The Housing Bubble

The Bend Bulletin reports from Oregon. “Home sales in Bend are down, but…more renters are in the market, and there are more houses to choose from, said Regan Scott, principal broker of Deschutes Property Management in Bend. That means falling rents for single-family homes and move-in incentives in some cases, Scott said. ‘This is unique in our market because this hasn’t happened in the past,’ Scott said. ‘We’re dealing with a new clientele, that (leasing) was not their goal. We have a new clientele that is doing this out of necessity to react to the market.’”

“Developers also are hiring Scott to find renters, for new homes that aren’t selling, he said. Scott said the influx of rental homes is primarily due to a soft housing market that is forcing investors who purchased homes for a quick profit to rent them in order not to lose them. Scott said many of the homeowners who hired his company never intended to rent their properties.”

“Stephanie Kramer, owner of Austin Property Management in Bend, has roughly 350 housing units, mostly single-family homes, under management, including a number of single-family homes that were added within the last six months, she said. Kramer expects to have 450 units under management by summer, partly fueled by homes that aren’t selling.”

“She also sees many new arrivals to the area who are choosing to rent instead of buy, betting housing prices will fall. There are also more potential home buyers who can’t line up loans, she said.”

“Valerie Hunter, a broker who specializes in foreclosures, said owners who lease a home usually have some equity in it. Otherwise, they are forced to sell, but in the current market, it takes a ‘fire sale’ to unload a property, Hunter said.”

“As a result, owners with properties in jeopardy usually list their homes for sale and for rent simultaneously, ‘just trying to get anybody to come to the table,’ Hunter said.”

“The Bend market had 1,262 single-family homes for sale in February, according to this month’s report from the Bratton Appraisal Group in Bend. The report listed 45 single-family home sales in February, the lowest since January 2005.”

“Traci Platiro, operations manager for Windermere Property Management in Bend, said her company can offer — with the homeowner’s approval — half-off discounts on the first month’s rent or, in some cases, a first month’s rent of $99.”

“‘People are taking a lot harder look in today’s market, in order to not have a vacancy, to see what they can do — so reasonable rates and move-in incentives always help,’ Platiro said.”

The Willamette Week from Oregon. “There are seemingly three kinds of Portland renters: those who’ve had a recent rent increase, those who soon will, and those competing for the dwindling supply of decent rentals at a decent price.”

“And industry insiders are predicting even larger rent increases ahead. So why these big changes? The mortgage crisis has made it harder to qualify for a loan. That means those who may have become owners a year ago are now forced to rent.”

“Norris & Stevens managing director Brian Bjornson says rents were kept ‘artificially’ low for the last few years because it was easy to buy and many renters opted to own instead of rent.”

“‘Now, many of those same buyers would like to rent out their condos,’ Bjornson says. ‘These condos in the Pearl and the South Waterfront aren’t selling, and the owners have $2,000 mortgages. They want to get as much of that mortgage covered as possible, so they try to keep rents high.’”

“According to Norris & Stevens—one of Oregon’s largest locally owned real estate and property management companies—newer two-bedroom, two-bath apartments in the metro area rented for an average of $865 at the end of 2007.”

The Yakima Herald Republic from Washington. “Hundreds of new lots have been created, and as many as 650 more are at one stage or another in the application process as developers move to meet what they say remains a strong demand in a popular area for residential housing.”

“The rapid pace of development and the resulting inventory does give developers pause. The growth is exceeding what has been the traditional market absorption rate of 200 to 300 homes per year.”

“‘For all of our thinking, we aren’t going to guess right every time. If we don’t guess right and something causes people to tighten up, that really drives down the housing process in Yakima,’ said Jon Kinloch, Apple Tree resorts director of marketing.”

“Pat Strosahl, CEO for United Builders of Yakima, called the current demand insatiable. So who are the buyers for these new developments? Strosahl said a quarter of the homes United Builders is selling in its various developments — including Zillah Lakes near Zillah and in the Yakima area — are from outside the area.”

“‘We think Yakima has a lot of advantages that Bend, Ore., has. There is a pretty significant range of recreational activities in close proximity. We are within three hours of the major metropolitan areas,’ he said. ‘We have this wine-country thing and house prices are reasonable compared to other markets.’”

