The Housing Bubble

The Associated Press reports from California. “Median home prices plunged in many of California’s most populous counties in February, with Southern California leading the slide with an overall drop of 17.9 percent compared to a year earlier. Median home prices fell this year in 15 major counties, DataQuick said. The median price in a six-county area of Southern California fell to $408,000 — the lowest level since October 2004, when it was $402,500.”

“That median is 19.2 percent below the region’s peak price of $505,000 last summer, the firm said. In the nine counties of the San Francisco Bay Area, the median price fell 11.6 percent to $548,000 compared to a year earlier and 17.6 percent from the region’s peak median price of $665,000 last summer.”

“Sales fell 39 percent from a year earlier in Los Angeles, Orange, San Diego, Riverside, San Bernardino and Ventura counties.”

The Union Tribune. “The median home price in San Diego County last month fell 13.5 percent from last year’s level, continuing the housing price decline that began after a dizzying run-up of real estate values reached its peak in the fall of 2005.”

“DataQuick reported the overall median price for all types of homes in February was $415,000, a drop of nearly 20 percent from the housing boom peak of $517,500.”

“‘The sales counts are so low,’ said DataQuick analyst John Karevoll. ‘What we are looking at is noisy, distressed-oriented activity. Anyone who can right now is holding on. We can’t extrapolate and say it’s representative of what the whole market is experiencing because it is just too little. We have neighborhoods where there is no activity.’”

“February was the 44th straight month that total sales of homes of all types within the county dropped on a year-over-year basis.”

The LA Times. “About one-third of Southern California homes sold in February had been foreclosed since January 2007, according to DataQuick. In the last real estate bust, Southern California home prices dropped 19% between 1991 and 1997, according to DataQuick.”

“The rapid pace of the decline has led Los Angeles economist Christopher Thornberg, who last year predicted a 20% decline in Southern California home prices, to revise his projection. He now thinks prices will fall 40%.”

“The typical monthly mortgage payment that Southland buyers committed to paying was $1,821 last month, down from $2,303 a year ago, DataQuick reported. Adjusted for inflation, the current payment is 18% lower than the spring of 1989, the peak of the previous real estate cycle. It is 28% below the current cycle’s peak in June 2006.”

The Sacramento Bee. “The La Jolla firm said 2,061 new and existing homes changed hands during the month in Amador, El Dorado, Nevada, Placer, Sacramento, Yolo and Yuba counties. Sutter County tallies were not available.”

“Regionally, there were 415 fewer closings than the same time last year. Sacramento County had a median sales price of $257,000 in February. That was down 27.7 percent from a year ago.”

The Record Searchlight. “In the first two months of 2008, the cities of Anderson and Shasta Lake didn’t issue a single building permit for new construction.”

“Of the 12 home permits issued in Redding in February, seven were taken out by D.R. Horton. The national firm is building the River Crest subdivision in south Redding, where it advertises homes starting in the low- $300,000 range, some $100,000 less than what they were going for a year ago.”

“The Press Enterprise. “Inland Southern California continued to be a hotbed of foreclosure activity last month, with the number of homes repossessed by lenders increasing nearly 21-fold in Riverside County and 15-fold in San Bernardino County over a year ago.”

“The most dramatic year-to-year increase was in the number of homes repossessed by lenders because the owners could not find a way out of their financial trouble by refinancing, selling the property for enough to cover the mortgage, or getting the lender to accept a ’short sale.’”

“First American Loan Performance, which tracks about 80 percent of mortgage lenders, says as of December, subprime mortgages accounted for 25 percent of all outstanding mortgages in the Riverside/San Bernardino metropolitan statistical area, which tied with Bakersfield for having the highest proportion of subprime mortgages in the state.”

“Also in December, 33 percent of subprime mortgages in the Inland counties were at least 60 days delinquent, up from about 10 percent a year earlier.”

“Analysts said they do not expect housing to rebound until distressed properties, including bank repossessions and short sales, are gone. ‘You have to clear the deadwood out,’ said Alan Nevin, chief economist for the California Building Industry Association.”

