The Housing Bubble

The San Francisco Chronicle reports from California. “Bay Area home sales nosedived to a 20-year low and median prices dropped nearly 10 percent last month. A total of 3,586 new and resale houses and condos traded hands in the nine-county Bay Area in January, down 41.9 percent from a year ago and 29.2 percent from December, according to DataQuick. It’s the first time regional sales have dipped below 4,000 in the 20 years that the La Jolla research firm has tracked the region and the 36th straight month of declines.”

The Sacramento Bee. “In the most ominous indicator yet of the Sacramento region’s struggling housing market, January saw nearly as many people lose their homes as buy them.”

“January’s 1,815 closed escrows in Amador, El Dorado, Nevada, Placer, Sacramento, Yolo and Yuba counties was only 33 more than the 1,782 foreclosures recorded in the same counties that month, DataQuick.”

“Median sales prices for all new and existing homes combined have returned to June 2003 levels in Sacramento and to December 2003 levels in Placer County, according to DataQuick. Sacramento County’s median sales prices for all new and existing homes are down a record 26.8 percent from January 2007, the firm reported.”

“The county’s $253,000 median sales price is down now 34.6 percent from an August 2005 high of $387,000. Sales typically rise in February and March, but foreclosures are rising, too, experts say.”

“‘We could see that number continue to go up,’ said Fred Arnold, president-elect of the California Association of Mortgage Brokers. He ascribes the continued increases to ‘the enormous run-up of (home) values and the enormous number of loans that went out where many people weren’t giving thought to whether they could afford the home.’”

Bay Area Newsgroup. “Anyone looking for a housing auction has two to choose from in the East Bay this weekend. Hudson and Marshall will be auctioning more than 300 bank-owned properties running from San Jose to Vallejo on both Saturday and Sunday.”

“Another auction by Kennedy Wilson, selling 46 newly renovated Fairfield condominiums, is set for Sunday. The 46 Raintree Terrace condos range from a one-bedroom, one-bath, 669-square-foot model to a two-bedroom, two-bath, 867-square-foot plan. Starting bids on five of the one-bedroom models are $120,000 and homeowners association fees are $316 a month.”

“Kennedy Wilson auction group president Rhett Winchell said the original prices ranged from about $220,000 to $332,900.”

“‘Right now, the price is set at about 60 percent of its original asking price and the process is now in the buyer’s hands,’ Winchell said. ‘This isn’t a place that has an unpublished reserve where the seller is not obligated to sell. If you bid $125,000, and it’s the only bid, then you get it.’”

“Studies have shown that loans diminished as Bay Area home prices soared and lenders heaped less desirable mortgages on an eager market. Bernie Kellman needs no reminder. He finally shed his bike messenger life in San Francisco and moved across the Bay, got a good job and bought a house in Richmond in late 2004.”

“Now he’s stuck with payments from a loan that rose sharply after three years. Kellman says he was duped. Hoping to stave off foreclosure, he pays two-thirds of his mortgage each month while he struggles to reach his lender. He says he gets 20 calls a month, reminding him he’s behind.”

“‘I was swept up in the idea I could own a home. I was so excited to see I could do it,’ said the psychiatric social worker. ‘We’re Bay Area people. We expect to pay more. Take 50 percent. That leaves me a lot for food, drink and toys for the kid. But I’ve made such a mess, got in such a deep hole. I’m not getting anywhere.’”

From KGO TV. “According to RealtyTrac, Stockton had 22,000 foreclosure filings in 2007, in a city of just over 280,000 people. That’s up 271 percent compared with 2006.”

“The misfortune of others has been a boon of sorts for realtor Glenn Woodard, who has 25 foreclosure listings right now. ‘When the market shifted to foreclosures, that’s when I shifted from the regular business to foreclosures. 85 percent of my business right now is foreclosure properties,’ says Woodard.”

“Even in Westin Ranch, some families are finding opportunity in the tough times. Jeff Barnes, his wife, and six children are moving in where so many others have moved out.”