“The proposed as-yet unnamed development by United Builders and its partner, is focusing on baby boomers approaching retirement. Apple Tree is seeing a larger percentage of buyers, 50 percent, from outside the area.”

“‘They are made up of professionals moving to Yakima for a particular job or moving to Yakima to retire or for some other reason,’ Kinloch said.”

“With retirees from the Seattle area and elsewhere having cash from selling their homes, the demand is expected to continue.”

The Olympian from Washington. “Thurston County foreclosure notices have increased more than 50 percent in the first quarter of 2008 compared with the same period last year. South Sound real estate agent Phil Sharp has tried to capitalize on this increase by offering tours of foreclosed property to potential investors.”

“On Saturday, about 15 people loaded into two white vans and toured 12 homes in Lacey and Olympia that were listed for sale by banks, or by owners hoping to sell their houses before they are sold at auction.”

“Thurston County hasn’t been immune from the ‘mortgage mess’ because of past lax lending standards and a slower housing market brought about by higher inventory levels, Sharp said.”

“A few years ago, there were only about 400 homes on the market to choose from, he said. Since, inventory levels have surged past 2,000 homes. The number fell to 1,977 homes in February, according to Northwest MLS data.”

“Because some owners might be home during the tour, he asked the group to be respectful with comments. ‘People are already feeling down; they don’t need to be kicked,’ Sharp said.”

“Tim Salo of Olympia said he wants to diversify his investment portfolio by buying real estate. He started shopping for foreclosed properties about six months ago, but then prices averaged about $250,000. Since, he has noticed prices for distressed property fall 10 percent to 15 percent.”

“‘Now, it pencils out,’ he said about the investment.”

“Still, Salo acknowledged that it was sad to see people losing their homes. On the second stop of the tour, 15 people filed into an Olympia house and came face to face with Timothy June, the owner. While everyone looked through the house, June stayed busy by cleaning up his daughter’s room.”

“Asked how he felt about the tour, June said he was glad to have people looking around. ‘I want the house sold,’ he said.”

The Sequim Gazette from Washington. “From about 2003-2005, Sequim real estate took off. The heyday of the local real estate boom is over. What’s left is a market stable enough to coast into the next jump in sales.”

“‘The outlook for Sequim-area real estate is positive when you consider factors relating to long-term supply and demand…and the fact that baby boomers are going to continue to retire here for years to come,’ agent Michael McAleer said. ‘For now we still have a constant flow of buyers that is still higher than 2001 and 2002 and a large housing stock for them to choose from.’”

“‘While houses are still being sold at a price higher than five years ago, we are not on an island,’ McAleer said. ‘We are not going to see the number of buyers from out of the area like we did during our big sale years.’”

“McAleer said an inflated housing stock and reduction in buyers emphasizes a buyers’ market in Sequim. ‘We define a buyers’ market based on number of houses on the market and how many houses sell per month,’ he said. ‘If there are six months’ worth of houses for sale, it’s a balanced market. Right now Sequim has 11 months of housing available, compared to 17 months nationally.’”

“The county’s median household income is $46,213, according to the state. With $10,000 down and an 8.23-percent loan, the median household would be able to purchase a $150,000 home, according to HSH Associates Financial Publishers.”

“There were about a dozen houses on the market at or below $150,000 in the last week of March. With median housing costs at $339,950, most county residents are unable to afford most of the housing stock.”

The Bellingham Herald from Washington.”The undeveloped 20-lot Roseberry Ridge subdivision is now the property of Skagit State Bank, after a slowing local real estate market left its would-be developer without better options.”

“Property records indicate that the bank filed a February foreclosure notice on the seven-acre property. The notice says that close to $2 million in unpaid debt was secured by the property. Whatcom County Assessor’s Office records indicate that Roseberry Ridge LLC paid $700,000 for the property in 2006.”

“Given present conditions in the real estate market, Roseberry Ridge developer Ken Tiderington said he didn’t think he could sell the lots fast enough to pay off his loan or even keep current on interest payments.”

“‘We would have had to keep paying interest until the market turned,’ Tiderington said.”

