”

“And panhandlers are a familiar peeve. Other common gripes are about trash piling up and a ‘frat house’ atmosphere. ‘Half the people coming and going don’t seem to live here. Parties get out of hand, and the police are called out,’ one reviewer of a Main Street building said.”

“A shocking number of complaints involve poop.”

The Chicago Tribune reports from Illinois. “Not far from Illinois Highway 7, Diane Hartman’s four-bedroom single-family home waits for a buyer who never seems to come. It’s the same story across Will County, in new subdivisions built out of cornfields and older streets lined with mature trees: There are precious few home buyers these days. After cutting her price by $25,000…Hartman said she’s resigned to staying as long as necessary, figuring an empty house would fetch even less.”

“It’s a painful surprise considering how everything was selling such a short time ago: ‘We thought this would go fast,’ she said.”

“‘When things were good, I probably would have had it sold in three weeks or so,’ said her real estate broker, Jim Karges, who has operated his local Karges Realty for 30 years. ‘It’s hard for sellers to realize where we’re at. They don’t have a clue how the market has changed.’”

“At the same time, foreclosures accelerated. Foreclosure specialist Dee Villegas said she has noticed a sharp uptick in Will County homes on the block, and she expects more to come.”

“‘They all headed out there for these brand-spanking-new houses. They were going after the American Dream,’ said Villegas. ‘The jobs are there. It’s just a shame you need several jobs to hold on.’”

The Herald News from Illinois. “Carolyn Shinault has tried everything to sell her old house. She advertised for a tenant recently but didn’t get any takers. Now Shinault and many others who decided to build or move in recent months are caught between two homes.”

“‘I’m in the new one, and I don’t want to go back to the old one,’ she said.”

“Shinault said she can continue to pay two mortgages for only six more months. She’s already lowered the price on her old home from $189,000 to $170,000. ‘After that, I’ll have to get a second job. I’m sure I’ll go lower than that — for sure.’”

“Laura and Scott Czerkies have been living in their new Joliet home since May 2006, and they’ve been trying to sell their Willowbrook townhome since June 2006. The couple has lowered the price on the townhome three times. They’ve also offered to pay association fees for one year and to buy down a potential buyer’s mortgage rate. Still there have been no takers.”

“‘It is quite stressful having to pay for two mortgages, two sets of property taxes, heating bills and association fees,’ Laura Czerkies said.”

The Times Herald from Michigan. “St. Clair County’s land management/equalization director, Kenneth Hill will soon go before the office of metropolitan planning and present his findings about the area’s foreclosures.”

“‘I’ve never been through a market like this. I’ve heard about it, from old-timers,’ he said. ‘I don’t want to be a ’sky’s falling’ kind of guy, but I’m not sure what anybody can do about it.’”

“The last two years have brought near exponential growth in the number of foreclosures in the Blue Water Area. In 2005, there were 453 sheriff’s deeds issued in St. Clair County, a figure more than 17 times the number in 1995 when there were 26 sheriff’s deeds issued in the county.”

“This year, there were 993 sheriff’s deeds, a nearly 220% surge.”

“Hill laughs when he thinks about how suddenly foreclosure rates have come to the forefront of the nation’s consciousness. ‘To tell you the truth, a year ago, we kind of didn’t know this was happening,’ he said.”

“‘What’s happening … people who are trying to sell their homes are competing against foreclosures, and they just can’t,’ said Buzz Stanko, a realtor in downtown Port Huron. ‘Why would someone looking for homes buy the one for $150,000 (from a seller) when they can have the one for $110,000 (from the bank)?’”

“The situation has grown worse recently as lending institutions have tightened loan practices, said Lester Wilkins, a loan officer at Flagstar Bank in Fort Gratiot. The end result is both mortgage officers and realtors are having a harder time getting buyers into homes, and sellers are faring even worse.”

“‘It’s a vulture’s market,’ said David Marsh, a developer in Kimball Township, (who has) two of the three homes he owns in foreclosure; all three mortgages are 30-year fixed. ‘It’s not a buyer’s market.’”

The Holland Sentinel from Michigan. “The housing market slump has caused Bosgraaf Homes to announce Thursday it’s ceasing production of speculation home building. This type of construction, also known as volume building, is based on the speculation held in inventory.”

“‘The collapse of the market for new homes has required Bosgraaf Homes to re-evaluate its position and strategy as a volume builder. We have essentially brought to a close our volume business,’ said Bosgraaf Homes President Mike Bosgraaf.”

“Bosgraaf Homes has been in the housing market for more than 30 years, according to spokesman Randy Boileau. Boileau explained there was no market for volume homes in 2007, nor will there be in 2008 and 2009.”

“‘It’s (volume building) a business that doesn’t exist now in West Michigan,’ Boileau.”

