The Housing Bubble

It’s Friday desk clearing time for this blogger. “If you’re planning on selling, it’s become more important to make sure your house is appealing, especially with a deep supply of homes on the market and a slowdown in sales across the area. ‘I’ve had buyers recently drive up to a place and not even want to get out,’ said Marlow Harris, a Seattle real-estate agent.”

“Suzanne Buchanan, president of Seattle-based SK Builders, recently built two Craftsman-style homes in the Rainier Beach area. The four-bedroom homes have been on the market for about seven months. Both appraised for $840,000 and $860,000 respectively, but their listing prices since dropped to $739,000 and $759,000.”

“While Buchanan has had several serious buyers, the offers fell through when their own homes couldn’t sell. ‘We’re just going to keep them on the market and see what happens,’ said Buchanan.”

“Evidence of the housing slowdown shows up in all kinds of places. Just ask Oregon commercial broker Jordan Samiee. Samiee needed an administrative assistant and got 83 applications for the position that pays $36,000 a year.”

“More than half came from real estate brokers or mortgage brokers, and some have master’s degrees. ‘People better qualified than me coming to work for me,’ Samiee said. ‘They’re just not making any money right now. They want a steady income.’”

“For most of its history, Campbell River has been a logging town, but in recent years the retirement and recreational property wave that has swept over the southern part of the island has been washing north, pushing up property values and driving real estate development.”

“New condos won’t make up for the loss of about 250 jobs from the Elk Falls sawmill in Campbell River. In the meantime, Mackenzie’s councilors have agreed to a pay cut next year and are working on a community development plan.”

“‘We’re not toast. We’re just toast right now,’ said Mackenzie mayor Stephanie Killam.”

“Oahu’s housing market has taken a plunge. Figures released today by the Honolulu Board of Realtors reveal a 40% drop in the number of homes sold last month compared to a year ago.”

“Linda Lau and her husband are trying to sell their three bedroom, two bath, 1935 square foot house in Queen’s Gate. The Laus had their house on the market last year for nine months.”

“‘We had one bite last time but because prices started falling they withdrew,’ said Lau. ‘Too bad we didn’t put it on two years ago, but it’s on now and we’ll wait it out.’”

“The inventory of unsold homes in the greater New Orleans region reached a record high in February with 8,806 single-family dwellings constituting a 14-month supply, according to the New Orleans Metropolitan Association of Realtors.”

“Phillip Hoffman built seven houses in 2007. Months after locking the doors on the finished dwellings, three remain vacant. ‘My expectations were to sell in the first year and here we are almost two years later with a for-sale sign still there,’ said Hoffman. ‘There is a lot of money going out the door with nothing coming in right now.’”

“The National Association of Home Builders is lobbying for tax credits for first-time homebuyers. ‘You got a lot of guys who came in to office on a ‘cut taxes’ platform. The question is, can the state afford it? Everyone wants a tax break. Get in line,’ said Greg Albrecht, chief economist for the Louisiana Legislative Fiscal Office.”

“Homes in Okmulgee are taking longer to sell, sometimes stretching to 90 days, said Tony Hale of The Nick Agency. The slower sales are encouraging people to sell for less.”

“Hale said he thinks the price drop is due to the credit crunch in the wake of increased foreclosures across the nation. ‘We’ve been having problems getting people financed here,’ he said. ‘They just can’t get a loan.’”

“Questions and answers about home appraisals in an era of mass foreclosures: Q: What is a house worth? A: Whatever an appraiser says it’s worth, even if the appraiser works for a mortgage company.”

“Q: Why wouldn’t a mortgage lender test the market with an independent appraisal? A: A mortgage company wants to write as fat a loan as it can, bagging fees and commissions. Independent appraisals get in the way.”

“Andrew Cuomo, New York’s attorney general, started investigating appraisals on loans Freddie and Fannie were buying. Fannie and Freddie also will pay $24 million to create the Independent Valuation Protection Institute, which will take complaints about bogus appraisal practices. And lenders will have to conform with the Home Valuation Protection Code in 2009.”

“Q: So what do these government- sponsored mortgage buyers have to say for themselves now? A: ‘These initiatives clearly serve the interests of the nation’s homebuyers, the housing markets and the broader economy,’ said Robert Bostrom, Freddie Mac’s general counsel. And, ‘We are pleased to work with regulators to do our part to ensure sound, accurate, independent and reliable appraisals,’ said Fannie Mae general counsel Beth Wilkinson.”

