The Housing Bubble

The San Francisco Chronicle reports from California. “Foreclosure used to be a last resort, something that hard-pressed homeowners would scrimp and plead to avoid. But some are deliberately choosing foreclosure as an early option. ‘It’s throwing good money away after bad’ to pay an escalating mortgage on a home that’s plunging in value, said Army Sgt. 1st Class Nicklaus Skaggs of Vacaville. He and his wife, Tishara, stopped paying their mortgage in February.”

“They have no regrets about their decision. ‘I feel like the pressure has lifted off my shoulders; before I was trapped,’ said Nicklaus Skaggs. ‘In the long run, I think this is the best financial solution. I have to do what’s right for my family. I don’t care if someone judges me. I certainly wouldn’t put my family in a position to lose $150,000 if I can help it.’”

“A Discovery Bay man who asked not to be identified said he is ‘upside down’ on his house by about $260,000. Instead of bemoaning the situation, he plans to capitalize on it.”

“‘I refinanced a couple of years ago and pulled out $100,000 and put in a fabulous pool,’ he said. ‘Now I’ve got this fabulous pool and fabulous house, but it’s not worth anything. Why shouldn’t I be building equity over the next four to five years instead of playing catch-up?’”

“The man said he has not made a mortgage payment for five months.”

“‘I’m playing the bank game,’ he said. ‘I’m playing chicken with them. I already got them to agree to put (the unpaid) payments on the tail end of the loan. What I’m really pushing them to do is to (adjust my mortgage) for the current market value and write off the rest. I’d love (to have it) lopped down to a $450,000 basis rather than $710,000.’”

“If the bank won’t negotiate, he’ll walk away, the man said.”

The Press Democrat. “More and more borrowers in Sonoma County are discovering that lenders have frozen their home equity loans or reduced their credit limits as property values continue to fall. Increasingly, homeowners in the North Bay must negotiate to keep home equity lines open as lenders guard against deeper losses in real estate, analysts said.”

“‘Basically it’s evidence of declining values. The lender is just interested in protecting their investment. They want to make sure it’s secured by the value of the property,’ said Mike Saenz, manager of seven IndyMac Bank branches in the North Bay.”

“Even as Sonoma County home values began to decline nearly two years ago, homeowners continued tapping home equity for a sizable amount of their income.”

“Sonoma County borrowers pulled $8.3 billion out of their homes over the past five years, taking out more than 162,000 equity lines, according to estimates by Moody’s Economy.com.”

“‘Home equity lines were given away like candy a year or two ago. When values started coming down, all these lenders revisited what they were doing here,’ Saenz said.”

The Fresno Bee. “The number of foreclosed houses that Fresno real estate agent Bill Pfeif is trying to sell has climbed in two years from virtually zero to about 500.”

“Since 2005, almost 1,300 houses have been repossessed by banks in Fresno, according to RealtyTrac. And the numbers could climb this year because a record number of households are expected to see their adjustable-rate mortgages reset to higher rates, analysts say.”

“‘The biggest recast that has ever happened happens this month, and that will just blow it through the roof,’ Pfeif said.”

“Pfeif and other agents in Fresno try to stay ahead of the surge in foreclosures. Pfeif is selling 50 to 60 foreclosures a month, many to first-time home buyers, but said it’s like swimming against the current.”

“‘More are coming in than going out,’ he said.”

The Bakersfield Californian. “On a recent Sunday, about 30 prospective homebuyers climbed on a bus for a trip with HomeBuyer Tours, a company that runs weekly home viewing tours designed to pinpoint the city’s best housing bargains — mostly bank-owned homes priced between $200,000 and $300,000.”

“Many liked what they saw. ‘They’re shocked about what they get for their money now,’ tour operator Ginny Wadsworth said.”

“The buyer has an excess of selection — 2,001 homes are listed for sale at $199,999 or below in Kern County, according to the Bakersfield Association of Realtors. Another 802 are priced between $200,000 and $249,999.”

“Home prices have started to decrease, easing the burden for families such as the Sandles. But the high affordability rates Kern’s residents once enjoyed are nowhere in sight.”

“‘It is true that the affordability factor has improved, but that’s relative,’ said Stephen Pelz, executive director of the Housing Authority of the county of Kern. ‘It’s improved from a year ago, but it’s still dramatically worse than it was six years ago.’”

“During the last three months of 2001, housing was affordable for 70 percent of those in Kern County, according to a housing affordability index by the National Association of Home Builders, a trade group, and Wells Fargo bank. The index weighs incomes against housing stock cost to come up with its estimates.”

“At the end of 2007, Kern’s affordability percentage had fallen to 22 percent. ‘It’s hard to see it getting back to 70 percent,’ Pelz said.”