“Inland economist John Husing said he expects that this year, foreclosures will drive down the Inland economy. ‘2008 will likely be the worst year in the 44 years I have studied the Inland Empire because of the housing market,’ Husing said.”

The North County. Times. “Banks have purchased nearly as many foreclosures in North County as have individuals buying homes over the last two months, according to reports from the North San Diego County Association of Realtors and a California foreclosure tracking service.”

“‘That is just the worst possible thing that could happen to a housing market; it doesn’t get any worse than that,’ said Christopher Thornberg, economist for Beacon Economics. ‘What you’re seeing is a buildup of inventories, and that’s going to have a very nasty impact on prices.’”

“Condominium sales in North County dipped 29 percent from a year ago, to 153 homes sold, with the median falling 21 percent, to $310,000.”

“‘I’m typically an optimistic person, but you have to be realistic about the environment we’re in,’ said Lyle Anderson, a real estate agent in Poway. ‘And with the amount of foreclosures coming through the pipeline, I think we’re in this for at least two or three years.’”

“Downtown Los Angeles has seen a much-heralded revival in the last few years. But there are signs that downtown’s residential boom is slowing, if not stalling out altogether.”

“Prices of condominiums have fallen more sharply here than in Los Angeles and Orange counties overall, according to DataQuick. The median sales price for homes sold downtown, almost all of which are condos, fell to $497,360 for the fourth quarter of last year, 16% below the peak reached in early 2007, according to DataQuick.”

“More than one-third of the residential projects approved by city officials have been sidelined. Some real estate analysts say developers and planners miscalculated its appeal as a residential community, leading them to build far too many projects for the demand.”

“‘There was great hype,’ said Fred Sands, a veteran real estate broker. ‘There was sort of a mania that fed on itself. People said downtown was the future, and young people bought into it. Some of those buildings should not have been built.’”

“Sands said he was seriously considering buying apartment buildings in the downtown warehouse district three years ago. He said he changed his mind after seeing ‘an attractive young woman pushing an infant in a stroller, with winos all around her.”

“Paul Park said he and his partner considered moving their office and residence downtown several years ago. Park said he found the well-publicized new night life and shopping downtown wasn’t as abundant as he would like. ‘We weren’t ready to homestead,’ he said.”

“Developers saw an opportunity to convert these vacant, often run-down office spaces into lofts. It’s a good idea that might make sense on paper, said USC professor Peter Gordon, but they were trying to create a market where one didn’t exist.”

“‘There’s a sort of faddishness’ to the demand for downtown lofts without doors on the bedrooms and bathrooms or dedicated parking spaces, Gordon said. ‘I don’t think it extends deeply.’”

The Californian. “A housing project once heralded as a model of affordability may sell its homes for close to market-average prices due to tumbling home prices in Monterey County.”

“Monterey-based Woodman Development Company built nearly all of the for-sale properties, then began advertising the homes in August. Woodman has an agreement with the county to provide homes for moderate and ‘workforce’ buyers, four-person households with incomes ranging from $76,080 to $114,000.”

“But William Silva, a developer with Woodman working on the project, said that without the concessions, the company risks losing the property to the bank. ‘We are unable to compete in this market,’ he said.”

“Silva said that under the original agreement, when homes in north Salinas were fetching $700,000, the Rogge Road homes were supposed to sell for between $260,000 and $480,000.”

“Now, because market-rate homes are selling for less than $400,000, Silva said the Rogge Road homes will have to sell for between $260,000 and $390,000 to meet affordability standards - meaning a loss for the developer.”

“Silva told the committee the only way to get qualified buyers is to remove the income restrictions to allow anyone to purchase one of the homes, not just households that earn $150,000 or less.”

“Since August, he said, only six homes are under contract - five for homes not yet built - and they are unable to sell 41 homes already constructed. That’s despite giving up on the anticipated $4 million revenues from the project and falling $2 million in the red.”

“‘I don’t think we have a successful project here,’ said committee chairwoman Linda English.”

