The Housing Bubble

Please post items of interest from outside the USA here.

The Used House Salespeople report from California. “Home sales decreased 33.4 percent in December in California compared with the same period a year ago, C.A.R. reported today. The median price of an existing, single-family detached home in California during December 2007 was $475,460, a 16.5 percent decrease from the revised $569,350 median for December 2006.”

“C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in December 2007 was 14.5 months, compared with 5.9 months (revised) for the same period a year ago.”

“In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 8.8 percent, or 25 out of 285 cities and communities, showed an increase in their respective median home prices from a year ago.”

The Orange County Register. “The California Association of Realtors reported today that the median Orange County house price for all of 2007 fell for the first time in 12 years. CAR reported that the median price of an existing single-family home was off 7.9% in December from December 2006.”

“According to CAR, the number of homes on the market would take 26.3 months to sell at December’s sales pace, down from 29.5 months in November…up from the 9.4-month figure for December 2006, CAR reported.”

The Union Tribune. “Despite a real estate downturn that has made housing in San Diego County more affordable, a new nationwide study shows that the county’s median priced home of $440,000 remains out of reach for most workers here…according to the Center for Housing Policy.”

“In San Diego County, the amount of household income needed to purchase a median-priced home during the third quarter of last year dropped 12 percent to $143,738, compared with $163,404 a year earlier. The county’s median household income is $68,000, and with wages destined to remain stagnant this year, there is little room for optimism for entry-level buyers, say some analysts.”

“‘We’re not going to get back to where the median-income household can afford the median priced home, so housing will still be unaffordable in San Diego,’ said Marny Cox, chief economist for the San Diego Association of Governments.”

“Foreclosure filings in Riverside County jumped more than 50 percent last month, and skyrocketed 300 percent compared to a year ago. A total 6,821 filings of mortgage default notices, auction sale notices and bank repossessions were recorded in the county in December, said RealtyTrac.”

“Statewide, there were 53,292 filings in December, a 33 percent increase over November, RealtyTrac said. The figure represented a 238 percent increase over 2006.”

“The state ‘documented the highest number of foreclosure filings and the most properties in some stage of foreclosure in 2007,’ according to a RealtyTrac statement.”

The North County Times. “New home sales in North County dropped for the second straight year, reflecting a national trend that showed the worst annual decline in new home sales ever recorded, according to by the Commerce Department.”

“New home sales in North County since 2005 have tumbled 49 percent. The region MarketPointe defines as North County Coastal - from La Jolla to Carlsbad - saw the biggest dive in new home sales, recording a mammoth 73 percent drop in fourth quarter sales to 87 properties from last year’s fourth quarter when 317 homes and condos were sold.”

“When compared to December 2006…the North County median fell 9 percent to $569,000. During housing slumps, buyers often look for the cheapest price, which tend to be in older homes, and builders often prefer to offer incentives such as granite countertops, rather than slash prices on new homes, said Russ Valone, president of MarketPointe.”

“‘There’s no doubt that we have inventory now that we never would have had three years ago,’ said Mark Connal, director of sales for a homebuilder in Escondido. ‘Loans are harder to get, the economy isn’t as good and a lot of people don’t want to buy because they haven’t perceived we’re at the bottom of the market.’”

From USA Today. “The most striking trend in the San Bernardino real estate market is the surge in foreclosures. Lenders filed close to 24,000 notices of default last year, up nearly 150% from 2006. And 7,727 homeowners lost their homes through foreclosure — roughly one in 20 sales and up nearly 720% from the previous year, according to DataQuick.”

“‘Foreclosures have been growing at a rapid pace for all of 2007, and we anticipate almost an avalanche in 2008,’ says Rich Cosner, president of Prudential California Realty.”

“His agents are telling owners who need to sell within the next five years to put it on the market now because prices are projected to fall further. For buyers…there’s a 15-month supply of homes to choose from. Price declines are hitting every neighborhood, Cosner says.”

“‘I’ve been in this business for 35 years,’ Cosner says, ‘and I don’t believe I’ve seen a more difficult market for homeowners. We are not anticipating any significant turnaround until mid-2009.’”

The Bakersfield Californian. “Kern County tops a new list of large U.S. home markets with a high probability that homeowners will miss a mortgage payment. First American CoreLogic’s report ranked Kern ahead of every other large metropolitan area in the country, just above No. 2 Stockton and No. 3 Fresno.”