“Tiderington is also developer of the 173-lot Pacific Highlands subdivision in Ferndale. He said the first 90 lots sold in about two weeks when they went on the market in 2004. He has now sold all but 26, but at this point the market has ‘just disappeared.’”

“‘There’s an overbuilt, abundant inventory of unbuilt lots in Ferndale,’ Tiderington said.”

“‘You cannot get a spec loan at any bank in Bellingham,’ Tiderington said. ‘The market’s dried up, the lenders have dried up.’”

“‘People who have money are still buying lots and building houses,’ Tiderington said. ‘That end of the market always stays the same. When the market is this bad, (custom home buyers) get the best deal.’”

“That’s because subcontractors will cut their prices when work is scarce. ‘Subcontractors right now are hurting big time,’ Tiderington said.”

The Vancouver Sun from Canada. “Metro Vancouver condominium prices are forecast to climb over five per cent this year and average 3.5 per cent a year for the next four years, according to the Conference Board of Canada and Genworth Financial Canada.”

“‘Prices are rising, so if you can get into the market, clearly in the Vancouver market, which is one of the best in the country, then you are going to get some return in terms of building your equity.’ said Jim Murphy, president of the Canadian Association of Accredited Mortgage Professionals, which promotes affordable home ownership.”

“‘Of the leading indicators for a price correction that we look at, so far, none of them have come to pass,’ said senior analyst Robyn Adamache. ‘So there is still quite a ways to go.’”

The Calgary Herald from Canada. “Calgary’s resale housing market has taken a dramatic turn and the latest MLS sales data from the month of March suggest it has become a buyer’s market with listings continuing to soar and sales plunging compared with a year ago.”

“‘We have moved into a market that is currently providing a great variety of choice for the buyer,’ said Ed Jensen, president of the Calgary Real Estate Board.”

“Total MLS listings inventory at the end of March was 12,597, a whopping 167 per cent increase from 4,723 registered in March 2007. The month-end inventory for single-family homes in Calgary metro was 5,957, up 155 per cent from a year ago, while for condos it was up a staggering 283 per cent from a year ago to 2,781 listings from 726.”

“‘With that surplus in inventory, what we’re seeing here is roughly one in five of the homes are selling,’ said Jensen.”

“‘The days of the sellers in the last couple of crazy market years just naming their price and throwing their house on without presenting their house correctly, those days are done. And I think we have to come to reality,’ he said.”

“‘One overhanging question is that supply level and how that will impact prices,’ said Lai Sing Louie, senior market analyst in Calgary for Canada Mortgage and Housing Corp. ‘I don’t believe we’ve reached the highest level of supply yet.’”

“‘We don’t expect any dramatic decrease in prices but we think that prices are going to go up and likely the annual average is going to be less than five per cent. Things are stabilizing right now but still the biggest risk is that with all that supply out there, it’s going to give people even more time for selection,’ he said. ‘It’s going to cause people maybe to compete more with each other. That sense of urgency to buy has diminished dramatically from a year ago.’”

“The average sale price of a single-family home in Calgary metro has increased for each month this year from the $444,769 it was in December — $455, 297 in January, $471,696 in February. It had peaked at $505,920 last July.”

“‘We’ve gone through some crazy years where our inventory was almost non-existent,’ said Jensen. ‘I think the sellers need to pay attention that this is a buyer’s marketplace.’”

The Daily Press reports from Colorado. “It is true. Foreclosures have increased in Montrose County. The total number of sales in the area are down. Home values have also decreased and there is a larger buyers market than ever before. Montrose native Dave Weber bought his house about three years ago. He knew the house needed repairs, but he never figured that additional construction projects, plus some unexpected medical emergencies would put him in the position he is in now — foreclosure.”

“About a year after he bought the home, he refinanced. Now he spends hours a day on the phone with the company trying to save his home, each time he is told something different.”

“‘When the market was really hot, almost anyone could get a loan,’ said Marjorie Phelps, broker and current president of the Montrose Association of Realtors.”

“Subprime loans were created to ‘make ownership more available to more Americans,’ said Merle Allen, director of counseling for the Grand Valley Housing Initiatives. It was economy driven.”