The Voice of San Diego. “In North Park, a curious, but not surprising, thing has happened. Developers built a condominium project, La Boheme, in 2006 with 224 units. They set 45 of them aside as so-called affordable units. The builder is selling three of these identical one-bedroom condos for $183,701 each.”

“They are affordable units, set aside for those with average incomes, as part of a government assistance program that controls their price. Local government must manage and enforce restrictions on who buys these homes, who lives in them and what they do with them over time.”

“The other day, as my colleague, the insightful Ms. Bennett, revealed, one of the normal condos in the development, a place whose value is not controlled by the authorities, went up for sale a few weeks ago.”

“What makes this one interesting is that the asking price for it is less than the prices of those homes set aside as affordable. The sellers are asking $168,000 for the condo.”

“Yes, it has happened. The market, without even trying, just did what the government has spent millions of dollars and hours trying to do.”

“There are two main things wrong with the government trying to create affordable housing units for people to buy. One: it doesn’t make any sense. Yes, you might get some people into homes who might have had to rent. But what’s the point? You also strip them of some of the financial benefits of owning a home.”

“The second reason that it’s awkward for government to try to control the market value of some homes is that…the market value of a government subsidized affordable condominium will never actually drop — the government will see to that.”

“What’s the point of making people homeowners if you strip homeownership of its benefits and risks? You do get the benefit of knowing more people are ‘homeowners.’ But we are paying a steep price to provide a few people this lofty title.”

“The market is correcting from the mania that hoisted prices to the crisis levels that so worried San Diego leaders. What caused home prices to go up so fast is exactly what is causing them to collapse now: the consequences of mortgage lending unshackled by rationality.’

“Unfortunately, like many, city leaders assumed not that those consequences would come home but that we had entered a new reality in which home prices never fell. They decided to invest more than $3 million into something we are close to getting for free.”

Some housing bubble news from Wall Street and Washington. Bloomberg, “Standard & Poor’s said today in a report…writedowns from subprime securities will probably rise to $285 billion. The ratings company previously estimated losses of $265 billion in January. The world’s largest banks and securities firms, including Citigroup Inc., UBS AG and Merrill Lynch & Co., have reported more than $188 billion of subprime-related losses since the start of last year, according to data compiled by Bloomberg.”

“‘It is clear that the ultimate credit losses on the more than $1.2 trillion of subprime loans originally granted in the U.S. from 2005 to 2007 will be substantial,’ S&P said in the report, which focused on U.S. subprime asset-backed securities.”

“Future writedowns may come not only from banks but also hedge funds, insurers and institutional investors, S&P said.”

From Reuters. “An affiliate of U.S.-based buyout firm Carlyle Group has defaulted on about $16.6 billion of debt and expects its lenders to seize remaining assets.”

“Carlyle Capital Corp, a fund listed in Amsterdam, said that talks with lenders deteriorated after a drop in the value of its mortgage investments, which it said would result in margin calls of $97.5 million on top of the $400 million it was already facing.”

“A ’successful refinancing is not possible,’ Carlyle Capital said.”

“‘We’ve been expecting, for a while, for the hedge funds to get into trouble,’ said Andrea Cicione, a credit strategist at one of Carlyle Capital’s lenders. ‘We are in a vicious spiral of unwinding years of increasing leverage in the space of a few weeks,’ he said, and no one can say how much leverage must be wrung out before the unwinding comes to an end.”

“Carlyle Capital said the only assets it has left are AAA-rated residential mortgage-backed securities, and it expected lenders to foreclose on this collateral. On Tuesday, the U.S. Federal Reserve expanded a securities lending program to provide short-term liquidity of $200 billion.”

“The Fed ‘clearly could provide an incentive for the banks to let hedge funds go under when they get in trouble, rather than keeping them afloat,’ Cicione said. ‘Now banks can seize the assets and post them as collateral.’”

“The Carlyle Group, based in Washington, DC, has more than $75 billion under management and has attracted a string of high-profile advisers.”

