The Housing Bubble

The Times Herald reports from California. “The median home price in Vallejo dropped about 21 percent in December over December 2006, said Solano Association of Realtors president Lori Collins. Benicia’s median home prices fell even more dramatically during that same period - slipping about 54 percent, she said.”

“But what is bad news for home sellers may be good news for the economy in general, said Collins and Alan Schwartzman of Benicia’s Advance Mortgage. ‘We are seeing more buyers out there, and they’re making offers,’ Collins said. ‘Maybe it’s a sign that they’re not going to continue waiting.’”

“But home prices will likely continue sliding south for a while longer, Schwartzman said. ‘The rate of decrease will slow, and the combination of (the tax incentives and new federal mortgage lending limits) will work synergistically to help many people nationwide to improve their financial situation,’ Schwartzman.”

“Though the housing crisis is unlikely to make an immediate reversal, the stimulus package ‘may, if not prevent a classically defined recession, may at least help support a very mild and short-lived recession,’ Schwartzman said.”

The Recordnet. “Thieves have been systematically stripping fixtures from one of the largest homes in the county since the residents left and security guards were pulled by its county landlords several months ago.”

“The sprawling, Mexican-style home - between 7,300 to 8,700 square feet, based on building permits - sits on almost five acres at a rural crossroads in the eastern section of San Joaquin County. It includes a large, custom-designed indoor pool filled with murky green water, three kitchens and seven bathrooms.”

“‘It’s sad that every time somebody drives by, they take a chunk of the house with them. To me, it’s just sad that there’s another house being screwed up,’ said Sherry Williamson, one of those neighbors.”

“She drives by the house several times a day and often sees unfamiliar trucks in the driveway. When her suspicions have been raised, she calls the Sheriff’s Office.”

“‘I’ve talked to everybody that would listen to me. You can’t get anybody to board these houses up,’ she said, referring to other abandoned homes in the area that are becoming an increasing problem as owners run into financial problems and just walk away.”

“Environmental Health’s Alan Biedermann has seen a sharp increase in problem homes that are damaged. Many are way beyond repair and must be demolished, he said.”

“‘Stealing is becoming way more common. We’ve got five properties in that area alone that we’re dealing with now,’ said Biedermann.”

“About every six months, he takes demolition contractors on a tour of abandoned homes so they can bid on deconstructing the property. Typically, five to 10 contractors are interested in the work. On last summer’s tour, they visited 17 homes.”

“Last week on his most recent tour Biedermann led 30 contractors through 32 homes slated for the wrecking ball. ‘It’s going to probably get worse before it gets better,’ he said.”

The Fresno Bee. “Fresno’s most vulnerable neighborhoods have been hit hardest by the mortgage crisis, a Bee analysis of housing data shows. Already there are signs that a torrent of foreclosures could trigger more crime and decay in the city’s struggling core.”

“Foreclosures rose rapidly in Fresno County in 2007, with lenders repossessing more than 1,500 properties — a 405% increase from the previous year, according to RealtyTrac.”

“Nearly every community is affected. In Selma, Clovis, Kerman and other cities, hundreds of families have been uprooted, leaving vacant homes in their wake. Many of the lost homes are in new subdivisions on the fringes of Clovis and Fresno, particularly in the southeast, west and northwest parts of Fresno.”

“The ‘real scary part’ of the failed mortgages is what will happen to the neighbors, said David Mendoza, executive director of the Community Housing Council of Fresno. ‘Long term, you’re looking at a domino effect,’ he said. ‘You have blighted homes. Then a loss of tax revenue … and after that, more crime — drug use, burglary … graffiti.’”

“Isaias Mendez lives in central Fresno, across the street from another foreclosure house where homeless people have slept. Mendez warns his three children to stay away from the house. ‘A lot of people sleep in there,’ he said. ‘They keep breaking windows at all hours of the night and making a lot of noise.’”

“Chen Zheng, who owns the house next door, is building a concrete wall to keep burglars out. He said his home was burglarized eight times last summer.”

“Bill Pfeif, who is trying to sell about 300 foreclosure homes in the Fresno area, said many of them had been neglected for at least eight months by the time he took over. Residents stop taking care of homes once they stop making payments.”

