The Housing Bubble

The San Francisco Chronicle reports from California. “A total of 343,220 single-family detached California homes closed escrow in February (seasonally adjusted), down 28.5 percent from 480,170 a year earlier, the California Association of Realtors said. Median sales price in the state was $409,240, down a stunning 26.2 percent from February 2007. In the Bay Area, the Realtors said sales were down 32.5 percent in February compared with a year ago. The median price was $706,880, a 5 percent drop compared to a year earlier.”

“One Bay Area home seller said she is close to pulling her home off the market and renting it out instead. Ali Liptrot has had her San Rafael 3-bedroom, 1-bath home on the market since early this month with no offers despite lots of visitors. Liptrot, who sells property in Baja and has her real estate license, said her asking price of $629,000 is on par for her Santa Venetia neighborhood.”

“‘It is a little perplexing; I thought for sure I’d have at least one offer by now,’ she said. ‘Every single person who walks in the house says, ‘Your house is beautiful.’ I’m like, ‘Yeah, so put in an offer; give me something to play with.’”

“Because Liptrot purchased in 2000 and has ample equity in her home, she’s not desperate to sell.”

“‘I’m keeping it on until the end of next week and then that’s it,’ she said. ‘I have a good friend I could rent it to for a year and then re-evaluate next year.”

Bay Area Newsgroup. “Foreclosure auction sales more than doubled in San Mateo County in February over a year earlier, though they slowed somewhat from their blistering January pace, a new report revealed Monday.”

“Some 81 homes were sold at foreclosure auctions last month countywide, up 224 percent from February 2007, according to a Web site that tracks California foreclosure sales.”

“Most of the local foreclosures are occurring in blue-collar cities such as San Bruno, Daly City and South San Francisco. Parts of San Mateo, Redwood City, Menlo Park and East Palo Alto are also experiencing a high rate of foreclosures.”

“Many homes in the poorer sections of these areas have lost $50,000 or $100,000 in value, real estate agents say.”

“Sean O’Toole, founder of ForeclosureRadar stressed that with more than 37,000 notices of default statewide, many more foreclosures are expected in the late second quarter and early third quarter.”

“That means many more foreclosures are on the horizon for San Mateo County, he said. In February, there were 300 notices of default countywide. That was up from 244 in January.”

“In August and September, when the subprime lending crunch kicked in and started fueling foreclosures, notices of default in San Mateo County were about 160 per month, O’Toole noted.”

“‘It appears that a number of banks don’t move in on foreclosures immediately,’ said John Gieseker, real estate agent in San Bruno. ‘Banks probably still are trying to grapple with the amount of foreclosures they have.’”

“The 81 February sales figure countywide was down from 121 in January. But the January spike was due to a backlog of foreclosures from late last year, as banks often don’t foreclose on people during the holidays, Gieseker said.”

“San Mateo County’s foreclosure rate is low compared with those in other California counties. Alameda County was up twofold to 487 sales. Santa Clara County was up more than fourfold with 351 sales.”

“In San Joaquin County, which includes Stockton, foreclosures were up more than four times compared with a year ago, with 940 sales. Merced County was up nearly fivefold, with 316 sales. Sacramento County more than doubled to 1,392 sales.”

“Riverside County had a staggering 2,159 sales, up nearly threefold. Another major problem area was San Bernardino County, which had 1,568 auction sales, up 352 percent.”

The Monterey County Herald. “Nearly 40 percent of Monterey County home sales listed in The Herald during a two-week period in late February and early March likely were foreclosures, indicating a move by banks and mortgage firms to recoup some of their losses, said one real estate expert.”

“Out of 43 homes listed in The Herald and sold from Feb. 27 to March 11, 17 were owned by banks or mortgage firms. In Seaside, all five homes sold during that time were owned by banks or mortgage firms, and in Soledad, all four sold homes were likely foreclosures.”

“In Salinas, seven of 18 sold homes were owned by banks or mortgage firms. One bank-owned home was sold off San Miguel Canyon Road in North Monterey County.”

“Sandy Haney, chief executive officer of the Monterey County Association of Realtors, said bankers are selling foreclosed properties as it becomes increasingly clear the housing market won’t rebound immediately.”

“‘Banks have finally said, ‘We have to get rid of these properties,’ Haney said. ‘I don’t think holding onto them until the market comes back (is) going to work.’”