The Journal Sentinel from Wisconsin. “Ken King, who helps Sheboygan-area consumers with debt problems, has noticed a change in attitude among some who come to see him. It used to be that people who owned homes would make it a priority to pay the mortgage. They didn’t want to lose their home or forfeit the down payment or equity they’d built up, said King.”

“Now, however, some mortgage borrowers who stretched financially to buy a home with temporarily-low ‘teaser’ payments and no money down - and haven’t owned it long enough to gain any equity - are taking the position that it’s hopeless to try to save the house.”

“They’ll await foreclosure and use their money to try to keep up with other monthly bills instead. ‘We see people coming in who say, ‘We’ll just let the home go. We don’t have anything in it anyway,’ said King, who has been a consumer counselor for 15 years.”

“In its third-quarter delinquencies bulletin, the American Bankers Association said consumer payments that were at least 30 days overdue had risen since the second quarter in almost every loan category: home equity, auto, personal and boat.”

“The report put the overall consumer delinquency rate, not including credit cards and other revolving credit, at 2.44% of accounts, its highest level since 2001. That was the last year there was a recession.”

“‘People are getting squeezed real hard. So now the question is, ‘Who’s not going to get paid?’ King said.”

“Pointe Blue, a large condominium development that promised to reshape much of Racine’s lakefront, is dead, city officials announced.”

“Developer Scott Fergus was unable to secure financing for the project, with 434 planned condos, 90 apartments and an estimated $120 million price tag.”

“Because there’s no way to predict when commercial credit markets might change, city officials and Fergus decided it was best to terminate their agreement on Pointe Blue, said Brian O’Connell, Racine’s city development director.”

“‘It didn’t make sense for the partners to just be hanging there,’ O’Connell said.”

“He announced plans in May 2006 for Pointe Blue. The site overlooks Lake Michigan, just north of downtown Racine. Condo prices ranged from $200,277 for a 900-square-foot unit to $995,000 for a 2,600-square-foot waterfront villa.”

“Fergus, a Racine native, described Pointe Blue as ‘Cape Cod meets Miami in Racine’ when it was announced in 2006.”

The Star Tribune from Minnesota. “A growing number of Twin Cities businesses are giving up trying to repay the debts they owe local banks on development projects.”

“The area’s banks face the highest level of unpaid loans in years, according to a Star Tribune analysis. The share of unpaid loans on business construction and development loans was four times higher in the third quarter of 2007 than in the same period of 2006. Unpaid loans also are four times higher than they were in the third quarter of 2001, a recession year.”

“Twin Cities-area banks hover near the top of the list of lenders nationwide reporting business borrowers as slow-pays or no-pays, according to the Federal Deposit Insurance Corp. (FDIC).”

“‘Typically, construction loans shouldn’t be past due,’ said Rich Gilloffo, a regional manager at the FDIC’s Chicago office. Banks often require borrowers to take out more than they need for a project, creating reserves to keep payments current in case borrowers encounter financial setbacks.”

“‘When you see [nonpayment rates] go up, they’ve run out of reserves,’ Gilloffo said. ‘Are we concerned? Yeah.’”

“A recent FDIC survey of 204 U.S. metropolitan areas found only 16 with higher rates of troubled business loans than the Twin Cities. ‘There aren’t too many metropolitan areas that are worse,’ Gilloffo said. ‘What’s happened has happened rather quickly.’”

“The boom-bust cycle is affecting business and residential real estate, said George Karvel, a real estate professor at the University of St. Thomas.”

“‘Our ability to forecast demand is so poor that we tend to facilitate overbuilding by making too many loans,’ Karvel said. As real estate values plummet, banks may end up getting paid dimes on the dollar for some of their commercial real estate loans, he said.”

“Rosita Fields hit a dead end when she tried to refinance the mortgage on her south Minneapolis house: The appraisal came in at less than what she owed.”

“Aaron Smith was equally stymied when he tried to buy a $180,000 house in St. Paul. The appraisal was $10,000 less than the asking price. The sellers refused to budge, sinking Smith’s chances of getting financing.”

“It’s a major turnaround for an industry that critics said was plagued by inflated appraisals which didn’t garner much attention as long as prices were rising. Now many lenders are trying to curb their losses by scrutinizing not only the borrower, but the value of the property, as well.”

“‘Values might have retreated more than the consumer might be willing to admit,’ said Tom Musil, director of the Shenehon Center for Real Estate at the University of St. Thomas.”

“According to a survey last year by the October Research Corp., almost 90 percent of the appraisers polled said that they were pressured by mortgage brokers, lenders, realty agents, consumers and others to raise property valuations. That percentage was nearly double the findings of a study done three years earlier.”

“The study also found that 75 percent of appraisers reported ‘negative ramifications’ — including being blacklisted — if they didn’t cooperate.”