“Q: If this was such a good idea, why did it take a national foreclosure crisis to prompt a state attorney general to think of it? A: Good question.”

“When I went looking to buy my first house, there was a number that wagged a finger in my brain. Twenty percent. That was the down payment. If I couldn’t come up with that, I couldn’t afford the house.”

“Many good homes slipped away. I walked out the front door sighing, wishing I had more money. But it seemed like such a hard and fast rule, every real estate agent and banker repeated it - ‘You need 20 percent down to get a mortgage.’ There was no alternative.”

“So I waited. I waited until I found one I could afford. And I gave the bank 20 percent. And I bought it.”

“This was almost 20 years ago. Things have changed. The other day I read a New York Times story that said the median down payment on a house last year was 9 percent. And almost a third of home buyers put down no money at all.”

“So perhaps it’s no surprise to see so many ‘for sale’ signs on my block, and the next block, and in neighborhood after neighborhood. Or even worse, houses that simply have been abandoned. After all, it’s easier to walk away from something when you didn’t give too much to own it.”

“Nobody wants to wait. We have a sense of entitlement. Gimme mine now. Why shouldn’t I have a house? Why shouldn’t I have a bigger one? Why shouldn’t I buy and flip like my friend the next town over? Look at the TV. Everyone’s getting rich but me!”

“A subject in that Times piece said, ‘I know I’m working the system, but you got to do what you got to do.’ Twenty years ago, that meant wait. Today, it means something else entirely.”

“Juan Medina has no equity on his house and an adjustable-rate mortgage where the interest-only payment has gone up to $5,500 a month. ‘I’m retired,’ Medina said. ‘I tried at least 20 different lenders, and there’s no equity in the home.’”

“The home, according to estimates, has lost about $27,258 in equity, and Medina is one of the 8.8 million homeowners who now owes more than the house is worth.”

“For the first time since the Federal Reserve started tracking the data in 1945, the amount of debt tied up in American homes now exceeds the equity homeowners have built. The Fed reported Thursday that homeowner equity actually slipped below 50 percent in the second quarter of last year, and fell to just below 48 percent in the fourth quarter.”

“Jay Damato, a broker and owner of Elite Financial in Walnut Creek, said the housing downturn is the worst he’s seen. ‘Mostly, in the 1990s you had to put 10 percent down — so if prices went down by 10 percent, you were still even,’ he said.”

“The threat of so-called ‘mortgage walkers,’ or homeowners who can afford their payments but decide not to pay, increases as home values depreciate and equity diminishes. Banks and credit-rating agencies already are seeing early evidence of it.”

“Medina said he hasn’t made a payment for six months and has been denied twice for a loan modification due to financial hardship. ‘The house is the only thing I have,’ Medina said. ‘For me, the American Dream is gone.’”

“‘We got a major real estate bubble,’ Chris Thornberg said. ‘We got consumers due for some major retrenchment, we have a falling dollar, making U.S. assets look that much less desirable, a massive trade deficit.’”

“He said that in December 2004. For years, Thornberg gave his outlook as part of the UCLA Anderson Forecast, predicting the housing boom was about to bust.”

“Thornberg, now with Beacon Economics, says the worst is yet to come. With the peak of loan resets coming in the third quarter this year, this is ‘the year of the walk-away.’ When I asked him if a lot of lenders may end up not resetting, he said, ‘It doesn’t matter.’”

“In housing, we should have seen this coming. He claims that between 2004-2006, .75 new homes were built per new adult, while .6 is the norm. He says for the past two years, four million new units were built, while there were only two million new families.”

“Thornberg also cautions investors from listening too closely to Wall Street. ‘They. Don’t. Care.’ He says Wall Street works solely for December 31st and the bonus that comes with the end of the year.”

“So, when do things get better. Ever? ‘The good news about the recession is they do eventually end,’ he says.”

“Regionally, though, it will be tougher in some spots. When an audience member asked whether to sell a couple of condos in Florida or wait it out, Thornberg said, ‘Sell. Now.’”