“He doesn’t dispute that run-down buildings hurt adjacent property values. Still, he criticized the city for enforcing property codes, saying it’s simply done to generate revenue for the city.”

“‘The only thing they’re doing is punishing the banks, which have already lost a ton of money,’ he said.”

“Gerardo Campos owns three rental properties in the area. Campos said he is interested in buying the house for investment purposes. ‘They want too much,’ he said. ‘They want $189,000, but I think it’s worth $100,000.’”

“Mendez bought his house two years ago after moving from Minnesota. He regrets the decision. He doesn’t know who will move into the vacant homes next door and across the street. He doesn’t want to wait around to find out.”

“‘If I rented, I’d leave,’ he said. ‘Now that I own, I have to stay.’”

The County Sun. “The mortgage crisis is affecting residents nationwide, but it may be most pressing in California, specifically the Inland Empire. On Saturday, some homeowners went to Ontario’s Loveland Community Church on Inland Empire Boulevard for answers.”

“Ontario Mayor Paul Leon said he was familiar with the situation that homeowners face. He shared a story about a friend who approached him four years ago and tried to get him to take out a loan.”

“The friend told Leon that he would be able to pay back the loan in four years, and that all the costs would be recouped in that time.”

“‘That was what people were being told by people they trusted,’ Leon told the audience. ‘This was my own friend. Well, let me tell you, right now I’d be moving out with nowhere to go.’”

The Voice of San Diego. “In the year since national spotlights became trained on problems affiliated with subprime mortgages, some pundits and analysts have made ’subprime’ synonymous with the entire crisis in the economy, the housing market and a lot of other, sometimes unrelated, issues.”

“But growth in late payments and foreclosures among other loans in San Diego County speaks to a problem that is far from contained to subprime, analysts caution.”

“Between November 2006 and November 2007, according to FirstAmerican Loan Performance…signs of distress increased among the other 87 percent of outstanding loans in the county, those prime loans restricted to borrowers with very good credit.”

“‘That’s the part we are all watching,’ said Mark Carrington, director of analytical sales and support at First American LoanPerformance. ‘The subprime, that’s to be expected. What we’re watching is the prime delinquencies beginning to increase.’”

“While just 0.44 percent of the prime loans outstanding in the county had late payments for at least 60 days in November 2006, the share of prime loans in that situation had tripled to 1.54 percent by November 2007.”

“Just 0.14 percent of prime loans were in foreclosure or bank-owned in November 2006. But by November 2007, that share had jumped to 0.57 percent.”

“To the extent that growing late payments and delinquencies on the prime side represent a greater problem than many in the region have acknowledged, the societal bent toward over-leveraging and burdensome debt aren’t restricted to any certain socioeconomic status, said Jim Bliesner, who fights foreclosure as the chairman of the City-County Reinvestment Task Force.”

“‘It’s about people’s over-extended financial situations, the heavy burden that comes with delinquent debt,’ he said. ‘And its escalation with those penalties that end up on people’s doorsteps. There’s a whole lot of trip wires out there in the economic landscape that when people are stable and growing, we don’t see.’”

“Joseph Galascione is president of ERA Metro Realty, which published a report last month observing a growth in the number of loans outstanding in North San Diego County that the firm would consider a high risk for foreclosure.”

“Interestingly enough, in this last report for the first time, the number of resets or potential foreclosures in North County outnumbered the South Bay, Galascione said. ‘(So far) South Bay has just been riddled with foreclosures and North County has been able to survive.’”

The Daily Pilot. “Pete Zehnder and Steve Jones want so badly to see the Westside redeveloped that they’d give housing away there for free. And for six months this year, they plan to do exactly that.”

“The owners of Bettershelter, a Costa Mesa developer that builds affordable housing, opened a condominium complex called 1.7 Ocean last summer on Bernard Street. Zehnder and Jones sold the first 10 units in the complex easily, but with the housing market dragging, they’ve come up with a special incentive to lure buyers to the last two.”

“The program, known as ‘Live Free,’ allows residents to move into the two-bedroom units and not pay a penny for the first six months.”

