The Housing Bubble

The Sacramento Bee reports from California. “Robert Kleinhenz, deputy chief economist for the California Association of Realtors, gave an hour-long overview of the economy, the mortgage market and the housing outlook to the Sacramento Association of Realtors. His basic tone: big-time caution about the immediate future - and largely because the mortgage market is still cracking down and making it hard for many people to qualify for loans. But…like many others he is seeing a better second half of 2008 than this first half - and is using words like stabilizing.”

“More and more, even those like Kleinhenz who have proved overly optimistic in their previous forecasts, are offering some sense that - barring unforeseen events that bring big job losses - this year is going to see the worst of it for housing.”

“He predicted slight growth in Cailifornia’s economy during 2008 and cited the advantages that population growth brings to even a weak housing market. Especially the kind of growth that Sacramento will see by virtue of its growing affordability again and its inland California location.”

“Kleinhenz, representing an industry that resells existing homes, saw the near crash in building permits being taken out by home builders in the Sacramento region as a positive. He said: ‘This is a good thing because you don’t want more new-home production coming onto the market when there is so much for-sale inventory out there.’”

The Press Enterprise. “For five years more houses built meant more jobs in the Inland region, earning the area a spot in Forbes’ April roundup of best areas for job growth. Now, the jobs have stopped being created, and for the first time in the Inland region’s statistical history, the region’s job growth fell.”

“Riverside County hopes to secure a grant that would train residential construction workers in skills needed for commercial and redevelopment building, said Tom Freeman, spokesman for the Riverside County Economic Development Agency.”

“‘At a time when housing is slowing down, our sewer projects we’re doing, our roads projects were doing, our parks projects — all these create private sector jobs,’ Freeman said. ”

“Creating jobs to offset losses in home construction and related industries has posed a challenge, Freeman said.”

“Many colleages asked Bunker Rayner what he was thinking of when he bought Corona Mortgage Financial Corp. in March 2007, just when the real estate industry was collapsing and other mortgage brokers were closing their doors.”

“He concedes it was ‘the worst time you could buy a mortgage company’ and he embarked on the venture very nervously. During an interview last week, Rayner was optimistic. He pointed to a sign in his lobby that says ‘We’ve been invited to a recession. We respectfully decline.’”

“The mountain of bank-repossessed houses ultimately will evolve into sales because lenders will be forced to drop prices as far as necessary to unload those properties, Rayner said.”

“Q: Are you doing much refinancing for people who can no longer afford the rising interest rates on their adjustable mortgages? A: No. There are people who call and want to refinance their homes…but a lot are upside down on their homes and there is nothing I can do.”

“Q: How do you retain employees when business is so tough? A: It is hard. I have lost loan officers on commission who have gone back to regular 9 to 5 jobs.”

“Q: Are you having difficulty getting people to qualify under the tighter lending standards? A: Probably one of every five people I talk to qualify for a loan. It is all a numbers game.”

The San Bernardino Sun. “A bank employee stumbled upon a foreclosed house used to grow marijuana, leading to the seizure of an estimated $4.5 million in drugs in two houses and an arrest Saturday.”

“Police began investigating the case Thursday when the bank employee inspecting a foreclosed house found pot plants inside. Evidence there led police to another house used to grow marijuana in Fontana.”

“The five-bedroom houses sit in upscale neighborhoods. Angel Wayhang Kou, 30, of Rancho Cucamonga was booked into jail on suspicion of cultivating marijuana, maintaining a residence for drugs, theft of utilities and conspiracy. Police Sgt. Jeff Decker said Kou owned both homes, but both were in foreclosure.”

The Reporter. “Vallejo is set to become the largest California city to declare bankruptcy after leaders voted in favor of the solution to the city’s spiraling budget crisis. The city council voted unanimously Tuesday night following hours of public comment.”

“Vallejo has been slammed by increasing costs of its public safety contracts, the housing crisis, lower property values and state raids on local coffers.”

“Former Chamber of Commerce chairwoman Verna Mustico warned that if the city files for bankruptcy it could make the current housing crisis worse. But numerous residents agreed with the city manager’s office that at the end of the fiscal year, Vallejo will run out of money and had no other option but Chapter 9 protection.”

The Contra Costa Times. “A day of tough decisions for Contra Costa supervisors ended Tuesday with unanimous approval of a county budget that will slash nearly $51.7 million from programs.”