“According to CCC’s annual report, counterparties for its repurchasing agreements as of the end of 2007 were Bank of America, Bear Stearns, BNP Paribas, Calyon, Citigroup, Credit Suisse, Deutsche Bank, ING, JP Morgan, Lehman Brothers, Merrill Lynch and UBS.”

From CNBC. “Federal Reserve Chairman Ben Bernanke should resign and the Fed should be abolished as a way to boost the falling dollar and speed up the recovery of the U.S. economy, investor Jim Rogers, CEO of Rogers Holdings, told CNBC Europe Wednesday.”

“‘No country in the world has ever succeeded by debasing its currency,’ he said. ‘That’s what this man is trying to do. He’s trying to debase the currency as a way to revive America. It has never worked in the long term or the medium term.’”

“The Fed’s move to accept risky collateral is not part of the central bank’s business, he added. ‘What is Bernanke going to do? Get in his helicopter and fly around the world and collect rents? That’s absurd,’ Rogers said.”

“A recession may be a good way to clean up the economy, while trying to prevent one may cost more and actually worsen the recession, Rogers said. Also, investment banks should be allowed to fail.”

“‘Listen, investment banks have been going bankrupt since the beginning of time. If people make mistakes — if you bail out every investment bank that gets in trouble, that’s not capitalism, that’s socialism for the rich,’ he said.”

“Japan’s Shinsei Bank lowered its full-year forecast for a third time on Thursday, hit by widening subprime losses. Shinsei, which still owes the government more than 200 billion yen ($2 billion) from a bailout in the 1990s, has been one of the Japanese banks hardest hit by the subprime crisis.”

“Shinsei spokesman Donald Macintyre said subprime-related losses could total as much as $100 million in the fourth quarter, or the three months to March. That is on top of the $218 million the bank reported as of the end of December.”

“Japan’s banks have so far lost about 600 billion yen from the subprime crisis, according to the Financial Services Agency, Japan’s regulator. That is still just a fraction of the massive hit taken by western banks.”

“Shinsei has taken criticism for being slow to repay the government. ‘From an investment standpoint, Shinsei has very little to offer,’ said Koichi Ogawa, chief portfolio officer at Daiwa SB Investments.”

“Sales of new apartments in Tokyo fell to a 15-year low for February, a research firm said on Thursday. Sellers of apartments in Japan’s major metropolitan areas have been hiking prices to offset the higher cost of land and construction materials, but with wages stagnant and the economy shaky demand has tailed off.”

“The research firm’s data showed that the number of new apartments put up for sale in the Tokyo metropolitan area came to 3,460 units in February, down 28 percent from a year earlier and the sixth straight monthly decline.”

“It was also the lowest level for that month since 1993, after Japan’s economic bubble popped.”

“Irish Life & Permanent’s bank permanent tsb will no longer offer 100 percent mortgages to home buyers due to a slowdown in Ireland’s housing market, a permanent tsb spokesman said on Thursday.”

“An end to Ireland’s decade-old property boom, when prices quadrupled, has put the brakes on years of rapid economic and jobs growth.”

“A permanent tsb spokesman said it will cut the maximum amount it will offer for residential mortgages to 92 percent from 100 percent from the end of March. It began to offer the service over two years ago, spurred by a booming market and competition from rivals.”

“‘We think this is a prudent approach to the current market circumstances,’ he said. ‘The era of significant (house) price increases has come to an end.’”

“The spokesman said permanent tsb would also cut the maximum loan it will offer to investors looking to buy homes to rent, to 80 percent from 90 percent. ‘It is reflecting a changing mortgage market place in Ireland,’ he said.”

The Globe and Mail. “The effects of the U.S. subprime crisis are showing up on the fringe of the Canadian mortgage business. The result is a slow retrenchment in a sector that held about 5 per cent of the Canadian mortgage market before the credit crunch spread from the United States in August.”

“Some offices have been closed, employees have been let go, and fewer so-called alternative products are being offered to borrowers who do not qualify for regular loans.”