“County records show that lenders sent 8,651 default notices to Kern property owners in 2007 — more than twice the rate in 2006, when 3,275 defaults were recorded.”

“Eydie Gibson, a real estate agent at Watson Touchstone Real Estate, said the recent increase in foreclosures allows some buyers into the market as lenders price foreclosed homes to sell quickly. ‘It’s a temporary bump,’ she said. ‘It’s an opportunity for some, a tragedy for others.’”

“But credit consultant Anselmo Moreno found it harder to see the ranking’s positive side. He said local real estate professionals pushed sales too hard between 2004 and 2006, leading some people to buy when they should not have.”

“‘It was just a matter of time before (mortgage lenders) realized we are at the highest risk for mortgage defaults,’ Moreno said.”

The Fresno Bee. “In Fresno County, the number of new homes sold in 2007 fell 19.4% from the year previous to the lowest level in three years, slipping below 2004 figures. In Madera County, sales fell almost 62% compared with 2006 to 432 — the lowest total since 399 houses changed hands in 2003.”

“‘Builders have been waiting for buyers and buyers have been waiting for prices to drop. At some point, they have to match up,’ said Robert Keenan, executive director of the Home Builders Association of Tulare and Kings Counties.”

“Last year was the first year that new-home prices took a tumble. The median price of a new home in Fresno County in 2007 was $293,000 compared with a peak of $349,500 in 2006. Likewise, Tulare County values fell 14.5% to $267,250 from $312,500.”

The Modesto Bee. “Northern San Joaquin Valley home prices have plummeted, but they haven’t fallen enough to become affordable for most wage earners, a new study shows.”

“Home buyers must earn about $98,000 a year to comfortably afford a median-priced house in Stanislaus County, the Center for Housing Policy reports. But workers in only one of the 64 occupations studied — construction managers — earned that much last year.”

“Even two-income couples with good jobs — such as accountants, police officers, school teachers and firefighters — barely can cover ownership costs, the report showed. The findings were about the same for San Joaquin and Merced counties.”

“Anita Hellam, executive director of Habitat for Humanity for Stanislaus County, remembers during the mid-90s ‘when the majority of the working families living in Modesto were able to find affordable housing.’”

“But Northern San Joaquin Valley home prices nearly tripled from 1996 to 2005, pushing ownership out of reach for many residents.”

“Even though valley home prices fell about 25 percent during the last year, Hellam said more people than ever are seeking Habitat for Humanity’s help to acquire their first home.”

The Recordnet. “In San Joaquin County, new-home sales fell 26.9 percent, from 2,865 in 2006 to 2,095 for all of last year, according to the Gregory Group in Folsom.”

“Joe Anfuso, CEO of Stockton-based Florsheim Homes (said), ‘I think it’s all part of what we need as part of the correction cycle.’”

“He noted that home buying traffic picked up in December and has gained some momentum, though many would-be buyers continue to sit back to see whether prices keep dropping. ‘The only thing that’s stopping them is what if the market goes down?’ he said.”

“In response, the company is rolling out a price guarantee: If a buyer purchases a new home this year, the buyer is guaranteed a rebate if the base price of that home is lower at the end of the year. ‘To get people off the fence, we’ll take the ride with them through the year,’ Anfuso said.”

“The average selling price of a new home in San Joaquin County dropped 12 percent over a year, from $519,350 in the fourth quarter of 2006 to $456,956 in the fourth quarter of last year.”

The Auburn Journal. “The comeback of the $200,000 home and the promise of Placer County’s continuing popularity as a place to live are two of the clouds local real estate leaders are focusing on during a troublesome market.”

“Placer County Association of Realtors statistics for December show a $357,000 median value for the 226 homes sold in December — down from $366,000 in November, and $439,700 in December 2006.”

“The median value is well off the peak of a red-hot August 2005 real estate market in the county, when it soared to $517,500 and 486 sales were closed.”

“Joe Newton, Association of Realtors president, said Monday that while the market has been awash with negative industry statistics, the downturn has meant clients buying and selling homes ‘rely on us even more as trusted advisors.’”

“Over the weekend, Newton had a chance to compare notes with California Association of Realtors colleagues at a conference in Indian Wells. The 2008 Placer County association president said that while the Lincoln area had some problems, the market was much more positive in other areas of the county.”