“The bungalows are priced at $519,000 each, the lowest price in the complex, but for that first half-year, the Bettershelter owners will foot the entire bill using the money they made off the previous 10 sales.”

“Overall, the owners hope to target first-time home buyers at 1.7 Ocean — and they want to take some of the stigma off the Westside, an area often associated through the years with crime and poverty.”

“‘Everyone reads so much negative press [about the housing market] that they’re scared to come out,’ Zehnder said. ‘They feel they should not be in the market at this time. We want to tell people it’s a very smart time to be in the market.’”

Some housing bubble news from Wall Street and Washington. Associated Press, “Shares of American International Group Inc. hit a new 52-week low Monday after the insurer said in a regulatory filing that auditors have found material weakness in how it reports the value of certain credit default swaps. In a filing with the Securities and Exchange Commission on Monday, AIG said it would need to alter the way it values credit default swaps involving collateralized debt obligations.”

“CDOs are funds that contain slices of bonds, some of which are backed by mortgages. Back in August, AIG called exposure to subprime debt ‘minimal.’ In November, it maintained that despite some losses due to mortgage-backed bonds, its exposure to the debt remains ‘high quality,’ with ’substantial protection.’”

From Bloomberg. “AIG, the world’s largest insurer by assets, said auditors found a ‘material weakness’ in how the company values its credit- default swap portfolio. The stock fell the most in 20 years.”

“The contracts declined by about $4.88 billion in October and November, according to data in a regulatory filing today. The drop was confirmed by company spokesman Chris Winans. AIG had said in December that the value of the ’super senior credit derivatives’ fell by about $1.1 billion in those two months.”

From MarketWatch. “Shares of IKB Deutsche Industriebank tumbled more than 20% Monday, retreating after weekend reports that the struggling German bank needs a further 2 billion euros ($2.9 billion) in capital to cover its subprime-mortgage risks.”

“But German newspaper Frankfurter Allgemeine Sonntagszeitung reported Sunday that KfW, which holds some 40% of IKB, cannot afford to provide any further capital and that the other banks that participated in the rescue have so far refused to increase credit lines.”

“The newspaper said the additional capital is needed in light of IKB increasing its view of the risk from assets on its balance sheet, to 3.3 billion euros from 1.35 billion euros.”

“The bank also has about 8.1 billion euros of exposure through its off-balance-sheet Rhineland Funding. The investment vehicle borrowed money by issuing short-term commercial paper and invested in longer-term debt, including subprime mortgages.”

From Reuters. “CNA Financial Corp, a commercial insurer whose majority owner is Loews Corp, said on Monday fourth-quarter profit fell 50 percent, hurt by losses related to subprime fixed-income investments.”

“Net realized investment losses totaled $61 million, reflecting what CNA called a ‘decline in credit market conditions including credit spread widening and exposures to sub-prime collateral in our fixed-income securities.’”

“Banks are driving the cost of protecting corporate bonds from default to the highest on record as they seek to hedge against losses on collateralized debt obligations, according to traders of credit-default swaps.”

“‘Banks have taken losses, spreads are going wider and they are just cutting positions,’ said Andrea Cicione, a senior credit strategist at BNP Paribas in London. ‘Lenders are probably reducing risk positions in a deteriorating credit environment by unwinding CDOs.’”

“Contracts on the benchmark Markit iTraxx Crossover Index soared 17 basis points to 547 at 12:50 p.m. in London, according to JPMorgan Chase & Co. The Markit iTraxx Asia Ex-Japan Series 8 Index soared the most in one day, rising 15 basis points to an all-time high of 144.5, according to BNP Paribas SA.”

“The Group of Seven estimates banks worldwide will suffer writedowns of $400 billion on home loans, German Finance Minister Peer Steinbrueck said at a weekend meeting of officials and central bankers in Tokyo.”

From Realty Check. “You just can’t make this stuff up. Apparently even a big builder’s daughter can’t seem to keep faith in the Florida housing market.”

“According to an SEC filing, Wendy Topkis, daughter of Toll Brothers co-founder and Vice-Chairman Bruce Toll, is walking away from a Florida condo, just like everyone else. A Toll Bros. condo!! The Palm Beach Post says it best: Et Tu Wendy?”