“For the first time in a decade, county spending will drop next year. It had been rising by 7 percent annually. But as the economy falters and the housing market implodes, revenue and expenses will dip by 4 percent. All told, that represents an 11 percent shift from a typical budget year.”

“The supervisors…also noted that these cuts are just the beginning. The county is bracing for millions of dollars more in losses when lawmakers complete the state budget this summer.”

“The budget shortfall ‘has forced us to look at new ways of doing things,’ Supervisor Gayle Uilkema said. ‘Right now, this is discouraging. … But the reality is, the world is going to be brighter from Contra Costa’s view if we stop digging a (financial) hole.’”

From ABC 7 News. “The combination of foreclosures and declining property values are putting a squeeze on local governments throughout the Bay Area. Marin County will probably have to lower the assessed value of at least 1,000 homes. Contra Costa County is re-assessing about 65,000 properties, and expects to lose at least $40 million in taxes as a result.”

“Alameda County will reassess about 40,000 homes and business at a cost of at least $20 million in property taxes and the South Bay may take the biggest hit of all.”

“‘We proactively reduced the assessed value on 43,000 residential properties this year,’ says Clara County Assessor Larry Stone.”

“Santa Clara County’s reassessment of 43,000 properties has resulted in $6 to $7 billion of property tax value to disappear. The county’s share of those revenues is one percent which is a loss of $60 to $70 million.”

“Santa Clara County is facing a $172 million deficit this year according to county executive Peter Kutras. ‘We’re struggling and there is no way we can get enough revenue to keep us going,’ says Kutras.”

Bay Area Newsgroup “The slide in residential real estate prices and sales has yet to abate, and could hound the economy for two more years, according to an ominous assessment presented Tuesday at a realty conference.”

“What’s more, when the housing market manages to stagger back on its feet, don’t expect it to come roaring back, according to Kenneth Rosen, chairman of the Berkeley-based Fisher Center for Real Estate and Urban Economics, which sponsored the conference in San Francisco.”

“‘To think that we will have a big recovery in housing is a mistake,’ Rosen told the conference.”

“The big unknown is the state of the economy generally. The housing market slump also could imperil the overall economy, especially consumer spending. That’s because home owners in recent years had tapped the equity in their homes through residence-backed lines of credit.”

“The jump in home equity bolstered the income of a typical family with two wage earners. ‘People also had a third earner in the family,’ Rosen said. ‘That was the house.’”

“In the housing industry builders and buyers have been at a stalemate. Who wants to buy when the price might go down? And while builders need to sell their homes, they also needed a way to convince buyers. So in this game of chicken, builders have pulled off the road and are offering price guarantees to sweeten the deal.”

“Signature Properties, based in Pleasanton, has a few communities with a two-year price guarantee, including two in Livermore and others in Concord, San Pablo, Richmond and San Francisco. There are some restrictions to the deal.”

“‘We believe the homes will hold the value pretty well and after the next two years, I think we will find some recovery in the marketplace,’ said Linda Kime, vice president of sales and marketing for Signature Properties.”

“Homes prices have also gone down, more than 18 percent year-over-year in Alameda County, DataQuick Information Services Inc. reported. Prices have gone down from 4.4 percent in Marin to 26.9 percent in Contra Costa counties.”

“‘We know the market sucks. The questions is what are you going to do about it?’ Pacific West, a Reno, Nev. builder writes on its Web site. The builder, which has homes in El Dorado Hills and the Central Valley, is guaranteeing if the price drops before the last home sells in the community, it will issue a check to the buyer for the difference — even if it’s two or three years later.”

“Jed Kolko, a research fellow at the San Francisco-based Public Policy Institute of California, said that while the price guarantees could encourage sales, the risk to builders is low. At best it’s an insurance against a small or modest drop in prices and not a big fall.”

“‘If prices fall significantly, then the developer might not be selling homes in the community anymore or even go out of business,’ he said. ‘Then the guarantee would be worthless.’”

From CNBC. “I’m no expert on, well, anything. That’s why I report what other people say. Increasingly, experts are saying we are at the bottom of the housing cycle.”

“Exhibit A: I interviewed ‘golden boy’ developer Rick Caruso last week. He said that while it’s difficult to predict a bottom, he’s investing now. I’ve never known him to be wrong.”