“That compares with areas like San Diego, Stockton and Elk Grove that were struggling with foreclosures, he said.”

“‘The leaders in the industry know that a positive attitude is important so our clients move forward with confidence and authority,’ Newton said.”

“Michael Lyon, CEO of Lyon Real Estate, pointed to a marked increase in the number of homes for sale priced below $200,000 as a bright sport for the industry.”

“‘Just one year ago less than two percent of the homes for sale were priced below $200,000,’ Lyon said. ‘Now 12 percent of the homes for sale in the four-county Sacramento region are priced below $200,000, with the majority of these homes being bank owned.’”

“Lyon said that increase, with the number of closed sales in December jumping 50 percent over November, indicated a ‘new boom’ in that sector of the market.”

“Lyon said the second bright spot from December’s survey revolved around the inventory of houses in the $200,000 to $300,000 range. The inventory of 3,969 homes represented 30 percent of the total number of homes listed in the four-county inventory taking in Placer, Sacramento, El Dorado and Yolo counties.”

“Placer County sales were up 300 percent for the year in the $200,000 to $300,000 price range due to sharp price declines, he said.”

“The Trendgraphix report’s overall totals for the tri-county region of Sacramento, Placer and El Dorado counties mirrored the Placer County numbers. Sales were 22 percent lower than December 2006 sales and the December inventory of 13,181 homes for sale was 28 percent higher than the December 2006 inventory.”

Some housing bubble news from Wall Street and Washington. CNN Money, “The housing market is only getting worse, according to the latest report from S&P Case/Shiller released Tuesday. Home prices were down 8.4 percent in November compared with last year in its 10-city index, a record low. The 20-city index also fell 7.7 percent. The Case/Shiller report compares same-home sale prices. The industry considers it to be one of the most accurate snapshots of housing prices.”

“‘We reached another grim milestone in the housing market in November,’ said economist Robert Shiller, co-creator the index in a statement. ‘Not only did the 10-city composite index post another record low in its annual growth rate, but 13 of the 20 metro areas, each with data back to 1991, did the same.’”

“The worst hit market of the 20 metro areas covered was Miami, where the median home fell a whopping 15.1 percent in value. San Diego prices also fell steeply, down 13.4 percent. Las Vegas was off 13.2 percent and Detroit by 13 percent.”

“Every city in the index recorded at least three consecutive months of falling prices through November.”

“The three biggest U.S. cities also recorded year-over-year declines; New York was down 4.8 percent, Los Angeles 11.9 percent and Chicago 3.9 percent. The losses in Los Angeles accelerated in November; that city recorded the largest month-over-month drop of any index city, 3.6 percent.”

From MarketWatch. “For the 20 cities, prices fell a record 2.1% in November. In the past three months, prices fell at an annual rate of 16.2%.”

“The housing and mortgage meltdown caused the biggest one-year drop in the rate of homeownership on record, according to government figures released Tuesday.”

“The Census Bureau report showed that home owners accounted for 67.8% of occupied homes in the fourth quarter, down 1.1 points from a year earlier. It’s the largest year-over-year drop recorded in the report. The ownership rate was also well below the 68.2% ownership rate in the third quarter of 2007.”

“Homeownership rates, which have been tracked since 1965, hit a record high of 69.2% at the end of 2004.”

“The report also also showed a record 2.18 million homes vacant and available for sale in the fourth quarter, up from the 2.07 million in the third quarter and the 2.1 million a year earlier.”

“The fourth-quarter reading on vacant homes for sale matched the previous record set in the first three months of 2007.”

“The number of foreclosures soared in 2007, with 405,000 households losing their home, according to a report released Tuesday. That’s up 51 percent from the 268,532 homes that were repossessed in 2006.”

“Total foreclosure filings soared 97% in December alone compared with December of 2006, according to RealtyTrac. For the year, total filings - which include default notices, auction sale notices and bank repossessions - grew 75%.”

“More than 1 percent of all U.S. households were in some stage of foreclosure during 2007, up from 0.58 percent the year before.”

From Reuters. “Countrywide Financial Corp, the largest U.S. mortgage lender, on Tuesday said more than one in three subprime mortgages were delinquent at year-end in the $1.48 billion portfolio of home loans it services.”

“Countrywide said borrowers were delinquent on 33.64 percent of subprime loans it serviced as of December, up from 29.08 percent in September.”

