The Housing Bubble

The LA Times reports from California. “Effie Micheals placed her three-bedroom, three-bath South Pasadena condo on the market last August for $750,000. Great neighborhood, great school district. She figured she’d get top dollar. And why not? The Southern California property market had been minting money for years. Buy a home, sit back and let the dollars pour in.”

“It was as close as you could get to a sure thing. Kind of like buying tech stocks in the late 1990s. But the thing about bubbles is, they have a habit of popping.”

“A few months after Micheals’ condo was listed, it was reduced in price to $725,000. When that didn’t work, it was knocked down again several weeks ago to $679,000.”

“Micheals bought the nearly 1,700-square-foot condo for $675,000 in 2005. She saw it as a steppingstone to another home in the vicinity, and planned to use the cash from its appreciated value to buy something even nicer.”

“‘There was no way I thought I’d ever let my home go for less than $800,000,’ Micheals said. ‘Everyone wants to live in South Pasadena.”

“Now she figures she’ll take a loss once all the fees are taken into account when the condo’s sold at its current bargain-basement price — if it’s sold, that is. ‘It’s very disheartening,’ Micheals said. ‘I’m very upset.”

The North County Times. “San Diego posted the highest rate of home price depreciation in the nation during the fourth quarter of last year — losing more in three months than the national average of homes lost in one year, according to a housing report.”

“Home sales prices in the county dropped more than 3 percent in just one month and 9.14 percent in three months, according to December data from the Case-Shiller Home Price Index, compiled by Standard & Poor’s. The national 20-city composite lost 9.08 percent from December 2006.”

“Year-over-year, homes in all of San Diego County lost about 15 percent in value. Many real estate agents and housing analysts said in interviews that they think the price decline will continue because foreclosures have hit new highs and sales new lows.”

“‘As long as the sales are going down, that means the market sucks and there’s no bottom in sight,’ said Jim Klinge, owner of Klinge Realty in Carlsbad. ‘But really, the market’s great if you’re a seller and you’re willing to put an attractive price on it. Buyers are out there. But they don’t want to sell it. They want to goose it up 10 (percent) or 20 percent and try and hit the jackpot like they’re in the casinos.’”

“Lyle Anderson, a Poway real estate agent, said it is possible San Diego’s January numbers will post a monthly decline just as large as December’s, which would make three straight months in which homes lost more than 3 percent in just one month. If that happens, the county’s homes would lose slightly less than 12 percent in four months.”

“‘Then you’re hitting a historical number,’ he said. ‘If you were to look at the statistics … the worst we’ve had before was 11 (percent) or 12 percent — and that was for the year.’”

“Lower-end homes, defined as those priced below $431,605, have borne the brunt of housing depreciation, plummeting 23 percent in value in one year, according to Case-Shiller. The higher-end tier, homes priced above $638,891, has lost 8.6 percent in one year, the report stated.”

“‘In the boom of the market, there was not much gap between the nice homes and the fixer-uppers. That gap is back, and it’s bigger than ever,’ Klinge said. ‘It’s compelling for buyers now to wait until they get a nice deal on a screaming big house.’”

The Voice of San Diego. “National foreclosure tracker RealtyTrac reported Tuesday that San Diego County foreclosure activity rose 20 percent between December and January.”

“‘Judging from memory and so on, it’s way way way beyond what we saw before,’ said Ramsey Su, a retired real estate broker and investor who sold bank-owned properties in the 1980s and 1990s.”

“‘There still seems to be the complacency that we are in this position. Nobody seems to be concerned that this is going to hit home, hard, sooner or later. How do you handle so many foreclosures?’ he said.”

“Yamila Ayad is the president and broker of Mission Home Loans in San Marcos and a board member for a local consortium of nonprofits that hosts events for distressed homeowners. She said San Diegans, even some of the professionals attempting to curtail the spread of distress, are growing used to new records being set every month in the data.”

“‘I think that the sad thing is that we’re just not amazed anymore,’ she said. ‘I hate to say this, but we end up feeling numb, anaesthetized by the issue.’”

“In her specialty market, the corridor surrounding Interstate 15, real estate associate broker Kris Berg said she’s noticed that trend among the lower-priced homes.”

“‘Some communities are being hit more dramatically — the lower end communities, like Mira Mesa,’ she said. ‘And certainly the condo markets, regardless of their location.’”

