The Housing Bubble

It’s Friday desk clearing time for this blogger. “On average, Nantucket homes last year sold for 88 percent of their listing price, down from 91 percent in 2006 and 93 percent in 2005. Particularly at the high end, however, some prices were significantly slashed. An eight-bedroom compound on 14.8 acres in Quidnet, originally listed for $19.5 million, for example, sold in late December for $10.25 million.”

“Brokers are predicting continued price reductions, believing many properties are still overvalued by their sellers. ‘I think there’s a lot of overpriced inventory still,’ said Penny Dey, co-owner of Atlantic East Real Estate.”

“South Florida’s condo market has never been so hot. At least not from the perspective of private equity funds and investors who want to buy distressed projects at 40 percent to 50 percent discounts. Northland Investments paid $21.7 million, or an average of about $86,500 per unit, for 251 unsold units at a 364-unit Boynton Beach conversion project. Tarragon paid $74 million, or about $203,000 per unit, for the property in October 2005.”

“‘The dislocation and dysfunctionality of the real estate market has provided us with a lot of significant opportunities, said Steve Rosenthal, Northland’s CEO.”

“The final 2007 numbers are still being compiled but The Central New York Homebuilders and Remodelers association calls the market slow but steady. At Liverpool Lumber, owner, Joe Ehle’s seen housing slumps in his two decades in the business, and he says this one reminds him of the big downturn in the early 1990’s.”

“Ehle says, ‘when you’ve been through it and been through a real downturn you know what you’re going to see.’”

“New Future Building Group is feeling the heat in Kamloops (even in January) after the first phase of its Mission Hill development sold out in eight hours, setting a new record for the area.”

“‘A significant percentage of the buyers were from out of town and are intending to use their affordable ‘lock and leave’ luxury condo as a home base for four-season recreation,’ says Curt Woodhall, VP of marketing for New Future Building Group. ‘Kamloops is expected to lead the province this year in price appreciation, so buying in the area is a good investment.’”

“The MLS resale market set a new standard nationally in 2007 with the number of sales, new listings, average price and dollar volume in Canada’s major markets all reaching their highest annual levels ever. said Richard Corriveau, regional economist with the Canada Mortgage and Housing Corp, said the resale housing market across the country is experiencing a soft landing in many of the markets due to the escalation in prices.”

“‘A saving grace for the markets has been the introduction of the extended amortizations. If we consider our forecast one year ago, the overall result across Canada exceeded forecasts and the strong take-up of the extended amortization product is one contributing factor to that,’ said Corriveau.”

“Falling house prices in suburbs south of Wollongong are providing good opportunities for families and investors entering the property market, say real estate industry sources. Illawarra Real Estate Institute chairman Leigh Stewart said there was good value at the lower end of the market in suburbs such as Unanderra and older areas of Albion Park and Dapto.”

“‘In some of these areas properties are being sold at land value,’ Mr Stewart said.”

“For those frozen out of the housing market by high prices in New Zealand, data suggests cheaper houses may be on the way, economists said. The median price fell 8.6 percent in Southland to $191,000 ($A217,057), 6.4 per cent in Otago to $NZ250,000 ($A220,643) and Wellington was the other region to take a big hit, with the median price dropping 6.3 per cent to $NZ370,000 ($A326,552.23).”

“REINZ national president Murray Cleland blamed the holiday break, interest rate rises and slowing immigration for the fall. ‘However, it is unrealistic to expect the stellar increase in prices as seen over the past seven years to continue indefinitely with the market now entering a period of consolidation.’”

“Real Estate Institute December figures released yesterday show a third fewer houses were sold than in the same month last year. Christchurch was not immune to the decline, with a 32 per cent drop in the number of sales compared with December 2006. Prices have flattened and in some areas declined.”

“Real Estate company Simes valuer Phil Wilkinson said the slowdown was now ‘across the board’ whereas it used to be confined to certain sectors of the market. ‘Places are taking longer to sell. We’re no longer seeing the premium prices of a year ago,’ he said.”

“The Olympics are now only 8 months away and Beijing, the capital of China, has become the first city with a dramatic housing price drop in the new year of 2008. A report by a real estate research institution claimed that, recently, lots of buyers maintained a ‘wait and see’ attitude, leading to a large decrease on trading volume.”

“After several months of rising prices, a downward trend has started.”

“Kansas City area homebuilders willing to cater to consumers’ evolving needs should start digging out from the housing slump next year, industry experts said.”