“Toronto-based Xceed Mortgage Corp. yesterday suspended its line of uninsured mortgage products, effective immediately. Mississauga-based lender MoneyConnect Inc., meanwhile, told brokers last week that it’s liquidating a portfolio of mortgages.”

“Lenders in this sector that rely on securitization can’t access financing to take on new mortgages, noted Jim Murphy, president of the Canadian Association of Accredited Mortgage Professionals.”

“HSBC Financial Corp. Ltd. shut down its mortgage services operation here, closing dozens of locations and cutting about 300 jobs as it exited the subprime mortgage business in North America. GMAC Residential Funding of Canada cut about 70 employees.”

“And Accredited Home Lenders, which could not be reached for comment, appears to have chopped its Canadian work force and stopped accepting new loan applications at its Toronto and Vancouver offices because it could not securitize the loans in Canada.”

“The decrease of uninsured mortgages has caused an increase in business for alternative lender Home Capital Group Inc., whose mortgages are insured by Canada Deposit Insurance Corp. and cover no more than 80 per cent of a home’s value, CEO Gerald Soloway said.”

“The entry of higher-risk mortgage providers into the conservative Canadian market was an anomaly, and he’s happy to see things returning to the way they were.”

“‘I personally think … this is a good thing for the economy long term, because we’ve seen the devastating effect it’s had on the United States with mass foreclosures, mass evictions, great disruption. They thought they were doing a great gift for people letting them into a house with no money down,’ he said. ‘But I think in reality the disruption to society as a whole far outweighs that benefit.’”

The Associated Press. “Treasury Secretary Henry Paulson said Thursday that a presidential working group wants stronger regulatory oversight of mortgage lenders to avert the kind of credit crisis that is dragging the economy down.”

“One recommendation calls for federal and state regulators to strengthen oversight of mortgage lenders and another urges state financial regulators to implement strong nationwide licensing standards for mortgage brokers, according to the group’s report, released Thursday.”

“‘The objective here is to get the balance right — regulation needs to catch up with innovation and help restore investor confidence but not go so far as to create new problems, make our markets less efficient or cut off credit to those who need it,’ said Paulson, who heads the working group.”

“It includes Federal Reserve Chairman Ben Bernanke and the heads of the Securities and Exchange Commission and the Commodity Futures Trading Commission.”

“Bernanke said the group’s recommendations ‘constitute an appropriate and effective response to the deficiencies in our financial framework that contributed to the current turmoil in financial markets.’”

“‘The turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into early 2007,’ the president’s working group concluded. ‘But the loosening of credit standards and terms in the subprime market was symptomatic of a much broader erosion of market discipline on the standards and terms of loans to households and businesses.’”

“‘There is no single, simple solution to the problems that have emerged … yet we have determined that market participants’ behavior must change,’ Paulson added.”

The Philadelphia Inquirer. “For all the Federal Reserve’s efforts to get the nation’s capital markets back on track, what is needed most of all might be time, Kenneth D. Lewis, CEO of Bank of America Corp., said in Philadelphia.”

“‘I think everybody is frustrated at not being able to come up with a solution,’ Lewis said on a visit to the National Constitution Center.”

“‘One wonders if the answer is not just some more time and some more pain before we can set this right,’ the head of the nation’s second-largest bank said.”

“Bank of America…is contending with subprime-mortgage-related losses even though it did not make such loans. The losses are coming from complicated mortgage-related securities held by the company’s investment-banking division and from home-equity loans, Lewis said.”

“The losses on home-equity loans are occurring because many borrowers…now owe more than their houses are worth, so they abandon them, Lewis said.”

“‘It’s actually a sociological factor that we’ve never seen before, because people in the past have always protected their homes above all else,’ Lewis said. ‘Now they are paying their credit card and their automobile loan, but walking away from their house.’”

KMBC reports from Missouri. “Some local real estate agents are trying to turn foreclosures into someone’s windfall. The agents are taking prospective buyers on buses for what they call Equity Tours. KMBC’s Bev Chapman reported that there are plenty of for-sale signs in the metro area, and agents are willing to cut prices to move houses. ‘You can’t build this home for what you’re going to pay for it,’ real estate agent Mary Edwards said.”