KWGN TV reports from Colorado. “With the number of foreclosures at an all time high in Colorado, homebuilders are starting to feel the effects of the economy in their pocketbooks. Kevin Autry, a homebuilder from Franktown has been sitting on a vacant home for more than two years in Fort Morgan. ‘We’ve already lost any profit that we might have had on the project,’ said Autry. ‘I can’t turn it back to the bank, I don’t want to ruin our credit.’”

“Autry says he has seen many builders go out of business, but he is optimistic about the economy. ‘There’s jobs, there’s people making money, it’s just hard to get the ball rolling,’ said Autry.”

The Greeley Tribune from Colorado. “Weld County’s high foreclosure numbers are now affecting housing prices. Matt Revitte, who brokers foreclosed properties in Greeley, said he isn’t surprised. ‘As more and more foreclosures get thrown into the pool of existing housing, it will dilute the market value,’ Revitte said. ‘It’s probably the natural order of the market trying to reach an equilibrium.’”

“‘If housing prices have decreased, when you’re buying, guess who gets the benefit?’ said Chalice Springfield, CEOof Sears Real Estate. If, for example, someone wanted to buy up but had to take a $30,000 loss on the sale, you also may be buying a foreclosed house from a bank that’s taken a $60,000 hit, Springfield said.”

“‘You might be able to make it up on the back end,’ Springfield said.”

The Denver Post from Colorado. “About 11 percent of subprime borrowers in metro Denver have lost their homes to lenders via foreclosure, more than double the rate nationally.”

“And another 15 percent are either in foreclosure or more than 90 days late on their mortgage payments, according to a report from the Federal Reserve Bank of Kansas City.”

“‘If you look at our composition of subprime loans, they tended to have originated earlier,’ said Mark Schweit zer, an economist overseeing the Fed’s Denver branch.”

The Gazette from Colorado. “New-home construction sputtered again last month in the Colorado Springs area, while the pace of local foreclosures showed no signs of slowing. ‘It looks like all the signals are that we’re going to have a pretty slow year,’ said Colorado Springs economist David Bamberger.”

“Foreclosures totaled 457 in February, a single-month record and a 72.5 percent increase over the same month last year, according to the El Paso County Public Trustee’s Office. Foreclosures are coming into El Paso County Public Trustee Tom Mowle’s office at the rate of about 25 a day, which means about 500 a month, he said.”

“‘There’s really no reduction in site,’ he said.”

From KKTV.com in Colorado. “Foreclosures have hit an all time high in El Paso County and the problem isn’t likely to get better anytime soon. Wednesday morning the Murphy’s home belonged to them, now it doesn’t. Their stuff was left lying in the front yard.”

“Around 10:30 Wednesday morning they were told by their mortgage company that they had 30 minutes to get out of the house. ‘This is not trash, this is our life,’ said Wanda Murphy.”

“‘They told me they had already sold the house to someone else,’ Jerry Murphy said. He says without warning dozens of people showed up. ‘I’m embarrassed to stand out here on the street,’ Jerry said.”

“He says he and his wife fell behind on payments several months ago. He was injured in a car wreck and had to quit working and they had to take out a second mortgage to pay off medical bills. But Jerry says he was trying to refinance and even though he knew foreclosure was a possibility he was told it may not have to come to that.”

“‘They are throwing my stuff out on the lawn while I am on the phone with one of their branches telling me that there is a possibility they can work with me,’ Jerry said. ‘They say owning a home is the American dream, this is no dream.’”

The Aspen Times from Colorado. “The dollar volume of real estate sales plummeted 42 percent in Pitkin County during the first two months of this year compared to last year, according to an analysis by The Aspen Times.”

“Mike Russo, managing partner of Aspen Land and Homes Sotheby’s International Realty, said there has been an overreaction to the slow start to 2008 in Pitkin County and somewhat of a misinterpretation to what is happening. ‘You have brokers saying the market is in the tank, the prices are declining,’ Russo said.”

“Digging deeper reveals that sellers have resisted dropping prices, at least until recently, he said. This year’s slow start looks particularly bad because it is compared to record levels set for January and February in 2007. Last year started off very, very hot.”

“‘It’s not the great cause for alarm that everybody thinks,’ Russo said.”

The Arizona Daily Star. “In 2007, there were 22 single-family homes listed above $1 million, and seven sold for that much, according to the Tucson Association of Realtors. From January 2004 to December 2007, the median sale price of homes listed on the MLS rose by 42 percent, to $210,000 from $148,000.”