“‘It is such a buyers’ market,’ said Dan Whitney, president of the Overland Park-based Landmarketing research firm. Buyers ‘are waiting to get the best deal and are trying to time the market, but they’re not moving yet. Bargain-hunting will become an Olympic event.’”

“A developer who has converted several local apartment complexes into condominiums is eyeing a similar project in Kirkwood.”

“Bruce Mills, CEO of Clayton-based Mills Properties, is awaiting approval from the city’s planning and zoning commission for a $120 million, 10-year condominium project. If plans go through, Mills said, he’ll resort to his usual business model: lease units until buyers arrive.”

“‘It doesn’t work financially unless we get the additional units and the tax (abatement),’ he said. ‘(My company is) still around because I don’t want to do anything stupid.’”

“Portland-area homeowners saw modest growth in home values in December, welcome news at a time when housing prices are collapsing around the country. But Portland’s trend of relative housing prosperity might not continue much longer. Since August, prices have dropped 8 percent since hitting their all-time peak of $302,000.”

“Broker John Lee last weekend showed a North Portland house to young couples from New York and Boulder, Colo. The four-bedroom, 2,447-square-foot home is just a block from Adidas’ campus. It started at $450,000 in November. It’s now $388,500.”

“Broker Kathleen O’Donnell sees the same thing with the cottage she’s selling on Northeast Regents Drive. The home went on the market in October at $685,000, and the price hasn’t been dropped.”

“‘Portland continues to be a draw for people who want a better quality of life at a better price point,’ she said. ‘This is the last major city on the West Coast that’s affordable.’”

“Mortgage lenders are adopting a more cautious approach in the face of the housing market slowdown, according to a financial information group.”

“‘This more cautious approach of lenders starting to reduce their exposure to the property price fluctuations shows that they have a real concern over the future of the UK housing market. A case of negative equity is bad news for both the borrower and the lender,’ said David Knight, mortgage analyst at Moneyfacts.co.uk. ‘It is not hard to understand why this pattern has emerged.’”

“‘Perhaps it’s a sign that the ‘live now pay later’ culture that we saw take over in 2007 may gradually be coming to an end,’ he said.”

“On Wednesday, the president of the Federal Reserve Bank of Kansas City told Colorado lawmakers that things may not be as grim as the media is reporting. Sure, foreclosures keep rising, manufacturing is slipping, the subprime-lending fiasco has turned into a global credit crunch, Canada’s loonie is suddenly saner than our dollar, and the stock market is eroding faster than Rudy Giuliani’s presidential bid.”

“But employment, business investment and other key indicators remain strong.”

“This is quite a fix we’re in: No savings, no investment, no productivity gains, no more flat-screen TVs for you. The $9 trillion national debt isn’t helping, either.”

“‘The consumer has to begin saving,’ Hoenig said. ‘Now, that’s easy for me to say. Can we do it overnight? No. Because if the consumer suddenly decided to save 10 percent…what happens to consumption in the United States? It drops off dramatically. Inventories build, and this slows down the economy.’”

“It might even cause a recession. But a negative savings rate could cause one too. Hoenig has not lost his optimism to this economic dilemma, though. ‘It took us 15 to 20 years to get to this point,’ he said. ‘It will probably take us more than a decade to raise slowly, consistently, the savings rate. It can be done. We’re a great country. We find solutions. But it will not happen on its own.’”

“And, this is just my guess, but it also won’t happen before the next recession.”

“The shape of the new American housing market, the post-bubble market, is starting to emerge. It is one that favors the young who never owned a house. The ideal home buyer now, in a reverse of what was true for years, is a renter who is not burdened with a house.”

“But not owning a home, which may be hard to sell, is a big plus. Now…the homeowner cannot move until the old home is sold, and that is getting more difficult.”

“It is possible that we will see a negative spiral, in which lower prices reduce the availability of loans, and thus push prices lower. That, in turn, could leave more homeowners unable to refinance exploding mortgages, producing more forced sales that push prices even lower.”

“That would be the reverse of the cycle that prevailed until mid-2007, when easy credit made loans available even to those with dubious credit, driving up prices and, for a time, making it appear that there was little risk in mortgage lending.”

The Sacramento Bee reports from California. “Priced out of buying a house in 2003, Santiago Avila-Gomez and Stephani Crespin rented all through the housing boom, then waited out the bust until the closing days of 2007. That’s when they finally scored the house of their dreams. The house was built in 2004 in a new community just outside the Pocket in south Sacramento. It had been repossessed by the lender and cost the married couple $214,500. The original price four years ago: $455,000.”