“Berg said she is seeing buyer activity picking up, an interest level growing among people who are tired of waiting. That’s not necessarily translating into a slew of closed transactions, though.”

“‘No buyer wants to feel like they’re going to buy a house today and it’s going to be worth less tomorrow,’ Berg said.”

From NBC San Diego. “The number of foreclosures for San Diego in January was up 165 percent compared with the same period last year, according to RealtyTrac. One mortgage broker said that there are still a lot of adjustable-rate loans that will reset at higher rates in the next two years.”

“‘If people are losing their jobs or not getting the high-paying jobs they anticipated, they may not be able to make those adjusted-mortgage payments,’ CalPacific Mortgage spokesman Tom Rice said.”

“People in financial trouble aren’t the only ones going into foreclosure. There a growing number of people whose home values have dropped so sharply that they are choosing not to continue paying for the residences.”

“‘When you’re under water, what’s the upside?’ Rice said. ‘They figure that taking a foreclosure is a hit from a credit standpoint. They will walk away from it.’”

The Sacramento Bee. “As fears of falling home values continue to grip the Sacramento-area market, more home builders are offering limited protections against losses to help worried buyers sleep at night.”

“‘No one wants to purchase a home or a car or a microwave and know that two months, three months or five months later there was a better deal out there,’ said Barry Grant, Sacramento territory president for Los Angeles-based KB Home.”

“To woo anxious buyers, KB promises if it lowers prices during the three or four months between a signed sales contract and finished construction, the buyer will get the lower price. The same applies to interest rates.”

“Grant said the builder ’sporadically’ offered the guarantee in local projects last year, but ‘has made a commitment this year that we’re doing it on every built-to-order home in Sacramento.’”

“One of the Sacramento region’s leading town house and condominium builders, Reno-based Pacific West Cos., is going a step further. It’s telling customers that if they buy today and the builder drops prices before the development is finished, even as far out as two years, they’ll be reimbursed for the difference.”

“‘It becomes kind of a psychological edge. You feel comfortable with what you’re buying now,’ said Taylor Cohee, the builder’s VP for sales.”

“The deal is being offered at two of the builder’s condo communities in Folsom and El Dorado Hills, and also in Reno and Fresno. The Folsom and El Dorado Hills projects already sell in the low $200,000s.”

“Among buyers won over was Luis Gallardo. He is moving to El Dorado Hills. ‘I think it gives you some comfort level that with the economic conditions being what they are, and the housing market being what it is, that you’re not going to continue to lose more money,’ said Gallardo.”

The Santa Cruz Sentinel. “Lenders unable to sell mortgages on their books have turned conservative. Investors stuck with billions in bad loans have turned cautious. Borrowers are frustrated. Appraisers who have to calculate home values are challenged. Home sellers forced to drop asking prices are disappointed.”

“‘There’s not a lot of good news,’ said Mark Junod of First Horizon Home Loans, one of six local mortgage brokers and lenders assessing the state of the market (at a) presentation organized by the Santa Cruz Association of Realtors and Santa Cruz Home Finance.”

“Rick Campbell of Wells Fargo Home Mortgage offered a bright spot: The bank’s analysts expect to upgrade the Santa Cruz County market from ’soft’ as of Dec. 15 to ’stable’ as of Feb. 29. In contrast, Santa Clara is expected to fall from ’stable’ to ‘depressed’ and Monterey from ‘distressed” to ’severely distressed.’”

“Lenders want money down and proof borrowers can repay the loan. Credit score under 740? Expect higher interest rates. ‘A lot of people got loans that shouldn’t have gotten loans,’ said Dwayne Dawson of Washington Mutual Home Loans.”

“Borrowers had ‘no skin in the game,’ said Graham Morland of Sterling Properties, offering an opinion from the audience. ‘A majority of the short sale cases here were 100 percent financing.’”

“Campbell faulted borrowers who didn’t read their loan documents, and Junod faulted loan agents unable to explain complex loans to their clients. ‘A cleansing was needed,’ said Junod. ‘About 31 percent of loan agents are out of the business.’”

“Dawson agreed with Tai Boutell of Santa Cruz Home Finance that it’s too easy to become licensed as a lender. ‘The test is not geared to lenders,’ Dawson said. ‘I pulled out my calculator twice.’”

