The Housing Bubble

It’s Friday desk clearing time for this blogger. “The wealth-sapping downturn in home prices continued during the fourth quarter of 2007, the Florida Association of Realtors said Thursday. And county clerks in Palm Beach and St. Lucie counties report foreclosure filings tripled from January 2006 to January 2007. In one recent short sale, agent Bob Graeve brokered a deal for a West Palm Beach condo for $90,000. The seller owed the bank $180,000.”

“And in another deal in Jupiter, the seller paid $430,000 in 2005 - and is under contract to sell for only $309,000. ‘Buyers will buy if they’re getting a deal,’ Graeve said. ‘Buyers aren’t going to pay last year’s price.’”

“Former Lansing resident Brian Kramer moved to Oregon for a job opportunity three years ago. But his house on Aurelius Road is still for sale. Kramer has dropped the price several times but hasn’t found a taker. The audio-video technician said he might resort to selling it for less than he owes.”

“Kramer originally listed it for $129,000. After slashing the price several times, he plans to relist the house for $110,000 and possibly work out a short sale. ‘I just want to get rid of it at this point,’ he said. ‘It’s been such a hassle. I can’t do anything with the house. I just want to offload it, basically, and I want to be able to not owe thousands and thousands of dollars on it.’”

“‘You just can’t sell it because you can’t compete with the foreclosure market and the foreclosure market has hit every price range,’ said James Pyle, owner of Lana Wagner & Co. Real Estate in East Lansing. ‘You have inexpensive homes to homes that are billion-dollar homes that have been foreclosed on.’”

“Pyle said he has seen a house originally sell for $75,000 and then be listed for less than $10,000 after foreclosure.”

“Nearly 18-percent of homes sold in Nevada last year were foreclosures. That’s said to be four times more than the number of bank owned homes sold in 2006. Some local REMAX brokers have bought a bus and they’ll take you on a tour to see foreclosed homes in the area.”

“We checked out one home that was in foreclosure and has dramatically dropped in price. It sold for $700,000 roughly two years ago. Now a sale is pending for $425,000.”

“It costs a lot less to buy a condominium today in Kitsap County than a year ago, according to new real-estate tracking figures. The January median closing price of $299,900 was down $135,000 from a year ago. The average closing price fell nearly $87,000, to $346,980, according to the Northwest MLS.”

“One of the largest condo complexes in Kitsap advertised one unit marked down from $545,000 to $449,000. Even with the lure of new bargains and plenty of choice, the Kitsap condo market has slowed. Only five condo sales closed last month in Kitsap, down from 33 in January 2007.”

“Lee Avery, branch manager for the Bremerton John L. Scott office in Bremerton, is optimistic about tomorrow. ‘From here, it’s only going to go up,’ Avery said.”

“It wasn’t long ago that home buyers felt obligated to pounce on the first good deal that came along. Home sales were sizzling and another bidder was certain to make an offer. Today, house ‘for sale’ signs seem to be sprouting like dandelions across the Salem area.”

“‘You could throw a rock and hit three,’ said Bob Riggi, a real-estate broker with Windermere/ Pacific West Properties Inc.”

“Home sales have dropped, builders are seeking fewer construction permits, and homeowners are having to wait longer to sell their properties. Foreclosures also have surged.”

“But builders and other players say the Alaska housing market has remained fairly isolated from the Lower 48 housing depression. Dan Fauske, who heads the Alaska Housing Finance Corp., a state lending agency, and others said it’s not surprising the downturn could nail some builders after a string of bullish building seasons.”

“‘Last year, people were pretty much in denial that nongrowth was happening,’ said Chuck Spinelli, owner of one of the area’s largest home builders. ‘Everybody thought that by spring and summer of last year, this little hiccup bubble would be over and we’d be on the fast track again. By fall, everybody realized it didn’t happen and there were some harsh realities showing through.’”

“The whole local housing industry has tightened up for leaner times, he said. ‘Nobody is out there lending money on speculative building the way they were a year and a half ago,’ he said.”