“Daddy is quoted as saying she just changed her mind because she had another child and the place would be too small, but I’m guessing the 13 percent drop in Florida prices was screaming at her a little louder than the baby. So Wendy just adds to the company’s 61 percent cancellation rate in the Sunshine State.”

“The daughter of Bruce Toll informed the company last month that she and her husband ‘did not intend to make settlement’ on a $2.47 million home they had previously agreed to purchase, the company said in a regulatory filing.”

“Toll Brothers went on to say that it intends to pursue its rights under the agreement of sale with Toll’s daughter, Wendy Topkis.”

The Chicago Tribune. “But when I called TCW Group Chief Investment Officer Jeffrey Gundlach this week…he was fixated, and agitated, about information anyone could interpret. ‘Listen to this,’ he said as he read a headline from a CNNMoney.com article: ‘Homeowners: Can’t pay? Just walk away.’”

“‘People have decided that it’s acceptable to default on mortgages,’ said Gundlach, a top bond fund manager who was singled out by Morningstar Inc. as a ‘Manager of the Year’ in 2006 and predicted the current housing mess early in 2007.”

“‘It’s acceptable to default!’ Gundlach emphasized, his voice a mixture of dread and disgust. ‘They even have a new term for it: ‘Jingle mail.’ ‘We are in a growing culture of default,’ Gundlach said.”

“The way Gundlach sees it, this is one of the biggest threats to the economy. He sees the potential of a dangerous spiral of nervous lenders and a housing glut. And the risk in this spiral is clear: Fewer people will qualify to get loans, so more houses will sit on the market and prices will slump more.”

“Lehman Brothers economist Michelle Meyer noted that Toll Brothers, a luxury home builder, reported this week a 37 percent year-over-year decline in signed contracts in the fourth quarter. And the average price per home dropped from $730,000 during the first quarter last year to $634,000.”

“Builder D.R. Horton recently reported a 52 percent drop in sales, and 44 percent of the sales that were arranged ended up being canceled.”

The Washington Post. “For a time, the snow-dusted forests ringing this picturesque mill town might as well have been made of gold.”

“Eager U.S. construction companies scooped up Canadian lumber in record volume during the great American housing boom of the middle of the decade. As prices spiked, sawmills cashed in, spending millions to increase production.”

“They upgraded factories and enticed laborers with salaries upward of $80,000 a year, adding third shifts to pump out wood for McMansions in Miami and instant subdivisions in Phoenix, 24 hours a day.”

“The lumber bubble brought to this sleepy town of 4,500 people about 600 miles north of Vancouver a rush of wealth, still easily visible in the freshly minted Ski-Doo snowmobiles and $60,000 pickup trucks, now idle in driveways.”

“‘Everybody went out and bought new toys,’ said Mackenzie’s no-nonsense mayor, Stephanie Killam. ‘Nobody thought it would ever end. They were wrong.’”

“As the ripple effect of the U.S. subprime-mortgage collapse spreads around the world, the boom times for Mackenzie and dozens of other towns built on the legacy of the Canadian lumberjack have come crashing down as fast as you can say ‘timber.’”

“With wood demand and prices plummeting along with U.S. housing starts, three of Mackenzie’s five sawmills have shut down indefinitely and others have cut shifts — propelling the town’s unemployment rate from single digits to more than 70 percent since August.”

“Similar events are playing out across the Canadian hinterlands, where at least 139 sawmills, many of which depend on the U.S. market for most of their sales, have been forced to close indefinitely or reduce shifts over the past 18 months, according to Canadian government statistics.”

“Thousands of forestry workers are jobless, creating what analysts are calling the industry’s worse shakeout in modern history.”

“‘They were selling $250,000 houses [in the United States] to guys who worked at McDonald’s, and guess what, they couldn’t afford them,’ said Gerald Girard, a laid-off Mackenzie lumber worker. ‘So now, who’s paying the price for it? It’s not just them, aye. I’ll tell you who. It’s us.’”