“If Wadsworth’s bus passengers are any indication, some consumers are intrigued by falling prices, but still cautious. Several said they rode the bus not to shop, but to learn about the real estate market in an atmosphere free of high-pressure sales tactics.”

“Steve Holian has taken the bus tour twice. He thinks current prices are ‘very interesting,’ but plans to wait for prices to fall further before he buys.”

“‘My father wants to buy me a house in Bakersfield, but we’re on a limited budget,’ Holian said.”

“He’s ‘watching out for the creampuff’ home deal — ideally, a discounted foreclosure near Stockdale High School, where his son is a student. Some homes caught his eye on the tour, but nothing fit the bill.”

“‘I’m not in the position to pull the trigger quite yet,’ Holian said.”

The Press Enterprise. “In a well-kept neighborhood with nicely manicured lawns east of Park Hill, a corner home stands out with weeds about 3 feet tall growing in the front yard.”

“Part of a fence has been bashed in, there’s a large hole in the ground where the swimming pool was, and the entire backyard is overrun by weeds. It’s a sign of the times, said Hemet senior code enforcement officer Kathie White.”

“‘Somebody wanted to get in real bad,’ said White. She said the home, with its overgrown weeds and broken fence, was an ‘open invitation’ to transients and people of shady character.”

“Hemet was among the Inland cities that basked in the housing bubble not too long ago, and now it is among those reeling since that bubble burst. Worried about the declining state of many homes now going through foreclosure, the city, by targeting banks and mortgage companies, hopes to prevent any future blight.”

“‘It will actually force the mortgage companies to be more responsive,’ White said. ‘Some of them are not even in the phone book.’”

“Jesse Kim said there are days he’d just as soon find something else to do than show up at his store and sell hardly any furniture.”

“His business, Riverside Furniture on Magnolia Avenue, is well stocked…but customers have been in short supply lately, and Kim and others in his industry are calling this the steepest downturn in recent memory.”

“‘For eight years, business was OK,’ said Kim. ‘Last year it started getting a little bad, but this is the worst it’s ever been, and I’ve been doing this 28 years.’”

“Furniture retailers depend on home turnover to drive sales because purchases are typically made shortly after moving to a new residence. There were 13,164 homes that changed hands in August 2005 in Riverside and San Bernardino counties, the peak for this decade.”

“But in January, the most recent month for which there is data, only 3,050 homes were sold, according to DataQuick.”

“‘It’s pretty bad right now,’ said Ty Pham, who owns Elite Furniture on Base Line in San Bernardino with his brother Mike. Pham said he’s using the store’s parking lot as an outdoor display area to attract some trade.”

“‘In the old days, we didn’t even have to advertise to make money,’ he said.”

“Inland economist John Husing said the severity of the current housing bust took a lot of people by surprise. It goes beyond the simple bursting of a bubble, he said. ‘All of us expected a housing slowdown, but didn’t expect the market to virtually stop,’ Husing said. ‘The thing we all missed was the seizing up of the credit markets all over the world.’”

“The sudden and steep crash sent some retailers who depended on housing activity from prosperity to bankruptcy. For example, Wickes enjoyed double-digit revenue growth every year from 2002 to 2005 and was still expanding.”

“Husing said some firms might have been a little shortsighted. ‘There’s always a tendency to over force the existing position,’ Husing said. ‘But no one has experience in this kind of downturn.’”

The North County Times. “Michael Pattinson’s company has spent $4.3 million for dirt. The land also has everything needed to build a home: a road, permits, level ground. But for now, it looks like some very expensive dirt.”

“In response to a severe local housing recession, developers like Pattinson, president of Carlsbad home-builder Barratt American, are sitting on land plots they have poured millions of dollars into and looking outside of the state to build.”

“Pattinson will wait until the market shows signs of recovery to build. In the meantime, he has started looking at projects in Idaho, Utah and Canada.”

“‘We’re all dressed up with nowhere to go,’ said Pattinson, whose company sold 397 homes in 2006 and 116 in 2007. All homes were in Southern California.”

“Other builders said they are not looking outside of the state but have simply slowed development locally. Several said they are unwilling to slash prices on their products because of the high cost of building homes in California.”

“‘We have lots of lots ready to go,’ said Fred Maas, president of Black Mountain Ranch, a master-planned development west of Rancho Bernardo. ‘But we’re not going to sell at a price below what they’re ultimately worth. We’ve got a special property here in a constrained market.’”

“Pattinson has railed against state building permit fees during interviews and at a recent real estate conference. Fees were raised during the housing boom. Now that the housing market has taken a dive, Pattinson said the fees should be toned down to reflect the recession.”

“‘You guys all had your snouts in the trough when everything was going up and now it’s time to roll them back,’ he said.”