“Houston-home builders builders ended 2007 on a sour note, posting big drops in starts and sales as the housing market continued to weaken. Even with production cuts, there were 21,570 single-family homes under construction or completed and vacant at the end of last year.”

“To get rid of some of that inventory, builders have been aggressively cutting prices. This week Beazer Homes launched a promotion giving $45,000 discounts on homes priced between $220,000 and $350,000 and $25,000 off lower-priced properties.”

“The builder is also slashing prices on new-home orders — or so-called ‘dirt sales.’ ‘We need to generate some excitement,’ said Kurt Watzek, Houston division president for Beazer Homes. ‘That’s the whole point of what we’re doing today — to get some new sticks in the air and get people excited about coming into communities.’”

“Home sales in Omaha fell nearly 10 percent in the fourth quarter of 2007 compared to the fourth quarter of 2006. Omaha experienced strong home sales from 2002 to 2006, said Mike Riedmann, president for residential sales at NP Dodge Real Estate. In June 2006, sales started to drop and inventory started to build, he said.”

“‘It seems both years the market just ran out of steam. Inventory built, and people waited,’ said Riedmann.”

“Mark Hart, president of the Omaha Area Board of Realtors, said the board along with the Metro Omaha Builders Association and several large real estate companies will launch a $250,000 campaign Monday to educate people on why it’s a great time to buy.”

“‘In the next six months to a year, people are going to be saying, ‘Why didn’t I buy in the first quarter of 2008?’ Hart said.”

“Asked whether the property industry was in crisis, Lugton’s Real Estate general manager Kevin Laurence said the Real Estate Institute of New Zealand figures for February and March would give a better indication of the state of the market.”

“A glut of houses for sale and a cooling in property prices have tipped the Hamilton housing market firmly in favour of buyers. There are more houses for sale than almost any other time in the past decade, with some sellers struggling to get any nibbles, and open homes attracting no one.”

“Lodge Real Estate Hamilton East branch manager Warwick Johnson estimated there were more than 1600 houses for sale in Hamilton, up 30 per cent on a year ago. ‘When the market was ticking along very well we would be listing and selling houses on the same day with competing offers and that’s not happening now,’ he said.”

“When the toxic substance of choice is greed, who is to blame: the pushers or the addicts? This is today’s question as Mike Cox, the attorney general, fills auditoriums from Cobo Center to Saginaw, bringing government to the people at his foreclosure forums.”

“At a mortgage broker’s spiffed-up office on Livernois, where the ceramic tile floors were laid just as the bubble was bursting, even the brokers are signing up for civic group duty. Bill Haley, at Prime Financial Plus, sees houses crumbling, owners crying, and a foreclosure aftermath of looting and collapse.”

“The lenders and the borrowers and the regulators are all in meetings. They’re in recovery, like 12-step group members, but dealing with the consequences of too many loans gone bad.”

“In the housing binge, everybody stuffed themselves. The getting was good, and only a few suckers seemed to be getting hurt. The housing churn pushed up the state tax collections, enriched investors and bankers, and enabled Michigan homeowners to go granite in their kitchens.”

“When the toxic substance is greed, the addicts hit bottom first, and later even some of the pushers get hurt.”

The County Sun reports from California. “Real estate agent Richard Kegley negotiates home sales all over San Bernardino County, but lately he’s in the business of persuasion. Not persuading would-be homeowners to buy, but convincing sellers their homes are severely overpriced. ‘(Sellers) ask me what it would take to sell in 30 days, and when I tell them, they say, ‘Come on, be realistic,’ Kegley said. ‘They keep reducing the price, but they’re always too late.’”

“A real estate veteran of more than 20 years, he said the current housing meltdown ‘has a different twist to it’ than prior slumps. ‘Last time we had some equity on properties,’ he said. ‘This time there’s just no equity. The prices are much lower than what’s owed on the properties.’”

“Six months ago, Josee Maclaughlin, a real estate agent in Upland, stayed busy advising sellers to spruce up their homes. Lately, though, she mostly deals with ’short sales,’ where…the bank takes the loss.”