“The two said the bank paid their closing costs on the four-bedroom house on a 6,000-square-foot lot. It then wrote them a $4,500 check to replace the air conditioning unit that had been stolen during the year the home sat vacant.”

“In Sacramento County, 45.9 percent of December sales were properties marketed by banks and loan servicers.”

“‘What you’re starting to see right now with the foreclosure inventory swelling is the banks are getting aggressive,’ said Lincoln-based real estate agent Mike Toste. ‘They’re the ones wheeling. If all their competition is bank-owned and they drop prices 30 to 40 percent, then they’ve got to do the same thing. If they can’t sell within 60 to 90 days, they’re getting extremely hungry. I think 2008 is going to be a year to remember.’”

“The prospects for another tough year have some of 2007’s buyers already re-examining their decisions. John Reed moved to Sacramento last year from Portland. He bought a new home in West Sacramento last July.”

“‘I have a lot of second thoughts now,’ Reed said. ‘I knew the prices were dropping a little, but I didn’t expect them to go down so much. They’ve probably gone down 10 percent in six months.’”

The San Francisco Chronicle. “Bay Area median home prices and sales volumes experienced significant declines in December, according to a report released Thursday.”

“Realtor Melody Grandell has had a three-bedroom Redwood City house listed since August ‘just as the market started to tank.’ Despite cutting $149,000 off the price to its current $760,000, and investing in painting, staging and new doors, the owner has not had an acceptable offer, possibly because the home still needs some work, she said.”

“‘It seems like home buyers are waiting for the ideal property; something that doesn’t need any upgrading,’ Grandell said.”

The Mercury News. “The housing slump continued to spread throughout the Bay Area at the end of 2007, as sales dropped for the 35th month and prices fell to 2005 levels, Dataquick reported.”

“Sonoma median home prices also dropped the most, from $525,000 last year to $410,000 this year. Contra Costa dropped down 11.3 percent to $505,000, Solano County dropped 15.8 percent to $370,000 and Alameda fell 8.3 percent to $540,000.”

“In December, jumbo loans dropped 80 percent in Alameda, 78 percent in Solano, 68 percent in Contra Costa and 52 percent in San Mateo counties, said Andrew LePage, an analyst with DataQuick. ‘You just can’t ignore the incredible drop-off in jumbo loans,’ he said. ‘It’s like a switch was flicked in August.’”

“‘I think there will be more seller acceptance … starting now and in February,’ said Patrick Lashinsky, president of ZipRealty. ‘More than 50 percent of homes in Contra Costa County had price reductions. That means the seller came in too high.’”

From NBC 11. “A new movement, dubbed ‘Acorn,’ is underway to prevent buyers from scooping up the dozens of foreclosed Bay Area homes during the state’s real estate slump.”

“At an auction Thursday, protesters rallied on the steps of the Alameda courthouse bellowing, ‘No foreclosures, no bids,’ in hopes of discouraging people from purchasing the foreclosed property.”

“Alma Reyes nervously watched as her home went up for bidding after her monthly mortgage payment increased by $1,300 just six months after she had refinanced with a broker who she said never informed her of the consequences.”

“‘I don’t think it’s fair that I have to lose everything and these people have their homes in the hills and luxury cars and I am losing my house,’ Reyes said in Spanish.”

“Reyes’ home went unsold, giving her and her family a temporary furlough to stay in the house.”

The Bethel Island Press. “If the value of homes in southeast Antioch significantly plummets at the same time that the number of home-owners behind on their tax payments significantly increases, the Mello-Roos Board could find itself in the unpleasant position of foreclosing on homes in the district.”

“‘At this point it does not seem to be a realistic prospect. But you always have to plan for disaster scenarios,’ Dan Bort, legal counsel for the Mello-Roos District, told the board.”

“Prices have dropped on the homes in southeast Antioch, as they have elsewhere. Gary Agopian, who is both a new Mello-Roos board member and a real estate agent, said some homes are selling today at 2004 prices.”

“But to put that in perspective, during the height of the real estate bubble, ‘for about two or three years, we had run-ups of over 20 percent appreciation per year,’ he said.”

“‘The current housing prices would have to drop 75 percent before you ran the risk that you would hold a tax foreclosure sale and no one would come and no one would bid,’ said Bort. ‘The county’s risk is that the real estate values will go so low that it will become uneconomic to bring taxes current on the delinquent homes and the homes will simply be abandoned.’”