“Asked if struggling borrowers can get a loan modified, the lenders said: It depends. ‘Our modification department is swamped,’ said James Giuffre of Wachovia Mortgage. ‘The question is: What can you afford?’”

“Junod said lenders are looking for permanent solutions. ‘If they think it’s temporary, they won’t make adjustments,’ he said.”

The San Francisco Chronicle. “Daniel Mudd is president and CEO of Fannie Mae, the giant government-sponsored entity that, along with Freddie Mac, buys and packages billions of dollars of mortgage loans for resale in secondary markets, which helps to keep interest rates low. The following interview was edited for space and clarity.”

“Q: How did the mortgage crisis happen and who’s to blame?”

“A: For a period of time, the market grew. It grew too fast. It had a big adjustment and a period of big dislocation came in the summer, and now we are in a period of volatility and uncertainty…The market is looking to find a new level. And by the market, I mean home prices, housing starts and mortgage rates.”

“Both lenders and borrowers had a huge amount of confidence that ultimately led to overconfidence. The lack of other things to invest in caused people to invest in real estate, and a lot of the products, and I think it’s specifically pronounced in California, were designed to get monthly payments down at the beginning.”

“Q: Is there any sense of responsibility from any of the people that are involved in this, the mortgage brokers, the lending industry? We are finding evidence of fraud and lots of it.”

“A: There were instances where people got put into homes that they couldn’t stay in and it should have been known at origination that they weren’t going to be able to stay in those homes. There is responsibility there. There is liability there and there should be people prosecuted for that.”

“Q: Do you feel that 100 percent of those people should be helped out in some way? A: No. Mixed in that humongous set of almost $1 trillion dollars worth of mortgages are out-of-state investors that purchased three, four or five properties. We took a sample in Las Vegas and the problem in Las Vegas is not actually at the working-class part of the market. It’s in the second home, condominium-investor property and those are where the subprime loans are.”

“Q: There are people that are making $80,000 in homes that cost $800,000. How can you justify giving mortgages to people who don’t have the means to repay them? A: I think that putting people into homes that they can’t stay in is clearly a problem and I don’t think there is justification for it.”

“Q: Is Fannie Mae, in your opinion, backed by the full faith and credit of the federal government? A: No.”

“Q: Your lenders, your creditors are giving you a preferential rate. Do you think they think you are backed by the full faith and credit of the government?”

“A: My opinion derives from my own experience. I go out and see investors around the world. Foreign investors are lending money (for) housing in the U.S. market. So I go around and see investors and on the front page it says we are not an agency of the federal government. We are not fully backed by the federal government. When I am asked that question, the answer is no.”

Some housing bubble news from Wall Street and Washington. CNN Money, “New home sales slipped to a nearly 13-year low in January, according to a Census Bureau report showed, down 2.8% from 605,000 in December. Sales fell 33.9% from the same month last year and hit their lowest levels since February 1995. The median price of a new home sold in January was $216,000, down 4.3% from $225,600 in December and 15.1% from $254,400 a year earlier.”

“This decline probably doesn’t accurately capture the weakness in prices for new homes, as about three out of four builders have reported having to pay buyers’ closing costs or offer other incentives such as expensive features for free in order to maintain sales.”

“‘We may not pull out of this for another 5 years,’ said senior economist at the Credit Union National Association, Mike Schenk.”

“The latest housing boom was about nine years long, and there’s a way to go to undo some of the excess, Schenk believes. ‘Prices were up 45% over the last boom,’ said Schenk. ‘Prices that are down 10% do not return us to normalcy.’”

From Bloomberg. “A decline in inventory failed to keep pace with the drop in demand. The number of (new) homes for sale fell to a seasonally adjusted 482,000, and the supply of homes at the current sales rate jumped to 9.9 months’ worth, the most since 1981.”

“Sales of previously owned homes, which account for about 85 percent of the market, fell in January to the lowest level since records began nine years ago, the National Association of Realtors also reported.”

“New-home purchases, which account for the rest of the market, are considered a timelier indicator because they are based on contract signings. Existing home sales are calculated when a contract closes, usually a month or two later.”

“Toll Brothers Inc., the largest U.S. luxury homebuilder, reported its biggest quarterly loss in 22 years. The results included pretax writedowns of $245.5 million.”