“‘It was a good idea gone bad,’ he said. ‘The American Dream was to own a home, but it wasn’t available to the working class American. The idea was never being that someone would look at that and take advantage … it spiraled out of control.’”

“From 2002 to 2005, Montrose County saw a large steady increase in sales, according to analysis by Lynn Vogel of Comparable Sales Research. The total dollar sales also increased significantly during that time.”

“Between 2003 and 2004, the total dollar sales growth rate in the city of Montrose was at 58.83 percent. That growth rate was high again between 2004 and 2005 at 29.99 percent. However, data shows Montrose, city and county, started to fall after 2005.”

“‘Our adjustment started in 2005,’ said Vogel.”

“Where the area is seeing the largest inventory, according to Phelps, is in the $240,000 to $325,000 range. However, Montrose has a larger-than-normal inventory in all areas. Phelps said she heard there is a five to 10 year build-out in the county.”

“‘A lot of people move here and want to buy a home, but it’s hurting because they can’t sell their home in California, the Front Range,’ Phelps said.”

USA Today on Colorado. “Foreclosures are ripping through the rows of new homes in the flatlands where Denver turns to prairie. The foreclosure epidemic has swept so quickly through this part of Denver that in less than two years, lenders took action on 919 of the roughly 8,000 properties here, according to city records.”

“‘The people ultimately getting hurt here are the homeowners, often lower-income people that probably should never have been approved for a mortgage in the first place,’ says Sindee Wagner, a deputy in the city’s Public Trustee office.”

“Dave and Suzie Evans’ was a tidy, two-story house on Orleans Street,. Dave Evans admits the $182,000 mortgage they took out was more than the couple could afford, even with both working.”

“‘My parents taught me not to spend more than a third of your paycheck on a house, but that went out the window,’ he says. They wanted to buy and fell in love with the house. For a time, it worked.”

“Then Evans lost his job. The couple fell six months behind on their mortgage. Their credit cards slipped, too. And their car payment. At first, creditors called at all hours. Then even the bank stopped calling.”

“‘Eventually we sat down and said that’s it,’ Suzie Evans says. ‘It was almost a relief when we got to the day when we walked out of that house, when it was over.’”

The Greeley Tribune from Colorado. “Shelley Costigan’s dream seemed so real it felt tangible. The project was a way for Greeley Realtor to create business. She had done similar things on a smaller scale before. She would work with a builder to build a spec home or two, and the homes always sold.”

“That was during Greeley’s roaring housing market. Times, of course, have changed. With the downturn in the real estate market, building has slowed, lots planned for development sit vacant and growth rates are stagnant.”

“She sold two homes right away. ‘Then the market just started changing,”‘ she said. ‘It pretty much just slowed down, totally.’”

“Greeley has about 4,000 vacant units that could be developed. ‘If you look at it as a peak year, you would say we’ve only got about two years of capacity,’ said Greg Flebbe, the senior planner with the city of Greeley. ‘If you look at it as what we’re expecting for this year, you’ve got about 20 years of capacity.’”

“During the boom years, said developer Jeff Demaske, Greeley made a good market because the prices for homes were good.”

“As the housing bubble grew, however, everyone wanted a piece. The city raised its fees, farmers started charging more for land. As builders passed these costs onto the price of a new home, much of the demand dried up. It no longer made sense to commute to Loveland, when a house there cost virtually the same as one in Greeley.”

“‘It’s our own fault to a certain extent,’ Demaske said. ‘There were just too many lots on the market.’”

“‘I don’t think it will ever get back to the growth it was,’ said Costigan. ‘I think part of that was because as a market, Greeley was very low in the pricing of their homes, so there was a big adjustment there.’”

“Costigan said the reasons for the slowdown are varied and complex, but she points to the housing boom itself as a contributing factor. Greeley simply over built. ‘We were building quickly,’ she said. ‘Because for a while we had a definite need for new construction, and we just kept going and going and going.’”

“In retrospect, the housing collapse shouldn’t have caught anyone by surprise. ‘We should have known,’ she said. ‘It always goes in cycles.’”

The Arizona Daily Star. “There apparently is no shortage of deal seekers in the Green Valley real estate market. Dozens of them turned out for Saturday’s auction of nine new homes in Las Campanas Village.”