From Bloomberg. “Countrywide Financial Corp lost $422 million in the fourth quarter, failing on its promise to return to profitability. The mortgage company posted a $1.2 billion third-quarter loss, its first in 25 years.”

“Provisions for credit losses were $924 million in the fourth quarter, compared with $937 million in the preceding quarter and $73 million in the year-earlier period. Results included $831 million of impairment charges tied mostly to home- equity securitizations (and) a $394 million writedown on loans the company holds.”

“Loan production recorded a pretax loss of $448 million. Total loans funded fell 48 percent to $61.2 billion. Countrywide said 3.6 percent of the outstanding balances of home equity loans for ‘prime,’ borrowers in its servicing portfolio were more than 90 days overdue as of Dec. 31, up from 1.4 percent a year earlier.”

“Countrywide faces a lawsuit by the New York city and state comptrollers and their pension funds, alleging Countrywide defrauded investors with overly optimistic comments. The lawsuit added 26 securities firms and two accounting firms this month as defendants.”

“In its annual report filed with the U.S. Securities and Exchange Commission, Goldman said it was cooperating with requests from governmental agencies and self-regulatory organizations for information about securitizations, collateralized debt obligations and synthetic products related to subprime mortgages.”

“Meanwhile, in its annual report filed with the SEC, Morgan Stanley said it was responding to subpoenas and information requests from governments and regulators concerning subprime and non-subprime mortgages. The SEC filings came on Tuesday.”

“Morgan Stanley also said it was a defendant in lawsuits over its role as an underwriter of preferred stock offerings for mortgage lenders New Century Financial Corp, and Countrywide Financial Corp.”

“Imagine a Morgan Stanley broker telling his or her client about some assets that are nearly worthless because they can’t be sold. Would that customer feel any better that the brokerage was simply ‘reclassifying’ that investor’s losses?”

“That seems to be the question facing investors in Morgan Stanley today after the brokerage and investment bank said it reclassified $7 billion of funded assets and $279 million in unfunded assets from Level 2 to Level 3.”

“The levels are a new kind of accounting parlance Wall Street instituted last year. The bigger the number, the harder it is to sell or value the securities in question. In other words, Morgan Stanley no longer knows how much these assets are worth because no one is buying.”

“Just as troubling for investors is how Morgan Stanley announced the move: It was buried on page 64 of its 191-page quarterly report. It’s been a long three months since the firm won kudos for taking an aggressive $3.7 billion write-down that many thought would represent the worst for the firm.”

“Home builder Meritage Homes Corp posted a net loss for the fourth quarter compared with a year-earlier profit, in part because of lower sales and charges for lower land values reflecting the slumping U.S. housing market.”

“‘This has been the most difficult year we’ve experienced in homebuilding in more than 25 years, and we currently expect 2008 will also be challenging,’ Steven Hilton, Meritage’s CEO, said in a statement.”

“The fourth quarter net loss included $130 million of pretax real estate-related and joint venture valuation adjustments and $58 million of pretax goodwill write-offs.”

“During the quarter, Meritage reduced its inventory of homes built on speculation by 10 percent, cut its purchases under options by about $55 million, and acquired about 650 fewer lots than it did the prior quarter.”

“During the quarter, home closing revenue fell 25 percent to $615.6 million, due to an 18 percent decline in homes closed to 2,139, and a 9 percent decline in the average selling price of a home. Arizona had the largest decline in home closings, down 44 percent.”

“New orders fell 13 percent to 1,048 and the value of the orders were off 23 percent to $271.6 million.”

“Florida-based home builder TOUSA Inc TOUS.PK said it is filing for protection under Chapter 11, as part of a proposed restructuring, in the wake of the crumbling U.S. housing market.”

“The filing includes TOUSA Homes Inc, Newmark Homes LP and entities that represent all their brands — Engle Homes, Newmark Homes, Fedrick, Harris Estate Homes and Trophy Homes.”

“Tousa Inc. lost 98 percent of its market value in the past year. There were 37 affiliates that also filed today.”

“Tousa, the largest builder by assets and debts in bankruptcy and at least the 14th to file since June, missed three interest payments this month as home sales and prices fell in Florida, where the company does most of its business.”

“The builder never recovered from the August 2005 purchase of Transeastern Properties Inc., a closely held Coral Springs, Florida-based homebuilder, said Robert Curran, a managing director at Fitch Ratings, who covers builders.”