“And Haney said the trend is expected to continue, given the explosion in foreclosed homes in the county. According to the county’s 2008 annual housing report, the number of foreclosed properties is expected to nearly double this year over 2007.”

“And county officials estimate that foreclosures will soar to nearly 3,000 homes in 2008, with the majority of those again expected to be in Salinas. ‘In Salinas, in particular, the marketplace is all about foreclosures,’ Haney said.”

“Haney said one home in North Salinas reflected the wildly fluctuating home market. In 1997, the three-bedroom, two-bath home, built 20 years earlier, sold for $124,000. Nearly a decade later, at the tail end of the market boom, the home sold for $505,000 in May 2006.”

“In August 2007, the home went back on the market, listed at $439,000, and eventually was sold earlier this month for $250,000. Haney said the home was almost certainly in foreclosure when it was sold.”

“Last year, county Assessor Steve Vagnini said, assessors lowered property assessments on about 1,000 homes during its annual review. Vagnini estimated the average reduction at about $50,000 per property.”

“This year, Vagnini predicted that as many as 5,000 properties could have their assessments reduced by an average of as much as $200,000, resulting in a reduction in property values of about $1 billion.”

“‘The impact (of the housing market collapse) wasn’t nearly as great last year to the county treasury,’ Vagnini said, ‘but it will be this year.’”

The Ventura County Star. “Even in past downturns, home values haven’t fallen this hard or fast. ‘We’re definitely in uncharted terrain,’ said Robert Kleinhenz, deputy chief economist of the California Association of Realtors. ‘That’s why it’s so difficult to figure out what the next few months will hold.’”

“In Ventura County…the median sales price was $520,270 in February, down 11.9 percent from $590,380 in January and 23.6 percent from $680,690 in February 2007.”

“The median’s month-to-month decline is ‘alarming’ because it represents an acceleration of the market decline, said Bill Watkins, executive director of the UC Santa Barbara Economic Forecast Project. ‘And that’s potentially dangerous, especially when you combine it with other weaknesses in California’s economy — in particular, the budget,’ he said.”

“Sellers can’t tell what their house is worth because consumers can’t justify spending anything on a house right now, said Mike Hobbs, a consultant for the Realtor Auction Division of Integrated Marketing Solutions in Ventura.”

“When that happens, there’s no movement, so prices drop, said Hobbs, who recently took his house off the market because the value depreciated more than the amount owed.”

“Gary Painter, director of research at the USC Lusk Center for Real Estate. He says the median’s decline represents a ’sample selection bias,’ reflecting that bank-owned properties were the largest component of sales.”

“The median price of an existing, single-family detached home in California last month was $409,240, a 26.2 percent decrease from $554,280 in February 2007, CAR reported. ‘It’s hard to imagine that the median will go much lower than that,’ Kleinhenz said. ‘That’s almost $200,000 off from its peak.’”

The Daily Breeze. “The South Bay housing market continued its slide in February, with some communities seeing a double-digit drop in home prices. Excluding the Palos Verdes Peninsula, the South Bay saw its median home price decline 7 percent last month, compared to a year earlier, said the report by CAR.”

“‘We have too much inventory,’ said Rose Pasquel, who co-owns Coldwell Banker Harbor Coast Brokers in Carson. She noted that ‘the entire state of California is considered a declining market.’”

“The Palos Verdes Peninsula saw a drop in median price of 0.4 percent to $1,150,000. But so few homes sold on The Hill that none of its four cities were individually cited. A city or community must sell at least 30 homes during the month to be cited.”

“Manhattan Beach, one of the highest-priced cities in California, also was left off the list of communities. That was the case with Hermosa Beach, El Segundo and inland areas such as Lawndale, Lomita, Carson and Gardena.”

“Gardena’s absence from the February report was unusual since the city usually meets the 30-home threshold.”

“Gardena and Carson will see tough times as many homeowners with adjustable-rate mortgages can expect loans to reset higher, Pasquel said. ‘I think this is just a first wave of problems,’ Pasquel said. ‘This is just the first wave of mortgages to reset. So we have ‘09 and ‘10 to deal with.’”

The LA Daily News. “The median price of a Los Angeles County home plunged a record 20 percent, or $117,010, in February from a year ago as sales continued their free fall as foreclosures increased, a trade association said Monday.”

“During February the county’s median price fell to $467,200 from $584,210 last year. It’s the second consecutive record drop, percentage wise. Sales in the county fell 42 percent from February 2007 and slipped 10.5 percent from January, the association said.”