“Exhibit B: Hedge fund manager Cyrill Moulle-Berteaux writes in the Wall Street Journal that home sales are bottoming and that price declines will quickly slow. Soon, people will start buying again, owners underwater in mortgages will be more willing to tough it out, and mortgage-backed securities will stabilize.”

“Exhibit C: A friend who runs a homebuilder in foreclosure-heavy Stockton says appraisers are using foreclosures as comps, driving down prices. This is forcing him to match those prices or risk losing loans for his buyers because his new homes are too ‘expensive.’ The race to the bottom is picking up speed.”

Some housing bubble news from Wall Street and Washington. MarketWatch, “In a sign that the U.S. housing market may have further to weaken, an index of sales contracts on previously owned homes fell 1.0% in March from the prior month, the National Association of Realtors reported Wednesday. The NAR’s index, considered a leading indicator of existing home sales, was 20.1% below the March 2007 level.”

“Some observers were cheered by last month’s report that signaled a bottom could be approaching. However, the February index was revised to a decline of 2.8% from the prior estimate of a 1.9% drop.”

“‘Although some market adjustments are necessary, a downward overshooting of the housing market would cause unnecessary loss in economic output, income and jobs,’ said Lawrence Yun, NAR chief economist. ‘It is critical to stimulate housing demand by inducing fence sitters back into the market. A home buyer tax credit on any home purchase would accomplish that.’”

From Bloomberg. “Florida home builder WCI Communities reported its sixth consecutive loss. The first quarter net loss widened to $84.1 million,, the Bonita Springs-based company said Wednesday in a statement. Revenue declined 59 percent to $137.1 million.”

“WCI said net new orders fell 23 percent to 183 and completed home sales declined 45 percent to 309.”

“‘Beyond the seasonal lift in Florida, there are no signs that demand has firmed — many potential purchasers continue to sit on the sidelines afraid of falling prices and the direction of the economy,’ CEO Jerry Starkey said in the statement.”

“‘We…saw a dramatic drop in traffic and new orders in the Northeast and Mid-Atlantic,’ said Starkey. Most of WCI’s business is concentrated in Florida, but it also builds in the New York and Washington, D.C., metropolitan areas.”

The St Petersburg Times. “St. Joe Co., the state’s top private landowner with 638,000 acres spread mostly across the Florida Panhandle, suggests the real estate market in its neck of the woods might have bottomed. The company’s task now is to ‘retrain’ buyers that home purchases can’t be deferred forever, CEO Peter Rummell said Tuesday.”

“‘We have trained people to expect that prices are going to be lower tomorrow than today if they just wait,’ Rummell said. ‘So now people are going to have to learn that they’ve gotten to that point.’”

“St. Joe’s residential housing business, mainly Gulf Coast resort property, has been in free fall. Its closest project to the Tampa Bay area is the SevenShore condominium project in Bradenton. The residential side of the business brought in $30-million in early 2007 but only $9.8-million in early 2008. The company said ‘opportunistic value buyers’ have replaced traditional home purchasers.”

“In the first quarter of this year, the company made $91-million on the sale of 57,435 acres to sportsmen, investors, conservationists and other buyers attracted to prices of $1,330 to $4,500 per acre.”

“In a conference call Tuesday, Rummell said home and lot prices are ’starting to firm’ after deteriorating 20 to 30 percent from their peaks in August 2005. ‘If we are in fact on the floor of the valley, the question is, ‘How wide is the valley?’ Rummell asked.

The Associated Press. “State-owned Bayerische Landesbank said Wednesday its ¤1.1 billion (US$1.7 billion) in write-down related to risky subprime investments pushed the company to a first-quarter pretax loss of ¤770 million.”

The Post Gazette. “While it does not appear any local banks have frozen home equity lines of credit in Western Pennsylvania, at least one — National City Bank — has indicated that it might exercise that option.”

“‘In situations where there has been a material change in financial circumstances or a significant decline in the mortgaged property’s value, we may suspend further access to a homeowner’s line of credit,’ said Bill Eiler, a company spokesman.”

“‘We are facing an unprecedented time in the housing industry, and we believe it’s prudent to assess and address risks that arise due to significant changes that have occurred since the original line of credit was extended,’ he said.”

“Mr. Eiler did not want to identify any markets that might be affected; the bank covers nine states. Countrywide and other major banks have been notifying customers across the country that they no longer can write checks on their credit lines because sinking home prices have left them with little or no equity.”