“‘It was too much for Tousa, in the midst of a major market correction — particularly bad in Florida — and the addition of Transeastern never got any traction,’ Curran said.”

“‘It’s possible we’ll see more homebuilders, both public and private, file for bankruptcy,’ Curran said. ‘As weak as housing has been, a possible recessionary environment will weaken it further still.’”

“Other homebuilders, such as Hovnanian Enterprises Inc., have said that Florida has been a drag on earnings. Hovnanian Chief Financial Officer Larry Sorsby referred last month to a ‘Fort Myers effect’ on the Red Bank, New Jersey-based builder’s profit margins.”

“‘This action is necessary to reflect the realities of today’s homebuilding market,’ Antonio B. Mon, Tousa’s CEO, said in a company statement.”

“Florida had the second-highest number of foreclosure filings and properties in some stage of foreclosure in 2007 behind California. With more than 2 percent of its households entering some stage of foreclosure, Florida documented the second-highest state foreclosure rate for 2007, more than twice the previous year.”

“Nevada posted the highest foreclosure rate for 2007 of 3.4 percent.”

The Philadelphia Inquirer. “In the annals of financial fiascoes, the subprime-lending crisis has been especially big, messy and legally complex. What’s more, people could end up going to jail.”

“For weeks, a drumbeat has emerged from Philadelphia law firms calling attention to new or existing practice groups focusing on the subprime mess. As a general rule, it amounts to a repackaging of mortgage-lending, insurance, white-collar defense, bankruptcy and litigation services that firms have been providing for decades.”

“But this repositioning is occurring in an entirely new and somewhat unfathomable context: an explosion of lawsuits, coverage disputes, and now criminal investigations resulting from the collapse of credit and housing markets.”

“‘There have been a lot of borrowers who have been hurt by what has happened here, and there is no doubt that foreclosures are skyrocketing, and now you see what is happening in the stock market. So there is a natural urge to figure out who is at fault, and that results in a lot of litigation,’ said Alan Kaplinsky of one of the firms to set up a subprime-practice group.”

“Tad Decker, CEO of Cozen O’Connor, said his firm was pulling together lawyers who focused on litigation, white-collar defense and bankruptcy to respond to diverse clients facing subprime problems. The firm’s long-standing insurance practice also has found a niche interpreting coverage contracts for insurers facing payouts for the actions of corporate officers of companies sued by burned subprime investors.”

“‘This is a very visible, public problem that is affecting almost everyone,’ Decker said.”

“‘In these kinds of situations, there are always fingers being pointed, and deep pockets sought, and scalps to try and obtain,’ said Hank Hockeimer, a former federal prosecutor who now is a white-collar defense lawyer with the subprime group at Ballard Spahr.”

“‘I don’t think you can point to one person’s scheming or fraudulent behavior as causing this,’ said Bonnie Glantz Fatell, leader of the business-restructuring and bankruptcy group at Blank Rome L.L.P. ‘Housing values were going up, and there was a lot of money in the market, and people were getting very creative in how to offer financing to people with all levels of qualification.’”

The Tribune Herald. “As domestic and foreign investment markets continue to seesaw, financial experts advise that there’s only one good option, uncomfortable as it may seem: Ride out the storm.”

“‘At the present time, there are not a lot of good options available to individuals to protect themselves from this decline,’ said Baylor University economics professor Kent Gilbreath, who was a member of the Federal Reserve Bank of Dallas board of directors from 1979-1986.”

“‘Perhaps an analogy would be best here: passengers on an airplane that is losing altitude. There is nothing the passengers can do except buckle their seat belts and hope that the drop in altitude ends,’ he said.”

“Gilbreath and other economic experts say they have seen this economic struggle on the horizon for some time, but many were caught off-guard.”

“‘It’s not a good time,’ said Gilbreath, who presented a paper at the Western Economics Association’s international meeting in July titled ‘The Coming Perfect Economic Storm.’ ‘I’m normally a very optimistic person and, while I expected a serious economic challenge, this financial crisis has caused a financial decline earlier than I anticipated. I didn’t think it was likely to come until about 2010…The nation wasn’t prepared for it now.’”

The Chicago Tribune reports from Illinois. “The Chicago metropolitan region ‘isn’t as bad as Florida and California, ground zero in the housing recession, but we have the same problems,’ said economist Diane Swonk. The ills ailing the new-home market here include too much speculative building and soaring mortgage default and foreclosure rates, she said. Especially hard-hit are Chicago’s inner-city neighborhoods and growing communities like Joliet, Swonk said.”