“On a monthly basis, sales increased 9.6 percent. Leslie Appleton-Young, the association’s chief economist, said that the monthly sales increase could be an encouraging sign since February was the strongest sales month of 2007.”

“‘So we expect to see that percentage (decline) moderate as we go forward,’ she said. ‘I think we are heading into kind of a bouncing along the bottom (mode) for a little while. I don’t think this will be a sharp V in terms of recovery.’”

“In the High Desert, which includes the Antelope Valley, the median price fell 31 percent to $220,380 and sales fell 27.7 percent from from a year ago.”

The Press Democrat. “New loans are trickling out that cut borrowing costs for larger Sonoma County home mortgages, but the savings fall short of expectations, potentially limiting any boost to the stagnant housing market, lenders said.”

“Borrowers continue to pay higher interest rates for loans above $417,000, the old cap on loans backed by the government. It can also be difficult to qualify for the new loans created by the federal economic stimulus package, which temporarily provides government backing for loans up to $662,500.”

“‘It will help a little bit probably, but not a ton, as we were hoping. It’s not going to solve the housing problem,’ said Alison Fetherolf, VP for the Santa Rosa office of Sterns Lending, which funds mortgages.”

“But loans up to $662,500 in Sonoma County still carry higher interest rates — as much as a full percentage point — than loans under $417,000, lenders said. Rising interest rates may dull the impact of the new loans. Mortgage rates have moved higher for more than a month due to concerns over the housing market and rising inflation.”

“‘A loan at 7 percent is not going to help the housing market,’ said Scott Dovala, branch manager for Ascent Home Loans, which funds mortgages.”

“On Monday, for instance, one lender charged 6.125 percent interest on loans up to $417,000, but 7.125 percent on those up to $662,500. For even larger loans, the lender charged 8.125 percent.”

“While that middle tier is less expensive than the jumbo rate, the pricing still reflects a risk premium because of the large loan amount.”

“‘The lenders are all afraid no one is going to buy them. That’s the whole problem. That’s why the regular jumbo picture is so ugly,’ said Kris Anderson, a mortgage broker in Santa Rosa.”

“Lenders stung by soaring foreclosures are requiring borrowers to meet tough standards to qualify for all loans, including the new mortgages.”

“‘Will borrowers be able to save money by refinancing? Sure they will. But realistically, they will not save as much as they currently think,’ Dovala said.”

“Fannie Mae, for instance, requires a 700 credit score if the borrower’s down payment is less than 20 percent of the purchase price. Fannie Mae also won’t allow homeowners to refinance a first and second mortgage into a single loan.”

“‘It’s pretty huge. A lot of people have first and second mortgages,’ Fetherolf said. ‘If Fannie Mae isn’t allowing us to pay off the second, then it really doesn’t do us any good.’”

Some housing bubble news from Wall Street and Washington. Reuters, “Prices of existing single-family homes slumped for the 18th month in a row in January, for a record annual drop, according to Standard & Poor’s/Case-Shiller home price index released on Tuesday. The composite month-over-month index of 20 metropolitan areas fell 2.4 percent to 180.65 from December, bringing the measure down 10.7 percent from a year earlier and 12.5 percent from its July 2006 peak.”

“‘Unfortunately, house prices continue to decline and the decline continues to be really nationwide,’ said David Blitzer, who chairs S&P’s index committee.”

“‘The weakness is not contained to the bubble areas,’ said Michelle Meyer, an economist at investment bank Lehman Brothers in New York. ‘It has spread to the rest of the nation.’”

“House price depreciation accelerated in February, according to FBR analyst Michael Youngblood, citing data from data provider LoanPerformance.”

From MarketWatch. “Home prices in 10 of the 20 cities have fallen at double-digit rates in the past year. ‘No markets seem to be completely immune from the housing crisis,’ said Blitzer.”

“For the past year, the biggest price declines have been in Miami and Las Vegas, both down 19.3%. Two cities that had continued to see price increases last year — Seattle and Portland, Ore. — turned negative in January.”

“Two large banks — Industrial & Commercial Bank of China and Bank of China — posted higher fourth-quarter profits on Tuesday, but the state lenders were hurt by holdings in subprime-related securities in the United States.”