“‘There’s a lot of signs, a lot of foreclosures, but we’re moving in. For some people, it’s a bad thing. And for some people it’s a good thing. Now some people can get into a house that they couldn’t get into before,’ says Barnes.”

The Ventura County Star. “Ventura County recorded 423 sales last month, a 38.6 percent decline from 689 in January 2007. The number of transactions was a record low for any month in DataQuick’s records, dating back to January 1988.”

“The county’s median sales price for new and existing homes and condominiums was $477,750 in January, a 15.4 percent drop from $565,000 a year ago.”

“‘Clearly, this doesn’t look good,’ said Bill Watkins, executive director of the UC Santa Barbara Economic Forecast Project. ‘It’s still reflecting the deflationary expectations people have. When you expect prices to go down, there’s no reason to buy today.’”

The North County Times. “The only thing slower than molasses in January, it seems, is Riverside County’s home-sales market.”

“Buyers closed escrow on 1,939 new and existing houses and condominiums last month, the lowest number since January 1997, when the county’s population was roughly half as large as it is now, a research company reported.”

“Prices continued to plummet across Southern California, with Riverside County’s median sale falling to $331,500, its lowest level since July 2004, according to the monthly report by DataQuick.”

“The 20 percent decline in that figure since January 2007 — when the median was $415,000 — was the steepest in Southern California.”

“Banks seized as many as 2,800 of the underlying properties last month in Riverside County, according to a California tracking service. That number looms ominously over the 1,939 sales figure.”

“The result is that the number of homes for sale has continued to grow at an alarming pace. ‘As long as we keep inventory up and banks keep shoveling them in, we’re going to see a little more depreciation,’ said Gene Wunderlich, a longtime real estate agent in Wildomar.”

The Union Tribune. “So far, said DataQuick analyst John Karevoll, home selling has involved a great deal of distressed properties, nearly 50 percent of all San Diego sales in January involved foreclosures and defaulted homes.”

“‘Bad as it is for those involved, it is something that can work its way through the system,’ he said. ‘But if we add in a recession, then prices could go back to where they were in 2004.’”

“The current San Diego median is already back to those levels, he acknowledged, but that’s because distressed properties are selling at a sizable discount. In a recession, values of all properties would drop.”

“‘If we do start to see that, then things are going to be grim, to put it mildly,’ he said.”

The Ramona Sentinel. “A skyrocketing real estate boom that made fortunes on paper for some and sent prices soaring for all is having a bumpy return to Earth, affecting Ramona with as many as 237 homes in either foreclosures, auction, or pre-foreclosure, show records from ForeclosureRadar.”

“With 300 homes in the local MLS inventory, the 237 distressed properties spell the potential of a significant impact on the local real estate market.”

“Twenty-four homes sold in Ramona in December, reports Ramona Real Estate Association president Lisa Schmidt, reflecting a 32 percent drop in the median price.”

“‘They are in a great position now to buy if they can qualify for a loan,’ she said.”

The Thousand Oaks Acorn. “The slumping Conejo Valley housing market can expect little relief in 2008, a stark contrast to the area’s retail business environment which continues to see signs of growth and prosperity, experts said.”

“John Paglia, Pepperdine assistant professor of finance, warned that even though the area’s unemployment rate remains well below the countywide level of 5.7 percent, recession is still a concern.”

“The biggest worry locally is the steady decline in home values. The Conejo Valley’s drop of 15-19 percent in single family median prices exceeded the county’s decline of 13 percent in 2007, a report from Pepperdine’s Graziadio School of Business and Management shows.”

“At what point the prices will stabilize is anybody’s guess. ‘It seems like a bottom is called month after month,’ Paglia said.”

From Marketplace. “Scott Jagow: ‘There is another side to all these new foreclosures — it’s keeping people who buy foreclosed homes very busy.’”

“Sean O’Toole runs a website called ForeclosureRadar. Jagow: ‘Anything else that strikes you about what’s going on right now? The environment, with so many foreclosures happening?’”