“On a recent day, Edwards was showing prospective buyers about 20 houses. She said the homes would give the buyer between $10,000 and $50,000 in instant equity because of their low sale price.”

“One of the homes is in the Four Pillars subdivision in Blue Springs. The home is listed for $314,900. Agents said if you tried to build it, it would cost about $350,000. The house has been on the market for 221 days.”

“Agents said banks that hold the titles to houses such as this want to get them off the books. ‘So they drop the prices to get them out of their inventory so they can get good loans in hopes of recouping some of their losses there,’ Edwards said.”

The Post Dispatch from Missouri. “When Tina and Edward Aldrich bought their home in Dogtown 22 years ago, Edward was a union steelworker with a steady job.”

“But the loss of that job and other setbacks prompted the Aldriches to refinance their mortgage four times. Now, they are among the hundreds of St. Louis-area homeowners who are teetering on the brink of foreclosure.”

“New figures show that foreclosures jumped 52 percent in the city last year, to 2,593. They were up 32 percent in St. Louis County, to 3,760. It was the second consecutive year of double-digit increases in both areas, according to the Public Policy Research Center at the University of Missouri-St. Louis.”

“When the area last went through a real estate boom-and-bust cycle, property values topped out in 1987, with a bottom reached five years later in 1992, said Michael Duncan, information technology manager for the county’s planning department.”

“‘This time, the peak was in 2005, so do the math,’ Duncan said. ‘It will probably take until 2010 to bottom out.’”

“The Aldriches paid just $37,000 for their home on Glades Avenue 22 years ago. Their mortgage has ballooned to $164,000 after they refinanced four times in recent years. Various real estate websites estimated the house’s current value between $72,000 and $138,000.”

“Chris Krehmeyer, president of a nonprofit agency that provides counseling to borrowers, stressed that families need to have income to make payments on whatever payment plan can be worked out with a lender. His agency can find a solution for about a third of the people who call.”

“‘If you have a loss of income that’s not replaced, then there’s not a doggone thing we can do,’ he said.”

The Chicago Tribune from Illinois. “What this real estate market needs is a buyer of last resort, and until it went broke last month, Sirva Inc. thought it could fill the bill.”

“As housing sales ground to a halt last year, the Westmont-based parent of Allied Van Lines was busy buying unsold homes under agreements it made with its moving and relocation clients.”

“It owned 532 by the end of June, 799 by the end of September and, as of Jan. 11, Sirva had piled up 1,236 houses, with a monthly carrying cost of $3 million. Its Chapter 11 bankruptcy filing came Feb. 5.”

“‘I am excited by our prospects,’ Sirva CEO Robert Tieken told investors in the midst of the August credit crisis. ‘For now at least, the impact of the real estate market downturn on our North American businesses appears to be stabilizing.’”

“By November, Tieken admitted that conditions had gotten worse. Soaring inventories were putting ‘tremendous pressure’ on profit margins, he said, ‘both in terms of losses on the sale of these homes as well as the associated carrying costs.’”

“Still, he ‘remained optimistic,’ stating, ‘We have no plans to file for bankruptcy.’”

“Investors knew Sirva faced ‘a very, very risky situation,’ and Tieken was not alone in misjudging the depths of the residential real estate bust, said Glenn Tongue, general partner in T2 Partners LLC, a Sirva investor. ‘If they’d anticipated the downturn, they wouldn’t have carried so much inventory.’”

“The federal government…left unchanged the local benchmark for ‘jumbo’ mortgages of $417,000 or more, dashing the hopes of many who had anticipated a break on big loans.”

“Chicago’s median sales price wasn’t high enough to qualify: Illinois Association of Realtors data, for example, pegged it at $254,000 for 2007, and a 125 percent raise would bring it to $317,500. As such, the original $417,000 dividing line between conforming and jumbo loans remains intact.”