“Bank of China, hardest-hit among the country’s big banks by subprime exposure, said it held $5 billion in asset-backed securities at the end of 2007, or 2.13 percent of its investment securities, and booked $1.58 billion in provisions and markdowns on the holdings.”

“Industrial & Commercial Bank said it held subprime-backed securities worth $1.23 billion at the end of December 2007 and booked $400 million as an allowance for potential losses on that portfolio.”

From Bloomberg. “Bank of China’s market value has dropped by $83 billion since it announced $7.95 billion of subprime-related holdings on Oct. 30, making it Asia’s biggest casualty of the U.S. mortgage market collapse.”

The Globe & Mail. “When you add it all up, the commercial paper in Canada’s frozen $32-billion market has lost more than 40 per cent of its face value because of market conditions, according to RBC Dominion Securities analyst André-Philippe Hardy. Hardy based his estimate on court documents that were recently made public.”

“He believes that a further $3-billion portion of the market that’s tied to U.S. subprime is probably worth about 20 per cent.”

The San Francisco Chronicle. “In one of the more spectacular meltdowns in mutual fund history, Schwab YieldPlus - marketed as a higher-yielding alternative to money market funds - has plummeted to just $2.5 billion in assets from more than $13 billion in May.”

“The shrinkage reflects both a decline in the fund’s asset value and a mass exodus by investors. Schwab YieldPlus is not the first but is by far the largest ultra-short-term bond fund to run into trouble as a result of its exposure to subprime and other mortgage-backed securities. As of December, it had about 46 percent of its assets in mortgage-backed securities.”

“Marc Itzkowitz, a software product manager in Palo Alto, invested more than $100,000 in the fund, starting in summer 2005, to put toward a down payment on a house.”

“‘My forecast was, toward the end of the decade there would be a fall in real estate. I’m a renter. I wanted to park money in something that would be safe so when prices declined, I’d have my payment preserved,’ he says.”

“Itzkowitz really started worrying about the fund in February, but didn’t sell until last week, when his adviser told him to get out. Itzkowitz lost 17 percent, or about $23,000, enough to impact his home-buying plans.”

“He takes part of the blame himself. ‘It’s my bad. You should never believe you can get higher yields without any risk,’ he says.”

The Wall Street Journal. “Foreclosures are occurring at the highest rate in decades — and as a result, lenders are acquiring homes faster than they can sell them off. Last year, sales of foreclosed homes rose just 4.4%, while the supply more than doubled, according to First American CoreLogic.”

“On Lagrange Street in the city of Worcester in Massachusetts, two brick apartment buildings stand side-by-side in varying stages of decay — boarded up, ‘No Trespassing’ signs affixed, paint peeling.”

“Across the street, a condominium complex is on the brink. Three of its eight apartments are in foreclosure.”

“Like many cities in the United States where the home vacancy rate has scaled its highest since records began in 1956, the former textile mill city of Worcester in Massachusetts is turning to the courts to fight back.”

“In western New York, the city of Buffalo filed a lawsuit on February 21 against 36 lenders — including big names like JPMorgan Chase & Co Inc and Countrywide Financial Corp — who were involved in 57 foreclosures that led to properties being abandoned and ultimately demolished by authorities.”

“Alisa Lukasiewicz, who runs the city’s law department, said Buffalo drew inspiration from similar lawsuits in Cleveland and Baltimore. ‘These properties are in a state of legal limbo,’ she said. ‘Banks walk away. The homeowners are gone, and the property is still there.’”

“In some cases, mortgage companies threaten foreclosure if borrowers fall behind in loan payments but never go through with it, leaving the borrower technically the property’s owner and complicating efforts to revive an abandoned home.”

“‘Another big problem we have had is this new wave of lending,’ said Cindy Cooper, a Buffalo city prosecutor who specializes in housing. ‘It’s difficult to work out who holds the note, who is in control of a property. These mortgages have been packaged into portfolios and sold on Wall Street.’”

“‘Because of the foreclosure crisis we are seeing this incredible glut of inexpensive distressed houses being sold at pennies on the dollar,’ Cleveland city councilman Tony Brancatelli said in a telephone interview.”

“‘The mortgage companies don’t want to hold onto them so they are dumping them on the Internet at a rapid rate. People are buying them 15 to a 100 at a time,’ he added.”

The Boston Globe. “While Hillary Clinton and others are offering government help for homeowners facing foreclosure, John McCain is more about tough love.”