“Joe Russo, head of the building division for Escondido, said the city will not consider decreasing development fees because the funds acquired are used to upgrade services that are affected by more houses.”

“‘We’re trying to play catch-up with our infrastructure. Development is supposed to pay its own way,’ Russo said. ‘Everybody who wants to build something needs to pay for what they’re building.’”

“Pattinson said he is waiting for the rate of time it would take to sell all homes on the market to drop to seven months before starting to build. Inventory in North County stands at 12 months.”

“‘If (the fees) keep getting passed along, we’re going to do what we’re doing here —- sitting on empty lots,’ Pattinson said, overlooking the land Barratt American bought three years ago.”

“Pattinson said he expects to wait a year for the market to show signs of recovery. Then, he plans to build the homes four at a time to gauge interest. Usually, the company would build all 12 homes at once.”

“‘We’re in uncharted territory. We’ve never seen this before,’ he said.”

“Some economists and academics have predicted the housing market will struggle for much longer than Pattinson’s expectation of one year. They say the median price needs to be affordable for the median household income, which could take three or four years.”

“But some builders say it is impossible to build affordable housing in San Diego and turn a profit simply because of the permitting fees, which have been ramped up in recent years.”

“‘You can’t have some of the regulations and priorities that we encumber housing with in California and then lament the lack of affordable housing in any genuine sense,’ said Paul Tryon, chairman of San Diego’s Building Industry Association.”

“‘If you go back to 1977, housing in California was exactly as it was nationwide in average price. … It was desirable in 1977. It didn’t get sunnier. The surf didn’t get better,’ he said.”

The Santa Fe New Mexican. “When my wife and I sold our Santa Fe townhouse in 2006 and moved to Austria to spend some time with her family, we didn’t think we’d be able to afford to live in Santa Fe again. The price of housing was just too high for us. Then, in November 2007, we took a peek at the SFAR Web site. Bingo! There were 93 residential listings for less than $300,000. Granted, many of those were gussied-up apartments — er, I mean ‘luxury condos’ — but there were several really nice looking homes.”

“So, what’s happened to the Santa Fe housing market that allows two cheapskates like us to buy a house in the city we love with a mortgage under $800 per month — and still have money left in our savings?”

“‘Santa Fe is such an isolated place that it took a while for the housing troubles in places like California and Texas to trickle down to us. But it did, and our market dropped,’ said our Realtor, Christine Wiltshire.”

“Overall, home sales in the city declined 36 percent over last year, according to the Santa Fe Association of Realtors 2007 Fourth Quarter Market Report. The median house price fell $25,000 to $350,000. The median price in southwest Santa Fe (the most affordable section of the city) dropped to $284,000.”

“And nowhere are Santa Fe’s market woes (and opportunities) more apparent than in the under-$300,000 range. Sales have fallen in this category 42 percent over last year, resulting in a glut of lower-priced homes. ‘The demand is not there, because buyers in that price range are not qualifying,’ Wiltshire said.”

“According to Bob Chernock of Santa Fe Realty Partners, marginally qualified borrowers who mortgaged their homes with money from subprime lenders are now struggling to keep those homes.”

“‘The sound of keys dropping on tables is astounding,’ Chernock said.”

“People in some areas of Santa Fe, who bought their homes two or three years ago have lost 25 percent of their value, but now I think the values are pretty firm,’ Chernock said.”

The Arizona Republic. “Paul Joray and his wife listed their house in Maricopa for sale in December for less than they paid for it in 2006. The couple, retired university administrators, bought a $719,000 house in Chandler’s Ocotillo Lakes in January to be closer to their daughters.”

“‘We bought there because we knew this is the time to buy, but it’s not a terrific time to sell,’ Joray said.”

“They listed their Maricopa house for $359,000, despite spending about $20,000 in landscaping. ‘I guess I’m bummed because I’d like to sell my house for what I paid for it,’ Joray said.”

“But the town’s median home value dropped 19.8 percent in 2007 compared with a year ago, according to Information Market. ‘I’m an economist so we understood that it’s a great market to buy a house but not a great market to sell a house. We’ve sort of resigned ourselves to this,’ he said.”

“Drew Hackney, who lives in Ahwatukee, buys homes and remodels them to ‘flip,’ or resell them for a profit. Hackney recently bought a 3,500-square-foot home in Ahwatukee for $950,000 and spent $150,000 to renovate it.”

“Hackney, who recently appeared on an episode of TLC’s Flip That House, initially listed the home at $1.45 million. But after three months of not selling, he dropped the price to $1.385 million.”

