The Housing Bubble

The Recordnet reports from California. “In the early days of the housing downturn, home builders tried to pump up sales by offering various buyer incentives. That segued to cutting the base costs to try to attract buyers who were focusing more and more on the price tags. The newest trend is a price guarantee to try to relieve a would-be buyer concerned that the house bought today might sell for less in the future as housing prices ease nationwide.”

“‘This is the latest incarnation of those kinds of things - and one of the more creative,’ said Greg Paquin, president of the Gregory Group. ‘This is the most significant and maybe the one that has the most impact.’”

“And it is largely responsible for doubling sales in recent weeks, said aid Joe Anfuso, Florsheim CEO, who declined to state sales figures. ‘It’s a great selling factor to get the deal closed,’ he said. ‘You’ve got to be creative. We’ve found something that at least makes a buyer feel comfortable making the decision to purchase.’”

“‘There’s a fear factor in buying today,’ Ryland Homes spokeswoman Marya Barlow said. ‘This is a way to bring people off the sidelines and to the closing table - to rebuild their confidence.’”

“She said the price guarantee reflects builder confidence that prices are about as low as they are going to get. ‘Everybody has already cut prices, and I don’t see any more price declines,’ she said.”

From KFSN. “Stockton is the unofficial foreclosure capital of the country, with 6,300 homes in the foreclosure process. Fresno currently has 4,200, Merced 1,300 and Los Banos 1,100. Saturday there was a bi-city effort to help keep some people in their north valley homes.”

“Heather Schaefer attended one of two foreclosure prevention workshops held in Los Banos and Merced Saturday. She moved from Morgan Hill to Los Banos two years ago because of lower home prices.”

“‘We bought the house for $452,000. We basically were put into a loan we couldn’t afford at first. We were told by the broker 6 months after we closed we would be able to re-finance and the payments would go down,’ Schaefer said.”

“She says that didn’t happen and now her payments are hiking from $2,700 a month to $5,100 a month.”

“‘We can barely make the $2,700 and we just started being able to make the $2,700 payment and now they’ve bumped it up effective as of today to $5,100.’”

“Los Banos city leaders say Schaefer’s home, like many others facing foreclosure, is in a newer subdivision.”

“Tommy Jones, Los Banos Mayor, says ‘Those would be the first homes that sold at maybe $400,000 to $450,000, so with the decline, that home is probably only worth $250,000 or $300,000; because some of our homes have had a 50% reduction.’”

The Sacramento Bee. “Take $2 billion away from Sacramento’s homeowners – money they could be spending on cars or plasma TVs or kitchen cabinets – and you begin to understand what the housing slump is doing to the region’s economy. The 25 percent drop in housing prices since 2005 means fewer homeowners are able to borrow against their equity.”

“Across the state, DataQuick said equity extractions fell by $25.36 billion last year. At least one big lender, Countrywide Financial Corp., is cutting off thousands of borrowers who obtained equity lines of credit but whose houses have since sunk in value.”

“Scores of banks that once flooded mailboxes with loan offers are now rejecting homeowners looking for cash or lower rates. It’s the opposite of what happened during the boom.”

“Allen Perez took out a $100,000 equity loan on his Rocklin home in 2005 to install a swimming pool and pay other expenses. But when Perez, who’s now struggling financially, tried to refinance two weeks ago in hopes of lowering his monthly payment, he was turned down.”

“The home is ‘upside down’: He owes $530,000 on a property worth just $465,000. As a result, his family is cutting back on dining out and going to the movies. His two children had to drop out of youth soccer and baseball.”

“‘That’s heartbreaking for a parent,’ said Perez.”

“Judy Jones estimates she’s taken about $165,000 out of her home in the Rosemont area through a series of loans over the past decade. Among other things, she spent it on a new sunroom, a backyard patio, vacations and her beloved khaki-colored Toyota Prius.”

“Her latest loan, a refinance last April, netted her $28,000 cash, most of which went to pay credit card bills. ‘I’ve been living off that for 10 years, off the equity in this house,’ said Jones.”

“No more. Though she still has some equity, Jones said she is having trouble making her payments, is ‘maxed out’ and ‘can never borrow another nickel.’”

“Divorced and on a fixed income, she has recently cut way back on clothing, restaurants and other expenses. She spent just $250 on Christmas gifts, down from her usual $1,000 or so, and jokes that she’s single-handedly slowed the economy.”

“‘You noticed it’s been taking a dive because I haven’t been spending the last couple of months,’ she said.”