“O’Toole: ‘Well you know, probably the biggest thing I see is everybody talks about this being a subprime issue…but something that’s not really talked about a lot that I’ve seen when I’ve tried to sell my inventory is that I’m really competing with the new homebuilders, and the new homebuilders have really lead prices down.’”

“‘You know, in Mantica, California, there were homes selling for $670,000, Anderson homes. They recently held an auction, and that same subdivision, that same $670,000 property was sold for $380,000. You know, if you paid 670 two years ago, and you can now buy that same house for 380, it’s awfully hard to find the will to keep making the payment.’”

Some housing bubble news from Wall Street and Washington. CNN Money, “Home prices continued their plunge during the last three months of 2007, setting a real estate trade group’s record for the biggest-ever quarterly drop. The national median price drop of 5.8%, to $206,200 from $219,300, was the steepest ever recorded by the National Association of Realtors (NAR), which has been compiling the report since 1979.”

“‘The continuing crunch in the jumbo loan market that began in August has disproportionately reduced the number of transactions in higher price ranges,’ said Lawrence Yun, NAR’s chief economist, in a statement.”

“Each of the four U.S. regions recorded losses compared with the fourth quarter of 2006. The West took the worst hit, at 8.7%. Prices dropped 4.8% in the Northeast, 5.4% in the South and 3.2% in the Midwest.”

“In Lansing, Mich., square in the Midwest Rust Belt, prices plunged 18.8% to $109,600. In Sacramento, Calif., prices fell 18.5% to $197,600, and in both Jackson, Miss and Riverside, Calif. prices dropped 16.8%.”

“Cape Coral, Fla., condo prices were down 26% compared with the last three months of 2006 to $202,300, and Tucson, Ariz., prices dropped 19.8% to $128,000. Atlanta prices fell 12% to $141,100, and Las Vegas was off 10.3% to $178,500.”

The Orlando Sentinel. “The International Builders’ Show in Orlando opened with leading economists warning that the nationwide plunge in residential construction and sales will continue at least until early 2009.”

“‘There are a lot of downside risks,’ David Seiders, chief economist for the National Association of Home Builders, told reporters at the opening of the trade group’s annual conference. He said falling home prices ‘are part of the solution’ for getting sales and construction moving again because they will help balance of supply and demand.”

The Herald Tribune. “There is something different this year: The mood of the builders. It is not good. Seiders acknowledged that after his unusually bleak market forecasts for 2008. Builders are concerned, he said. Gravely concerned. His forecast last year was for a mild decline in the housing market, but still a solid year. The same cannot be said for 2008, Seiders said.”

“It’s ‘a good time to buy a home … just not good enough’ in the eyes of a lot of potential home buyers, said Seiders.”

“In the category titled ‘vacant year-round single-family homes for sale,’ the numbers will soar from 950,000 in 2005 to 1.65 million in 2008.”

“‘The biggest problem for the economy is in the financial markets,’ Seiders said. ‘This easily could spiral downward as this thing feeds on itself.’”

The Palm Beach Post. “‘This really does look like something out of a Warner Bros. cartoon, where Wile E. Coyote has fallen off that cliff and still hasn’t hit bottom,’ said Seiders. ‘It’s pretty clear that the housing contraction is not yet over.’”

“The hard-hit areas all share a common characteristic: a glut of homes for sale. ‘Before prices can turn up, we have to get rid of the oversupply problems,’ Berson said.”

The Dallas Morning News. “‘It’s absolutely essential to get this thing moving in the other direction and get home sales going,’ Seiders said. He said the housing market must improve ’so this doesn’t degenerate into an absolute debacle.’”

“‘Home prices have fallen significantly in some parts of the country, and they are going to fall some more,’ said said David Berson, economist with mortgage insurance giant PMI Group.”