“The bidding came hesitantly and in increments of only $1,000 or so. Several of the winning bids landed around $140,000 plus a 10 percent auction premium. That’s about $100,000 below the list prices for the two-bedroom homes, which ranged from about 1,680 to 1,760 square feet.”

“The developer, Mark Hughes, called it ‘a bad night in Las Vegas.’”

“Only three of the houses, those that were “absolute” with no cancellation rights, were sold after the auction. Hughes made counteroffers for the other six. Hughes said he probably will reduce the prices of his remaining houses based on the auction results.”

“The winning bids ‘were lower than I expected,’ he said.”

“A drop in prices is not welcome news for some retirees who bought at the peak. Winter resident Joe Morrow, who attended Saturday’s auction, said his Green Valley house is probably worth about $150,000, compared with about $200,000 two years ago. Judging from the prices at the auction, he thought he might revise that estimate to the $120,000s or $130,000s.”

“Gary Beatty, an unsuccessful bidder on two properties, said he felt sorry for other buyers in the Las Campanas neighborhood who paid in the $230,000s or more. He bid about $137,000 on both tries on behalf of a brother. The winning bids were not much higher.”

“‘This market is terrible right now,’ he said.”

From KTAR.com in Arizona. “Some homeowners facing foreclosure are finding a way to take advantage of the slumping housing market.”

“As mortgages structured during the housing boom leave them with negative equity, they are purposely allowing those homes to go into foreclosure while buying another home at today’s depressed prices.”

“Jill Hoogendyk with Home Point Mortgage in Phoenix said it’s a growing trend.”

“‘Many times, homeowners are upside down on their property. They can’t sell the property, so they walk away,’ she said, adding, ‘Before they let that happen, they go and buy another property because their credit’s still intact and their income justifies the other property. Then they move into that property and walk away from the property that they’re unable to sell.’”

“Hoogendyk added, ‘People can’t afford the home they’re in, so they’re actually moving down to a more affordale home for them.’”

In Business Las Vegas from Nevada. “Sales during the fourth quarter for all three categories were bleak, with the 8,668 recorded representing a 50 percent drop from the fourth quarter of 2006.”

“One of the hardest hit areas for single-family housing was 89146. Its prices fell 28 percent to $211,075. Another hard-hit area was east of the Strip in 89169, which has many condo conversions. Its median price fell 52 percent to $204,500.”

“With about 40 percent of the existing home sales in some phase of foreclosure, Dennis Smith, president of Home Builders Research, says he expects the median price to remain at or below the current level.”

“‘It appears many foreclosures are now being sold by banks at roughly 35 percent to 50 percent below peak prices of 2004,’ Smith says.”

“Operators of the Trump International are hoping the resort will be greeted as a breath of fresh air in the Las Vegas market when the property opens its doors March 31.”

“It should. The luxurious 645-foot, 64-story, $500 million hotel and tower will be smoke-free and has no casino.”

“‘It will be a place of refuge for our residents and guests,’ said Steve Shalit, managing director. ‘No clang, clang, clang sounds from slot machines anywhere in the building. And, it has a lot of Donald Trump in it.’”

“Trump International is classified as a condominium-hotel property with about 95 percent of the rooms privately owned. Studio apartments start at $700,000 and the one-bedroom units at $1.8 million. Shalit said because the tower hasn’t opened yet and it’s difficult to gauge how often residents will occupy their units, it’s hard to tell how many rooms will be available for rent on any given day.”

“Trump International is next door to the site of the proposed Plaza hotel project where the New Frontier once stood and adjacent to the construction site of Boyd Gaming’s Echelon. Another new neighbor on the horizon is the Fontainebleau, across Las Vegas Boulevard.”

“‘Besides, we’re right across the street from a spectacular shopping mall in the Fashion Show, and I’m sure many of our guests will take advantage of having those high-end stores nearby,’ Shalit said.”

“Shalit also said, like Mark Twain, reports of the demise of the second Trump tower in Las Vegas have been greatly exaggerated.”

“‘The second tower is designed and will take reservations when the market is right for it,’ Shalit said.”