The Orange County Register. “It wasn’t so long ago that Orange County developers couldn’t build condos fast enough – and with cheap financing, they could sell them even faster. The market was so lucrative that when they couldn’t build condos from the ground up, developers converted apartments instead.”

“‘You would have had to have huge rent increases for 10 years to get the same return on investment as a condo,’ recalls Delores Conway, director of USC’s Casden Real Estate Economics Forecast.”

“But with sales of all new Orange County residences down nearly 63 percent from January 2007 and sales of existing condos off 39 percent, developers are beginning to reverse course.”

“Apartments – especially high-end rentals – are back. ‘It’s the beginning, perhaps, of a trend,’ Conway says.”

“Emile Haddad, chief investment officer of Lennar Corp., said last week that his company is still weighing whether to convert its A-Town Metro project near Angel Stadium to apartments.”

“To make it financially worthwhile to switch to apartments, developers in most cases must be able to charge rents well above the current $1,676 average. Many rents are closer to $3,000 a month. USC’s Conway doesn’t think that will be a problem.”

“But Walter Hahn, a veteran Orange County real estate economist who has seen the housing market come and go, thinks it may not be as simple as just switching gears from condos to apartments.”

“‘For $3,000 a month, you can buy something today,’ he says. The median Orange County condo price hit $370,000 in early February, down $100,000 from the March 2006 peak.”

“There already are hints that landlords are having more difficulty raising rents. Axiometrics Inc says that rents at the largest Orange County complexes rose just 2.4 percent in the first quarter vs. the same period last year and that they were down 0.5 percent over the third quarter.’”

“Part of that could be the economic slowdown that is pushing more tenants to double up, reducing apartment demand. A shadow rental market of foreclosed properties or homes held by speculators desperate for cash flow may compete for tenants.”

“‘High-end apartments? Not if they are centered around the Platinum Triangle or some other place,’ Hahn says. ‘Even the Irvine Co. had some lease-up problems with part of several hundred units in the Spectrum. It took a while to lease out.’”

“Hahn thinks it could take until 2012 or 2013 for condo prices to return to the point where they will be profitable for developers, but that doesn’t necessarily mean apartments will be the answer.”

“‘It’s probably going to be a soft market would be my guess,’ he says. ‘Vacancies are going to go up, and there’s going to be some pressure on rents.’”

The Press Telegram. “With each passing day, the water gets deeper. And more homeowners are struggling to keep their heads above the water line as dark clouds dump more rain on the housing market. At some point, opportunity should bubble to the surface. But no one knows when.”

“And don’t talk to Michael Carney, executive director of the Real Estate Research Council at California State Polytechnic University, Pomona, about this being a down cycle. That implies a market moving in a circular fashion.”

“He says that all markets move between peaks and troughs, or valleys if you prefer. He peers into this abyss and sees nothing. ‘If you can figure out when the bottom is going to be in home prices, call me. And don’t tell anyone else,’ he said. ‘I really want to know where the trough is.’”

“When you bought your house is important, and so is your financial situation.”

“‘If you can pay your mortgage and still have a job, you’re not upside down,’ said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp. ‘And I think people forget that a home is a place to live with tax benefits and not an investment.’”

“If you bought about five years ago, you may be able stay afloat, Kyser said. ‘You still have equity. And even if the price slips (under the purchase price), you’re still OK.’”

“Carney noted that homeowners need to assess their current financial state and make the best bet they can. ‘You could be under water today, but if you are lucky, you won’t be under water tomorrow. Then you have an incentive to wait,’ he said.”

The Bakersfield Californian. “About 50 teenagers and young adults broke into an empty, foreclosed home in southwest Bakersfield Saturday, throwing a raging party and making off with the home’s high-end appliances, according to neighbors.”

“‘They’re all out front, they’re drinking,’ said Scelina Mitchell, who lives across the street from the home.”

“HSBC Bank USA repossessed the home in November, county records show. It sold for $540,000 in 2006, according to First American Real Estate Solutions.”

“Mitchell and her husband, Matt Mitchell, said police simply dispersed the partygoers, and they worry the ‘nonchalant’ response might attract future rabble rousers.”

“‘What I would have liked was at least a reprimand,’ Matt Mitchell said. ‘And a report filed.’ On their normally quiet block, two other homes are in foreclosure, he said.”