“Carrie Coghill-Kuntz, president of DB Root & Co., a Downtown investment manager, said she believes banks are making a smart move in scaling back on credit where equity has been lost.”

“‘It goes back to the whole reason we’re in this mess,’ she said. ‘People are borrowing too much.’”

The Sun Sentinel. “In the U.S. Bankruptcy Court’s Southern District of Florida, there were 73 percent more business and personal bankruptcies in April compared with a year ago, according to new statistics. Business bankruptcy filings nationwide increased 49 percent in April from a year earlier, the biggest gain so far in 2008.”

“The rise in bankruptcies began a couple of years ago with the housing downturn and now related businesses, including contractors, door and window companies and flooring businesses, are declaring bankruptcy.”

“‘This is really serious. It’s not going to be a short cycle. It’s not a quick recovery,’ said Paul Singerman, bankruptcy lawyer for Levitt and Sons of Fort Lauderdale.”

“For every client that files bankruptcy, Singerman said he has 10 more troubled clients that do ‘workouts,’ to avoid bankruptcy. They sell the business, refinance debt, or take on new partners with money.”

“In South Florida, many family-owned businesses are being affected. ‘We’re seeing generations of wealth evaporate,’ Singerman said.”

The Charleston Daily Mail. “A Welch-based bank that looked for growth by opening an office in Florida five years ago now finds itself working out of a mortgage mess. Ameribank Inc., after grappling for decades with a shrinking coalfield economy, opened a branch in wealthy, growing Palm Beach County, Fla., in 2003.”

“Jim Sutton, the bank’s vice chairman at the time, explained the theory behind the Florida expansion: ‘The growth of Palm Beach County will allow us to prosper.’”

“But the expansion turned sour last year. Bauer Financial Inc., an independent bank rating firm that rates banks on a scale from 0 to 5 stars, gives Ameribank 0 stars - its lowest rating.”

“Palm Beach Post Staff Writer Randy Diamond told the story in a March 7 article headlined, ‘Rural W.Va. Bank Lost Big on Loans Here.’ The article recounts how, after opening the Florida office, Ameribank struck a deal with Lending One, a Florida-based mortgage broker. Borrowers paid Lending One 15 percent interest, Diamond reported. Ameribank assumed the risk for loans in 11 states and in return received 8 percent of the interest.”

“Lending One ‘was selling thousands of no-money-down one-year home mortgage and renovation loans designed for speculators who wanted to buy fixer-uppers and flip them for sale at a higher price,’ Diamond reported. ‘But the borrowers didn’t have to repay any of the money until after the houses they bought had been renovated and sold.’”

“Ameribank President David Hartman said Tuesday, ‘The whole concept that the price of real estate is going to constantly go up is a stupid idea. If that stops and you’re talking about people buying homes as investment properties only and the price of homes goes down, that can be a problem.’”

The Palm Beach Post. “In a wide-ranging mortgage scam, two real estate investors and a mortgage broker used inflated appraisals, straw borrowers and phony loan applications to fleece big-name lenders of millions, federal prosecutors say.”

“The collateral for the ambitious fraud? McMansions throughout Palm Beach County, including several in posh gated communities in Wellington and Boca Raton.”

“An assistant U.S. attorney calls the alleged scammers ‘economic parasites’ whose ilk have played a little-noticed role in the mortgage meltdown that has roiled financial markets worldwide. Such scams have been especially common in South Florida, where state and federal investigators believe a boom-and-bust housing market has made some willing to bend the rules for illicit profits.”

“The U.S. Attorney’s Office accuses Berry Louidort and Ralph Michel (also known as Ralph Duverneau) of putting together deals for two dozen homes in Palm Beach County, persuading banks to loan far more than the properties actually sold for, then pocketing the difference and letting many of the homes lapse into foreclosure.”

“Boca Raton mortgage broker Lauren Jasky helped Louidort and Michel arrange the deals, prosecutors say.”

“Louidort, 26, Michel, 35, and Jasky, 29, were arrested April 23, and it’s hard to say which detail of their deals, as federal officials describe in court documents, is the most jaw-dropping.”

“There’s Michel - a native of Haiti who, according to his attorney, can’t read or write well enough to pass a U.S. citizenship test - collecting ‘assignment fees’ of $650,000 and $600,000 on side-by-side homes in the Versailles development in Wellington.”