“‘They’re trying to get all the bells and whistles on the home to get the most value out of their house … but it’s only helping a little bit,’ Maclaughlin said. ‘If there’s a house going for $100,000 less than the one with green grass, it’s not going to make much of a difference.’”

The Press Enterprise. “San Bernardino County sales fell the steepest in the region, plunging 53 percent from January 2007, for a total of 1,111 transactions, which DataQuick said was the smallest monthly count since the company began keeping track in 1988.”

“The median home price in San Bernardino County slipped below $300,000 to $298,000, representing more than a 21 percent drop from an all-time peak of $380,000 reached in November 2006.”

“Steve Johnson, a director of MetroStudy, said although home builders have cut their prices by about 25 percent to induce buying, there still are 5,400 finished and vacant houses in western Riverside and San Bernardino counties, twice the unsold inventory available two years ago.”

“Also, at the end of January, there were 36,198 resale homes listed by the Multi-Regional MLS, which serves the San Gabriel Valley and Inland Empire. Spokesman Eric Turner said at the current rate of sales, it would take a record 20 months to sell those homes if no more properties came on the market.”

The LA Daily News. “State officials launched a comprehensive educational program on Thursday designed to help slow the growing number of foreclosures. The ‘90 Days of Hope’ program details steps that homeowners can take to avoid losing their homes if payments on their adjustable-rate mortgages become unmanageable.”

“‘We want them to check their paperwork. Some of them don’t even know what kind of agreement they got into. They don’t even know that their rates will be resetting,’ said Rosario Marin, secretary of the State and Consumer Services Agency.”

“In last year’s fourth quarter, a record 4,536 homeowners in Los Angeles County lost their homes to foreclosure, and the outlook remains grim, according to DataQuick. ‘There is a good chance we will pass that record in the first quarter of 2008,’ DataQuick analyst John Karevoll said.”

The Fresno Bee. “Sales of new and used houses in Fresno County fell 36.2% in January compared with the same period a year earlier, and the median price fell 13.8% to $250,000, according to DataQuick.”

“Cliff Lloyd of London Properties predicts more houses will be sold this year, but said an abundance of bank-owned houses will push values down more than they should be because panicky lenders are slashing prices too much.”

“‘It’s not fair for our market,’ he said. ‘I’m seeing situations where something is on the market for three weeks and instead of going from $230,000 to $225,000 they are going to $199,000. Of course that will create multiple offers and a quick sale.’”

“In Fresno County, nearly 74% of the families who bought their houses in 2006 and 55% who purchased them in 2007 owe more on the house than it is worth, according to RealtyTrac.”

The Modesto Bee. “Rents are flat, sales are scarce and values are way down for apartment complexes and rental properties throughout the Northern San Joaquin Valley, landlords were told at a Modesto luncheon.”

“John Citrigno, who specializes in multi-family housing sales, said ‘historically unprecedented’ competition from single-family rental homes is holding down apartment rents. Citrigno said typical three-bedroom home rents in Stanislaus County two years ago were $1,200 to $1,500 per month. Now they’re $900 to $1,200 per month.”

“Gary Kirkpatrick, an investment property specialist in Modesto said small complexes report having more vacancies, fewer qualified applicants and falling property values. ‘Those who bought in 2005 and 2006 are all upside-down (with expenses exceeding revenues), and they can’t sell their properties for what they paid for them,’ Kirkpatrick said.”

“Kirkpatrick offered this example to demonstrate the market shift: A duplex on Gemini Court in Modesto resold four times in three years. It sold for $159,000 in 2002, $218,000 in 2003, $316,000 in 2004 and $400,000 in 2005. He estimated the current owner, however, is losing about $11,274 a year.”

“Citrigno said some Merced apartments can be purchased for $45,000 per unit. He said that’s a bargain because building com- parable units would cost more than twice as much.”

The Recordnet. “San Joaquin County real estate brokers say the sales predominantly are foreclosure homes, with most of those selling at less than $250,000. As expected, sales prices continued to slide, falling to a median of $283,000 last month, a 33.4 percent drop from a peak during the housing boom of $425,000 in July 2006.”