Readers suggested a topic on how housing prices and incomes will be resolved. “How about inflation vs. deflation? Most of those who post on this blog believe housing prices and consumer spending will have to collapse back to the level income can support, but there seems to be a difference of opinion as to how it is going to happen. I see it, in part, as a choice — and the choice that is being made is inflation, even if that means the dollar will no longer be the world’s reserve currency and the rest of the world will never lend to us again.”

Another said, “We’ve had 3 solid months of rising consumer prices and over a year of falling home prices. What’s more, the credit crunch is widening its grip. People are so hopeless, they are walking away from their homes. The entire financial system is in chaos. Unless wages rise for the masses, we are heading for depression.”

One responds, “But how, exactly, would this come about? Government/city workers may have the safest and most recession-proof jobs, but the bureaucracy in those institutions moves so slowly that it would take a couple of years before any wage increases were instituted. City and state revenue will fall in a recession, making a wage increase unlikely.”

“In the private sector, of course, sky-high CEO wages could come down and regular worker pay could come up, but how likely is that? If anything a tanking economy will result in more layoffs and more downsizing while the suits keep getting bonuses. This will continue until shareholders finally realized they’ve been getting fleeced for the last couple decades and demand an end to over-the-top CEO compensation. I won’t hold my breath on that.”

“So what’s that leave? Maybe increase the minimum wage to an actual livable level, like 15 bucks an hour? Corporations would fight that tooth and nail. I see no viable scenario for wage inflation.”

One said, “In a perfectly globalized world a factory worker in Bangalore or Shanghai or Des Moines would have exactly the same standard of living and there aren’t enough resources for 6B people to live like north Americans. So the inevitable end of globalization is a drop in American standard of living.”

One added, “I have wondered how China will avoid going through a similar downturn if the U.S. stops spending like it does.”

A reply, “China and India’s economy is based on us buying their crap (China’s) and their services (India). If we consume less, China and India also hit a recession, demand drops for commodities, and all those people trying to hedge against inflation, end up getting burned by less demand and less purchasing power from their consumers which means deflation.”

One had this, “A good friend of mine just returned from a visit to China last week. He said real estate prices in Beijing are outrageous — sub-500 square foot apartments for the wage equivalent of 300K USD. They are displacing tens of thousands of people for the Olympics, and Beijing is one big construction zone. China has gone into development overdrive, but it can’t be sustained forever.”

A reply, “It takes 6-12 months for our spending slowdown to hit China. They are already drastically trying to increase domestic consumption but once the Olympics is over, it’s game over for them as well. Commodity prices (cement, copper, iron, oil) will drop like a rock once their building binge stops, as our binge here has already stopped.”

To which was posted, “The more pedestrian commodities will certainly suffer from the world-wide slowdown, but Gold is a special case. There is only enough to satisfy 1 out of every 50 units of fiat moneys in the world.”

And lastly, “As a corollary to the inflation/deflation debate, how about some discussion as to indicators of the commodities bubble topping out? Are there any already present?”

“I previously believed that there wasn’t another asset class big enough to replace real estate as a bubble, but I’m beginning to believe that commodities as a whole may just fit the bill.”

The East Valley Tribune reports from Arizona. “Less than two years ago, Gilbert homeowners Tim and Kris Koster moved to the East Valley and shelled out $433,000 for a five-bedroom home. They recently heard a similar-sized home in the area sold for nearly $130,000 less. Looking back, it was the worst possible time to buy with house prices so overinflated, Tim Koster said. ‘I could just remember when we were buying this house, the sense of urgency, because prices were so high we thought we were going to get left behind,’ he said.”

“The Kosters don’t have the luxury to sit tight. They’re faced with a job transfer back to Colorado this summer, and the family’s options look bleak.”

“They already lost $40,000 in equity from their old home, which they used as a down payment. And the Gilbert home is listed at $394,900, a price that would pay off the mortgage and cover closing costs. ‘We leave with the skin off our backs, basically,’ Kris Koster said.”

“She’s put the home on Craigslist and other Web sites as a rental, but the rent wouldn’t fully cover the $2,100 monthly loan payment.”

“The Kosters say their last-ditch option is foreclosure - a dire scenario they never imagined could happen. ‘It’s always in the back of your mind,’ Tim Koster said. ‘I don’t sleep as well as I used to.’”

“Just more than 7,000 Valley properties entered the foreclosure process or were actually foreclosed in January. That compares to less than 4,400 home sales during the same month last year, according to Information Market.”