“There’s Louidort, also a native of Haiti, describing a scheme to buy 50 condos in Boynton Beach while stealing $4 million from lenders. He thinks he’s talking to a willing accomplice. In fact, he’s laying out the plot to an undercover FBI agent who captures the conversation on videotape.”

“There are straw buyers, such as the part-time Publix cashier whose income on loan applications was inflated from $13,000 to $344,000 so she could qualify for $1.3 million in loans on a palatial home in a gated community in Boca Raton. The borrowers haven’t been charged.”

“In another instance, a borrower making $25,000 a year as a hotel worker claimed to make $594,120 a year at Florida All Insurance. That borrower landed $1.8 million in loans for a home in Wellington.”

“There’s Jasky saying she doesn’t want to know the unsavory details of the loans she’s shopping to lenders. Meanwhile, her mother is acting as the Realtor on some of the deals.”

“In court documents, FBI Special Agent Elizabeth Lynch, who posed as a developer who wanted in on the deals,…describes an April 14 meeting with Jasky, Louidort and an unidentified appraiser. Louidort outlined his plan to buy 50 Boynton condos valued at $115,000 and fool lenders into believing they were worth $205,000.”

“‘During this discussion about the kickback, Jasky stated words to the effect she didn’t hear, didn’t see and didn’t care and continues to talk about closing 10 and 50 loans, as soon as possible,’ Lynch wrote in an April 22 affidavit.”

“And there are some of the world’s most sophisticated financial institutions, including JPMorgan Chase and Bank of New York, making loans on these properties for twice what they were worth. The Wall Street giants approved these mortgages in 2007 for much more than the properties sold for in 2005 and 2006, despite the steep downturn in home prices in Palm Beach County.”

“‘This case is getting bigger by the minute,’ Assistant U.S. Attorney Lothrop Morris said during an April 30 hearing in federal court in West Palm Beach. ‘We have no idea how big the loss is going to be.’”

“Lauren Jasky is out of jail after putting up her home and two homes her parents own as collateral for her bond. Louidort and Michel remain in jail.”

From 11 Alive.com. “Record-high numbers of home-foreclosure sales filled courthouse steps across Metro Atlanta on Tuesday.”

“Mortgage holders, trying to get some of their money back, at auction, from homeowners who defaulted, sent their attorneys to the first-Tuesday-of-every-month mission with bigger inventories than ever to sell, in one of the toughest sellers’ markets ever.”

“Protestors, angry at the mortgage industry, showed up at the auction outside the Fulton County courthouse singing and chanting and marching. They were unable to stop, or even drown out, the efficient drone of the mortgage attorneys reading the legal descriptions of hundreds of properties and trying to sell them.”

“The protestors are accusing mortgage lenders with ‘reverse red-lining,’ making quick profits off of the poor by writing them home loans that they can’t possible pay back to whomever ends up holding the mortgages.”

“‘I’m not against free enterprise,’ said the Rev. Dr. Richard Cobble, ‘because this is America…. There ought to be a system in place where everybody can sit at the table, where it would be a win-win situation for everybody’ so the borrowers can keep their homes and the mortgage holders can, eventually, be paid in full.”

“Investor Lamar Lang is at the auction, stuck with an inventory of more than a dozen $500,000 homes in default that he can’t sell. ‘I’ll tell you what, if you don’t steal a house now, you’d better not buy. ‘Cause you can’t sell it.’”

“Chenieve Williams, who has never owned a home, came to the Fulton County courthouse steps to try to buy one. She and her husband researched the foreclosure notices and found a midtown Atlanta condo that was scheduled for auction.”

“‘The market value, I’d say, is probably going to be around $170,000. And the opening bid is $33,000,’ cash.”

“The American Dream has not ‘gone bust’ for Williams. It’s just recycled. ‘It’s really just, it’s a way to build wealth, personal wealth. So my husband and I decided now is the best time to jump in.’”

The Columbus Dispatch reports from Ohio. “With so many would-be buyers waiting, M/I Homes wrapped up an anxious year during which it sold a large portion of its land holdings and worked hard at cutting expenses. M/I Homes’ CEO Robert H. Schottenstein attributes some of his company’s problems selling homes to consumers’ unrealistic expectations. He believes buyers expect to realize the full value of what they think their homes are worth before selling and moving up.”