“‘I know I’m setting a new market precedent,’ he said, adding that he ignored ‘comps’ because the house is unlike others in the area. It’s a gamble. The house is in the 85044 ZIP code, which saw the median home value fall by 6 percent in 2007 compared with a year ago.”

“Buyers like Dan and Joey Bolster like the decline. The couple recently bought a 2,500-square-foot home in southeastern Gilbert for $283,000 that had been foreclosed on by the bank.”

“‘One man’s pain is another man’s pleasure,’ Dan said. ‘This house that we are buying, it’s like we skipped that whole first-home step and moved to the whole nice big old mamma jamma. We were able to jump five years ahead. I don’t care if it drops (in value). I won’t lose a wink.’”

“Bolster said he and his wife have friends who say they are ‘upside down’ in their house, meaning they owe more than it’s worth. ‘I want to tell them they should have rented or leased or just hung out for a while,’ he said. ‘It was just common sense that (values) were going to decline.’”

“While shopping for a new home, Bolster said he and his wife found several houses they wanted but that other buyers had already bid on. ‘Right about now, we thought we should do something,’ he said. ‘I had a feeling that this thing (downturn) isn’t going to last.’”

“Quick-flip deals on new homes are long gone. It’s the Valley’s growing number of foreclosures that has caught investors’ attention now. Last month, Ray and Elaine Balderas bought two foreclosed homes in south Phoenix. The couple paid about $100,000 each.”

“‘If you buy a home for $100,000 in the Valley, you can make money on it,’ said Elaine, who used an equity line of credit off the couple’s Laveen home to buy the properties.”

“The Balderases know investing is tricky because they have lost money on it before. The couple paid $199,000 for a south Phoenix property in 2007, put $50,000 into renovating it and sold it for only $203,000 in January.”

“‘The main thing about investing now is to not buy expensive homes because there aren’t as many buyers for them,’ said Elaine, who teaches and works as a cosmetologist.”

“Margie O’Campo de Castillo of Arizona Dream Realty said homes priced below $200,000 are selling much faster now than higher priced houses: ‘Foreclosure properties can be a good investment, as long as there aren’t too many of them in one neighborhood.’”

“Last month, 2,250 homes in the Valley were foreclosed on. That is 200 more than in January. A year ago, there were only 365 foreclosures in metro Phoenix. New-home communities in the West Valley that led the local housing boom for sales are now plagued with the Valley’s highest foreclosure rates.”

“Eight of metro Phoenix’s top 10 areas for foreclosure rates are on the Valley’s west side, according to an Arizona Republic analysis of data for the past 13 months from the Information Market. Tolleson topped the list.”

“‘The West Valley communities had some of the most affordable new homes during big price run-ups of ‘04 and ‘05,’ said Jay Butler, at Arizona State University Polytechnic. ‘But still, a lot of buyers in those suburbs had to stretch to buy during the boom, and many ended up with subprime loans.’”

“Data released by the Mortgage Bankers Association of America last week show the number of Arizona homeowners behind on subprime-mortgage payments hit 16.2 percent at the end of 2007, which is an almost 3-percentage-point increase in three months.”

“Margie O’Campo De Castillo of Arizona Dream Realty said there are neighborhoods in newer West Valley suburbs where there are multiple foreclosures on one street.”

“‘There are new homes in the West Valley bought by investors that were never even lived in and are now in foreclosure,’ she said. ‘It’s very sad and so hard on the homeowners in those areas trying to hold on.’”

The Review Journal from Nevada. “An increasing number of renters in Las Vegas (are) caught up in the foreclosure mess. They’re losing security deposits and rent money because, unbeknownst to them, landlords failed to make mortgage payments and the homes have entered foreclosure.”

“Nevada led the nation last year, RealtyTrac reported. The state had 66,316 foreclosures, a 215 percent increase from 2006.”

“Clark County had the top seven foreclosure ZIP codes in the country. ZIP code 89131 in northwest Las Vegas, led with 627 foreclosed homes sold last year, Las Vegas-based SalesTraq reported. The median price was $333,000. ZIP code 89031 in North Las Vegas had 502 foreclosure sales at a median of $240,166.”

“The situation is not improving. Foreclosures account for a growing percentage of home sales in Las Vegas. Nearly 40 percent of the 983 existing home sales in January were bank-owned properties, Patty Kelley of the Greater Las Vegas Association of Realtors said.”

“Jenell and Christopher Chow were renting a four-bedroom home in North Las Vegas from an unlicensed business that advertised ‘rent to own’ homes. They had plunked down $5,200 and were paying close to $1,900 a month on a two-year lease option.”

“One November evening, after just six months of living in the house, the Chows got a knock on the door. It was someone from the constable’s office serving a five-day eviction notice to Scott McCabe and occupants. McCabe had rented them the house.”