“As the architect and contractor of Rancho Merlita, Diana Osborne will offer 15 homes on a 13-acre site that once belonged to cosmetics legend Merle Norman. Prices for the homes start at $1.6 million.”

“Historically, homes that sell for more than $1 million have been found mostly the north of the city. In 2007, 392 homes in that area were listed for more than $1 million, and 91 were sold.”

“The second concentration of million-dollar homes is in the Northeast. That area had 103 homes listed above $1 million, and 16 sold for that much last year.”

“Osborne said she is confident that people will buy the homes in spite of the housing slump. ‘The only question is: When is Tucson going to boom again?’ she said.”

The Arizona Republic . “Moving to a big house in the Verrado development in the far West Valley in December was a dream come true for Marcel Pelletier and his girlfriend. For $1,000 a month in rent, the couple was able to drastically upgrade from their rental in Avondale, and get Evans’ children into a better school, they said.”

“But the homeowners have warned the renters that their financial picture has changed, and with the possibility of foreclosure, they should be looking for a place to move. ‘It’s ridiculous, to tell you the truth,’ Pelletier said.”

“If they could afford it, they could buy the house. But they say it’s not worth the $330,000 owed on it considering homes on the same block are selling for $290,000 or so. ‘There’s already five houses on our street nobody lives in,’ he said.”

“‘It’s a bad situation,’ said Kevin Murphy, director of Labor’s Community Service Agency, which he estimates to be the largest foreclosure-intervention service in the state. ‘We’re talking to a lot of people that are devastated.’”

“‘Up until less than a year ago, we were able to help most of the people we talked to out of foreclosure,’ he said. ‘Now, because of these crazy loans, we are not able to help most. They are either upside down and can’t sell, or the next increment of their (adjustable-rate mortgage) kicked in and its another 300-400 bucks a month they just can’t make.’”

“For some clients, finding the fat to cut is easy. Counselor Dollie Torrez made one man sell his boat and cut end his weekend trips to the lake to keep his home, she said.”

“‘I encourage them to either get a second job or increase their income somehow,’ she said. ‘And cut their spending. If they have cable or Internet, cut their utility bill. If they are going out to eat or ordering movies, I tell them to go to the library.’”

“Foreclosed properties in Chandler jumped tenfold from 2006 to 2007, according to the real-estate data research firm Information Market. Realtor, Liz Morganroth, who solely handles foreclosure properties in the Southeast Valley, said her business has increased so rapidly that she is having trouble keeping the properties maintained.”

“‘The weed problem is coming from the HOAs constantly. You can drive down the street and see it,’ she said. ‘We can’t keep up with them fast enough.’”

“Brian Lincks, VP of City Property Management Company, said HOAs his company represents are struggling with paying for the upkeep of the empty properties, at the same time they’re not receiving monthly dues from the property owners with houses in foreclosure.”

“‘It’s hard on the HOAs,’ he said. ‘Some even have to raise dues temporarily to cover some of the dollars they’re not getting.’”

“In the meantime, neighbors like the Webbs are left to keep up the place on their own. Last weekend, as the couple worked outside on their own lawn, they said they hoped that after a two-year vacancy, the place will come off the market soon.”

“‘I’d like to see someone move in and take care of the place,” Bob Webb said before pointing to his own house. ‘We’ve got a big investment here.’”

“Marshall Vest, a University of Arizona economist who predicts a growth rate of about 2 percent this year, relies mostly on the numbers of new electric residential customers in the Phoenix and Tucson metro areas.”

“Pete Ewen, an APS economist, predicts only about a 1.5 percent growth rate in APS customers because of the large inventory of unsold houses and the loss of construction jobs. In previous decades, the rate has…never fallen below 2.5 percent, even during some of the worst recessions in the 1970s and 1980s, he said.”

“‘We haven’t seen the bottom yet, so the trajectory is still downward. The housing market is still overbuilt and they’re continuing to overbuild it, so I think the prospects for construction job growth are weaker in the near term than stronger . . . Sitting here today, I am not sure that 1.5 percent is low enough,’ he said.”