“Frank Orello, sales manager for Coldwell Banker Grupe in Stockton, said foreclosure homes are attracting so much attention from buyers that it’s getting competitive. ‘There are multiple bottom-feeders out there, and they are raising the bar,’ he said. ‘It’s a little surreal. We’re getting the same kind of action we got in 2004, but the prices are a little wholesale.’”

“Ben Balsbaugh, residential sales manager for PMZ Real Estate in Stockton, said most of the houses selling are foreclosure properties - about 77 percent of January’s sales. Most home are selling below the $250,000 mark, he said.”

The Sacramento Bee. “The regional 2008 real estate season opened in the winter cold and stayed there: January saw nearly as many people lose their homes as buy them. A near-tie between foreclosures and home sales represented the grimmest indicator yet for a housing market now 30 months past the peak of a five-year boom in which loans came easy and home prices doubled.”

“Bank discounts and low interest rates are sparking multiple bids now for houses priced from the $100,000s to the $800,000s, said Kevin Coates, president of Sacramento-based Avalar Real Estate and Mortgage Group.”

“‘The reality is that $700,000 house was a million or a million-one when this started,’ said Coates.”

“As foreclosures continue to grow in the capital-area real estate market, Sacramento and Elk Grove are copying a trend launched last year in Stockton: bus tours of bank-owned homes.”

“‘This office lists a lot of foreclosure properties, and we want to get them sold,’ said Keller Williams partner Lori Mode. ‘I’ve lived in Elk Grove for over 30 years and I hate to see it like this.’ Nonetheless, the sooner they’re sold, the faster it’s back to normal.”

The Press Democrat. “Sonoma County home prices have fallen 19 consecutive months. Hitting $500,000 in January, the county’s median home price has dropped 19.2 percent since the market peaked in summer 2005 and is down 8.3 percent from a year ago, according to The Press Democrat’s monthly real estate report prepared by Coldwell Banker.”

“A record number of Sonoma County residents lost their homes to foreclosure in 2007. Even more are in danger with default notices also at record levels. In response, lenders have been tightening once-lax loan standards that helped juice the housing market.”

“Purchasing the typical $500,000 house in Sonoma County with a jumbo loan today likely would cost a buyer about $400 more in monthly mortgage payments compared with a conforming loan, said Maia Lomax, co-owner of a Santa Rosa mortgage brokerage.”

“To get the lower loan rate the buyer must make an $83,000 down payment, compared with the more typical $50,000 down payment in a jumbo loan, she said. ‘If you have the money and you can do it, this is definitely the time to buy. But you’ve got to have the money to get a good loan,’ Lomax said.”

The Santa Cruz Sentinel. “Robert Bailey, a regional VP for the National Association of Realtors, knows a Santa Cruz couple who refinanced their way to foreclosure. The couple bought a house in 2004 for $486,000, refinanced in 2005 for $535,000, refinanced in 2006 twice — for $600,000 and then $700,000.”

“Now the bank owns their home — because they couldn’t refinance again. The time of double-digit home appreciation is over.”

“Yes, there were ‘gross abuses’ and ‘actual fraud’ but those aren’t the only reasons the housing bubble burst, Bailey said. ‘A lot of this issue was created by us,’ said Bailey. ‘We’ve turned our homes into investments where we live. The ATM mentality has to go.’”

The San Mateo County Times. “Foreclosure auction sales more than tripled in San Mateo County in January compared with the same period last year, a new real estate report revealed. In San Mateo County, many of the foreclosures are in low-end markets such as Daly City, South San Francisco, East Palo Alto, East Menlo Park and San Bruno, said Don McFarland, an independent real estate broker in Burlingame.”

“There also are pockets of San Mateo and Redwood City where low-end homes are sold and foreclosures are occurring, he said. ‘It’s the low-end buyers who were in trouble,’ said McFarland. ‘They don’t have any money.’”

The Mercury News. “For the first time since the housing downturn began in late 2005, housing prices in Santa Clara County dropped last month compared with a year earlier. And fewer homes sold in January than during any month in 20 years.”