“‘In other words, the county would essentially be saying to the public, ‘You can have this house if you’re willing to pay the taxes on it.’ And the public would collectively be saying, ‘No thanks, it ain’t worth it.’ Currently, the county does not see that happening. But of course, conditions could change and the county could change its mind,’ he said.”

“Audience member Norma Hernandez was also concerned about the district getting bogged down in foreclosure proceedings.”

“‘Foreclosure isn’t easy,’ she said. ‘You will be in court for the rest of your life doing foreclosure. We have 1,400 homes on the block right now in foreclosure in Antioch, and that number is going to continue to grow. I suggest you watch your reserves.’”

The Santa Cruz Sentinel. “First come the foreclosures, then the lenders take ownership, and now come the auctions. Six Santa Cruz County properties will go on the block Feb. 23 in San Mateo. Locations include Aptos, Ben Lomond, Boulder Creek, Santa Cruz and Watsonville. All of these are properties taken back by the lender after foreclosure.”

“Starting bids range from $29,000 for a 320-square-foot cottage, 1513 Jackson Ave., Ben Lomond, to $269,000 for a 1,370-square-foot house at 229 Market St., Santa Cruz.”

“Are prices coming down? You betcha. The Ben Lomond property sold for $220,000 in 2005. The Santa Cruz house sold for $765,000 in 2006.”

“Year-end statistics show 2007 was brutal: 993 defaults, 506 foreclosures and 253 sales. In 2006, there were 452 defaults and 146 foreclosures; in 2005, even fewer — 333 defaults and 109 foreclosures. Liese Varenkamp, editor of the Santa Cruz Record, didn’t track foreclosure sales by county before because there were so few.”

“I don’t see any relief yet. For the first week of 2008, there were another 44 default notices — three times as many as in 2007.”

The Modesto Bee. “Dismal figures on valley real estate sales and prices released Thursday for December marked the end of a tough year for the industry, professionals acknowledged. The best they could say about 2007 was that there are a lot more affordable homes on the market now in the Northern San Joaquin Valley and interest rates are low.”

“In Stanislaus County, sales were down 38.8 percent last month compared with December 2006. San Joaquin County’s sales volume dropped 37.2 percent and Merced County’s 56.8 percent.”

“The median price for Stanislaus County homes sold last month was $281,250, while San Joaquin County’s was $320,000 and Merced County’s, $257,000. San Joaquin and Merced counties’ numbers were down from December 2006 by 24.7 percent and 21.2 percent, respectively.”

“For the year, the median price fell by $73,250 in Stanislaus County, $80,000 in San Joaquin County and $68,000 in Merced County.”

“‘Brutal. Just brutal. Short sales are what’s causing us grief,’ said Realtor Rob Ellett in Modesto, when asked to sum up 2007. ‘The good side is that prices are coming back to reality.’”

“The fallout led to sharp job losses in real estate, said Ninon Lapan-Dalman, a Realtor in Modesto. ‘I’ve seen a tremendous amount of agents get day jobs and now do real estate on the side,’ she said. ‘And I’ve seen mortgage lenders just disappear.’”

“Broker Larry Matos (said) investors must make 20 percent to 25 percent down payments. He said that keeps out speculators who pay little up front and try to sell quickly.”

“‘We’re beyond a transitional market,’ he said. ‘Buyers now are just cautious, not cautious and nervous.’”

The Denver Post reports from Colorado. “The top economist for the National Association of Realtors on Wednesday offered a positive prognosis for the Denver-area housing market. While the housing market is in the dumps nationally, it’s important to remember that all real estate is local, Lawrence Yun told…the Jefferson County Association of Realtors. ‘It’s nonsensical to concentrate on the national figure,’ Yun said. ‘Local information is far more relevant.’”

“‘There’s too much focus on the national figures,’ Yun said. ‘National figures can dampen consumer confidence.’”

“The subprime-mortgage crisis already is a thing of the past and should not affect the housing market going forward, Yun said. ‘The subprime mess is a Wall Street mess,’ Yun said. ‘They made a huge gamble, and they lost. Subprime is a past event that’s unrelated to homebuying.’”

“Bob Golden, CEO of the Colorado Association of Realtors, said most of what Yun said doesn’t surprise him. ‘We’ve had a dip, and it’s likely we’ll pull out of it,’ Golden said. ‘As long as you’re staying in a home for the long haul, appreciation up and down doesn’t have a dramatic effect if you’re not using it as a cash vehicle.’”