“When Mesa homeowner Sergio Calderon refinanced in 2006, he knew he was jumping into a ‘horrible loan,’ an interest-only loan with a 8.25 percent adjustable rate. ‘I knew it was a risky gamble,’ Calderon said. ‘As far as the housing market getting cold, I really didn’t see that one coming.’”

“He took out $80,000 in equity to start a landscaping construction business in Goodyear, expecting to sell his house later that year. When gas costs became too much, he rented an apartment close to work and tried to sell the Mesa house.”

“After 14 months, he gave up and recently rented out the place. Even with a tenant, Calderon said he’ll still be paying $500 a month on the mortgage, while also paying $800 in rent.”

“Meanwhile, his construction business is getting hit by the housing downturn, and he worries about losing income. He’ll keep making both payments as long as he can. Meanwhile, his family is cutting back on eating out, day care and other expenses.”

“People believed values would keep climbing, so they could always refinance again, said Joann Hauger, executive director of Community Housing Resources of Arizona. ‘Some of these people started to believe that their savings was their house,’ Hauger said.”

The Arizona Republic. “A small, young Scottsdale-based home builder says it could not compete with prices on discounted resale homes and with the promotions that bigger, more established builders were offering in the slowing economy.”

“As a result, Randall Martin Home decided it could not afford to complete four subdivisions it has started around the Valley, a company spokeswoman said. The decision to walk away from its vacant property and unsold homes has left people who have purchased and moved into the builder’s houses worried about their neighborhoods.”

“Jason and Cheri Diefenbacher of Chandler said they knew Randall Martin was in trouble when a subcontractor recently threatened to put a lien on their house if a $500 bill continues to go unpaid.”

“The couple closed on their home Jan. 18. But since they’ve moved in, they haven’t heard from the builder, who was supposed to complete final repairs within 30 days.”

“‘It’s a concern, because who is going to do the warranty work?’ said Cheri Diefenbacher.”

“Credit is the oil that greases America’s economic engine, and right now, that engine is sputtering. The easy money has evaporated. For Diane Valencia, it could mean losing a home to foreclosure.”

“Valencia is a subprime borrower who has owned her Youngtown home since 2004. She has been able to make her payments at the initial 9 percent rate on her ARM, but when that reset recently above 11 percent, things got dicey.”

“Valencia did succeed in getting her lender to modify that reset rate back down to around 9 percent, but the relief will last for only half a year. After that, she worries she’ll have to sell the home or lose it.”

“‘All I want is a fixed rate,’ she said. ‘They can see with my history that all payments are on time, but no one wants to help.’”

The Daily Courier from Arizona. “Approximately 230 people attended the Central Arizona Partnership Economic Forecast conference. Mike Dougherty, president of the Prescott Area Association of Realtors, said buying options are robust, and mortgage rates are good as Realtors enter the traditional selling season that runs from February through October.”

“Dougherty described the local housing demand as ‘pent-up’ and he believes inventories will decline as unmotivated sellers withdraw from the market because they can afford it.”

“‘In our market, sellers pricing their homes aggressively will succeed because buyers are looking for and getting bargains,’ he said. ‘I think it’s going to be a strong year.’”

“Realtors sold 3,226 homes in 2005, 2,362 homes in 2006 and 2,080 in 2007. Prescott’s median home price is down from $390,000 in February 2006 to $306,000 in January 2008.”

The Verde News from Arizona. “When it comes to sorting out the slide in Verde Valley home prices, everyone’s numbers say the same thing, your house isn’t worth what it was a couple of years ago.”

“‘The problem with statistics is you can make them say anything you want them to say,’ said Dan Mabery, of Mabery Caldwell Banker Real Estate in Cottonwood. ‘We see that coming out of Phoenix and we see that in the way we decipher them. We say it has only been a 5-percent drop. Well, bull. My belief is that it has dropped at least 20 percent. And that may be conservative.’”

“‘Here you don’t have as many comps to work with. But you can look at properties in some of the subdivisions or at townhouses and see that what originally sold for $210,000 is selling in the $150,000 range. That’s a significant drop, and 20 percent may be conservative. It is not over yet. That’s the problem,’ Mabery said.”

“‘At the current rate properties are being sold for the amount listed, it would take three and a half years to sell a home in Camp Verde. The rate is 2.3 years in Cottonwood,’ said Camp Verde real estate agent Rob Witt. ‘We need more buys. It’s as simple as that.’”

“Throw into the mix the foreclosures and the desperation sales, and the basic foundations that support home values are not present, he said.”

“In one area of Camp Verde, the average asking price has fallen from $475,000 two and a half years ago to $312,000. Just six months ago the asking price averaged $373,000.”