“Alan Hummel, chief appraiser for Forsythe Appraisals in the Twin Cities and a past president for the Appraisal Institute, has taken his concerns over such practices to Washington, where he testified before a Senate subcommittee on banking and housing.”

“He blamed the problems on skimpy oversight and regulation of mortgage brokers, lenders and real estate agents and what he called a systemic coercion of appraisers.”

“‘Too many brokers and lenders unfortunately view the appraisal process as something to be manipulated,’ he told lawmakers.”

“The most serious attempts, and those that could have the broadest impact, have come from Fannie Mae, the nation’s largest provider of mortgage money, which has issued new rules aimed at protecting lenders and reducing the likelihood that homeowners will find themselves upside down on their mortgages.”

“‘It’ll blow a lot of first-time home buyers out of the market, especially in the most vulnerable neighborhoods,’ said Kris Wilson, senior loan officer for Fairway Independent Mortgage. ‘I really believe that Fannie is going to cause more damage than good by doing this.’”

“Sellers who had bought their homes at the height of the real estate frenzy are also going to feel the pinch.”

“‘They are not about to get out of a transaction with any equity and in some cases, may be upside down and be required to bring a check to closing,’ Wilson said. ‘It’s painful.’”

What do you see in your local housing market this weekend? Falling prices? “The balance of power in the housing market has shifted from the seller to the buyer, according to a new report. According to Daft.ie’s Review of 2007 actual prices of property fell consistently throughout the year, while asking prices remained the same. The average asking price for a property in Ireland is now €353,000, while prices in Dublin stand at €449,266.”

“By January 1, 2008, there was an average of 62pc more houses on sale around the country than in January of the previous year. The capital saw an increase of almost 65pc during the year, while south-east Leinster saw an increase of 87pc, and commuter belt counties saw an increase of 76pc.”

“‘Sellers can no longer expect to achieve 5-10pc more than their asking price, as they might have up to late 2006,’ said economist Ronan Lyons. ‘Now, at the start of 2008, sellers are typically expecting 5-10pc less than their asking price.’”

Signs of overbuilding? “Building permits for new homes across the Midlands fell last year for the first time since 2001, pushed by a glut of homes in Northeast Richland, according to a report out Friday.”

“‘We’ve got a little bit more inventory, but I don’t think anybody is in the panic mode,’ said George Delk, who has been building homes in Columbia for 24 years”

“Delk said economic advisers have been telling builders to slow down for the past couple of years. ‘But none of us wanted to listen,’ he said.”

Or foreclosures? “Bankruptcy lawyer Robert Stack said Friday he felt a little bit like a funeral director in 2007. Business was really good and that’s great for him, he said, but his prosperity meant sadness for many others.”

“Foreclosures in Waukesha County rose about 41 percent in 2007. The 41 percent rise, from 606 foreclosures in 2006 to 854 foreclosures in 2007, was less of an increase than the 51 percent jump recorded in Milwaukee County.”

Or legal matters? “The town of West Tisbury has filed a lawsuit against a mainland subprime mortgage company that loaned more than half a million dollars to an affordable homesite owner in town who had no ability to repay — and then foreclosed on the property.”

“The town claims that Fremont loaned Mr. Cote more than $580,000 on a lot that was permanently restricted for affordable housing purposes, knowing that he had no ability to repay the loan based on his income and credit history, and that he could not sell the lot to satisfy the obligation due to the restrictive covenants.”

“‘Fremont (and thereby Saxon) knew, or should have known, that Cote’s loan, absent prompt refinancing, would fail and result in foreclosure,’ the complaint states.”

“New York prosecutors are investigating whether Wall Street banks withheld information about the risks stemming from subprime loan-linked investments, The New York Times reported on Saturday.”

“Charges could be filed as soon as the coming weeks, the Times said. Connecticut Attorney General Richard Blumenthal told the newspaper he was also conducting a review and cooperating with New York officials. The federal Securities and Exchange Commission is also investigating, the Times said.”

“Two more defendants tied to the LHS Mortgage Inc. fraud scandal, one of the largest mortgage fraud operations recently uncovered in the Twin Cities, are going to prison.”

“Jill Lehn of Prior Lake, was sentenced in federal court Thursday to two years in prison and three years of supervised release after pleading guilty to one count of wire fraud and one count of money laundering.”

“Lehn’s sentence was reduced because she cooperated extensively with the broader investigation, which resulted in several other prosecutions, Frank Magill, acting U.S. Attorney noted in a release Friday.”

“Lehn was the most public of the defendants, writing a detailed story for Minnesota Realtor magazine last year. It expressed regret and explained how as a closing agent, she participated in preparing sham loan documents in more than 60 real estate transactions during the housing boom between 2004 and 2006, passing out the payments hidden from lenders.”

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