“The average price of Toll’s gross signed contracts in the fiscal first quarter fell 13 percent to $634,000 from $730,000 a year earlier. The average price of the canceled homes in the quarter was $770,000.”

“‘Ceaseless talk of a recession continues to dampen the mood of consumers,’ CEO Robert Toll said in the statement. ‘This drumbeat, coupled with concerns over mortgages, the direction of home prices, and foreclosures, has kept pent-up demand on the sidelines.’”

From MarketWatch. “Home builder Toll Brothers took more write-downs in its current quarter as revenue dropped 23% and its backlog of orders fell 42%. And what did the company blame that poor performance on? Loose lips.”

“Whether or not a recession occurs in the overall economy, it is here in spades in housing. And what is doing the talking is data. How about a conversation that begins with housing starts: They were down 30% in 2007 and they are likely to fall nearly that much this year, according to the National Association of Home Builders.”

“Then keep your jaws flapping over new-home sales, which are expected to fall to at least a 25-year low of 632,000 units this year.”

“Need another cocktail-party zinger? Cut in with existing-home sales, which are going to drop to a 20-year low in 2008. And if you want to halt everyone else’s chatter bring up the topic of home prices, which showed the first overall nationwide decline in 2007 since statistics have been kept.”

“Maybe the drumbeat that home builders really should have paid attention to was the thumping that occurred a couple of years ago as unqualified buyers and greedy investors beat a path to their subdivisions and high-rise condominiums.”

“But back then the only tune companies heard was sales and the only rhythm sales agents swayed to was the one brought by steady commission checks.”

From Reuters. “U.S. banks and thrifts set aside record amounts of money last year in anticipation of higher loan losses, as the housing and credit markets soured, U.S. regulators said.”

“FDIC Chairman Sheila Bair linked the earnings drop to weakness in the housing sector and the credit squeeze in financial markets. ‘We can expect these problems to continue in 2008,’ she told reporters.”

“Analysts said they see broad signs of deterioration in bank credit quality, mostly concentrated in a half dozen states led by Michigan, Florida and Georgia.”

“Banks set aside record reserves in the fourth quarter and for the year to cushion against expected loan losses. They set aside $31.3 billion in the fourth quarter to offset weakening conditions in the housing and credit markets, and $68.2 billion for the full year.”

“The industry’s delinquent loans jumped 32.5 percent to $26.9 billion in the fourth quarter, the biggest quarterly percentage rise in 24 years, the agency said. U.S. lending standards are being tightened and loan demand is slowing, FDIC officials said.”

“‘This is an inherently healthy process and it won’t last forever,’ Richard Brown, the FDIC’s chief economist, told reporters. The weakness in the credit markets ‘probably has several more quarters to run,’ he added.”

“Fannie Mae, the largest provider of financing for U.S. home loans, reported a $3.6 billion quarterly loss on Wednesday and said it expects a ’significant’ worsening of the housing bust.”

“Fannie Mae said its results were largely driven by a $3.2 billion loss on derivative contracts used to hedge its investment portfolio as interest rates declined.”

“Washington-based Fannie Mae, which was created in 1938 to boost homeownership, is now struggling to strike a balance between enlarging its business while tightening underwriting guidelines to protect itself from further losses.”

“Regulators and lawmakers have leaned harder on Fannie Mae and Freddie Mac in recent months to bolster the housing market, most recently by increasing the size of loans eligible for their purchase. However, losses at the companies have squeezed their profits and reduced their ability to expand.”

The Wall Street Journal. “Mortgage giants Fannie Mae and Freddie Mac are close to a deal with New York Attorney General Andrew Cuomo to make changes meant to discourage inflated appraisals, widely viewed as an important contributor to the mortgage crisis, according to people familiar with the matter.”

“The proposal, in which the two government-sponsored companies would require lenders they work with nationwide to change their appraisal practices, would cap a year-long probe by Mr. Cuomo’s office that has already resulted in a lawsuit against an appraisal-management company, for allegedly submitting to pressure by a big lender to inflate appraisals.”

The Advocate. “A Stamford hedge fund that has been steadily losing assets since the summer has informed investors that it has begun liquidating its remaining holdings and plans to close up shop for good.”

“Sailfish Capital Partners made a number of bad credit bets tied to subprime mortgages and has been dramatically affected by the widespread financial credit crunch, the firm’s founding partners, Mark Fishman and Sal Naro, wrote investors earlier this month.”