The Rocky Mountain News from Colorado. “‘The one thing that may be holding back your market is buyer pessimism,’ Yun said. ‘I think for your housing market it is irrational pessimism. You have very strong affordability.’”

“He did say, however, that the number of foreclosures, which set a record in the metro area in 2007, will continue to rise this year. But he still expects overall housing appreciation in the Denver area this year to be 4 percent to 5 percent. Also, a recession would mean further cuts in mortgage rates, which would make Denver housing even more attractive, he said.”

“Jim Smith, owner of Golden Real Estate, called Yun’s talk ‘fascinating.’ ‘The facts speak for themselves,’ he said.”

“One in every 19 homes in Adams County entered foreclosure in 2007, by far the highest rate in the metro area. The Adams County foreclosure rate hit a record 5.2 percent in 2007, according to an analysis by the Colorado Association of Realtors.”

“‘While foreclosure properties are of serious concern, the sky is not falling,’ Greg Zadel, president of the state’s Association of Realtors, said in a memo.”

“Although a record 26,386 foreclosures were filed in the metro area area last year, he noted that there are far more homes in the metro area than 20 years ago.”

“The city and county of Denver had a 3.4 percent foreclosure rate. It showed a 62 percent increase from the 2.1 percent foreclosure rate, by far the largest percentage increase in the metro area.”

“Carol Snyder, Adams County public trustee, said that the foreclosure problems may continue into early 2010. Many adjustable rate mortgages are still going to reset to higher rates, she said.”

“‘I think, unfortunately, this is something that is going to get worse before it gets better,’ she said.”

The Arizona Daily Star. “Spending on new homes in the Tucson area dropped by more than $567 million in 2007, according local consultant John Strobeck. The total amount spent on new homes last year was about $1.67 billion, down about 25 percent from the previous year, likely the steepest drop in more than a decade, Strobeck said.”

“‘It virtually has not decreased any year until now,’ said Strobeck, owner of Bright Future Business Consultants.”

“Permit activity for new homes also hit a low in 2007, falling to 5,098 — slightly below the number in 1996, the report said. The number of new homes sold in December fell to 496, down by 40 percent from the same month a year before, the report said. Median and average prices for new homes also dropped in December to $220,000 and $275,000, respectively.”

“Resale closings also showed a steep drop of about 35 percent from the same month a year ago, the report said. Resale median and average prices also fell compared with December 2006.”

The Arizona Republic. “‘The bottom of the housing market may occur in 2008 or 2009, but a full recovery will probably take three to five years,’ said Elliott Pollack, an Arizona economist and real-estate investor. ‘This slowdown ends when housing prices stabilize, and they will. Unfortunately, the worst is still ahead of us.’”

“‘Many of us thought last year would be the worst for the housing market, but 2007 was just the beginning, due largely to the credit crunch,’ said John Chadwick, president of builder Pulte’s Southwest operations.”

“Foreclosures are the big wild card for the housing market. A record 10,000 metro Phoenix houses were foreclosed on in 2007.”

“‘It’s going to be ugly, ugly, ugly this year,’ Pollack said. ‘But in five years, this will all be a bad memory.’”

The East Valley Tribune from Arizona. “Home prices could bottom out at the end of this year or early 2009, though a full recovery could take three to five years, Pollack said.”

“Some 57,000 homes — roughly 24,000 of them vacant — are for sale in the metro Phoenix market, he said. And the credit crunch has shrunk the buyer pool by 20 percent, and slower population growth could reduce it by another 20 percent, he said.”

“‘Things are getting tougher, not easier,’ when it comes to mortgage loans, he said.”

“The number of Arizonans filing for bankruptcy protection last year was up more than 60 percent over 2006, according to the U.S. Bankruptcy Court of Arizona.”

“However with a dramatic increase in foreclosures, an increasing number of homeowners found themselves too deeply in debt for bankruptcy to be an option, said Terrence Miller, clerk of the court.”

“‘What attorneys are saying anecdotally is … it just doesn’t make financial sense for them to file because they’re too far gone, that bankruptcy can’t help them,’ he said.”

“Statewide, bankruptcy filings totaled 10,570 in 2007, up from 6,479 in the previous year. In the Valley, filings totaled 7,204, up from 4,419 in the previous year.”

“Anthony Clark, a bankruptcy attorney with offices in Mesa and Phoenix, said he’s fielded a number of calls from homeowners asking how they can complete a foreclosure on their home rather than try to save it through bankruptcy proceedings.”