The Review Journal from Nevada. “Southwest Gas Corp. of Las Vegas on Tuesday reported a decrease in net income for the fourth quarter and for the year because of warmer than normal temperatures and slowing customer growth. CEO Jeffrey Shaw attributed slowing customer growth to the housing market slump.”

“‘For the first time in 15 years, our new-customer growth rate was below 3 percent,’ Shaw said. ‘We have not been immune from the downturn in the housing markets.’”

“Shaw estimated that the company’s service territory in Nevada, Arizona and part of California contained 25,000 vacant homes as a result of foreclosures. Housing prices are declining in Phoenix and Las Vegas, he said.”

“‘We believe that growth continues,’ Shaw said. ‘That’s just a big number of homes that needs to be absorbed.’”

In Business Las Vegas from Nevada. “A decline in Las Vegas property values has made more home lenders unwilling to finance purchases in similar spiraling markets. Some lenders have eliminated entire regions or even specific types of properties, including high-rise condominiums in Las Vegas, while others have tightened underwriting guidelines that have made it difficult for buyers to get loans.”

“‘It has been an interesting setback for mortgage brokers in Las Vegas,’ said Gary Schivo of Schivo Financial. ‘They are scrutinizing all loans, even full-documentation and high (credit) scores. Purchasing is getting more and more difficult and refinancing is impossible. … Interest rates are still beautiful but there are no products out there.’”

“Tim Sullivan, president of Sullivan Group Real Estate Advisors said what’s happening in Las Vegas is happening elsewhere where values are declining and the market shouldn’t feel picked upon.”

“‘My observation is that lenders are operating in a very business-like fashion,’ Sullivan said. ‘This is the nasty part of a down market, When you look at values declining so quickly, the lenders feel the market is crashing down on them.’”

The Reno Gazette Journal from Nevada. “Texas economist Ted C. Jones offered some advice Wednesday on how Northern Nevada can help resuscitate its housing market: Trim the asking price on homes.”

“‘You had a bubble, and it’s bursting. It’s time to get realistic,’ Jones, chief economist for Houston-based Stewart Title Guaranty Co., told a Reno audience.”

“‘We as an industry have a duty to counsel people on the best time to get a fixed-rate loan,’ he said. ‘We had a lot of people led down the path to slaughter who finally got to live the American dream. That’s wrong.’”

“Jones said Nevada’s falling home sales aren’t as severe as California’s, and he believes the Reno-Tahoe region’s allure with its physical attractions and quality of life will help it endure. ‘You live in a beautiful place here,’ he said. ‘If you don’t think you do, come live with me in Houston.’”

The Record Courier from Nevada. “Carson Valley of course can’t escape the world, or troubled California’s reach. But there are longterm forces working in our favor.”

“Rob Wigton mentioned something during a speech to the Douglas County Building Industry Association that struck me: ‘The fact remains that we sold real estate last year in this area at levels about equal to what was going on in 2002,’ the president of the Nevada Association of Realtors said.”

“The market has dipped from a peak. The correction cuts sharply if you are in the business, certainly. Blood is flowing from brokerages, title firms, mortgage lenders and construction. The ripples hit the merchants, restaurants, casinos and others, including local media, plenty hard, too.”

“But this is a correction, which happens periodically, not a collapse.”

“Besides, there’s a glint of silver in corrections. A drop in home prices will make homes more affordable to more people. Home ownership remains the single best way to build personal wealth, in addition to that niggling fact we all need places to live. Generally it’s better to own than rent.”

“Meantime, you can almost hear the investors unfurling and fluffing their wings from their perches, rustling ever more excitedly with each dour report. Soon, soon now, the market will reach bottom, and it will be time to swoop in.”

“Wigton and his wife, Kari, have begun swooping themselves.”

“‘I believe, strongly, that the worst is behind us and we are headed for stability,’ he said. ‘My wife and I just bought another investment home, at a great price, and we look forward to buying another in the not-too-distant future.’”

The Union Leader reports from New Hampshire. “Difficulties in the housing market have spelled trouble for a still unfinished development near MerchantsAuto.com Stadium. A broker working for Chinburg Builders said the company has sold just 14 of the 24 luxury townhouses it has built just south of the stadium and has not made a sale since June 2007. Last Friday, she said, the company slashed starting prices on the remaining townhouses from $349,900 to $249,900.”