“Founded in 2005, Sailfish had managed as much as $1.9 billion last year, before it began losing assets. Clients of the firm, who couldn’t withdraw money until Sailfish reached its two-year anniversary last summer, pulled about $400 million from the fund in January, according to published reports.”

“In their letter, the fund’s partners talk about the difficult economic conditions dating to last summer, when the housing market blew up and the credit markets collapsed. ‘The world has changed dramatically and rapidly since August 2007,’ the letter said.”

The Chicago Tribune. “Nationwide, 233,001 homes received at least one notice from lenders last month related to overdue payments, an increase of 57 percent from a year earlier, according to RealtyTrac.”

“‘You have more people going into default and a higher percentage of the properties going back to the banks,’ said Rick Sharga, RealtyTrac’s VP of marketing.”

“Nationally, attempts to help struggling homeowners seem to be falling short. ‘The loan workout modification programs aren’t having a significant material effect on keeping properties from going back to the banks,’ Sharga said.”

“One dramatic trend last month was a 90 percent spike in the number of properties that were repossessed by banks, compared with January 2007. ‘It suggests that there’s little or no equity in a lot of these homes, because they’re not even being sold to investors at auctions,’ Sharga said.”

“Efforts to save U.S. homeowners from foreclosure should not unduly alter the contracts behind troubled loans, a senior Treasury Department official said on Tuesday.”

“Proposals that ‘would retroactively change contracts on existing loans’ could cause long-term harm to the housing finance system, Treasury Assistant Secretary for Economic Policy Phillip Swagel said, according to prepared remarks.”

“Such a move ‘would make it more difficult for future subprime borrowers to get into a house in the first place,’ he said.”

“Swagel said the Treasury Department is examining whether there is enough market discipline in the current mortgage finance system. ‘The originate-to-securitize model succeeded in dispersing risk … but had the unwelcome effect of also dispersing information,’ he said.”

“Investors had too little information about the true risks of mortgage-backed securities collateralized debt obligations and other products that helped fuel the recent housing finance bonanza.”

“Besides lacking information, investors relied on a faulty assumption that U.S. home values would continue to rise and so put aside some of due-diligence work.”

The Sacramento Bee. “Mortgage rates are rising, putting additional pressure on the troubled housing market, and a new report on inflation suggests that rates might go up even more. Mortgage rates tend to move in tandem with the yield on long-term government bonds, which have increased in recent weeks as investors react to concerns over inflation.”

“‘We keep seeing more and more horror stories about the economy,’ said Michael McGee of a Rancho Cordova mortgage brokerage firm. McGee said higher mortgage rates aren’t helping a housing market that he believes is the worst of his 36-year career. ‘It’s never been as bad as it is today,’ he said.”

“Consultant Steve Dutra said higher rates will blunt the impact of falling housing prices, which analysts had hoped would kick-start a new round of buying.”

“‘With prices coming down, we were hoping interest rates would stay low as well,’ said Dutra, a VP in the Sacramento office of John Burns Real Estate Consulting. Higher rates means ‘a certain amount of people will be taken out of the market,’ he said.”

“Dean Wehrli of consulting firm the Sullivan Group said higher rates aren’t especially worrisome – but the economic trends are. ‘We have to be worried about jobs again – Sacramento’s job growth has slowed down so much the last few months,’ he said.”

“Sacramento-area unemployment has risen to 5.9 percent, while job growth is at its lowest level since 1993.”

“The recent uptick in mortgage rates has proved frustrating to potential homebuyers and existing homeowners, given the publicity over the Federal Reserve’s decision to slash interest rates. The Fed’s moves affect short-term rates and don’t necessarily influence the long-term rates to which mortgage pricing is pegged.”

“‘People are calling me up and saying, ‘Hey, I heard the rates are going down – I want to refinance,’ McGee said. He’s had to turn away most of his callers.”

The Naples News reports from Florida. “The Cape Coral-Fort Myers area had the highest rate of foreclosures in the nation in January, a mortgage research firm said. Charlie Green, the Lee County Clerk of Courts, said there were 2,297 foreclosures in the county during January. During the first four months of fiscal 2008 — from October through January — there were 7,766 foreclosures.”