“The presumptive Republican nominee, in a speech today in Santa Ana, Calif., blames the housing and credit crisis on a ‘bubble’ created by lenders who lowered their standards, Americans who bought homes they couldn’t afford, and financial players who invested in complex securities that were not transparent.”

“‘I have always been committed to the principle that it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers,’ he said.”

“In our effort to help deserving homeowners, no assistance should be given to speculators,’ McCain continued. ‘Any assistance for borrowers should be focused solely on homeowners, not people who bought houses for speculative purposes, to rent or as second homes. Any assistance must be temporary and must not reward people who were irresponsible at the expense of those who weren’t.’”

“He then called for homeowners to be required to put down payments on homes, for lenders to raise standards, and for all those involved to move to more transparency.”

“‘They’ve been asking the government to help them out,’ McCain said of lenders. ‘I’m now calling upon them to help their customers, and their nation, out.’”

“‘I will not play election-year politics with the housing crisis,’ he said.”

“McCain said lenders became complacent as housing prices continued to rise, lowering their standards and lending money to people who couldn’t pay it back. Some consumers, he said, bought homes they couldn’t afford, betting they would reap the benefits later of higher home prices.”

“Meanwhile, he said, the housing market lacked accountability and transparency, and ‘the initial losses spawned a crisis of confidence in the markets.’”

The Baltimore Sun. “Baltimore and the five surrounding counties saw an even steeper falloff in sales from a year earlier, down 33 percent. Prices are higher here than in the nation as a whole, and haven’t been dropping as fast.”

“Lawrence Yun, chief economist for the National Association of Realtors, suspects that some local buyers ‘are just waiting it out to see how much prices decline’ while others are holding off because they can’t afford to buy.”

“‘A price drop would help that picture,’ Yun said.”

The Review Journal. “Billy O’Keefe recognizes that real estate agents rank among the least-respected professionals on the planet.”

“For one thing, the barrier to entry is low. Because it’s relatively easy to get a license, you have the ’stripper/Realtor’ and ‘plumber/Realtor,’ said O’Keefe, who recently opened O’Keefe Casto Residential Brokerage in Las Vegas.”

“Realtors get paid the same commission when they close a transaction no matter how good or how bad they were at the job, he added. O’Keefe is operating under a different business model at his brokerage, one that holds agents accountable for their competency and guarantees money-back customer satisfaction.”

“‘Our guarantee states that if you’re not happy and don’t think we earned our money at closing, we will not charge you,’ O’Keefe said. ‘It’s risky. We’ve got brokers who think we’re out of our minds.’”

“O’Keefe Casto is recruiting real estate agents at a time when other brokerages have laid off staff or closed the doors. Their office was formerly occupied by Century 21 MoneyWorld. Mike West, president of Century 21 MoneyWorld, said he’s had to shut down two of his four offices and reduce staff to 250 from a peak of 357 agents.”

“‘Us and every other company,’ he said. ‘Liberty (Realty) closed three out of their four offices. You’ve got some in bankruptcy. Several ReMax offices have closed or merged.’”

From Marketplace. “Realtor Martha Ann Wishnev hasn’t cut many deals since home sales dropped nationwide. Rachel Dornhelm reports. Dornhelm: ‘Martha Ann Wishnev has been a realtor for 30 years. She works in Contra Costa County, near San Francisco.’”

“Martha Ann Wishnev: ‘I ordinarily sell about $7.5 million worth of real estate a year. And here it is, it’s the beginning of February. I haven’t had a sale yet.’”

“In fact, she hasn’t been involved in a transaction since October. Around the nation, realtors like Wishnev have seen sales drop 22 percent over the last year. Wishnev says she’s busy sending out documents, talking to homeowners associations and potential clients. She says the fact she hasn’t sold anything is taking a psychological toll.”

“Wishnev: ‘In real estate, you don’t get a penny until you close the escrow. So you spend a lot of money on advertising, a lot of money taking people around and you have to remind yourself that you personally are not a failure, that the real estate market is the problem.’”

“Wishnev is lucky. Her husband has a steady salary. But, she says, others must be in agony. She’s noticed the energy level drop at her office and empty desks.”

“Wishnev: ‘What happens is when someone decides to really pack it in, they just disappear. Where did he go? Well, he’s gone. What happened? I don’t know. It’s odd.’”