“As of Thursday, 5,935 houses and condos were for sale in Santa Clara County, he said. It would take 8 1/2 months to sell all of those properties at the recent glacial pace of sales.”

“Alyson Abramowitz’s recent experience shopping for her first house illustrates how tough it’s been to get a jumbo mortgage.”

“‘Basically every mortgage company says I’m their dream client,’ said Abramowitz,, who saved for years to amass a 20 percent down payment for a home in the $1 million range. But right after she agreed to buy the five-bedroom house late last month…lenders began saying her down payment wasn’t high enough.”

“‘Suddenly everyone was going, ‘45 percent down,’ she said.”

The Alameda Times Star. “Developers and construction workers who say they have been hard-hit by the housing crisis have formed an alliance to oppose Oakland Mayor Ron Dellums’ proposed housing policy.”

“Kathy Kuhner, owner of Dogtown Development, said Wednesday that small builders have had to put their projects on hold, because the economy and the foreclosure crisis means no one is selling, no one is buying and financing for new home construction has all but dried up.”

“In an odd twist of fate, Kuhner said she is negotiating to sell the 34th and Hollis property to an affordable-housing developer, for ‘pennies on the dollar.’ ‘Affordable housing is the only game in town,’ she said. ‘It’s the only thing that’s being built.’”

“Nicholas Dean, a surveyor, said most of his work involves condominium construction, and even that has been hit hard. ‘Nobody’s selling, nobody’s buying,’ he said.”

The Bay Area Newsgroup. “Bay Area home sales fell in January for the 36th month in a row and four Bay Area counties saw median prices drop below $500,000 something not seen since 2005, DataQuick reported.”

“‘There was very little selling in those counties and significant chunks of it were foreclosure activity,’ said analyst Andrew LePage. ‘In Contra Costa, 33.1 percent of homes sold in January had been foreclosed on in 2007. In Solano County it was 43.2 and Alameda it was 24.9 percent.’”

“Foreclosed sales counted for 19 percent for the entire Bay Area.”

“‘I think prices are still too high, by at least 10 to 15 percent,’ said Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto. ‘Too high means that they are unaffordable to people based on their current income. We were in a stage where housing problems got way out of line because lenders were not requiring income or assets.’”

“Lower interest rates for qualifying households between $400,000 and $700,000 would help but wouldn’t be enough to offset the change in lending practices, he said.”

“‘Some people can buy a bit larger house, but I doubt it will have much effect until the price correction and houses become affordable,’ Levy said. ‘It doesn’t make a difference if the house is still $200,000 more than you can afford.’”

The San Francisco Chronicle. “A total of 2,312 resale homes sold in the nine-county Bay Area in January, down 43.7 percent from a year ago and 24.2 percent from December, according to DataQuick. It’s the lowest regional sales total in the two decades the firm has tracked the area.”

“‘We’re going through the painful transition toward pricing that is realistic and we’re nowhere near that (yet),’ said economist Christopher Thornberg. ‘Even though your local real estate agent will tell you, it’s OK in this neighborhood or it’s a wonderful time to buy because interest rates are low, all that’s wrong. If you’re buying into this market, you’re overpaying.’”

“Annie Brown, a Realtor in Walnut Creek, said foreclosed homes in Brentwood that were $700,000 a couple of years ago are now selling for $450,000 to $475,000. ‘The bank-owned homes are really being priced to sell,’ she said.”

“Genevieve and Matt Garfunkle bought and moved into a $1.7 million, four-bedroom Colonial home in the Rockridge neighborhood of Oakland a little before Thanksgiving.”

“The problem is they haven’t sold their three-bedroom Mediterranean on which they’re still paying a monthly mortgage. It’s been on the market since November and they lowered the price from $834,000 to $799,000 after New Year’s. They’ve handed out many information packets at their open houses but still haven’t received anything above what they consider lowball offers.”

“‘All my open houses are very well attended,’ Genevieve Garfunkle said, ‘but they’re not ready to pull the trigger yet.’”