“Some recent studies have warned that the housing slump could drag on for several years. And educational programs offered to builders at their convention mirror the dour mood of the market. Seminar topics include ‘Unique Opportunities in Bankruptcy,’ ‘Selling in a Slower Market’ and ‘How to Compete With Resales and Foreclosures.’”

“Despite well-intentioned government programs and promises of forbearance by lenders, don’t look for any relief on the foreclosure front, economists said. ‘Sadly, I think the news is going to get worse before it gets better,’ said Frank Nothaft, top economist at Freddie Mac, the big mortgage company.”

“Mr. Nothaft estimates that 1.25 million U.S. homes wound up in foreclosure in 2007. ‘And we are going to see a higher number in 2008,’ he said. ‘It’s going to be a tough year to get through with further declines. We expect house values to continue to weaken nationwide over the year and into 2009.’”

“Mr. Nothaft said that if borrowers have good credit and employment and can make a down payment, it’s a great time to finance a house. ‘But certainly there are a lot of people who can’t do that,’ he said.”

The Chicago Tribune. “‘Home prices are going to fall more,’ said Berson. ‘From mid-2006, the peak, to the trough in mid-2009, the national average price will have fallen 15 percent, maybe more,’ he said. ‘California, Florida and Las Vegas will fall significantly more than that.’”

“The builders themselves appear to be getting more aggressive in pushing for relief: Association President Brian Catalde announced Wednesday that the trade group had voted to cut off further funding for congressional candidates ‘until further notice.’”

“‘Over the past six months, Congress and the administration have not adequately addressed the underlying economic issues that would help to stabilize the housing sector and keep the economy moving forward,’ Catalde said in a statement.”

The Washington Post. “The National Association of Home Builders, one of the top 10 corporate donors to politicians, has stopped contributing to congressional candidates after it failed to get what it wanted in recent anti-recession legislation.”

“The association had unsuccessfully pressed lawmakers to adopt a provision to reduce the tax liability of home builders by allowing them to offset their past profits with future losses. The lobby had also pushed to expand a program that allows states and localities to issue tax-exempt bonds that finance low-rate mortgages.”

“Election experts said the lobby’s move illustrated how closely interest groups tie their donations to the decisions they hope lawmakers will take on their behalf — a connection that usually goes unspoken.”

“‘This demonstrates in a starker fashion than we’re used to seeing how groups use political contributions to promote their positions in Congress,’ said Kenneth A. Gross, a campaign finance lawyer.”

“‘Lobbies like to pretend that congressional action and their donations aren’t tied,’ said Melanie Sloan of Citizens for Responsibility and Ethics in Washington. ‘But the home builders just confirmed that they are. What the home builders have done is expose the underbelly of the connection between money and politics.’”

“But lawmakers do not like to be reminded in public that lobbyists offer them money in hopes of receiving favorable treatment. ‘Many PACs use a carrot-and-a-stick approach,’ Gross said. ‘But just a stick can boomerang.’”

“One long-time association head said via e-mail that the home builders’ statement showed the ‘political instincts of spoiled children.’ The e-mail continued: ‘One would think that a savvy staff would have kept them from something that will make them the laughing stock of Washington.’”

“Others cheered the association’s choice. ‘This is what more industries should do,’ said Cleta Mitchell, an ethics lawyer. ‘Stop supporting officeholders who don’t support their views.’”

From Bloomberg. “UBS AG fell to a four-year low in Swiss trading after the U.S. subprime mortgage crash led to a record loss. Europe’s largest bank by assets fell 8.3 percent, the most in 5 1/2 years, after reporting a fourth-quarter loss of 12.5 billion Swiss francs ($11.3 billion). Zurich-based UBS took $13.7 billion in writedowns on assets infected by subprime mortgages.”

“CEO Marcel Rohner, speaking on a conference call with journalists, described the results as ‘unacceptable’ and said this will be ‘another difficult year.’”

From Reuters. “The Securities and Exchange Commission aims to increase the transparency of Wall Street’s disclosures and has more than 3 dozen investigations underway amid the fallout from the subprime mortgage crisis, Chairman Christopher Cox said on Thursday.”

