The Housing Bubble

The Daily Press reports from California. “Nearly three in four local homes sold in April were foreclosures, as prices of existing homes dipped 2.6 percent for the month, according to a new report. Among the 3,400 existing homes currently for sale in the Victor Valley, 279 homes sold in April, a 23 percent jump from March, according to Victor Valley MLS data complied by Larry Trombley of Century 21 Rose Realty.”

“Economist Al Gobar, who said people who are buying mistakenly believe prices have hit bottom. ‘I’m not sure the bottom is all that close,’ said Gobar. ‘I think with low interest rates and prices coming down people are coming back into the market, but I’m personally not convinced you’re going to get the best prices now.’”

“Also skeptical of whether this spring boom will continue is Jose Palafox, registered investment advisor with Starfox Financial Services. ‘As an investor I think real estate investments might be flat for a while.’”

“Palafox advised real estate investment if you make at least a 20 percent down payment to buy, an important cushion in case of market downturn so buyers would still have some equity. ‘Two years ago during the credit bubble if you were breathing you’d get a loan,’ he said. ‘Now there are more parameters. We’ve been telling our clients for two years real estate is a bad time, but you do need to find the right time for something to invest in.’”

“Though foreclosures may continue, according to Steve Johnson, director of Southern California for Metrostudy, prices are low in the Victor Valley, and it’s a good time to buy a house to live in rather than invest on.”

“Johnson thinks this buying season will wind down earlier than normal this summer. ‘I really don’t think the residential economy has legs to sustain a longer run, especially since the Inland Empire has seen 20,000 jobs lost relative to last year.’”

“From what she sees on the ground Caroll Yule, president of the Victor Valley Association of Realtors, thinks that the Victor Valley housing market is rebounding.”

“‘We’re very excited by the report, it couldn’t have gotten worse,’ said Yule. ‘It reflects what we are all feeling, activity has picked up. The significant problem of finding loans for buyers is keeping us from having a normal market … People were making good money in the credit bubble so nobody was worried and they kept making undocumented loans more and more casually.’”

From The Sun. “After weeks of being put through financial stress, PFF Bancorp’s stock got a reprieve Monday when Los Angeles investment banker B. Riley & Co. upgraded the stock to ‘neutral’ from ’sell.’”

“‘I don’t think there’s a whole lot further down the stock can go,” said Joseph Gladue, the analyst who made the upgrade on the Rancho Cucamonga-based bank’s stock. ‘Obviously, there’s still a risk. A stock in trouble can still go to zero.’”

“His choice of words - ‘in trouble’ - could be an understatement.”

“The market capitalization of the bank has fallen to $36.65 million in the past month. The stock closed at $1.62, which is more than 95 percent lower than it was valued in mid-2006.”

“Investors lost millions over the last month after PFF’s stock price started plunging because the bank announced it expects to report one of its largest-ever quarterly losses, totaling $159 million for its fourth quarter ending March 31.”

“PFF has also disclosed plans to restructure a $44 million loan with an unidentified commercial bank that it couldn’t repay by an April 30 deadline - an event that could have led to a default.”

“The bank also said a provision for loan and lease losses of $196 million is expected in the quarter. This provision is related to real-estate loans in the greater Inland Empire.”

The North County Times. “North County’s housing market continued to deteriorate in April, though at a much slower pace than in previous months. However, a tower of foreclosures still looms and threatens to send the market tumbling further, analysts say.”

“Though the median price ticked up slightly from March, that increase was probably the result of larger homes selling, because the median price per square footage dropped substantially —- 3 percent in one month to $247 per square foot, down 20.8 percent from a year ago, HomeDex reported.”

“It is possible for the median to increase while property values are declining.”

“April represented the strongest month for North County’s housing market so far this year, based on sales data. The greater numbers were driven by sales in Oceanside and Escondido, North County’s epicenters of foreclosure.”