“‘For the first third of the year foreclosures were up 2,100 percent,’ Green said. ‘It’s insane.’”

“Tom Moss admits buying a condo in Estero was an ill-advised investment. The Naples resident bought the property two years ago with thoughts of turning a profit. He paid $232,000 for the two bedroom, two bath, 1,416 sq. ft. unit with a third-floor view of the sunsets. Now, Moss will be ‘happy’ if he can sell for $180,000.”

“‘I got caught,’ Moss said. ‘After years of complaining about the growth, I decided to buy into it. But I got in too late and now I’m getting smoked.’”

“He listed his condo on Craig’s List, and wants to limit his losses to just over $50,000. ‘I don’t want to pay someone else money that I’m already losing,’ said Moss about resisting to list the property with a Realtor.”

“You could hear the despair about the market in Ray Garvey’s voice. The Realtor/investor has two homes in the foreclosure process and is trying to salvage a condo investment. Garvey admits the $239,000 asking price on his South Fort Myers condo might need some adjustment.”

“But having plunked down $220,000 for it a year ago, he’s faced with a losing proposition.”

“‘I’d take any reasonable offer but I’m not getting even that,’ said Garvey. ‘Someone offered $160,000 via e-mail but that means I’m going to have to come up with $55,000 at closing and I don’t have it.’”

“‘I don’t think you can find an enthusiastic Realtor right now,’ said Garvey who moved to Southwest Florida four years ago from New York.”

The News Press from Florida. “Lee County’s residential real estate market is in recovery as bargain hunters snap up great deals — but prices are likely to fall further before a huge backlog of homes is absorbed.”

“That was the word Tuesday night from real estate broker Denny Grimes of Denny Grimes & Co. at The News-Press Market Watch annual real estate symposium. ‘We are in recovery but that does not mean the bottom of the market,’ said Grimes.”

“Grimes said the sales price for houses is declining and likened a seller’s situation to somebody trying to catch a Slinky going down the stairs. Get ahead of the falling prices so you can sell the house, he urged.”

“‘It’s almost impossible to catch from the top,’ Grimes said.”

“He said there’s a silver lining to the cloud of falling prices, however: ‘Lee County is becoming affordable again’ with almost 3,000 houses for sale at $225,000 or less with at least three bedrooms and 1,500 square feet.”

The Herald Tribune from Florida. “January home sales in Southwest Florida gave further credence to Realtors who contend that the market is ahead of the rest of the state if not the nation in recovery. The 4 percent increase in sales for Sarasota-Bradenton and the 13 percent increase for the Charlotte County-North Port marked 2 of only 3 sales gains for Florida’s 20 largest markets.”

“But the sales gain came at a cost, with the median sales price dropping — 13 percent in Sarasota-Bradenton and 21 percent in Charlotte County-North Port.”

“Robert Milligan, a 26-year-old broker in Sarasota, says he is convinced that the market has hit its nadir, a notion shared by some Florida economists like Hank Fishkind.”

“‘We have hit bottom in Sarasota,’ Milligan said. ‘I am eating my own cooking by purchasing property now.’”

“Milligan has bought six houses and plans to hold them as rentals. He has found single-family homes in Sarasota that sell for $150,000 or less, and can finance them as rental property for $1,200 to $1,300 per month to cover his expenses.”

“‘Rentals are more favorable in Sarasota than in Charlotte or North Port since they had such a huge building boom there,’ Milligan said.”

“Pricing remains the focus for most of the region’s agents, said Brandon Kekich, a Lakewood Ranch-based team leader for Keller Williams Realty, who added that the current environment is testing the skills of Realtors, separating the ‘the pros from the Joes.’”

“‘We are having a big push of proper-pricing clinics because a Realtor is not not doing his client any good by wearing rose-colored glasses,’ Kekich said. ‘He should be telling his sellers to drop the prices’ to a realistic point ‘or get out of the market.’”

The Sun Sentinel from Florida. “Prices and sales of existing homes plummeted last month as South Florida’s housing downturn stumbled into a third year. Palm Beach County’s median price fell 12 percent in January, to $343,200 from $388,000 a year ago, the Florida Association of Realtors said Monday.”

“Sales tumbled 26 percent, to 369 from 496. It was the fewest homes to change hands in any month countywide since the Realtors’ group started releasing monthly housing statistics in 1994.”