“‘I don’t think many Realtors can tell you they have been through anything like this,’ Mabery said. ‘They [prices of homes] have never gone backwards in my experience. But they needed to. They went way too far. The people living here cannot afford to spend the kind of money people were getting. It doesn’t work that way.’”

The Reno Gazette Journal from Nevada. “Home foreclosures in Washoe County more than doubled in January from December and rose six-fold from a year earlier, a report shows. Using data from the Washoe County Assessor’s Office, analyst Brian Kaiser calculated a total of 177 foreclosures of single-family homes and condominiums in Washoe in January, all but one in Reno-Sparks.”

“That’s up 113 percent from December’s total of 83 and a 510 percent jump from 29 in January 2007. By comparison, there were 169 sales of new and existing homes and 57 sales of condos countywide in January. Among foreclosed properties, there were 58 sales in January, all in Reno-Sparks.”

“‘It’s great for buyers, but’s really rough on sellers,’ said Wayne Capurro, president of the Reno-Sparks Association of Realtors.”

In Business Las Vegas from Nevada. “There were 881 new-home sales in January, which includes condos and apartment conversions, 1,124 fewer than in January 2007, says Dennis Smith, the president of Home Builders Research.”

“In January, the median price of the sales was $274,000, a year-to-year decrease of $60,945 or 18.2 percent, Smith says.”

“Most of the recent new-home sales are priced under $250,000, and for the first time in years there are many homes being sold for less than $200,000, Smith says. Centex, Richmond American, Astoria, Rhodes and DR Horton have lowered prices recently at all or some of their subdivisions, he says.”

“Centex, for example, has sold homes at its Mesa Verde community in North Las Vegas for $97 to $113 per square foot, he says. In addition, Centex was offering 5 percent co-op fees and paying some closing costs for buyers.”

“By the end of 2007, there were finished lots selling for little more than $50,000, Smith says. He adds he won’t be surprised if major public builders offer finished lots at some locations for less than $50,000 per lot ‘about half of what many spent on lot improvements less than a year ago.’”

“‘I have spoken to clients who are looking at these prices as great opportunities for land banking lots for two to three years,’ Smith says. ‘The vultures are circling. Most are investors, but not all. I have been contacted by builders that are ready to pounce on the right deal. Obviously, location is a key factor, but at prices that are equivalent to those we saw seven to eight years ago, these price points have to be classified as a can’t-miss investment.’”

“The slowdown in the housing market has some builders thinking about building rental homes in the wake of the apparent success of a similar Las Vegas project.”

“Signature Homes had originally planned to sell all of the 92 detached three-story units it built near downtown Las Vegas, but with the downturn in the market, the builder decided to lease the homes as income-producing property.”

“Late last year Signature sold the gated housing community to Copperfield Investment and Development Co. of Los Angeles, a private equity group, for $18.4 million - $200,000 per unit. It continues to rent the homes.”

“When it envisioned the project, Signature had planned to sell the homes but once the project was under way, the builder realized the market wasn’t going to support it, said Michael Shaffner, a senior associate with Marcus & Millichap that represented a subsidiary of Signature Homes, in the sale.”

“‘Once they started doing the development phase, they were at the point of no return,’ Shaffner said. ‘They were committed and took a gamble and thought they could go ahead and lease them out.’”

“‘I have been in communication with other developers who are looking at this as maybe something they can do to position themselves during these trying times,’ Shaffner said. The idea is that once the market rebounds, the builders would sell the homes as they would any other subdivision they built, he said.”

“A fast-growing 24-hour community lends itself to having a large number of rentals, Shaffner said. ‘The gap between renting and owning is very large here,’ Shaffner said.”

The Las Vegas Sun from Nevada. “Taking a weekend real estate tour on a bus called the Foreclosure Express might seem a touch ghoulish, like robbing the dead or at least whistling past a graveyard. But you would be wrong. On the Foreclosure Express, they sing.”

“‘All aboard the Foreclosure Express,’ Realtor Barbara Zucker sings with a show-tune lilt, snapping her fingers. ‘Climb aboard, get your houses for less.’”

“In the Great Circle of Real Estate, we all have our roles to play, even scavengers. Especially right now. More than 22,000 houses are for sale in and around Las Vegas, Zucker says. Hundreds of thousands of dollars are coming off house prices like the faces melting off the Nazis at the end of ‘Raiders of the Lost Ark.’”