“‘We are doing absolutely everything we can to sell these and market these, what with the challenges in the current market,’ said the broker, Maura McLaughlin.”

“The lag in sales has delayed the company’s owner, Eric Chinburg, from continuing construction on a property that was supposed to hold 45 townhouses and a trio of mid-rise residential buildings. It has also put the city in a difficult spot. Tax revenues from Chinburg’s development are needed to pay for the $27.5 million baseball stadium.”

“Alderman Ted Gatsas, an early opponent of the stadium deal…reminded his colleagues, ‘I warned everybody about this deal.’”

“Alderman At-Large Mike Lopez called the situation unfortunate. ‘We went into the deal thinking it would be productive, and unfortunately the economy went south,’ he said. ‘I don’t think anyone is to blame for it.’”

The Boston Globe from Massachusetts. “Benigna Alarcon hoped that reducing her mortgage payment by $700 per month would be enough to save her Chelsea home from foreclosure. But she still can’t afford the $1,971 payment. Now two months behind on payments, Alarcon said she must either sell her home or risk foreclosure.”

“‘I don’t want to lose my house,’ said Alarcon. ‘I spent everything I had [saved] to buy it.’”

“Alarcon’s dilemma is shared by hundreds of local homeowners. Foreclosures tripled across the North region in 2007, rising to 1,040 last year from 361 in 2006, according to The Warren Group.”

“Abandoned homes, many of them boarded up, have cast a long shadow over the urban housing market.”

“‘It’s tragic when you see it,’ said Mayor Edward J. Clancy Jr. of Lynn, remarking about the Highlands, one of Lynn’s oldest and poorest neighborhoods. ‘People got into deals that looked too good to be true. . . And then they were left with nothing.’”

“Foreclosures, which also tripled during the month of January across Massachusetts, are expected to continue at a high rate, further weakening the housing market, a specialist said.”

“‘From what we’ve seen, they’re going to be as high as they’ve ever been,’ said Tim Warren, CEO of The Warren Group. ‘Unfortunately, because real estate prices have dropped, these distressed properties just aren’t worth what they were.’”

“After renting an apartment in Chelsea for 16 years, Alarcon bought a house for about $330,000 four years ago. She used $35,000, her life savings, as a down payment. She received an adjustable rate mortgage from a local bank, but it was not considered a subprime loan.”

“The mortgage payment first was $2,000 per month. After two years, the interest rate adjusted, and the payment climbed to $2,300. It then adjusted again, hitting $2,700 last year, she said.”

“At the same time, business at her restaurant also declined, greatly reducing her salary, she said…She sees little hope in reversing her misfortune. ‘I saved for 20 years to buy a house,’ Alarcon said. ‘Now I have nothing.’”

The Berkshire Eagle from Massachusetts. “The continuing influx of second-homers, and more realistic pricing for year-round residents, form a local silver lining for the nation’s grim housing crisis. ‘There are certainly more foreclosures than I’ve ever seen,’ said Maureen Phillips, a long-time mortgage loan officer at Greylock Federal Credit Union.”

“At the Lenox-based Century 21-Franklin Street firm, owner Bob Romeo believes the real-estate slowdown had its initial and greatest impact on the second-home sector. ‘A significant number of those folks look at the purchase of a Berkshire home as an investment; when they see it declining in value, they don’t buy,’ Romeo maintained.”

“In his view, the sharp increase in the number of condo units on the market — more than 200 countywide — doesn’t help. ‘They’re targeting the second-home buyer. Sales have not come to a screeching halt but they’re darned slow and it takes work to move them,’ he observed.”

“‘Agents are trying to be very realistic with sellers,’ emphasized Sandra Carroll, CEO of the Berkshire County Board of Realtors, in contrast with the tendency to ’shoot for the moon’ during the height of the mid-decade boom.”

“Lance Vermeulen’s Egremont-based real-estate firm recently opened a second office in Great Barrington. He acknowledged a ’slowing in the market, somewhat of a correction but not a dramatic change, that has built up the inventory of unsold homes — in June 2005, it was like a curtain dropped on the market, the beginning of the end of the boom.’”

“With adjustments bringing more $350,000 properties down to $300,000 or less, he said he has sold ‘plenty of houses’ to area residents.”

“Nationally, he conceded, the real-estate market is ‘taking a beating day after day, but anytime now somebody’s going to come along and say, ‘Now’s a good time to buy.’”