“‘I was hoping for a realistic view by the federal government that instead of county by county, they would go by market area,’ for the conforming loans, said builder Jay Lovett, who said he has struggled for eight months to sell a $798,000 rehabbed house in Deerfield.”

“Lovett said pushing some loans into conforming status rather than the jumbo category would have helped areas where upper-bracket homes dominate, such as on the North Shore. ‘For a $1 million house, that’s maybe $10,000 a year,’ he said.”

“Lovett is not the only one who is disappointed. ‘My phone was ringing,’ said Chicago broker Richard Biros. ‘People caught wind of that and said, ‘Isn’t this great?’ It’s unfortunate, because they sold it to everybody and this isn’t really going to help everybody.’”

The City Pulse from Michigan. “In front of the Ingham County courthouse on Kalamazoo Street in downtown Lansing, a small group of activists from Community Defense Against Poverty were gathered to speak out in favor of people who lost their homes as a result of foreclosure.”

“Inside the courthouse at the same time Ingham County sheriff’s deputies were auctioning off foreclosed homes. ‘We do this every Thursday, and have about 35 to 60 houses per week,’ said Deputy Sheriff Trenton A. Taylor. ‘Ten years ago we did two to three a week.’”

“The collapse of the housing bubble has cut deep into the economy of Michigan, much the same as in many other areas of the country. Massive jumps in foreclosures and dives in housing values are, and have been, affecting people and municipalities across the state since the bubble burst in 2006.”

“Barbara Sprague is living the nightmare. She had not one but two adjustable rate mortgages on her home. She said the mortgage company told her that she could avoid having to pay for private mortgage insurance — required if you have less than 20 percent equity in a house — if she took out two mortgages.”

“Sprague bought her home on Lansing’s west side in 2005, and just recently her rate skyrocketed. As a single mother, she said, she’s not able to pay the $112 that one of her mortgages went up, from $400 to $512— and all along she’d been struggling to pay the second mortgage, which was $148 per month.”

“‘They don’t tell you that you’re going to need extra income,’ said Sprague. ‘I was blindsided.’”

The Record Eagle from Michigan. “Mark and Sandy Piotrowski flipped through a binder of foreclosed home listings as they rode in a packed tour bus bound for another bank-owned property. The Traverse City couple were among 16 potential homebuyers who boarded Sherry White’s Repo Buyers Bus Tour on a recent Saturday.”

“In Grand Traverse County, the number of foreclosed properties skyrocketed from 179 in 2006 to 291 in 2007, about a 62 percent increase. Seventy-four properties are already listed in foreclosure for 2008, said Peggy Haines, county register of deeds.”

“‘It used to be the farm home and the low-income people that were in the foreclosures, and that’s no longer the case,’ Haines said.”

“White said the repo bus is a way to ‘bring affordability back to the market.’ But other area real estate agents question if efforts might be better spent helping homeowners avoid foreclosure in the first place.”

“‘We sold these homes to these people and I would love to see more members of the Traverse City Area Association of Realtors finding proactive ways of working with homeowners on the brink of being in trouble,’ said Cindy Anderson, an agent with another local Coldwell Banker office. ‘My hope is to see more of that and less of the carcass feeding.’”

“Nancy and Greg Stuck, of Traverse City, like most on the bus, weren’t overly concerned with how the houses got on the market. ‘They don’t own it, the bank owns it,’ Nancy said. ‘I don’t feel like I am picking over bones. They have gone on with their lives.’”

“Haines said fewer homeowners are working to recover their property during the foreclosure redemption period than in previous years.”

“‘Ten years ago they required a 20 percent down payment, so you would have some kind of investment in the property. But with some of these 100 percent or 110 or 120 percent loans you have nothing invested … so it would stand to reason that walking away from it would be a viable option,’ said Thomas Longanbach, Benzie County’s equalization director.”

“‘If I have 15 foreclosures and one is redeemed, it’s surprising,’ said Haines, of Grand Traverse County. ‘Maybe a third of them were redeemed before.’”