“‘We were kind of baffled,’ Christopher Chow said. ‘Why were we getting an eviction notice in his name? We called him and he said, ‘You’re out of luck. You’ve got to talk to the owner.’ ‘We thought you were the owner. What about the payments I’ve been sending you?’ ‘If you have any problem, talk to the owner.’”

“About half of the 22,000 homes for sale in Las Vegas are sitting empty, most of them purchased by investors during the boom years of 2004 and 2005. Now that home values have dropped and adjustable-rate mortgages have reset, the owners can’t afford the mortgage, can’t sell the house and can’t refinance.”

“Homes are being rented for $1,000 to $1,200 a month, undercutting the apartment market and driving vacancy rates to 9 percent.”

“‘You’ve just got a situation perfect for the landlord to milk out every rental payment and at the same time not make mortgage payments until the bank forecloses,’ said real estate attorney Charles Clawson. ‘It’s not the mortgage company’s fault. They have a right to their collateral. It’s just a tough situation for the renter if they haven’t protected themselves by having a real estate record search.’”

“Mortgage fraud and associated predatory lending practices have become the focus of criminal investigations in Las Vegas, which is quickly emerging as the mortgage fraud capital of America.”

“‘The FBI has come to Las Vegas in droves,’ said Debra March, director of the Lied Institute for Real Estate Studies at University of Nevada, Las Vegas. ‘I’ve never seen this many FBI people here.’”

“‘I think this is only the tip of the iceberg, not just in Las Vegas but all around the country,’ FBI special agent Scott Hunter said in February on National Public Radio. ‘One of the local detectives I work with said he used to get a complaint a month. Now they get several a day.’”

“Many are at fault in predatory lending, said Cory Frey, senior loan officer for Southern Fidelity Mortgage in Las Vegas. There’s the mortgage bank that employed the originator to place a certain loan with a borrower, a loan that was ‘doomed should the market miss one step, let alone trip and fall on its face as it just did,’ he said.”

“There’s the borrower playing the market who had to buy, despite his or her ability to pay back the obligation, just so they could realize a future return. And there’s the loan officer who, with no hesitation, would do anything to make a buck and not explain certain parameters, Frey said.”

“‘Much of what I encounter among today’s dazed and confused borrowers is that many were simply not aware or did not understand their loan’s features, such as negative amortization or its adjustable terms,’ Frey said. ‘Somewhere along the line…these borrowers were either not explained or did not care to understand the exact features relating to their loan’s low payment.’”

The Deseret News from Utah. “Utah’s high-end housing market is out of balance, with simply too many houses for sale that are priced $500,000 and above, local economists and real estate analysts say.”

“Along the Wasatch Front, more than 1,500 homes priced over $500,000 are currently for sale, according to the MLS.”

“About 36 percent of new single-family homes for sale in the greater Salt Lake area were listed at $400,000 and above in the fourth quarter of 2007, and 22 percent are priced $500,000 or more, according to Metrostudy. In 2003, just 7 percent of the local housing inventory was priced $400,000 or more.”

“‘With the upper-end market, here’s the glut of inventory,’ said Jason Eldredge, executive VP of sales for a Salt Lake-based real estate research firm. ‘If you’re a buyer, you love to hear this, but if you’re builder, you’ll hate it.’”

“‘The exacerbation of the whole issue was that builders were building to these $450,000 price points on average, and buyers were affording it,’ said Curtis Dowdle, executive officer with the Salt Lake Home Builders Association. ‘Then all of a sudden, we have the subprime meltdown and those loans ceased, and affordability became a real issue.’”

“In Salt Lake County, from the fourth quarter of 2006 to the fourth quarter of 2007, the total number of new homes priced over $430,000 jumped 217 percent, according to NewReach. The number of new homes priced $500,000 or more increased 244 percent.”

“Utah County saw a 449 percent jump in new homes over $430,000 and a 400 percent increase in new homes over $500,000. Weber County had a whopping 1,500 percent hike in new homes priced greater than $430,000 and 225 percent in new houses more than $500,000.”

“In Davis County during the same period, the number of new homes above $430,000 climbed 725 percent, and those above $500,000 jumped 925 percent.”

“The absorption of speculator homes will likely begin to occur soon, because investors will seek to avoid paying ongoing carrying costs as they sit on their unsold properties, Dowdle said.”

“‘There’s going to be some adjustment in pricing,’ he said. ‘There is no magic formula. A builder has to make monthly payments on every house they own, and that’s no fun for anybody.’”

“Matt Ure, co-owner of Lake City Custom Homes in Herriman, currently has five finished houses ranging in price from $500,000 to $1.5 million that are currently unsold. Ure said most builders like himself have already cut prices as much as they can without falling in the red. ‘I have already lowered many of my homes almost $100,000 since last summer,’ he said.”