“‘Unfortunately, about half of the people having problems with subprime mortgage loans could have qualified for prime loans,’ she said. ‘This reflects greed all around.’”

“‘I worry about the second shoe falling on the downtown condo market,’ Swonk added. ‘Chicago came late to this housing boom so there still are a lot of units in the pipeline due for delivery in the next 18 months. This year will be a big test.’”

“‘This is the first housing downturn that is self-inflicted, although exacerbated by financial institutions offering exotic housing loans,’ said Tracy Cross, president of a Schaumburg-based research and consulting firm.”

“As the housing market started to slow down two years ago ‘builders didn’t recognize the bell had tolled and kept on building,’ Cross said.”

“Prices climbed so high they no longer could be offset by low interest rates or exotic mortgages. ‘High home prices were a great culprit in the overall equation,’ Cross said.”

“At the same time, homeowners trying to sell their houses hesitated to lower asking prices. ‘Sellers held on too long, causing a logjam in the market,’ Cross said.”

“Indeed, new-home sales in the region fell 37.5 percent last year compared with 2006, with a 32.1 percent drop in Chicago and 39.2 percent in the suburbs, he said. Regional home sale prices, including builder incentives, fell 3 to 5 percent, Cross estimated.”

“Cherya Jenkins says she has been snagged by a Catch-22 of the mortgage-market mess: She wants to refinance the loans on her West Side three-flat but hasn’t been able to — because she tried to sell the building last year.”

“‘People who are facing rising payments in the future are being told to try and sell first,’ said Jenkins of Chicago. ‘But if they can’t sell the property, they have essentially ruined their chance to refinance it.’”

“‘When your home is on the market or has been on the market, generally, you’re not going to be allowed to get a new mortgage,’ said Keith Gumbinger, VP of a mortgage-industry publisher.”

“At least for a certain period of time. That’s because, he and others say, the mortgage business tends to presume that if you refinance your home after a failed attempt to sell, you still might try to sell it soon, paying off the loan and thus erasing any profit the lender might have made.”

“It’s not a new policy but, in the heat of the housing boom, it didn’t come into play very often.”

“Times have changed. The inventory of homes on the market in the Chicago area swelled in November to about 111,000, according to data from the MLS of Northern Illinois. In November 2005, when the market was beginning to cool, there were 73,000.”

“‘I’ve seen it twice in the last few weeks,’ said Dan Green, a mortgage broker in Chicago. One client is now waiting through the 90-day post-listing period his lender stipulated; the other managed to get a loan approved by a lender that had no days-off-market policies.”

“And that client is lucky he acted when he did, Green said. ‘I’m pretty sure that had we submitted the loan now, it wouldn’t have gone’ because the lender’s days-off-market policies have changed, he said.”

“‘So far, the people looking for these refi’s are people in trouble — speculators, investors and marginal players who also need to take cash out [of their new loans],’ said Ken Perlmutter, president of Perl Mortgage in Chicago. ‘People in those situations are going to have a hard time.’”

“Jenkins said that the irony in her situation is that she and her husband intend to hang on to the Austin three-flat for several years, though it was on the market for the better part of 2007. In October, they gave up on selling and decided to keep the building to recoup the money they had spent on repairs, she said.”

“But in November, she said, they learned that their payments would go up by $175 a month in February, to nearly $2,400, to cover a shortfall in her property-tax escrow account.”

“Her loan representative said that because the appraisal revealed that the house had been for sale in 2007, the couple would have to wait 12 months from the date the listing ended.”

“Jenkins began calling other banks, prefacing each conversation with the news her three-flat had been on the market in 2007. Numerous lenders told her the building would have to be delisted for three to 12 months to be considered for a refinance.”

“‘The issue is not a matter of bank policy but one of what criteria investors on the secondary market set forth when agreeing to purchase loans from lenders,’ said Terri M. Wilson, a VP for National City Bank media relations.”

“Chad and Jeanine Smith bought a townhouse in northwest suburban Lakemoor in December 2002, the line between profit and breaking even, or losing money, is a fine one.”

“‘I don’t want to have to take a loss, though I’m afraid that might have to happen,’ he said.”