The Journal Sentinel from Wisconsin. “Wisconsin may be escaping the worst of the national housing meltdown, but that doesn’t mean the pain here is shared equally. The Metro MLS recently released its market quarterly report, which details local trends by ZIP code for the last quarter of 2007. Nearly every one saw a drop in prices, sales volume, or both.”

“ZIP codes 53066 and 53029 are both deep into three-car-garage territory, their rolling Kettle Moraine hills studded with new developments of higher-end, move-up houses. They may look the same, they may live the same, but they don’t sell the same.”

“ZIP code 53066, with an average home price of $446,000, saw prices rise 24% but the number of houses sold drop by nearly 19%. Sellers were able to get 94.1% of the average asking price.”

“Homeowners in 53029 endured the opposite: Prices dropped by 13.7%, to an average $440,800, but the number of sales rose by nearly 14%. Sellers reaped 96.7% of the average asking price.”

“In 2003 to 2005, the height of the housing boom, 53029 saw a rush of subdivision development with hundreds of families buying half-million-dollar houses. Now, the area is oversaturated with high-end clones.”

“‘It’s a hot area where prices are dropping,’ says broker Paul Liebe. ‘More people are buying, but the houses aren’t getting the prices that they were a couple of years ago.’”

“There are so many similar upper-end houses that sellers must trim their prices to win buyers.”

“‘It’s very frustrating for the homeowners who bought at the top and have to take a $75,000 hit,’ says Liebe. ‘They were caught in the short-term cycle. Now, those prices are coming more in line with their neighbors.’”

The Star Tribune from Minnesota. “The latest city assessments are bringing some unusual news to much of Minneapolis: Home values are dropping. Drops of $20,000 to $30,000 are not uncommon in middle-class areas of south Minneapolis, where just a few months ago the assessor was expecting values to remain stable.”

“Although assessor Patrick Todd last fall predicted falling values on the foreclosure-ravaged North Side, some homeowners also report lower assessments in places such as Longfellow, Standish-Ericsson, Kingfield and Fulton. Some have never seen a drop before.”

“‘It was a big surprise to me,’ said Bill Kahn of Prospect Park, who got news of his 10 percent assessment cut on Saturday. ‘Usually in this neighborhood it never goes down.’”

“Todd said appraisals are more difficult now, with some homes on the lakes still gaining value, while others see big drops.”

“‘You have to be in tune with more smaller pockets than we used to,’ he said. ‘We’ve had far more people calling saying, ‘You just can’t lower my value like that.’ There are people who think, ‘You’re stealing my equity. This is my retirement.’”

“Others see a cut in value as saying that they made a bad home-buying decision, but Todd said it merely reflects a different time in the market. Some worry because they’ll be unable to refinance out of an adjustable-rate mortgage. ‘They’re feeling pressured because of that,’ Todd said.”

“Although assessors usually throw out sales of foreclosed property for purposes of setting markets, in some hard-pressed areas foreclosed property virtually define the market, Todd said. Moreover, the presence of that cheaper property puts downward pressure on the market, along with an oversupply of homes for sale, he said.”

“‘I guess it’s something to do with the subprime mortgage crisis across the country,’ Kahn said. ‘I can’t figure out how that affects our neighborhood, but I guess it does.’”

From WCCO.com in Minnesota. “Many homeowners in Minneapolis were surprised to learn the assessed value of their homes has decreased. One homeowner bought a two-bedroom, two-bath house for $224,000 just two years ago. However, it was quite a shock when the assessment arrived — the home value for 2008 was nearly $30,000 less.”

“The letters are prompting some homeowners to worry that they’ve lost equity from their home. ‘Yeah I was surprised … I don’t know why it happened,’ George Saari, a homeowner.”

“Homeowners can’t celebrate the news either, it’s unclear if the dramatically lower assessed value will mean a lower tax bill next year. Homeowner Craig Cropper said he is expecting his tax bill to decrease. His one-bedroom home decreased $30,000 in value. If his taxes don’t go down, he said ‘I’ll be just a little upset.’”

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