“In Berkshire County, he said, ‘We’re close to the bottom, not that the bottom was that far from the top.’”

The Eagle Tribune from Massachusetts. “In the early 1990s, a wave of foreclosures swept the city and arson quickly followed, sending weary firefighters racing from one suspicious blaze to the next.”

“Now, with more than 750 properties foreclosed or in the process of being foreclosed, and possibly hundreds more threatened, city leaders are taking action to protect neighborhoods all over Lawrence from another epidemic of arson.”

“A ‘bank responsibility ordinance’ adopted Tuesday by the City Council puts responsibility for the upkeep of foreclosed properties right on the new owners — the lenders themselves.”

“How banks will respond is unclear. Many lenders are national or international banks, and officials researching the matter have already run into some roadblocks, including ’secretive’ bank employees who didn’t want to give their last names, said fire Capt. William Lannon.”

“Unlike years past, foreclosures these days aren’t limited to certain neighborhoods. ‘The last time it was mostly the Arlington District. But now it’s all through the city,’ said Lannon, a member of a foreclosure task force organized nine months ago by Sullivan. ‘You name it,’ Lannon said. ‘They are all over the city.’”

“Above all, Lannon said he would hate to see a repeat of the 1990s. ‘We became the arson capital of the world,’ he said. ‘Lawrence doesn’t deserve that moniker.’”

The New York Sun. “After years of sustained growth marked by grandiose, ambitious plans for the city, the real estate development industry is displaying troubling symptoms.”

“The number of citywide building permits is expected to drop, public and private funding for projects is drying up, and a stream of multibillion-dollar plans is coming in over budget and behind schedule, with many designs being scaled back or scrapped altogether.”

“A shortage of federal housing subsidies and ongoing litigation from resident groups is threatening Bruce Ratner’s $4 billion Atlantic Yards project near downtown Brooklyn. The list of public and private projects on hold seems to grow on a weekly basis.”

“The president of the Real Estate Board of New York, Steven Spinola, said widespread concern in the real estate community has — so far — fallen short of ‘panic.’”

“‘I don’t know if they are collapsing,’ Mr. Spinola, a former deputy mayor for economic development, said. ‘There is clearly concern among our members, which is probably more than I feel. Four months ago people believed that if they had a project, that the financing would be available even if they had to put more equity in, or maybe the costs might be slightly higher. A month ago there was a concern that the financial institutions would not want to finance anything.’”

“The chairman of the Singer & Bassuk Organization, Andrew Singer, has already seen a marked change in financing structures from even just a year ago, when a developer could obtain between 90% and 95% of the costs of a project from available financing. He said today that figure is down to around 70%.”

“‘That is not a bad thing,’ he said. ‘It means that those projects that go ahead are with the developers that are the most substantial. It is a de-leveraging of the real estate business in general. The high leveraging has created this bubble. It hasn’t burst yet. Whether the air gets let out or it comes crashing down remains to be seen,’ he said.”

The Brooklyn Eagle from New York. “Construction of market-rate condominiums and below-market apartments has fallen far short of earlier predictions. The Eagle researched progress on the 58 projects in some stage of development listed with the Downtown Brooklyn Partnership.”

“Of the 5,285 market-rate condominiums planned, roughly 1,400 have come on the market, including buildings completed during the peak of the boom years. Based on various real estate databases, half are still for sale.”

“‘The challenge with residential today is not only related to the credit market,’ said Downtown Brooklyn Partnership President Joe Chan. ‘I think there’s also an increasing mindfulness to the total amount of product on the market right now, particularly on the condominium side.’”

“Other projects listed with the Partnership are stalled, like John Catsimatidis’ Myrtle Avenue project with 360 condos; were killed. ‘Unfortunately, the banks are out of business,’ and not just for developers, said Catsimatidis. ‘Six months ago a person could walk into a bank and put a $50,000 down payment [on a $800,000 condo] and get the mortgage.’”

“‘Now the banks are strictly following the old rules of [20 percent down],’ he said. ‘Brooklyn buyers don’t necessarily have $160,000 to put down.’”

“‘With 800 units coming on the market probably within the next year, I think buyers are going to be really fussy,’ said Halstead Property Director of Marketing William Ross.”

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