“The story of the Las Vegas real estate crackup is told in numbers, and the numbers on this house, a nice three-bed, two-bath with tile, granite counters and a small bricked yard are as follows: It was first sold in 2003 for $235,000. In 2006, it was resold for $395,000.”

“Today, the bank has it listed at $285,000, and Barbara says she’d offer less. The bank owns too much property and banks aren’t too proud to negotiate.”

“Sometimes, people who lose their houses do awful things to them. ‘Not meaning any disrespect, because you’ve got to have a lot of compassion for them,’ Barbara says. ‘But they put their foot through the wall, they pee pee all over the carpet.’”

“The bus is appalled. How could they do that? What are they, animals? Barbara says, no, they’re just people under a lot of stress. They’ve lost their houses, they’re upset. And they probably got into it, not to speak ill of anyone, because other, less scrupulous real estate agents and lenders told them they could afford it, afford anything.”

“The bus is less sympathetic. ‘Is that an excuse?’ Diane Cortest says. ‘They had to do their homework.’”

“As the bus pulls away from the fourth house, a three and 2 1/2 that sold new in ’05 for $440,000, sold again in ’06 for $469,000 and is now on the market for $269,000, a crowd of adorable, mostly blond children gathers on the curb. They shake their little fists at the bus and jeer.”

“On the way back to the office, Barbara leads everyone in one last round of ‘All aboard the Foreclosure Express. ‘I actually wrote that song in the shower,’ she says. A man pipes up from the back of the bus. ‘I’ll bet it sounded good in the shower.’”

What do you see in your housing market this weekend? Builder problems? “Thursday was move-in day for Rob Poidomani and Gretchen Reiners, the first residents of south Charlotte’s new Ardrey Crest subdivision. The big move followed an unwelcome surprise: They’d learned days earlier their builder was leaving the upscale project after starting fewer than 10 percent of the homes. D.R. Horton pulled out.”

“‘I’m sure a lot of people are perturbed,’ said Reiners, while carrying stuff into her new home. ‘But when you move into a neighborhood, you take the risks. Someone else will build here, and they will build nice homes. It just won’t be D.R. Horton.’”

“A proposed sale of the Bahama Island resort property in North Myrtle Beach has fallen through, leaving investors who lost millions of dollars in deposits on the failed condominium project with dwindling alternatives to recoup their losses.”

“‘We are asking that the property be frozen and not allowed to be disposed of or sold without prior court approval,’ said lawyer Jarrod Ownbey, who has filed lawsuits on behalf of 43 Bahama Island buyers who lost deposits. ‘We don’t feel that the bank is taking the depositors into consideration, and those depositors won’t be protected unless we intervene in the foreclosure action.’”

“A Bridgeport City Council member contends a proposed tax break for developer Phillip Kuchma’s half-finished downtown condo project is illegal, but city officials say the deal is on firm legal footing.”

“‘I don’t want a huge, half-finished project in downtown that will ruin development in the rest of the city,’ said City Council President Thomas McCarthy.”

Or foreclosures? “On weekends, Coppell real estate agent Tess Langevin loads up a bus full of potential homebuyers and heads out to look at foreclosed properties. Ms. Langevin has plenty of homes to show.”

“Based on last year’s foreclosures, the eastern and southern sectors of Dallas County have seen the largest numbers of lender sales. But there were also big pockets of foreclosures in fast-growing northern suburbs including McKinney, Keller and Frisco, according to Foreclosure Listing Service.”

“‘Most of the foreclosures I am seeing are in newer tract home neighborhoods,’ said longtime Dallas real estate appraiser Jack Towers. ‘And if they can’t refinance, they are stuck. We are seeing a lot of people just walk away from their homes.’”

“Mr. Towers said the scope of the home crisis has him worried. ‘I’ve been though a couple of these things, and I don’t like this one at all,’ he said.”

Or overbuilding? “About 18 months ago, the market for condominiums was enjoying a solid five- to six-year run. Today, however, many areas of the nation are scattered with ‘busted’ condos, some of them under construction or just completed, others that are condominium conversions and partially sold.”

“‘The formerly most-booming ‘boom areas’—Florida, Arizona, Nevada, and California—have the largest inventory of busted condos, but this situation exists in almost all parts of the country,’ Jules Marling, partner of Real Estate Research Corp, tells MHN.”

“‘Builders have overbuilt in some parts of the country, like Chicago, where there has been a drop in rents,’ Marling tells MHN. ‘It is now significantly cheaper to rent than to buy.’”

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