“‘One of the things that happened nationally during the bull run is that people began to expect their home prices to appreciate at rates you would expect to get with an investment,’ he said. ‘So they bought a house to live in, but they wanted it and expected it to be one of their best investments. Over the long haul it likely will be, but if you buy a house as an investment rather than as a place to live, then I think you’re getting confused.’”

The Toledo Blade from Ohio. “The Starboard Side development was once envisioned as the proof Toledo needed to show the suburbs there was still money to be made building housing within the city limits.”

“Proposed in the mid-1990s by three community groups, the $6.5 million project called for two-dozen upscale riverfront condominiums and 20 suburban-style houses. But today only a fraction of what was planned - seven condo units that sold for $250,000 to $330,000 - has been built.”

“The remaining lots sit undeveloped because of what the developer last week described as a chronic and straightforward problem: Toledo’s housing market. In a twist from original plans, finishing Starboard Side could now depends on government subsidies.”

“‘Ten years ago, we thought that marketing riverfront property, or property near the river, would be an easy task,’ said William Farnsel, executive director of Neighborhood Housing Services of Toledo Inc., which has taken the lead in managing the property.”

“Now, however, ‘with the way the real-estate market is locally and the collapse of values, there is no way you could fund a development with everything you need and be able to cover your cost. Starboard Side is out of money,’ he said.”

“Neighborhood Housing Services recently applied for federal tax credits in hopes of luring investors for a proposed 40-unit, three-story apartment complex for lower and moderate-income seniors age 62 and over. ‘Why are we switching tactics,’ Mr. Farnsel said. ‘Right now there is no market for single-family housing.’”

“Several condo dwellers have become angry that their side yards still bear the look of construction sites. ‘A lot of people won’t invite guests over because they’re embarrassed,’ said Fred Fogelman, who lives in a two-story unit. Neighborhood Housing Services talks ‘about building those across the street, but they haven’t finished these.’”

The Detroit Free Press from Michigan. “Much has changed since 2005, when the local market was at its peak. Places like Novi, Birmingham, Royal Oak, Ann Arbor and Sterling Heights, for instance, are more affordable now as home prices reach pre-2000 levels.”

“‘Buyers are out there in this market, but they are looking for a deal,’ said Paul Mychalowych, an agent in Farmington Hills. ‘In the range of $200,000 to $400,000, you can buy in downtown Birmingham now. A few years ago, you couldn’t touch it for under $500,000.’”

“Home prices have dropped 23.2% since peaking in December 2005, according to the S&P/Case-Shiller Home Price Indices. And Michigan home sales fell 26.5%, from the peak of 137,558 homes sold in 2004 to 101,094 in 2007, according to the Michigan Association of Realtors.”

“‘Everything’s on clearance now,’ said Amanda Callahan, an agent in Plymouth. ‘People are putting in $30,000 kitchens just to sell their houses and they don’t get that investment back.’”

“John Babcock, president of Babcock Homes in Commerce Township, said speculative houses that builders constructed when the market was at its peak are not being replaced when they sell.”

“‘We haven’t put a new spec in the ground for a year and a half. I don’t know of any builders who are building specs because there isn’t any money in that now,’ Babcock said. ‘While the existing home market is still flooded with homes and foreclosures, the new home market seems to be drying up.’”

The Daily Tribune from Michigan. “The number of homes foreclosed in Oakland County hit an all-time high in April, an indication that downward pressure on home values and local government revenues is likely to continue.”

“There were 968 foreclosures recorded in April, the highest one-month total ever and an 83 percent increase over the 529 foreclosures for the same month a year ago.”

“While perhaps it’s a good time for prospective homebuyers to jump into the housing market, the relatively low prices of foreclosures makes it difficult for sellers to unload their homes. ‘It’s really hurting the realistic and honest sellers,’ said Pat Jacobs of the North Oakland County Board of Realtors.”

“‘As values go down, the revenue stream starts to dry up,’ said Oakland County Executive L. Brooks Patterson. ‘I’d like to think we’re pretty much bottoming out. I don’t see any immediate relief in sight, but I don’t think this can go on.’”

“‘It’s bad for us, but it’s a national phenomenon,’ Patterson said. ‘California is losing 520 homes a day.’”