“Investors have been ‘deeply affected’ by market chaos unleashed by subprime lending and securitization practices, Cox told a Senate Banking Committee hearing.”

“The SEC has set up an agency-wide subprime task force and is reviewing the role of the credit rating agencies, which have been accused of assigning top ratings to structured finance products like mortgage-backed securities without conducting due diligence.”

“The SEC is trying to determine whether the credit raters’ role in bringing residential mortgage-backed securities and collateralized debt obligations to market impaired their ability to be impartial in their ratings.”

“Separately, the FBI said on Thursday it had recently opened two more investigations for a total of 16 corporations now being probed as part of its crackdown on subprime mortgage industry fraud.”

“Treasury Secretary Henry Paulson said U.S. regulators plan to alter rules for packaging loans into bonds in the aftermath of the subprime-credit collapse.”

“Paulson, and Federal Reserve Chairman Ben S. Bernanke, and their counterparts at the Securities & Exchange Commission and Commodity Futures Trading Commission are ‘carefully’ reviewing loan securitizations, the Treasury chief said yesterday. The process magnified losses on subprime mortgage-linked securities because it reduced the incentive for lenders to ensure that borrowers could repay their debts.”

“‘You can’t have gone through the process we’ve gone through without knowing there needs to be some changes,’ Paulson said in an interview with Bloomberg Television yesterday. ‘First, we need to get through this period with as little impact as possible on our economy. And then secondly, we need a strong policy response.’”

From MarketWatch. “The months-long deafening silence in Washington about the causes and lessons of the on-going financial market meltdown won’t end Thursday when the principal members of the President’s Working Group on Financial Markets appear before the Senate Banking panel.”

“Paulson said the White House is still in the ‘first phase’ of minimizing the impact of the financial market turmoil on the economy and hasn’t moved to the ’second phase’ of a strong regulatory response. As a result, large and small questions about the ramifications for the regulatory sector as a result of the crisis aren’t being asked or answered, in public anyway.”

“The savvy practitioners of securitization that chopped up mortgage loans and sold them to other financial institutions went over, around, under, and through the regulatory structure. And the whole time Congress was cheering the financial industry on to increase homeownership to all Americans.”

“‘There is enough blame all around,’ said Burt Ely, a consultant on banking regulation. He saw some of the roots of the crisis going back to the rescue of the savings and loan industry when experts said that banks should ship risks to other financial institutions.”

“So, although a number of considerations have created what could only be described as a conspiracy of silence among the executive branch, the legislative branch and the independent regulators about the crisis, the principal reason is that no one wants to bring up something where everyone is at fault.”

“Washington ‘has been so far behind the curve in the last 10-15 years,’ said Joseph Mason, a professor at Drexel University. ‘There ought to be an investigation about where they have been,’ he said.”

“But what is becoming increasingly clear to experts is that the emperor has no clothes. In other words, the regulatory system in place is riddled with holes, long-standing assumptions have proved incorrect. It is like the bedrock has shifted under the philosophy underpinning the U.S. financial regulatory system.”

National Public Radio. “Foreclosure, we’re told, is a last resort, an option that no responsible homeowner would ever choose. But some distressed homeowners, no one knows exactly how many, are…voluntarily walking away from their mortgages, engaging in a practice the mortgage industry calls ‘ruthless default.’”

“But is it really ruthless — or just good businesses sense? Some economists argue it’s definitely the latter.”

“Sometimes, they say, walking away from your mortgage makes economic sense, especially for homeowners who find themselves ‘upside down’ — that is, they owe more on their mortgage than their house is worth. In those cases, ‘voluntary foreclosures are not by themselves evidence of a newfound irresponsibility on Americans’ part,’ says Nicole Gelinas, writing in The Wall Street Journal.”

“Separating the economics of foreclosure from the morality (and the stigma) is not easy, though.”