“‘It’s a sign of the times where so many Valley homeowners are under water in their homes,’ he said. ‘We’re seeing a lot of people walk away from their homes, especially in Queen Creek and the west Valley. I would attribute it to overbuilding and overgrowth.’”

The Associated Press on Nevada. “Nevada’s foreclosure crisis claimed a high-profile victim Wednesday, as investment bank Deutsche Bank took the first step toward foreclosing on the $3 billion Cosmopolitan Resort & Casino project on the Las Vegas Strip.”

“Developer and owner Ian Bruce Eichner said his company was working with Deutsche Bank and Merrill Lynch to find new investors. The construction loan of $760 million went into default Wednesday, the company said.”

“‘This action by our lender comes as no surprise,’ Eichner said in a statement to The Associated Press. ‘With the current challenges within the real estate and debt capital markets, which are out of our control … we both anticipated and planned for this.’”

“The 2,998-room high-rise casino and hotel is under construction and due to open in late 2009 between the Bellagio casino resort and the CityCenter casino complex. Most of the units were condo-hotel rooms, which allow buyers to rent out the residences to hotel guests and split a fee with the resort management.”

“That led some observers to speculate that the project may have suffered from the weakening condominium market. But the company said demand for the units was strong, with 84 percent of the 2,184 units sold, and added that it was not the cause of the financing problem.”

“Sales of condo units and town houses plummeted in December, down 55 percent from a year earlier to 167 units, according to the Greater Las Vegas Association of Realtors.”

“‘The state of the luxury-condominium market is somewhat challenging,’ said Applied Analysis principal Brian Gordon. ‘The question remains: Is this a project-specific issue or is it a market issue?’”

The Las Vegas Business Press from Nevada. “The Las Vegas Valley’s industrial market softened in the fourth quarter as vacancies rose and rents dropped. The trickle-down impact from a hemorrhaging housing market and accompanying credit crunch are taking their toll.”

“There was 831,000 square feet of net absorption in the fourth quarter. There was 2.2 million square feet of new completions in the fourth quarter, with another 3.1 million square feet under construction.”

“‘We started to see a slowdown at the end of the second quarter 2007, which we expect to see continue through mid-2008,’ said Daniel Doherty, senior VP of Colliers International’s Industrial Division. ‘There is a big spin-off due to the dramatic drop in the residential market. But everyone is feeling that the construction on the Strip will pull us out of it once some of the hotel rooms come online.’”

The Salt Lake Tribune from Utah. “It started out on a good note, but 2007 ended up as one of the worst years ever for home building along the Wasatch Front.”

“Builders took out permits for the construction of 9,877 single-family homes along the Wasatch Front last year, the lowest level since 1993, according to Construction Monitor.”

“And the nearly 36 percent drop in permitting activity from 2006-2007 is one of the Wasatch Front’s worst yearly drops ever - it tops any percentage loss since 1990, when the service began tracking permitting activity in the state.”

“Unlike Utah, where the slowdown began in earnest just eight months ago, many other housing markets already have been in a downturn for a year or more.”

“One major culprit for the bad home-building year are the tighter lending standards. Another culprit is the cumulative effect of years of house-price increases that have put homeownership out of reach of more families, including those in Utah.”

“‘It’s really affected the [demand for the] $350,000 to $800,000 price range,’ said Jordan Bangerter, president of the Salt Lake Home Builders Association. ‘There just aren’t that many people that can afford that type of house payment now.’”

“Bangerter said he doesn’t believe that the Wasatch Front is as overbuilt as the Phoenix or Las Vegas metro areas, which have been hit hard by the downturn and have seen their economies suffer as a result. Still, he said, challenges for his industry in Utah loom.”

“‘Our industry is trying to adjust to meet demand for less expensive housing,’ he said. That’s a difficult challenge, he said, given that the public - and cities - prefer bigger and bigger homes.”

“Mark Knold, chief economist for the Utah Department of Workforce Services, said about 2,200 people in construction industry in the state filed for unemployment benefits in December 2007 up from only 1,300 in December 2006. ‘That’s a pretty big jump in unemployment claims related to the construction industry,’ he said.”

“Knold said there has been some spillover into other industries. A number of mortgage companies, for example, have shed some workers in recent months. ‘You have to think if we’re not selling as many houses, we’re not going to need as many mortgage people, title or real estate people,’ Knold said.”

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