The Record Courier from Nevada. “Local subcontractors are among the victims of the current mortgage crisis, some of them filing liens against property owned by local developer Syncon Homes.”

“Dana Linehan of Tri Valley Plumbing said Syncon owes them money. Tri Valley is now being sued by one of their suppliers, but can’t make those payments until they’re paid by Syncon.”

“‘They paid us in a timely manner from 2003-05, but we started having problems in 2006-07 and now, they haven’t cut us a check for four or five months,’ Linehan said. ‘I’ve been calling them, but they aren’t returning my calls.’”

“Mike Hansen, division manager of Gale Building Products in Reno, said his company has written off hundreds of thousands of dollars from some Reno developers, but Syncon has done well with respect to payments.”

“‘Other builders are in much worse shape,’ he said. ‘Builders have to understand their finances better. For awhile, they were selling homes as quickly as they built them and at that point, they didn’t have to understand finances.’”

The St Louis Post Dispatch reports from Missouri. “The downtown St. Louis turnaround that seemed just around the corner last fall may take longer than many had hoped. Indeed, the once-booming downtown residential market has cooled considerably. Over the past two years, 2,500 new rental and for-sale units were added to the 4,746 already in downtown, according to the Downtown St. Louis Partnership. Only 298 new units are expected to be added this year, said Jim Cloar, executive director of the partnership.”

“‘I have never built condominiums before so I have nothing to compare sales to, but the pace is slower than I would have expected,’ said Craig Heller, managing partner of St. Louis-based LoftWorks LLC, which is developing the Syndicate building.”

“‘If we can get the building built, we will get the condos sold,’ said Steve Smith, a partner in the St. Louis-based Lawrence Group. ‘Because housing prices are slowing, the psychology of the buyer is to wait and see if it becomes cheaper.’”

“One victim appears to be a boarded-up building on 14th Street, which was to be converted, starting a year ago, into Ford Condominiums. Condo and loft prices are falling along with the pace of development, said Lewis.”‘

“The last thing developers want is inventory sitting on their hands, so they will take a hit, sell at a lower price or give concessions,’ said Bob Lewis of St. Louis-based Development Strategies Inc. ‘We are starting to see that.’”

“Downtown has long faced distinct challenges: obsolete buildings, the difficulty of assembling land for large projects, and competition from cheaper, easier-to-develop suburban sites. ‘If St. Louis had constraining factors that prevented sprawl, that would give downtown an advantage,’ Lewis said.”

The Journal Register from Illinois. “The number of single-family homes started in Springfield last year was at the lowest level since 1984, and even fast-growing bedroom communities such as Chatham, Rochester and Sherman saw a slowdown in construction.”

“The Reserve, a 60-acre development on the southwest side of Springfield where most homes start at $500,000, sold out in three years. But father-son developers John and Steve Klemm decided to lower the price range when they started the adjoining Savannah Pointe development last fall.”

“‘We didn’t think there was as much demand now in that market (The Reserve). It’s somewhere between The Reserve and Panther Creek. We kind of toned it down a bit,’ said Steve Klemm.”

“He said he expects homes in Savannah Pointe, which is just south of Panther Creek on Illinois 4, to start for about $300,000.”

The Chicago Tribune from Illinois. “Once a relatively obscure slice of the real estate business, foreclosed homes that are now in the possession of lenders loom much larger as the economy flattens and housing sales stagnate.”

“Across the country, federally chartered banks held more than $12 billion worth of foreclosed properties at the end of 2007, about 100 percent more than a year earlier. Of those, $6.6 billion are residential properties of one to four units, said Keith Leggett, senior economist at the American Bankers Association.”

“One housing data firm said it found the same extraordinary doubling in the Chicago area in what’s known as REOs—real estate owned by lenders and investors.”

“Janice Lee fears she will lose her 1,400-square-foot Wilmette home next month. Lee found herself heading for trouble after she was diagnosed with lymphoma in 2003. To keep pace with her medical bills, Lee sought a $70,000 equity line on her home in 2004. Two years later, she sought a second line.”

“Nearly half of her $130,000 loan, or $60,000, went toward her mortgage and property taxes. But that pushed her monthly payments to $4,000 from $2,500 in two years. In January 2007, she refinanced, pushing her monthly payments to more than $6,000, she said.”