Chicago Business from Illinois. “The share of vacant houses and condominiums for sale in the Chicago area has moved higher the past two years, another sign of the slumping residential market.”

“The high rate chiefly reflects the rising number of foreclosures in the Chicago area. In Cook County, the number of homes in foreclosure nearly doubled from 2004 to 2007, to 26,450, according to a Chicago-based homeowner advocacy group.”

“The higher rate also suggests that new unsold condos and homes are piling up, especially downtown, where developers will complete a record 5,900 condos this year. Many people who bought new condos as investments are having a hard time flipping them, so the units are sitting empty.”

“The housing slump is also likely to drive down the share of local housing units occupied by owners rather than renters. Mirroring the national trend, the Chicago-area homeownership rate jumped during the residential boom, as low mortgage rates and easy credit drew more people into the for-sale residential market.”

“‘The boom took people out of rental and put them into houses,’ says Steven Hovany, president of Schaumburg-based Strategy Planning Associates Inc. ‘And the bust is going to reverse that.’”

The Chicago Tribune from Illinois. “It is no secret that downtown Chicago commercial real estate is weaker today than it was a year or two ago. But the situation in the suburbs is worse, according to recent surveys.”

“MB Real Estate, a diversified real estate firm, said its analysis shows that the overall vacancy rate for downtown increased from about 11.7 percent in the final three months of 2007 to 12.3 percent in the first quarter of 2008.”

“In the suburbs, MB Real Estate found, the vacancy rate rose from 16.1 percent in the last quarter of 2007 to 17.3 percent in the first quarter of this year. ‘The suburbs got hit by the mortgage crisis,’ observed Andrew Davidson, executive vice president with MB Real Estate.”

“His company noted that many mortgage companies and other residential related businesses such as title companies that opened during the housing boom have cut back or have been shuttered.”

“‘The closing of mortgage lending companies will continue to be an obstacle to market recovery,’ the report said. ‘In addition, landlords have not been able to attract tenants from the Chicago central business district as they may have hoped. It is clear that the current weakening in the economy is affecting the suburban Chicago market.’”

The Pioneer Press from Minnesota. “It may seem as though the Twin Cities housing market is drowning in bank-mediated listings like foreclosures and short sales, though in fact it is not. A new real estate report says only 20 percent of homes on the market are bank-mediated. The rest are just regular listings competing in an overloaded for-sale market.”

“Of the 32,368 homes currently on the market in the 13-county metro area, 6,548 either are foreclosures or short sales, according to a report the Minneapolis Area Association of Realtors issued.”

“‘We concluded that when you compare the two — the traditional against the lender-mediated — there are two different market places and two different median sale prices,’ Kevin Knudsen, president of MAAR, said in an interview.”

The Star Tribune from Minnesota. “When those distressed properties are factored out, the Realtors say, the Twin Cities median price fell 3.9 percent in the past year, instead of an overall 10.4 percent decline.”

“The study is a useful tool in understanding the impact of the foreclosure crisis on home prices, said Chip Halbach, executive director of the Minnesota Housing Partnership in St. Paul.”

“‘It tells a story which they’re not otherwise able to tell,’ he said. ‘It’s not scientific, but it does as good as job as we can hope.’”

The Argus Leader from South Dakota. “Sioux Falls had 1,547 building permits from January through April with a total value of $121 million. Both numbers are off 10 percent from a year earlier. Permits for new single-family housing are off 44 percent, with total housing units down 37 percent.”

“The figures point to a softer year ahead for a city accustomed to annual blockbuster gains as a sign of a bulging economy. ‘Are we down a little bit? Yes, but the whole United States is in a downward spiral,’ said Randy Bruner of Bruner Construction in Sioux Falls.”

“‘The office of the comptroller of the currency is changing requirements for lenders. It’s a whole different standard than 12 months ago,’ said Don Dunham Jr., owner of The Dunham Co. ‘With the national economy in the tank, I think that makes everybody cautious.’”

“Dunham knows of many new housing starts valued at a quarter-million dollars or more about to break ground. That’s a bright prospect, but there’s still caution in the air, he said.”

“‘The people still are coming into the economy, but instead of choosing to buy like they would two or three years ago, they’re choosing to rent, so they don’t need a down payment,’ Dunham said. ‘I don’t think job stability is the big issue. I think it’s scraping up the down payment.’”

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