“Last month, 1,746 Palm Beach County homeowners were notified by their lenders that they intend to take back the properties, more than double the 634 from a year ago, according to Realestat.com.”

“Palm Beach County’s existing condominium market also is in free fall. The median price slid 26 percent in January, to $157,700 from $213,100. Sales declined 20 percent, to 303 from 381.”

“Ken and Mindy Rohlman recently sold a Boca Raton condo for $300,000 and bought a four-bedroom house with a pool nearby for $375,000. The house was priced at $450,000 after the owner had turned down a $550,000 offer last year.”

The Atlanta Journal Constitution from Georgia. “Home sales in metro Atlanta have slowed to a trickle and likely will remain sluggish until sometime next year, according to Roger Tutterow, professor of economics at Mercer.”

“Monthly housing permits in metro Atlanta for single-family homes were 31,029 in December, a nearly 50% drop-off from June 2006. There were 3,244 housing starts in north metro Atlanta in the fourth quarter, down 49.4 percent from a year earlier. In south Atlanta, the tally was 1,661, down 65.8 percent.”

“Builders have watched with concern as the region’s inventory of unsold houses has swelled to almost a year’s supply in some areas. But Tutterow said the glut is partially responsible for a brighter consumer outlook.”

“‘It means there’s tons of property for them to choose from,’ he said.”

“Consumers are beginning to feel empowered because of their bargaining power and wide selection, ‘They know they have the upper hand in negotiations,’ Tutterow said.”

The Index Journal from South Carolina. “For home buyers, the time is now, but sellers might want to hold off putting their property on the market, officials said Tuesday in the wake of three reports showing large drops in existing-home sales.”

“‘I think this is a continuation of what we’ve seen in the past 18 months. We continue to see inventory increase and prices go down,’ said Walter Todd, portfolio manager for Greenwood Capital.”

“‘I think all the areas around the lakes are going to continue to grow rapidly,’ Tripp Whitmire, co-owner of Whitmire Real Estate Agency, said. ‘The problem is all the people in Florida can’t sell their places down there. We see a lot of people who come here and say, ‘This is where we’re going to retire as soon as we sell our house.’”

“Whitmire also said the coast is seeing a much larger price gap than the Upstate.”

“‘I do a little development down there (on the South Carolina coast), and it’s almost like the whole place is for sale,’ he said. ‘You just didn’t have the same number of investors down there that you had for a while. The prices on the coast spiked so rapidly in the ’90s and again in 2003 and 2004, so it’s in the middle of a price adjustment.’”

“‘I do see a lot of the prices dropping, but I think they were artificially high,’ he said.”

“Most local officials said the Greenwood market will continue to favor buyers as long as the supply of for-sale homes continues to grow. ‘We’re seeing a significant decline in housing starts, and that’s a positive thing,’ Todd said. ‘We need to stop building houses before we can stabilize. It just takes time.’”

The Sun News from South Carolina. “The cost of living on the Grand Strand is rising, and some residents are getting squeezed at both ends by paying higher prices for necessities while their paychecks grow less. Staples such as groceries, gas and housing costs have risen over the past year and forced people to dip into savings or cut corners.”

“Average wages in South Carolina grew 3.5 percent in 2007 to $37,246, according to Schunk. The most recent data for Horry County show average wages in 2006 were $27,905; the statewide average was $34,281; and the national average was $38,651.”

“Home prices driven up by the housing boom of 2005 and 2006 are fueling the cost of living increases, said Coastal Carolina University research economist Don Schunk. The median price of a condo rose $7,148 in 2007 to $192,148, according to fourth-quarter statistics from the Coastal Carolinas Association of Realtors. And single-family houses rose $9,455 to $216,500.”

“That makes for a $93,648 spike in condo prices and a $79,550 increase in single-family house prices in the past five years.” “‘Homes are much more expensive,’ Schunk said. ‘We have problems with a lack of affordable housing in our area that feeds into a higher cost of living.’”

“‘I basically turn [the electricity] off as much as possible,’ said Christina Pullen, who lives in Carolina Forest. She said she had to find a way to curb the $50 to $75 per month increases she saw in her bill recently.”

“That and pay cuts in her job as a flight attendant have made for tough times, she said. ‘It’s ridiculous. I took a home equity loan, and I’m living off my equity in my home. That’s not right,’ she said.”

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