The New York Times. “For more than half a century, Americans have proved staggeringly resourceful at finding new ways to spend money. By the 1980s, millions of Americans were entrusting their savings to the booming stock market, using the winnings to spend in excess of their income. In recent years, millions more exuberantly borrowed against the value of their homes.”

“But now the freewheeling days of credit and risk may have run their course, at least for a while and perhaps much longer, as a period of involuntary thrift unfolds in many households. With jobs shrinking, housing prices plummeting and debt levels swelling, the same nation that pioneered the no-money-down mortgage suddenly confronts an unfamiliar imperative - more Americans must live within their means.”

“‘We don’t use our credit cards anymore,’ said Lisa Merhaut, who lives in Leesburg, Va., and whose family last year ran up credit card debt they could not handle. Today, Merhaut manages her money how her father did. Despite a household income reaching six figures, she uses cash for every purchase. ‘What we have is what we have. We have to rely on the money that we’re bringing in.’”

“The shift under way feels to some analysts like a cultural inflection point, one with huge implications for an economy driven overwhelmingly by consumer spending.”

“The unraveling of the real estate market appears to have left millions of families with little choice, yanking fresh credit from their grasp.”

“‘The long collapse in the United States savings rate is over,’ said Ethan Harris, chief U.S. economist for Lehman Brothers. ‘People are going to start saving the old-fashioned way, rather than letting the stock market and rising homes values do it for them.’”

“For the 34 million households who took money out of their homes over the past four years by refinancing or borrowing against their equity, roughly one-third of the nation, the savings rate was running at a negative 13 percent in the middle of 2006, meaning they were borrowing heavily against their assets to finance their day-to-day lives, according to Moody’s Economy.com.”

“By late last year, the savings rate for this group had improved, but just to negative 7 percent and mostly because tightened standards made loans harder to get.”

“‘For them, that game is over,’ said Mark Zandi, chief economist at Economy.com. ‘They have been spending well beyond their incomes, and now they are seeing the limits of credit.’”

“Not long ago, Elena Gamble would have looked at the Cadillac parked across the street from her modest home in Elk City, Okla., and felt a twinge of jealousy.”

“‘We live in a small town, and everybody looks at your clothes and what you drive and where you have your hair done,’ said Gamble, who earns about $2,600 a month as a grievance counselor at a local prison. ‘Everybody wants to be rich.’”

“Now, she and her husband - a prison guard who brings home $2,000 a month - are grappling with $10,000 worth of high-interest debt. They no longer go to the movies or out to eat, except for the occasional visit to McDonald’s. They dropped their Internet service. Last May, their car was repossessed.”

“‘What we say now is, ‘If we can’t afford it, we can’t buy it,’ Gamble said. ‘It stays on the shelf.’”

The Marin Independent Journal. “As our economy falters because of the housing bubble and the erosion of the dollar’s value, there is less faith in this country’s economic soundness by our creditor nations.”

“A clear lesson is that we have for too long been living far beyond our means as a people and as a nation. We can no longer consume so much more in value than we produce.”

“Many in Marin are lamenting that real estate prices are skidding. We are ‘losing money.’ If we’re honest, we know that much of the equity in our overvalued real estate is ‘funny money’ based not on real values but on the speculative furor of the past decade.”

“Losing some of our shaky home equity is not the medicine we want. But perhaps it’s needed. It’s as true as ever that it’s better to live within our means and not go too much in debt - especially if it’s for all the wrong reasons.”

The Baltimore Sun reports from Maryland. “Half the communities in the Baltimore metro area saw average home sale prices decline last year as the housing slump deepened. The most expensive counties - Howard, Anne Arundel and Carroll, had the biggest share of ZIP codes where average sale prices fell last year.”

“The harborfront Canton neighborhood, where real estate investors and homebuyers alike bid up prices during the housing boom, is awash with For Sale signs and declining values. About 250 homes are on the market there. That includes three houses in a row on one block, all with asking prices below what the owners paid.”

“‘There’s so much competition,’ said J.D. DiGirolamo, a real estate agent in Canton who’s handling one of the three rowhouses - a foreclosure taken back by the lender. ‘I think a lot of people got in over their head.’”