“The couple began trying to sell their home in April 2007, with several potential buyers visiting over the summer. But they’ve had no one look at the three-bedroom unit in several months. They’ve lowered their price to $203,900 from $207,000 and are thinking about asking $199,000, he said.”

“‘I’d be happy with $199,000,’ Chad Smith said. ‘That would represent a profit, but not much.’”

“The Illinois group…said that for all of 2007, home sales in the Chicago area totaled 92,656, down 20.5 percent from 116,527 in 2006. In 2005, the year the market peaked, 133,305 homes were sold.”

“Analysts said the reduction of inventory of homes for sale was slightly encouraging, but the figure may reflect sizable numbers of people who took their homes off the market during the holidays and who may soon relist them.”

“Then there’s the rising flow of homes in foreclosure. Those properties are expected to land on the market in 2008 in record numbers.”

The Flint Journal from Michigan. “Pagi Pillen took on a part-time job. Mark Calvert got out of the industry altogether. The slumping local real estate sales market, where foreclosures and listings are high and sales prices have fallen, has taken its toll on real estate agents.”

“Membership numbers from the Flint Area Association of Realtors has fallen by about 300 in the past two years to about 1,000 today, said Mark Dickens, the group’s CEO.”

“Calvert, of Flushing Township said he got out of the business about a year ago, after his income fell by 35 percent to 40 percent. He sold real estate for 10 years.”

“Now, he’s going back to school. ‘It just had to be done,’ he said. ‘We can sugarcoat the economic realities all we want to. In my particular case, I just felt it was time for me to be retrained.’”

“Both Calvert and Pillen said real estate agents who do foreclosure and bank-owned property work are surviving, but those dealing in traditional sales feel the pinch.”

“‘I do have another job. I don’t have a choice,’ said Pillen of Byron. ‘I’m a single mom.’”

“The Garrow real estate firm once was one of Genesee County’s largest real estate companies, with eight locations and about 170 agents in 2006, when the company then known as Garrow GMAC Real Estate planned to expand into Oakland County, according to Flint Journal files.”

“Now called Garrow & Associates Inc., the company lists just three offices - in Vienna Township, Grand Blanc Township and Davison - and about 50 agents.”

“Some are also changing their specialty to reflect the market. ‘We have a lot of agents who are doing bank repos,’ said broker/owner Imad Isaac of the 40-agent RE/MAX Select in Mundy Township.”

“As much as 60 percent of the firm’s business is foreclosures or bank repossessions, said Issac, who serves on the Flint Area Association of Realtors’ board of directors. Isaac estimates that up to 40 percent of the more than 4,700 sales last year by Flint association members were foreclosures.”

“‘The problem is, it’s very difficult to sell a regular house because they’re competing against a bank repo,’ he said.”

The Pioneer Press from Minnesota. “Hard times for homebuilders spelled deals this past weekend at the Minneapolis Convention Center, where local contractors sold 180 of 216 newly built homes they put on the auction block.”

“The sales included nearly all of the 62 homes in a batch that had no set minimum price and simply went to the last and highest bidder, an unusual sight for a housing market known for stability.”

“Winning bids ranged from 20 percent to 75 percent off the original listing prices, said Brent Berry, president of Minneapolis-based Norman Mitchel International, which co-managed the auction. ‘There were townhomes that went for $58,000,’ Berry said. ‘I couldn’t believe it.’”

“Some went to first-time homebuyers such as Marie and Timothy Philippi. They successfully bid on a three-bedroom, three-bath unit with a view of the St. Paul skyline. Philippi said she didn’t want to disclose the price, but said they got it for ’substantially lower’ than its original $266,000 price tag.”

“‘I think it was an awesome deal,’ she said. ‘It’s still in the Sheetrock phase, so we get to pick out colors and cabinets and everything.’”

“Bill Johnson, head of the state’s No. 9 builder based on 2006 sales, said his company sold 18 homes in the auction, many to young couples such as the Philippis. He sold the homes at a loss, he said, with discounts around 40 percent.”

“‘Do we love it? No, but it’s OK,’ said Johnson. ‘Empty specs and empty houses do no one any good.’”

“Berry said he’s booking another auction with M.W. Johnson for March 15 in Cape Coral, Fla. That auction may involve 50 single-family homes, as well as some land.”

“Since builders are still calling him, Berry said he’s hoping to hold another auction in the Twin Cities later this spring.”

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