“But if someone were to offer him $520,000 for a $700,000 house that he’s listing for $600,000, he says he would rather bide his time. ‘I’ll say, ‘No,’ because I can wait, maybe rent it to cover some of the costs, then sell it for what it’s worth when the market is comfortable again,’ he said.”

The Spectrum from Utah. “From a five-year period, land value has increased considerably in St. George. Since 2002, price appreciation has increased 77.85 percent, according to the OFHEO report.”

“‘You have to keep these things in perspective,’ said Carol Sapp, executive officer for Southern Utah Homebuilders Association. She said the five-year appreciation rates give residents a better idea of their home’s values.”

“Sapp said northern Utah is about a year behind Washington County in terms of the market. ‘I don’t have a crystal ball, but I would expect the Wasatch Front to drop off a bit,’ she said.”

“Michael Dinsmore, of Encore Mortgage, said while 2005 is long gone, both buyers and sellers are seeing more realistic prices for homes in Washington County. ‘In 2005, the value of properties was less than the selling price,’ Dinsmore said. ‘Now, the housing is where it’s supposed to be.’”

CBS News reports from Florida. “Home appraisers Pam Crowley and Joyce Potts knew the roof was caving in on the housing industry four years ago, CBS News correspondent Sharyl Attkisson reports. That’s when they noticed their profession being turned on its head. Instead of letting them do their job and figure what a home was worth … bankers and realtors started telling them what dollar number to hit.”

“‘The appraiser is not to accept any orders where it’s pre-determined what the value should be,’ said Crowley, a Florida certified real estate appraiser.”

“More and more, appraisers have been told that, to get hired, they have to guarantee a high appraisal - sight unseen. One lender emails appraisers, ‘I need at least $210,000.’ Another writes: ‘I want to know if we can hit a value of 280K.’”

“Some lenders even send out blatant mass e-mails putting appraisers in a bidding war. To 77 appraisers for a home in Arizona: ‘whoever can provide the highest [appraisal] will receive the deal.’ ‘We were blackmailed,’ Crowley said.”

“We didn’t have to look far to see the fallout. Joyce Potts had just been called by a mortgage broker who wanted a high appraisal to refinance this tiny house in disrepair.”

“Attkisson asked Potts: ‘What was the number they wanted you to appraise this house at?’ ‘Well, it started at $210, then he says, ‘what about $175.’ Then, ‘how about $150. can you get $150?’ she said.”

“Potts turned down the job. But while we were there, another appraiser came by. He decided not to look at the house with CBS News cameras there.”

“Now under scrutiny, bankers and lenders are starting to adopt new rules to ensure independent, reliable appraisals. The changes are too late for many, including Crowley who’s lost her business.”

The Herald Tribune. “Foreclosure action in the first two months of 2008 was nearly three times greater than at the same time last year in Manatee, Sarasota and Charlotte counties. Distressed properties now account for roughly a quarter of all residential transactions, says Mary Howard, president of Lakewood Ranch’s Cornerstone Title.”

“‘It became prevalent toward the latter part of last year,’ Howard said.”

“County appraiser Web sites around Southwest Florida are burgeoning with lists of lender-owner properties. ‘You can find a list of the properties they own, and I guarantee they want to get rid of them,’ said Erik Sconberg of Manatee County’s Horizon Realty. ‘There’s anything you want from Longboat Key to the east side of any city.’”

“Many banks were freely lending during the real estate boom to people without the wherewithal to carry through on their purchases long term. ‘You’re dealing with many people who weren’t truly qualified to begin with,’ said real estate analyst Lou Goodkin. ‘You had no down payments, you had stretch buying, and we basically had the greatest speculation in the history of housing.’”

“‘It was such a distortion, where the appreciation was really artificially created,’ Goodkin said. ‘Even now, prices are still well above what most people could afford before.’”

“On Thursday, Sconberg was on Longboat Key checking on two properties he has listed, both foreclosed on by Brasota Mortgage, and both formerly owned by the same investor. ‘They’re both R.E.O.,’ Sconberg said, meaning ‘Real Estate Owned.’ ‘Big time flipper got caught.’”

“One is a four-bedroom, three-bath in Country Club Shores with a deep-water dock and a pool. It is five minutes from Sarasota Bay and the price is $1 million.”

“‘$1.5 million will get you 8,500 square feet, a monster of a place,’ Sconberg said of the house. ‘Dock on a canal that is hidden from the bay. Huge swimming pool, with a jacuzzi.’”

“‘The neighbors are for sale on Bayou for $2.5 million,’ Sconberg added. ‘Five years from now you will be sitting there going, ‘Wow, did I make a killing.’”