The News Leader reports from Missouri. “After several years of construction boom, the brakes hit the local home building industry in 2007. Builders in Greene County took out a little more than 1,000 single-family home building permits — down from nearly 2,000 in 2006. ‘Basically, we built too much,’ said Tom Wyrick, professor of economics at Missouri State University. ‘We’re now working the inventory off.’”

“Greene County resource management director Tim Smith sees it differently. ‘This is a subset of problems we’re seeing nationwide,’ Smith said. ‘The housing market hit the skids in 2007, making it very difficult to move new homes to buyers. As a result, builders — not sure if they can sell — stop building.’”

“Recent homebuilder association shows sold out its booths in record times. ‘Let me say, in 2005 and 2006 we were celebrating. Now it is the opposite of the coin,’ Wyrick said.”

“After continued feverish growth between 2003 and 2006, the county had expected a slowdown in homebuilding but the landing was a little too harsh, Smith said. Eddie Castleberry, the city’s building inspector, said the troubled financial market is to blame. ‘2005 and 2006 were really fantastic years, and the money was there. Now the money got a little tighter (than we had thought),’ he said.”

The Chicago Tribune from Illinois. “Sales of new condominiums are falling while inventory, especially downtown, is rising. Last year buyers agreed to purchase 3,783 downtown condo units, down from 5,783 in 2006 and 8,162 in 2005, according to a presentation by Appraisal Research Counselors.”

“Construction is slated to be completed on 6,000 downtown condominium units this year, double the number completed in 2005, the peak sales year.”

“‘New projects are outpacing sales and the gap is continuing,’ said Gail Lissner, VP of Appraisal Research Counselors. ‘We’ll see more auctions as an exit strategy.’”

“Now 5,814 condominiums are for sale in recently completed projects, still in construction or being planned. But the weakening job market is likely to dampen 2008 sales.”

“Commercial building in the greater Chicago region will muddle through 2008 at a slower pace than last year, and construction of condominiums will fall sharply, according to a report.”

“‘Total construction will decline 8 percent, to just under $18 billion,’ said the McGraw-Hill Construction Outlook for Chicago. ‘Residential construction will continue to be the major drag.’”

“‘Most analysts now agree that if Chicago had one construction market that would be considered in a bubble, it was the condo market,’ the report said. It used the word ‘dive’ to describe condo construction starts this year.”

The Times Herald from Michigan. “For two years, a ‘For Sale’ sign has hung in front of Debbie and Steve McCartney’s home in Port Huron. For much of that time, the house has been advertised ‘REDUCED.’”

“‘We hesitated buying it (five years ago), but we did because we didn’t know if we’d find anything as nice,’ Debbie said.”

“The couple have had five appointments to show the house in the past two years, and the home that once was appraised at nearly $150,000 is now on the market for $129,000 and poised for another price drop. They paid $132,000 for the home.”

“The McCartneys’ story has become all too common. Their real estate agent, Buzz Stanko, said more and more homeowners are bringing their own money to close sales.”

“The McCartneys are on their third real estate agent, and Stanko won’t distort the reality: They likely will drop their asking price below $120,000 before they attract a buyer.”

“‘I don’t think we’re ever going to see housing prices like this for the rest of my lifetime,’ he said.”

“Proportionally, the number of home sales throughout the Blue Water Area has fallen by a much greater percentage than the sale prices. In 2002, more than 90% of the houses listed on MiRealSource in St. Clair and Sanilac counties sold; five years later, only about 20% of the listings sold.”

“Patricia Burden, an associate at Regional Realty in Yale, said a closer look reveals the houses that are selling are the ones at the lowest price.”

“‘I think that part of this entire scenario is that at the present time there are very few buyers even looking to purchase homes in the higher price ranges,’ she said. ‘Of the 110 homes sold since the first of the year, 82 sold for under $150,000, (and) only 28 (are) selling for over that amount.’”

The Grand Rapids Press from Michigan. “The growing number of foreclosures flooding the housing market is sparking real estate agents to get creative. Following the lead of others across the country, Five Star Real Estate’s James Goetzka is renting a bus and signing people up for a ‘foreclosure tour,’ complete with snacks and drinks.”