“‘We need a culture of responsible consumers and homeowners,’ says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling, echoing a deep-seated American belief that one should always honor financial obligations.”

“The current housing crisis is different, argue some economists: Since some financial institutions sold these loans in a deceptive manner — for example, by approving people for loans they couldn’t really afford — then why should homeowners feel obliged to honor their commitments?”

“‘Walking away from one’s home should be the absolute last resort,’ says Gail Cunningham of the National Foundation for Credit Counseling.”

“But there is one category of homeowner, she says, where foreclosure does make sense: people who bought their homes ‘with their hearts and not their heads.’”

“‘For people who may never be able to afford their home, then walking away is a viable option,’ she says. ‘If long term, you’re not going to be able to sustain the mortgage payment, then you’re fooling yourself and should get out of that situation and move on to life after foreclosure.’”

The Hartford Courant reports from Connecticut. “More than 1,000 homeowners have flooded the Connecticut Housing Finance Authority with calls as they sought to qualify for the new loans, which were announced in November and funded by $50 million in state bond money. The loans are intended to help people refinance adjustable-rate mortgages at fixed rates.”

“But so far, eight weeks into the program, only 25 loans have been approved. At one of the three mortgage lenders participating, more than 300 inquiries resulted in just three loan approvals.”

“The problem is that homeowners seeking help typically don’t qualify for the program because they have tarnished credit, their incomes are too low or they don’t have enough equity in their homes.”

“‘I thought this was set up to help people like me, said Lorraine Bedus of Newington, who bought her home for $215,000 in October 2005 with two adjustable-rate loans that rolled over to higher fixed rates in 2007. ‘Why set it up if it’s not going to work for the majority?’”

“Gov. M. Jodi Rell’s office and state housing officials, however, say CT Families was never intended to rescue the thousands of homeowners struggling to make mortgage payments. Rather, the program was aimed at first-time home buyers with adjustable-rate, subprime mortgages who may not have understood that their monthly payments could rise rapidly after the first two or three years.”

“In Connecticut, there are an estimated 71,000 subprime mortgages worth about $15 billion, with as many as 8 percent of loans seriously delinquent. About 21,000 are adjustable-rate loans that will continue to reset to higher rates. Of those, about 3,000 financed first-time home purchases.”

“Kate McCue, the program manager for the CT Families program in New Britain, said…some of the people are stretched beyond their means where the amount of housing payments are equal to their complete income.”

“‘When you go to refinance those people, it is still too much for their income to make it an acceptable loan,’ she said. ‘I don’t think the guidelines are too strict. You just have to find the people who do qualify. This is not a bailout program for people who didn’t pay their bills for whatever reason. The cause of the delinquency has to be because of the mortgage going up.’”

The Boston Globe from Massachusetts. “Boston is moving to buy or seize several foreclosed condominiums in Dorchester in a significant expansion of the city’s efforts to prevent abandoned buildings from blighting fragile neighborhoods.”

“Mayor Thomas M. Menino plans to disclose today the city’s intention to acquire the properties, the first such effort in recent memory. He also will propose a new ordinance that would impose fines on owners of abandoned buildings.”

“The growing focus on foreclosed properties reflects a new reality. Officials so far have failed in most cases to prevent foreclosures.”

“The Globe reported yesterday that Providence Mayor David Cicilline is seeking an ordinance that would fine the owners of vacant buildings 10 percent of a building’s value if it remains vacant a year after receiving a warning from the city. The massive fine is intended to encourage quick sales by making it cheaper to sell at a loss than to wait for better times.”

“Menino’s office said yesterday the mayor would use the Providence ordinance as a model for one he will soon propose.”

The Enterprise from Massachusetts. “Realtor Coleen Polillio is riding through the slow housing market on a bus and she’s taking her clients with her. The party bus leaves Century 21 C& S Properties offices at 9 a.m. in what may be the first bus tour of foreclosed property in the area.”

“‘Nothing surprises me,’ said Eric Berman, spokesman for the Massachusetts Association of Realtors.”