“A growing number of lenders are labeling certain local ZIP codes, whole counties and even all of the Baltimore metro area as ’soft’ or ‘declining’ and requiring larger down payments for all types of loans.”

“‘Anything over $200,000 is going to sit longer,’ said Arthur Jordan, a real estate investor trying to sell a rehabbed house in the city’s Waverly neighborhood for $220,000. That’s down $30,000 from his original asking price, but the only offers he has gotten - all for much less - were from other investors.”

“‘I know investors who only sold one house last year. Some didn’t sell any,’ said Jordan, whose house has been on the market for five months and is competing with others on the block. ‘I know guys getting houses foreclosed on.’”

“Guy Cecala, publisher of Inside Mortgage Finance in Bethesda, suspects lenders will continue to pull back. It’s the logical business move ‘when they don’t really have a good idea of what the worth of a property is going to be down the road,’ he said.”

“Case in point: The trio of next-door Canton homes for sale on Foster Avenue, with their brick facades and high-end finishes.”

“One, bought for nearly $353,000 in 2005, is on the market for $349,900. Another has an asking price of about $28,000 less than its $262,500 purchase price in 2005. The third was foreclosed on by the lender last year - and DiGirolamo, the agent, figures the asking price will be about $100,000 less than its $430,000 sale price at the end of 2006.”

“‘I don’t know how it appraised for $430,000,’ he said. ‘I really don’t.’”

The Hudson Reporter from New Jersey. “Further proof that the national economic situation is worsening was unearthed Feb. 1, when the U.S. Department of Labor recorded 17,000 jobs lost nationwide in the month of January.”

“According to one local Union City resident, Oscar Perez, ‘We’re already in a recession, and it’s only going to get worse.’”

“Sergio Portilla of West New York is the proprietor of his own bus under Community Line Service. Driving a daily bus route from Journal Square in Jersey City to Manhattan, he’s noticed a substantial decrease in volume. He blames the plunge on the increased numbers of people being fired from their jobs in New York.”

“‘My customer [base] was reduced by almost 50 percent,’ he said. He added, ‘I used to work 14 hours, and now I have to work 18 hours to make less than what I was making before.’”

“Alma Campos together with her husband, Jesus Campos, have owned Biggies Mexican Restaurant on Bergenline Avenue for eight years. ‘We’ve always had loyal customers, but we’ve seen at least a 35-percent decrease in numbers,’ said Alma on the local effects of the crumbling economy.”

“With mortgage payments and private tuition costs for their children, Alma expressed her concerns regarding a possible tax credit. ‘I don’t know how it’s going to help us, and if it does, it won’t be much,’ she said.”

From Newsday in New York. “Locally and nationally, the economic picture has darkened considerably in the last month, with perhaps worse news about employment and home prices still to come.”

“In a way, experts say, whether the economy is heading into recession or not doesn’t matter because many businesses and consumers are already thinking in recessionary terms and making choices based on that thinking.”

“Kings Park residents Craig and Tammy Mehlsack are seeing that firsthand. As owners of Top of the World Limo, the Mehlsacks know when everyone else is cutting back — then they have to do the same.”

“The first signs, said Craig Mehlsack, came in November and December, when far fewer area customers took the usual holiday trips into Manhattan. So far this year, business is down 10 percent compared with a year ago.”

“Indeed, people are pulling back on everything from East End wine tours to trips to the airport, Mehlsack said.”

“‘Our business is based on the economy; it’s a luxury business,’ he added. ‘When somebody makes money, they’re going to say, ‘Maybe we’ll call Craig and do a wine tour.’ Now, it’s not happening.’”

“So, the couple is pulling back, too. They’re not buying new cars to add to their fleet and they’re cutting back on personal expenses, like eating out.”

“At Farmingdale-based Juma Technology Corp., managers are working to improve cash flow and keep credit lines open — but they’re also debating whether to continue with their growth plans or hold back.”

“‘It’s been a smoke and mirrors economy for four years,’ said Joseph Fuccillo, Juma’s president and chief technology officer. ‘Think about how much of the growth has been fueled by cheap money. You take the cheap money away and what happens?’”