“She missed her first payment last March and received a foreclosure notice in June. Lee said she has tried to get the terms of her loans modified and still hopes to work something out. She’s due back in bankruptcy court next month.”

“‘It’s like quicksand. … I went from a very normal, upper-middle-class existence to ‘Oh, my God, I can’t pay anything.’ It’s just crazy,’ she said.”

“David McCarthy, CEO of a Denver-based company that manages and disposes of REOs, said it will take three to five years to work through the properties on lenders’ books. The REO manager has 7,500 foreclosed homes in its inventory—double the amount from this time last year.”

“‘Some lenders want to explore leasing properties in hopes the market will turn around, and others are just churn-and-burn, get it off the books,’ particularly in struggling housing markets such as Detroit and Cleveland, McCarthy said. ‘They think, ‘The first loss is the best loss.’”

The Detroit Free Press from Michigan. “A three-bedroom, dusty pink colonial sits cold and empty among the family homes on a sophisticated Huntington Woods street. Last spring, the owner tried to sell the house for $399,900. But it would have been tough to overlook the blue cabinets in that unloved kitchen, the outdoor pool that spans the tiny backyard or the fact that metro Detroit’s housing market had hit the skids.”

“The house went into foreclosure, and this January the bank-owned property got slapped with a price tag of $239,900.”

“Next Sunday, if no buyers are found, the once stately house built in 1927 is expected to be part of The4closurebus Tour — a creation of Jeffrey Reiter and Pat Teeley, real estate agents in Huntington Woods.”

“‘A year ago, I couldn’t have done a foreclosure home tour,’ said Reiter. Earlier, he said many of the foreclosed homes were grotesque, had bad cases of mold and weren’t priced to sell.”

“Now, thanks to record foreclosures and the credit crunch, he and his partner see more banks becoming aggressive about pricing. And they’re spotting opportunities.”

“In Oakland County, one of the wealthiest counties in the country, there are 13,980 homes for sale. And 2,016 of those homes are either owned by banks or would need bank approval to sell.”

“Teeley, who has been selling real estate in southeast Michigan since 1995, blames part of the foreclosure mess on Michigan’s loss of jobs, greed and the fact that some people shouldn’t have been able to buy some of the homes that they did.”

“That said, she’s stressing the growing mainstream acceptance of shopping in the foreclosure market. ‘People can’t believe in this market there can be 10 offers on a house, but it’s happening. But only on foreclosures,’ she said.”

“We visit another home in Royal Oak. The home had a $280,000 mortgage on it in 2006. It’s now got a foreclosure price tag of $154,900.”

“Investors from as far away as Hong Kong and Hawaii are coming to Detroit to make their fortune buying foreclosed homes in bulk.”

“‘This is a millionaire’s market,’ said Jeremy Burgess, a 28-year-old investor from Washington state who has been living in Detroit for the past year. ‘I feel like I’m driving through the city and stopping to shovel diamonds in the back of my truck.’”

“His wife, Jeanna Kiehle, and partner Jared Pomranky formed Urban Detroit Wholesalers to scour the city for houses they can fix and rent. The idea is to generate cash flow until the market improves, and they then can sell the houses. They own 38 houses now and close on 15 more before the end of the month.”

“Burgess said homes in Detroit’s better neighborhoods are renting for $850 a month. His company manages the properties for the out-of-state investors. The investors are banking on a Detroit recovery in the next 5-10 years.”

“Banks see Detroit as a sore spot, said said broker Mark Nagy, because they cannot move the properties and there are so many.”

“‘Bulk buying will become more commonplace by the end of the summer,’ Nagy said. ‘Right now, so many properties in Detroit are like a hot potato. Whoever ends up with it will be crushed.’”

“In many cases, a bank today wants 55-65 cents on the dollar for a suburban property, yet investors want to pay 40-45 cents on the dollar, he said. In Detroit, the bank may want 30-35 cents on the dollar, and investors want it at 20-25 cents on the dollar.”

“‘Those two points have not met in the middle yet,’ Nagy said. ‘It’s an evolution process. It’s going to evolve that bulk sales will increase.’”