“In Massachusetts, the number of foreclosures shot up 148 percent, from 3,086 in 2006 to 7,653 in 2007, according to the Warren Group. And, there were seven times more foreclosures in the state in 2007 than 2005, the South Boston-based real estate data provider reported.”

“‘There’s so many, we haven’t picked them out yet,’ Polillio said as she prepares to make a list of 15 foreclosed properties to visit on the three-hour bus ride.”

The Boston Herald from Massachusetts. “Younger home buyers are sitting out the Bay State’s real estate downturn, with a dramatic drop in activity among buyers from 25 to 34 years old, a new survey found.”

“While younger buyers made up 60 percent of first-time buyers back in 2006, that number declined to 49 percent in 2007, according to an annual survey of trends in the local real estate market by the Massachusetts Association of Realtors.”

“‘The drop in the number of buyers in the 25- to 34-year-old age group is further evidence of the exodus of this educated age group from our state and the continued need for the development of starter homes,’ said Susan Renfrew, MAR’s president.”

“A new report released by the Federal Reserve Bank of Boston’s New England Public Policy Center, authored by Fed analyst Heather Brome, questions whether colleged-educated ‘young professionals’ - between the ages of 25 and 39 - are really leaving the area in droves due to stubbornly high housing prices in Massachusetts and the rest of New England.”

“The report says that the number of young professional ’severely burdened’ by housing costs - or those who pay out roughly 50 percent of their household income to cover housing expenses - is roughly the same here as the rest of the country.”

“‘Trying to link housing costs and out-migration (of young professionals), there’s just not a lot of evidence to prove that,’ said Brome.”

“Not everyone agrees with Brome’s conclusions. Geraldine Aine, a 27-year-old attorney now renting in Boston, said she’s thinking of one day moving back to New Jersey because she can’t find affordable housing here that would allow her to both pay off a mortgage and save at the same time.”

“‘I’ve been trying to buy a condo for some time, but it’s ridiculous what they’re asking for’ in some neighborhoods, said Aine, whose parents live in Florida.”

“Though 22-year-old Erika Zysman doesn’t fit into the exact age bracket that Brome studied, she said she’s already thinking of moving out of Massachusetts.”

“‘When I was younger,’ said Zysman, a Seton Hall graduate born locally, ‘I would have said, ‘Yes, I want to stay in Massachusetts when I get older.’ But now when you come back here (after graduating from college) and see the prices, it’s absurd.’”

“Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies, said…there’s ‘absolutely’ a connection between housing prices and decisions by all workers about whether to move or stay in an area.”

“‘People vote with their feet,’ said Retsinas, noting the state’s decline in population in past years.”

From Newsday in New York. “Housing prices on Long Island and in Queens slid further last month, to their lowest level in almost three years, a real estate cooperative reported Monday. One thing did go up, though, in the latest report from the MLS of Long Island: the inventory of unsold homes, which rose by 23 percent to 33,453.”

“The service said the median closing price for a home in the three counties was $417,500, down 4.6 percent from a year earlier. ‘The last time Long Island reported a median [closing] home price lower than $417,500 was in April of 2005 when it was $415,000,’ the service said.”

“In Suffolk, the decline was 6 percent, to $373,500. Queens was hardest hit, with the median price falling by 9.8 percent in January from a year earlier, to $438,000.”

“The service’s CEO, Joseph Mottola, attributed the larger declines in Queens and Suffolk to relatively higher percentages of subprime mortgages…and to homeowners having difficulty paying them.”

“‘When people perceive that they may get into trouble,’ said Mottola, ‘there may be a greater sense of urgency to sell and that will be reflected in the pricing.’”

The Times Herald Record from New York. “January’s local housing numbers, like those of the month before and the month before that, are pretty grim. Compared with a year ago, single-family home sales are down dramatically in Orange, Ulster and Sullivan counties, according to local boards of Realtors.”