“The biggest problems in the economy continue to revolve around real estate. Take the path of Century 21 Benjamin Realty in Syosset. Since the housing boom began in the late 1990s, Benjamin Realty grew from two offices to six and became a Century 21 brand.”

“Now, the company is back to two offices, both in Queens, as broker-owner Ed Gitlin sold his Long Island operation to Coldwell Banker last week. Business, Gitlin noted earlier this year, had fallen off by 20 percent and a staff reduction and office consolidation didn’t do the trick.”

“Some experts note that home prices on Long Island, which since last year have fallen by 5 percent in Nassau County and 7 percent in Suffolk, could drop by another 10 to 20 percent, or even more.”

“That’s potentially problematic for the overall economy, because in the past, housing has served as a catalyst for economic rebounds. ‘We’ve so paralyzed the housing market that we’ve taken it out of play,’ said economist James Parrott. ‘It’s a real question as to how the recovery gets under way.’”

“While the direction of the economy may lack clarity, the housing market, locally and nationally, is in decline. According to some experts’ predictions, home prices may continue to fall for another two years.”

“‘We are way early in the curve in terms of the devastation to housing,’ said Manhattan appraiser Jonathan Miller. ‘I think we will see an acceleration of price declines on Long Island.’”

“Martin Cantor, director of Dowling College’s Long Island Economic and Social Policy Institute, suggests home prices on Long Island, which have fallen by 5 percent in Nassau County and 7 percent in Suffolk over the past year, could drop another 15 percent before prices stabilize.”

“Some suggest price declines on the Island are worse than the data show. In many communities, prices are 15 percent off where they were a year ago, according to broke Bethany Marten of Baldwin.”

“As of December, Nassau’s median home price of $447,500 was 5.6 times the median household income in the county, while Suffolk’s $370,000 median price was 5.2 times income, according to Irwin Kellner, chief economist with North Fork Bank.”

“To get to a point where prices are four times incomes, median home prices would have to fall 24 percent in Suffolk and 29 percent in Nassau. ‘By this measure, housing prices have a ways to go before people can step up and buy them,’ Kellner said.”

“There’s additional evidence that price drops are far from over on the Island. The number of contracts signed in the first five weeks of the year is 30 percent below last year, said Century 21 Laffey Associates CEO Emmett Laffey of Greenvale.”

“‘The buyer pool has dropped dramatically,’ Laffey said.”

The Staten Island Advance from New York. “At one time, the Westerleigh colonial might have listed for a half million dollars even before the bidding wars began. Today, the home on Clinton B. Fiske Avenue, a block with plenty of curb appeal in a desirable North Shore neighborhood, is selling for $420,000 and the owners are willing to include chandeliers and some furniture as part of the sale.”

“‘If they want to make a deal, they know they will have to throw in a little more,’ said Claire Bisignano Chesnoff, a Realtor who is listing the house.”

“One of Ken Licata’s sellers in Sunnyside is offering all the new Bosch appliances with the home. Another offered a Kia car with the house, but the buyer balked. ‘Buyers want everything,’ said Licata, a longtime Realtor. ‘If you throw in a car, they want to know what kind.’”

“Mostly, though, homes that are priced right sell. Homes that are not, don’t, experts like Licata note. He levels with homeowners about the value of their home in today’s changed market. If they disagree and insist on overpricing, he will turn down a listing.”

“Buyers, meanwhile, should be looking closely at low interest rates, added Licata. ‘I don’t think people are really getting it that the interest rates are so good. The $700,000 property they could buy last year — now they can buy an $800,000 property for the same price at the six-and-a-quarter rate.’”

“ERA Master Realtors in Oakwood is listing a colonial in Annadale where the price dropped from $639,000 to $589,000 and the owner is throwing in a snow blower and a new washer and dryer.”

“The number of one-family, detached homes sold dropped by about 14 percent, from 1,168 in 2006 to 1,002 last year, and most real estate experts say there has been no shortage of price slashing.”

“Builder R. Randy Lee said he dropped the price on his new upscale homes at Opal Ridge in Pleasant Plains by about $25,000. He also added granite countertops, radiant heat and special trim packages, amenities once considered upgrades. ‘We are throwing in everything,’ said Lee.”

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