“‘This is only the first one,’ Goetzka said. ‘My goal is to continually run these because it’s obviously going to be a big dilemma here in 2008 and in 2009.’”

“Goetzka said the tour will consist of homes he has researched and believes to be good buys. All are vacant and owned by a bank or the U.S. Department of Housing and Urban Development. The four-hour tour’s route will be based on customers’ desires, but it will focus on Kent County.”

“‘I’m getting everything from the inner city at $8,000 or $10,000 all the way up to $150,000 or $200,000,’ he said.”

“Sue Harder was looking through the U.S. Department of Housing and Urban Development Web site when she spotted an opportunity. The director of Holland’s Ourstreet program saw HUD was making some foreclosed homes available to local governments to buy for the measly sum of $1.”

“The homes had been foreclosed on at least six months ago, and HUD hadn’t been able to find buyers for them. ‘This one is a rarity in our community,’ Harder said. ‘With the (large number of) foreclosures that have happened, this presented a unique opportunity.’”

“The City Council agreed, voting unanimously Jan. 30 to buy the 76-year-old house at 946 Lincoln Ave for $1 plus closing costs. The 1,086-square-foot house has three bedrooms, 2 bathrooms, a basement and a one-car garage.”

“Holland city tax records showed the Lincoln Avenue house had been owned by HUD since September 2006, and for six months before that by Wells Fargo Bank. The home had been purchased in April 2005 for $104,000 and was foreclosed on just less than a year later, according to records.”

“The city may work with a nonprofit agency to renovate the home and sell it to a family who otherwise might not be able to buy a house.”

“In Zeeland, city officials did likewise, with the City Council voting Feb. 1 to buy a HUD-foreclosed home at 40 N. Jefferson Ave. for $1. The two-bedroom, one-bathroom, 966-square-foot house is on 0.12 acre and is listed at $61,200, with an appraised value of $99,000, according to HUD.”

“The 87-year-old house’s state-equalized and taxable value dropped from $51,900 in 2005 to $39,600 in 2007, according to Ottawa County tax records.”

“‘What we’re looking at is putting it up for bid for some agency that wants to go in and fix it up’ and sell it, Zeeland City Manager Tim Klunder said.”

“With foreclosures skyrocketing, HUD is finding itself with homes that it can’t sell. ‘It’s given us an inventory that’s at an all-time high,’ said Louis Berra, field office manager for HUD’s Grand Rapids office.”

“In the case of the Holland house, HUD hadn’t gotten a single offer, even at a list price of $63,000, well below the appraised price of $89,000, city officials said.”

From WZZM 13 in Michigan. “With all of the foreclosures on the market, people trying to sell their homes face some tough competition. Many foreclosed homes are for sale well below the market value.”

“Tony and Sue Hinojosa are enjoying their first home. Brand new contruction with three bedrooms and one and a half baths…and they paid only $87,000!”

“For the seller it was a big loss. The Hinojosa’s got their deal because the house was foreclosed on by the bank.”

“‘Our goal is to get individuals onto a tour to look at the foreclosure homes. Hopefully, they buy those and get those out of the marketplace because we’re finding that the home seller such as your neighbor, friends, co-workers they’re having the toughest time selling in this market place because they can’t drop their price low enough to compete with the banks,’ said James Goetzka, the real estate agent who helped out the Hinojosa’s.”

“A similar house accross the street from the Hinojosa’s sold for $170,000 two years ago. They paid about half that price, forcing future sellers to lower their asking price.”

“Goetzka thinks the best way to raise listing prices is to sell foreclosed properties as quickly as possible. But, for now new home buyers are getting a great deal and they’re still helping the market with their investment.”

From Kiplinger on Minnesota. “Minneapolis real estate agent Cotty Lowry says that until it slowed down in 2006 and ground to a halt in 2007, the Twin Cities market was infected by what he terms a herd mentality, and ‘everybody and his brother’ owned at least one rental unit.”

“But as happened elsewhere, the market turned and investors bailed. In November, according to the Minneapolis Area Association of Realtors, the backlog of unsold condos rose 25% over the previous year, sales fell 20%, and the average selling price dropped 5%.”