The Bradenton Herald reports from Florida. “In February, the prices of existing-homes continued to fall - to $254,200 from $319,000 from February to February. Locally, the median price of a single family home was down 20 percent, tying with Miami for the second-largest price tumble. Punta Gorda experienced the largest price fall with a median price 25 percent below where it was just one year ago… according to numbers released by the Florida Association of Realtors.”

“Condos in Bradenton/Sarasota fared much worse. Only five of Florida’s 20 Metropolitan Statistical Areas saw fewer sales than Bradenton/Sarasota despite a 41 percent drop in condo prices from February 2007, bringing the median cost of a condo to $211,500.”

“‘We’re seeing that beginning offers are low even if the house is priced appropriately,’ said broker Michael Taylor.”

“Short sales may be a large reason behind the continued drop in prices. Joanne Owens, operating principal of Keller Williams of Greater Manatee has 54 listings and 40 percent of those are short sales. ‘I’ve had grown men coming into our office crying,’ Owens said.”

The Herald Tribune. “Like virtually every real estate agent contacted, Lynn Robbins of Coldwell Banker Residential Real Estate Inc., has listings on which the price has been reduced significantly, but where the seller is still waiting for offers.”

“‘I’ve got a really good deal on a house West of the Trail,’ Robbins said, referring to a 1926 home with hardwood floors, fireplace, and its own guest house, reduced from $800,000 to $700,000. ‘There’s a house across the street for $1.495 million.’”

“Robbins’ listing has been on the market since July, and the sellers are ’serious.’”

“The Sarasota MLS listed 10,035 single-family homes for sale in February, virtually unchanged from the 10,391 a year before. In Englewood, broker Jason Painter summed it up without too many numbers to get in the way: ‘I would say there is probably three years’ worth of inventory.’”

“They can get on the water in Punta Gorda Isles, and they are sitting there in the high $200,000s,’ said Luke Andreae of the Andreae Group for Re/Max Harbor Realty of Port Charlotte. ‘That is less than lots cost three years ago.’”

The Tampa Tribune. “When the foreclosure filing came last month, developer Fida Sirdar determined the only way to save The Place at Channelside condominium was to file for bankruptcy reorganization. It was either that, he said, or hand the keys over to the bank and walk way.”

“About a half-mile away, the developers of The Towers of Channelside also filed for Chapter 11 bankruptcy protection in January, after Wachovia cut off the company’s credit. And the developers of Trump Tower Tampa say they too may soon be filing for bankruptcy, if they don’t secure construction financing for the luxury tower this week.”

“All these projects have something else in common: vanishing buyers. Developers say buyers either wouldn’t close because the market had changed or couldn’t close because they no longer qualified for loans. Others were speculators or just lost hope in the projects.”

“‘Developers have been hanging in there and trying to make it work, but their cash flows are depleting,’ said real estate lawyer David Carter. ‘There’s going to be a lot of failures.’”

“Bonnie Dealva, who purchased a unit in The Place, said if the contractors had finished the building on time, more buyers would have closed before the market tanked. Dealva decided not to live there because the building feels empty. The Channel District didn’t turn out to be the vibrant area she thought it was, she said. She’s leasing out her place and renting an apartment near Rocky Point.”

The News Press. “Sales of single-family homes in Lee County soared in February as buyers were spurred into action by a sharp drop in prices. Prices have been falling steadily for about two years in Lee County, although last month’s sales were exactly the same as a year ago.”

“Mary Grace Munoz, of Cape Coral, who with her husband bought two single-family homes for $133,000 each. Her son and daughter each bought a house, she added.”

“Real estate agent Brett Ellis in Fort Myers attributed the pickup in sales to the rising number of foreclosures. A total of 1,674 foreclosure actions were filed in circuit court in February, down from a record 1,833 in January but up sharply from 624 in February 2007.”

“The Coral Lakes sales show that lower prices stimulate purchases, Ellis said, but they’ll also likely cause some who bought there for the old, higher prices to walk away from their mortgages and go into foreclosure.”

“David and Jessica Diaz are looking forward to regaining the American dream after they file the bankruptcy this week forced on them by Lee County’s housing industry collapse.”

“‘I never in a million years thought this could happen to me,’ said David Diaz, who’s working overtime to stay afloat while paying almost $7,000 a month in mortgages on their new Cape home and their home in Lehigh Acres they’ve been unable to sell.”

“But now he sees the handwriting on the wall: Even after cleaning out his 401(k) of thousands of dollars, their problems are too overwhelming.”