The Miami Herald. “For the second consecutive year, Florida ranked No. 1 in the country for mortgage fraud, as the stalled housing market quickly pushed both prevaricating borrowers and seasoned criminals into foreclosure.”

“In Miami-Dade County, more than 1,500 cases of suspected fraud have been reported to police since the fall, said Glenn Theobald, chief legal counsel for the department and chairman of Mayor Carlos Alvarez’s Mortgage Fraud Task Force.”

“‘We can’t get through them all — one case turns into five,’ Theobald said. The department, he said, has 10 investigators dedicated to mortgage fraud, representing a ‘tremendous commitment.’”

“Florida’s latest ranking comes despite a new mortgage fraud law passed last year that made mortgage fraud a crime and established stringent criminal penalties. The Florida law mirrors a similar measure passed by Georgia in 2005, which served to dramatically button down fraud in that state.”

“‘If the [Florida] law is followed diligently and people are pursued and caught and prosecuted, it is going to have an impact because the word will get around. That’s what happened in Georgia,’ said Merle Sharick, Mortgage Asset Research Institute’s national manager of business development.”

The Sun Sentinel. “Four kids, three dogs, one bathroom, 900 square feet. This adds up to a problem every weekday morning at Luci and Danny Brito’s tiny house in Pembroke Pines. ‘There’s literally a line, with each one holding a towel and a hairbrush, in our pajamas,’ Luci Brito says.”

“The value of their small home has shrunk and it is now less than their mortgage. They’d like to refinance their mortgage, but they don’t qualify, even though Luci and Danny Brito have good jobs in and good credit.”

“The Britos bought their home for $270,000 at the peak of the housing boom and appraisers say now it’s worth $250,000. No lender is going to give them a new loan large enough to pay off their current mortgage.”

“‘It’s laugh or cry, you pick,’ she said. ‘We can’t go looking for anything bigger.’”

“‘I don’t blame the lenders,’ said Gene Petrino, a mortgage broker in Pompano Beach. ‘But they’ve gone from one extreme to the other — from everybody gets a loan to nobody gets a loan. There has to be a happy medium.’”

The Orlando Sentinel. “The national mortgage crisis continues to hit close to home as Lake County homeowners keep defaulting on mortgages at a record pace, circuit court figures show. Following 2007, when a record 2,080 mortgage foreclosures were filed in circuit court in Lake County, banks and other lenders have sought to reclaim more than 700 properties since the new year began.”

“The county didn’t pass the 700 mark last year until late June.”

“Dale Purcell lost his home in Astatula to foreclosure Thursday, said he couldn’t keep up with mortgage payments after they jumped suddenly last year from about $900 a month to $1,700. He said he has painted the house, landscaped it and tried to sell it to save his credit rating.”

“‘You can’t even rent a DVD without a credit card,’ he told Circuit Judge G. Richard Singeltary during the court hearing.”

“The foreclosed properties range from modest homes to mansions. Just last week, judges in Lake County issued final foreclosure rulings on properties valued together at about $2 million.”

“Three other properties, with a combined value of nearly $700,000, were sold at a foreclosure auction Friday at the courthouse. Shannan Buttner, who stood as the lenders’ proxy, was the lone bidder. She said she was authorized to drive up the bid to within 85 or 90 percent of the debt.”

“She bid just $100 for each, meaning the homes remain the property of the lenders.”

“Life was coming at Sam Butler fast last year. His career was going strong, and the time looked right for a bold jump into Chicago. Butler had already found a house for his family in an Illinois suburb, so he placed his Orlando home on the market for just more than he had paid in 2005.”

“Then reality hit. The Butlers waited for prospective buyers to arrive. They eventually showed up, but with offers way below the $310,000 the Butlers had thought would materialize. And financing that new home no longer seemed practical.”

“‘We took the house off the market when we figured out the house in Chicago wouldn’t work,’ Butler said last week. ‘So for now, we are staying here.’”

“Mike Colpitts, editor of a Destin publication that follows housing-market trends, thinks any rebound in housing is still off in the distance and those hoping to get their hands on the equity they thought they had in their homes will have to wait.”

“‘A lot of people will be stuck in their homes for a lot longer than they ever thought they would be,’ Colpitts said recently. ‘This situation will probably last until the middle of 2010, and it will be horrible for a lot of folks — as bad as it gets, really.’”

“Central Florida’s supply of unsold dwellings has grown from a one-month inventory in 2005 to more than 28 months’ worth as of a month ago.”

“Mike and Katie King have discovered that the real-estate market is far different than they thought it was last summer, when Mike King accepted a new job in Vero Beach and the couple put their Apopka house up for sale.”