“Fear of the unknown pervades his market, says Lowry, driving qualified buyers into high-end rentals — ‘what they think is the safe route,’ he says. Suburban empty-nesters who had planned to move downtown have decided to sit tight for now.”

The Star Tribune from Minnesota. “For Twin Cities-area real estate agents, last month was the slowest January in more than a decade.”

“The number of closed home sales in the Twin Cities metropolitan area fell 21.3 percent compared with January 2007, and the median sale price fell 8.9 percent, according to data released by Twin Cities-area Realtor associations.”

“Slack demand and an oversupply of unsold homes pushed the median sale price down to $205,000 — a 10 percent decline, or $20,000 lower — than in the same period two years ago.”

“‘We’re all paying the price for rapid growth,’ said Tom Musil, director of the master of science in real estate program at the University of St. Thomas. ‘People made a lot of money and realized a lot of gains, and now we’re seeing an adjustment to those prices.’”

From Finance and Commerce in Minnesota. “The Beard Group has reached a turning point. The 18-year-old real estate development and management company is about to assume a new name and a new business profile, and it starts that new chapter with a new round of financing behind it.”

“‘We’ve been gearing up for all this for over a year,’ said Tom Gump, one of the co-principals at Beard, whose new operating name is Neighborhood Development Partners, LLC. Those changes will…shift the company away from the mixed-use redevelopment and infill projects that have long been its specialty.”

“Instead, it’s turning its attention to land development for residential and mixed uses. ‘Probably 70 percent of what we do will be raw land from now on,’ Gump said.”

“And for the foreseeable future, the firm’s major targets in the land market will come from the ranks of the failed residential developments that dot the region, many residual fallouts from the foreclosure crisis that has hammered the housing market locally and across the country.”

“The company made its first acquisition in that distressed market last Thursday when it closed on the unsold portions of Inspiration, a 242-acre development in Bayport.”

“A Brooklyn Park-based residential firm had lost Inspiration in foreclosure late last year to M&I Bank after the developer was unable to repay $9 million of a $14.65 million development loan. Neighborhood Development obtained the foreclosed project, which includes 133 undeveloped lots, for $4 million, according to Washington County records.”

“A project with big debt-service bills but little hope of selling new homes in a deeply slumping market – means promising opportunities for a well-capitalized, experienced developer like Neighborhood Development, Gump said, and the opportunities should continue to grow during the year.”

“‘Many banks have been holding loans in forbearance, hoping the housing market would turn and their customers could get their projects back on track,’ he said. But with job creation flat and few signs that the economy will rebound this year, ‘a lot of loan committees are going to decide that they need to move those non-performing loans off their books.’”

“But despite the glut of remaining unsold homes and residential communities, always getting generous discounts in the distressed land market isn’t a certainty yet, according to one of Neighborhood Development’s erstwhile competitors.”

“Mark Petersen, who was regional acquisitions manager for homebuilder Lennar Corp. until early 2007, founded Sawbill Cos. last spring hoping to find bargains in the local residential market.”

“But Petersen said that distress hadn’t yet translated into significant price reductions, and he and his partners decided to close Sawbill early this year. ‘We looked at a lot of properties, but [sellers] were asking prices that didn’t seem realistic,’ Petersen said. ‘I just wasn’t willing to pay those prices.’”

“Historically, land prices are slow to adjust to depressed housing markets, according to Tom Musil, head of the real estate master’s degree program at the University of St. Thomas. Owners who are leveraged and strapped for cash will reduce prices if they need a sale, but longtime owners often try to maintain the price, believing that markets will return to peak prices, and that limits the potential size of the market.”

“Land buyers are also deprived of another benefit that helps other investors in a risky, transitional market, Musil said: Unlike other real estate investments, the cost of land can’t be depreciated, eliminating the small but reliable return other buyers enjoy.”

“By buying at the discount they achieved at Inspiration the company can offer attractive prices to builders, according to Gump, and that will be key to succeeding in a soft market. ‘What kills a community is when builders back away, properties sit unsold and values get depressed,’ he said.”

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