“It’s time to make a move, he said. ‘I’m tired of being upset and trying to keep thinking of ways of doing things.’”

“‘People are just beat up right now,’ said the Diazes’ attorney, Charles Phoenix of Fort Myers. ‘It used to be you lost your job or some asset failed — now they’re getting it from every direction. Their house has fallen in value, and worst of all that’s offset by a huge debt they can never hope to pay off.’”

“If anything, the number of bankruptcies being filed understates how bad the situation is, Phoenix said: ‘Really, the pipeline is constricted. There are only so many law firms handling bankruptcies.’”

“Many of the current ones are people who, like the Diazes, are cleaning their financial slate, an option that’s increasingly acceptable in society, Fort Myers-based bankruptcy attorney Carmen Dellutri said.”

“‘All of a sudden it’s become not fashionable but OK,’ he said. ‘I think people are coming to the realization they’re not going to be able to dig their way out of that hole themselves.’”

“Many clients, he said, ‘are doing well, but they’re bleeding themselves to death. One gentleman said, ‘I spent $100,000 in the past year keeping up these investments.’”

“Diaz said the housing bust hit his family hard: Jessica lost her $60,000-a-year job as adjuster and accountant for a construction firm and has started up a home-based specialty cake business. He’s resigned himself to losing the custom house in Cape Coral they worked for years to attain: ‘We owe $344,000 and it’s now worth $250,000 to $280,000. In the prime of the market it was worth half a million.’”

“Ultimately, he said, ‘The moral of the story is sometimes things are just out of your hands. You’ve just got to go with the flow.’ Fighting off bankruptcy too long can destroy you, he said. ‘It’s like a big hole in the boat. You can try to bail the water out but you know eventually it’s going to get tired and you’ll sink.’”

“Cindy Roper, a Realtor in Fort Myers, said she has been encountering a lot of short sales.”

“‘There was a lot of vacant land there and a lot of people built on speculation, hoping to make some money off of it,’ she said. ‘You had a lot of construction workers out there and they were able to purchase a newer home, 2000 and up, and of course, a lot of them lost their jobs. It’s been a spiral down effect for everyone.’”

“Roper is the listing agent for a home (where) the bank holding the mortgage is reviewing a short-sale purchase offer for the three-bedroom, two-bathroom home with a pool and a two-car garage, she said.”

“The asking price was $239,000 when the house, built in 2001, hit the market last October, but now stands at $138,000, she said.”

The Miami Herald. “An average home sold for around $306,000 here — down more than $50,000 from the same time last year. And still, the stockpile of unsold homes grew. The 80,000 homes and condos listed for sale don’t include thousands of condos still under construction nor thousands of properties acquired by lenders through foreclosures during the past few months.”

“Only 360 home sales were closed in Broward in February, a 28 percent drop from the same time last year. In Miami-Dade, the number was 244, down 41 percent. The number of condos sold was 459 in Broward, down 18 percent; in Miami-Dade it was 235, down 46 percent.”

The Sun Sentinel. “South Florida’s housing market looks worse now than it did at the end of a brutal 2007. Palm Beach County’s overbuilt condominium market is reeling. The median condo price last month fell 24 percent, to $159,300 from $209,600 a year ago.”

“Susan Gordon of Rhode Island listed her parents’ three-bedroom house in Boynton Beach in January 2006, just as the housing boom was ending. She never received an offer and has sliced her price to $229,000 from $350,000.”

“‘I’m getting a little bit fed up constantly lowering the price and not getting anything meaningful out of it,’ said Gordon. ‘But I guess it’s happening all over.’”

“In many cases, buyers are making low-ball offers, regardless of a home’s condition, Boynton Beach agent Bob Melzer said. ‘Buyers are all convinced that the market’s a disaster, but they can’t separate the houses that are overpriced from the ones that are well-priced,’ Melzer said. ‘It’s very frustrating.’”

The Orlando Sentinel. “Rising consumer prices and slumping home values are straining some Central Floridians, especially those with lower incomes and oversized mortgage payments. People who until recently had counted on home-equity lines and other forms of credit to bridge the gap between stagnant incomes and higher prices for food, gas and other items are particularly vulnerable.”

“‘My house is up for sale,’ said Kim Hanley, a custodian at Walt Disney World. ‘I just put it on the market. I can’t keep up; it’s gotten to be too much. The economy is terrible; gas prices are ridiculous. I’ve even done things like moved to a slower-speed Internet connection. I’ve cut down on air conditioning. But it’s not enough.’”