“‘Right now, people are buying for the thrill because prices keep going down,’ said John Graham, a real estate agent in St. Clair Shores who works primarily with investors. ‘The rental market is going to be crazy good. That’s what these out-of-state people are seeing.’”

The Journal Sentinel from Wisconsin. “Developer Scott Fergus, whose First Place on the River condominium development was taken over by a court-appointed receiver in January, filed a Chapter 7 bankruptcy petition Tuesday.”

“Fergus listed assets of $721,567 and liabilities of $80.9 million in documents filed in U.S. Bankruptcy Court in Milwaukee. Most of Fergus’ assets are tied to his Oconomowoc home. Cost overruns and a lawsuit involving its former general contractor have plagued First Place, among the largest housing developments downtown.”

“Fergus, a former state legislator, has completed other housing developments in the Milwaukee area, including a 10-story condo building at 601 E. Ogden Ave.”

“Fergus had planned to develop the $120 million Pointe Blue, with 434 condos, 90 apartments and commercial space overlooking Lake Michigan, just north of downtown Racine. He dropped those plans in January after he was unable to secure financing.”

The South Washington County Bulletin from Minnesota. “There are…indications of a booming American economy gone bad in a city where almost nothing stood in the way of growth for decades: For sale signs that won’t go away, single-family homes converted into rental properties at an increasing rate and a disconcerting spike in mortgage foreclosures that dot the sprawling suburban landscape.”

“The wave of foreclosures in Washington County — 148 alone in Cottage Grove during 2007; more than 850 county-wide — has left government agencies scrambling in a search for how best to help, city officials trying to stay on top of vacant properties and some homeowners, buffeted by a lagging economy and lower home values, hunting for help.”

“‘Up until the end of last year, people would’ve assumed it was an inner-urban problem,’ said Ed Nelson of the Minnesota Home Ownership Center in St. Paul. Now, ‘most people understand it’s across the board, it’s not hitting one specific neighborhood, not hitting one type of income group.’”

“Lack of knowledge about the home buying process turned into one of the multitude of contributing factors in the surge of foreclosures. Nelson said many buyers took out adjustable rate or no-down-payment mortgages without comprehension of what fluctuating interest rates could mean to their monthly payments.”

“‘In the suburban areas specifically we are seeing that clients were maybe overextending themselves, getting into a little more home than they could handle,’ he said.”

“It has all led to a problem so vast, so void of easy solutions, it has many experts scratching their heads in a search for solutions. ‘I’ve been working in this field since 1992 in urban areas,’ said Rich Malloy, deputy executive director of the Washington County Housing and Redevelopment Authority, ‘and (I’ve) never seen anything like it.’”

The Star Tribune from Minnesota. “Not long ago, Minnesota home builders led the way out of recessions with placards that read, ‘Now Hiring.’”

“During the last two recessions — one seven years ago, the other 17 — home-building jobs bounced back earlier and more energetically across Minnesota than they did across the nation.”

“From March through November 2001, Minnesota home builders turned in an astonishing performance. They hired more workers each and every month of a national economic downswing.”

“This time around, Minnesota home builders have few incentives to be heroes in the job market in the face of a brake on sales that started almost two years ago, said Pam Perri Weaver, executive VP for the Builders Association of Minnesota. ‘Never have they been in an environment where interest rates are 5.5 percent and residential home building is not rising,’ Weaver said.”

“Said state economist Tom Stinson: ‘Even though interest rates are low by historical standards, you still have to convince people to borrow money to buy an asset that may be going to continue to decrease in value for a year or more.’”

“‘This is a sector that, all of a sudden, has enormous leverage on the rest of the economy,’ Stinson said. ‘It’s affecting the free flow of credit,. Not just credit for housing but credit for all kinds of activities.’”

“Another reason Minnesota’s home-building industry held up well in the last two recessions — and may be more vulnerable now — was that the state’s population was growing at its fastest pace in decades, said Steve Hine, director of labor market information at the Minnesota Department of Employment and Economic Development.”

“‘We were a magnet state,’ with job and population growth that outpaced the nation in many industries, he said. ‘As our unemployment rate has approached the national unemployment rate, that magnetism has been reduced.’”

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