“A recent study by Moody’s Economy.com predicted that home prices in Orange and Dutchess counties will have slipped about 12 percent by the time they bottom out in 2009. Some sellers have already adjusted their prices accordingly, making their homes a relative bargain by today’s standards.”

“‘We’ve come down, as an average, 12 to 14 percent on new construction prices,’ said local builder Lewis Donnelly.”

“One of Donnelly’s projects, a string of seven homes in Circleville, could be illustrative of where Orange County’s market is headed. He bought the land a year ago for $90,000 a lot, after two deals in the $140,000 range fell through. Recognizing the softening market, Donnelly prepriced the homes at about $400,000, some $10,000 to $20,000 below the market.”

“He dropped the prices again as construction, and the housing downturn, progressed. Now, he’s listing the homes for about $370,000.”

“‘A year ago, this house would have been $419,000,’ said Donnelly, pointing to a 2,750-square-foot, center-hall colonial with four bedrooms, 2.5 baths and a host of amenities.”

“A cursory review of local home listings suggests some builders have been slower to drop their prices. Elsewhere in the Town of Wallkill, there are new colonials similar to Donnelly’s listed for $429,900, and even a few smaller ranches priced around what Donnelly is asking.”

“‘It’s not like they’re trying to make a lot of money, but they’re stuck,’ Donnelly said of the other builders. ‘Guys can’t get out, because they paid $140,000 per lot. Those guys are in trouble.’”

The Democrat and Chronicle from New York. “Talk of a pending recession spurred by a housing slump is greatly exaggerated by national media and could spur a self-fulfilling prophecy as the negative news is emphasized, the chief economist for the National Association of Realtors told local real estate agents today.”

“Yun told the Greater Rochester Association of Realtors that the national news outlets tend to cherry pick data and expert interviews to perpetuate the story that the economy is heading into recession as housing prices fall and foreclosure rates rise.”

“‘If the news organizations have an agenda, they will call somebody and they’ll get the information they want,’ he said.”

“He said short-term losses have actually brought the markets back to healthy levels, which is often ignored in the national storyline. They give more play to economic experts who support those stories, he said.”

The Buffalo News from New York. “Lawrence Yun says all real estate is local, and he uses the Buffalo area’s experience to make his point.”

“‘Even though we are seeing a large sales decline in many parts of the country, it’s showing up [in] the national data, locally the sales data are actually vibrant and picking up,’ said Yun, chief economist at the National Association of Realtors.”

“‘Certainly things are turning for the better here in Buffalo,’ he added.”

“Yun acknowledged that last year was a bad one for national home sales, fueled by the subprime mortgage meltdown. In 2007, national home prices declined for the first time probably since the Great Depression, but he said that 1.5 percent drop should be put into context.”

“‘The proper perspective is, well, we did have a housing market boom, we had better than a 50 percent runup in home prices, and now we’re giving back 1.5 percent from a nationwide point of view,’ he said.”

“Yun said he believes there is pent-up demand for home purchases. But he argued that the national media have a ‘bias’ toward stressing negative news about real estate, making potential buyers unjustifiably hesitant.”

“‘There seems to be excessive pessimism among potential home buyers in not wanting to make a purchase, despite the fact they have a huge capacity financially,’ he said. ‘With this fear in place, it can lead to a self-fulfilling prophecy.’”

“Some high-priced parts of the country are going through a necessary transition since their markets accelerated too quickly, he said.”

“Yun said the national market has retreated to the pre-boom level, after removing the ‘excess boom’ from the market. He cited examples in markets like Florida and Nevada, where a buyer would purchase 10 homes in one neighborhood solely to ‘flip’ them.”

“Mayor Byron W. Brown said the Buffalo area’s low real estate prices are attracting attention. Each week, he said, investors, investment groups and business leaders from places like Boston, New York City, Ohio and California make inquiries.”

“‘We have seen investors that are expressing tremendous interest and confidence in the city, and that only bodes well for the future of Buffalo and Western New York,’ Brown said.”

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