“Hanley, a single parent in her 40s with a teenage daughter, makes $11.82 an hour at Disney but said she has been on medical leave recently and is falling behind. ‘At my age, I expected to have a nice little nest egg, but I hardly have any savings,’ she said. ‘It’s hard to keep up.’”

“On Saturday a busload of prospective home buyers went searching for bargains as part of a tour of foreclosed and bank-owned homes in east Orange County. Tours also are planned in Seminole and Osceola counties. The empty homes beckoned bargain hunters with new carpet and paint and tantalizingly low prices.”

“Rudy Darden, 27, was among the busload of potential buyers hoping to snag a home for a fraction of its original value.”

“‘I wasn’t expecting to see new carpet, tile and appliances in a foreclosed house,’ said Darden, an Orlando newlywed and first-time home buyer, as he inspected a house near the University of Central Florida.”

“In one house, the residents expressed their frustration by hammering holes in the walls, staining the carpet and damaging the stove before leaving their home to the bank that held the mortgage.”

“Carlos Colmenares, a Kissimmee-area renter, said he could see the stress the former owners were under by the condition they left the house. Still, he said, ‘It’s a great opportunity for us buyers.’”

The Times Union. “Jacksonville’s single-family dwelling sales fell 40 percent in February to 687, with the median price 9 percent lower at $180,200. Area sales of existing condominiums also decreased by 12 percent to 92; sale prices fell 21 percent to $142,500.”

“One local analyst explained the Northeast Florida drop as a consequence of the excess new home inventory that has prompted builders to offer a myriad of incentives. Although some potential buyers might want to move into one of these new homes, they can’t sell their existing home.”

“‘Incentives are good for the new buyer, but consumers can’t match those incentives,’ said Ray Rodriguez, owner of the Real Estate Strategy Center of North Florida Inc. Rodriguez doesn’t fault builders because they ‘have to do something to keep business alive.’”

“Some home owners there are dropping prices and throwing in golf carts to move a deal, said Realtor Dottie Lay.”

“‘Your home has to either be staged cleaner and nicer or you have to offer incentives,’ said Lay, who has dropped the sales price on her own St. Augustine home more than once as she prepares to move into a new home still under construction.”

The News Journal. “Upon returning to Florida to check on two rental properties she and her husband own, Regina Marston was surprised by to see how much this seaside community has gone to seed.”

“Numerous homes, some of them in one stage of foreclosure or another, have overgrown and unkempt lawns, boarded-up windows, blue tarp-covered roofs or missing shingles, and boats, cars and trash in the yard.”

“‘I live in California now, but I came back in December and I was shocked to see the decline in the area,’ said Marston, a former long-time resident who plans to retire here one day. ‘Values are falling. I pay $8,000 a year in property taxes, and what am I getting in return?’”

“‘Over time, things get out of hand, and unless someone reports it, it doesn’t get fixed,’ said Realtor Al Weeks, the Marstons’ agent, who has been in the real estate business in Ormond-by-the-Sea for 21 years.”

“If a yard needs to be mowed, a notice is mailed to the address on record for the property owner. If the notice is returned, code enforcement officers will post another notice on the property for 10 days, after which a crew will be sent in and a bill will be mailed to the property owner charging an hourly fee for the mowing and a $200 administrative fee.”

“If the bill is returned, a lien will be placed against the property, said Carol Kerrigan, Volusia County’s code enforcement manager. ‘We can do it twice a year,’ Kerrigan said. ‘We’ll probably do a lot of these until we run out of money.’”

“But Regina Marston doesn’t think that goes far enough.”

“‘That’s a plan? The market has changed, and that won’t work anymore,’ she said. ‘The county can’t do business as usual. This is an unusual situation. This is an emergency.’”

“Two streets over from one of the Marstons’ properties is a home that was foreclosed on March 11. The grass was overgrown, brown fronds drooped from a palm tree in the front yard, a storm door stood open and a section of wood fencing lay on the ground. County records show the foreclosure sale will be April 11.”

“‘If the county isn’t doing anything right now, what are they going to do when these (foreclosures) hit the market?’ Marston said. ‘I think the county has allowed this area to get to such a place that I won’t be able to sell either one of my homes for what they’re worth.’”

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