“Nine months later, they are living in a rented town house in Vero — and their Central Florida residence is still unsold. ‘I knew things were kind of bad, but not this bad,’ King said. ‘We were down here in Vero for three or four months, and nothing was happening with our house, so we lowered the price by $17,000.’”

“That hasn’t worked. Now, King said, he is considering leaving his new job and returning to Apopka to live and work. ‘Yes, I might consider moving back to Orlando if the house doesn’t sell,’ King said. ‘Right now, we are waiting. I’m committed here until our lease runs out in June. We just keep hoping the house will sell and the noose will be loosened from around my neck.’”

“Renting is another option. But the expanding supply is limiting what they can charge.”

“‘The downside of renting [is that it] might only cover 70 or 80 percent of a loan payment,’ said Bill Murphy, president of Remarc Homes, an Orlando custom-home builder who is renting out some of the properties that he built in the Orlando area during the housing boom.”

“‘I have about 16 houses that I built and couldn’t sell,’ Murphy said. ‘Like every other builder a few years back, I got up in the morning and just said, ‘Let’s build.’”

“Murphy has decided that it’s better to rent his houses for now than to sell them at deflated prices. ‘I think the market has bottomed out,’ he predicted, though ‘the places I used to be able to rent for $2,200 a month now go for $1,900.’”

“‘It used to be no problem selling; if you had a pulse, you could buy one,’ he added. ‘Now the banks are a lot more careful.’”

What do you see in your housing market this weekend? Speculation? “A dream chance of owning a brand new condominium in the heart of Manhattan has turned into a nightmare for dozens of Irish-based investors who signed contracts to purchase apartments in a new development on the East Side two years ago, only to be recently informed that the entire building was sold to New York University.”

“But now, the Irish investors who signed contracts to buy an apartment sight unseen have been left bitterly disappointed. ‘I’m still stunned over what’s happened because it is so grossly unfair,’ one Irish purchaser. ‘We signed our contracts and handed over our money in complete good faith, and this is what happens. I know that real estate dealings can be tough, but this just isn’t right.’”

“The booming seller’s market is becoming a buyer’s market as it normalizes from an estimated 248,000 Hurricane Katrina evacuees…that deluged the Baton Rouge area in September 2005, buying just about anything sight unseen with a roof or slab at full price or higher.”

“It’s a ‘buyer-seller market’ now, says Judy Burkett, president-elect of the Louisiana Realtors Association. ‘You’ve got to really price that house close to market. We price our houses pretty much what they are going to go for. The prices are not inflated. I don’t think there’s a bubble here.’”

Complaining sellers? “Michigan’s real estate market has been in a slump for the past few years because of a number of reasons. ‘The complaint of home sellers is that the prices and the values of their homes have decreased,’ said Realtor Jean Watts in Ann Arbor. ‘Also a complaint of home sellers is that buyers want too much. They want the seller to do everything.’”

Inventory problems? “Staggering new numbers show 10 North Texas counties reporting a foreclosure increase in 2008. Five of the 10 are up more than 20%. Compared to this time last year, foreclosures are up 42% in Kaufman County, 38% in Denton County, 27% in Tarrant County and 15% in Dallas.”

“And as the foreclosures rise in the Metroplex, so is another problem: thieves preying on the misfortune of others. When realtor Ann Stewart arrived at a foreclosed house in Hurst, she was flabbergasted. Just months ago the home listed for $990,000. Now that thieves have walked off with everything including the kitchen sink, it’s listed at about $500,000.”

“‘You could come into a home like this and conceivably have to spend $100,000 to replace what they’ve taken,’ Stewart explained.”

Failed projects? “About three years ago, developer Wayne Colmer said the demand for dozens of his newly built Morro Bay homes far exceeded his supply. Now, the part-time Morro Bay resident said construction of his latest project—the Black Hill Villas, approved by the California Coastal Commission earlier this month— will be on standby indefinitely until the housing market improves.”

“‘We hope to continue building in SLO County,’ Colmer said. ‘But right now we won’t see anything good with Black Hill Villas.’”

Housing bubble spillover? “Marin’s cooling real estate market spells trouble for the College of Marin and other schools whose budgets depend on local property taxes. ‘Next year will be the last of our marginally good years,’ said Al Harrison, vice president of operations at the college. ‘The 2009-10 school year will be the beginning of our troubles.’”

“‘Nobody is unaware how housing prices nationwide and a lack of confidence in our monetary policy have put us at risk locally,’ said Trustee Philip Kranenburg. ‘We have to put our financial house in order.’”

“‘I really hope I’m wrong,’ Harrison said. ‘I’ve never lost sleep since working for the College of Marin. But I’ve begun buying sleeping tablets, because I think I’m going to start losing sleep this year.’”

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