“For example, Oceanside’s 92057 ZIP code, the northwest portion of the city, has led North County in foreclosure numbers. Its sales in April doubled from a year ago, from 30 to 60, and posted the most April sales of any North County ZIP code.”

“Of those sales, about 65 percent were bank-owned foreclosures. And roughly 10 percent were short sales.”

“‘If it’s not already here, I think hard-hit areas will be foreclosure-based. Foreclosures will not be the only thing on the market, but they will be the only thing selling,’ said Jim Klinge, a real estate agent based in Carlsbad. ‘If you’re a regular seller, there’s no way to compete. You can, but you have to drive the price down faster than the banks are, and most sellers are very resistant to that.’”

“‘Foreclosures are going up at a more and more rapid pace,’ said Christopher Thornberg, an economist with Beacon Economics. ‘We’re in the midst of this nasty little feedback cycle that keeps pushing things down, down, down. There’s nothing to indicate things are turning around.’”

“On the other side of the coin, some real estate agents see a nascent recovery in the housing market. ‘I’ve been saying for a few months now that we bottomed out toward the end of last year,’ said Jerry Kalman, a real estate agent specializing in Fallbrook.”

“But Kalman acknowledged that the looming foreclosures could mean turbulent times ahead. ‘It (foreclosure sales) has been putting downward pressure on prices, and I think it will continue to create a lower bottom in the market,’ Kalman said. ‘They haven’t gone away, for sure.’”

“North County’s housing market has frozen to the point where one builder is resorting to a sales promotion usually seen on late-night infomercials: buy one, get one free.”

“Starting this week, Michael Crews Development, a home builder based in Escondido, will toss in a free home with the purchase of another.”

“But wait, there’s more. The 4,000 square-foot homes in San Pasqual Valley include six-car garages and pools. With the purchase of a $1,599,900 home in San Pasqual comes a free $400,000, 2,000 square-foot home in downtown Escondido.”

“Some housing analysts wrote off the promotion as a gimmick. ‘It sounds like a certain degree of desperation to me,’ said James Hamilton, an economics professor at UC San Diego. ‘It’s a very unique situation where somebody might want to have two residences. But that’s targeting such a specialized market, and maybe that’s what they’re going for.’”

“Between the downtown Escondido project and the San Pasqual subdivision, Michael Crews Development has sold one house since January 2007.”

“Mark Connal, sales director for Michael Crews, said there is no desperation in the promotion and it is simply a way to try to sell two homes at once in a down market. ‘We’re saying we’re here to make deals. Would we have done this four years ago? No, they would have sold right away,’ Connal said. ‘It’s an effort to be realistic and move product.’”

“Still, the buy-one-get-one promotion is unprecedented, said Tracey Seslen, a real estate professor at the University of Southern California.”

“‘Builders and banks are getting desperate. They don’t want to have that inventory on their books for any amount of time,’ Seslen said. ‘The goal is just to sell, because having a house sell for $100,000 is $100,000 more than they would have otherwise.’”

“Connal said the free home deal is not subsidized by raising the price on the high-end homes in San Pasqual Valley. The last Michael Crews-built home in the gated community sold in December 2006 for $1.64 million —- without the free condo.”

The Recordnet. “Under different circumstances, David Coon wouldn’t mind checking in for jury duty. The Mantecan said he might even find it interesting if he wasn’t also trying to keep his small business afloat in hard times.”

“Summoned recently to the San Joaquin County Superior Court in downtown Stockton, Coon told a judge he couldn’t afford to be away from his family business, Covan Home Systems, more than a few days. His firm wires homes for alarms and sound systems.”

“‘If I had jury duty for the next couple of weeks, it would probably be our undoing,’ Coon said. ‘That’s how critical it is.’”

“He’s not alone. Attorneys who work at the downtown Stockton courthouse and rely on local residents to decide court cases say more potential jurors these days are begging out of their duty. They tell heartrending woes of losing their jobs and they fear home foreclosures.”

“This year, about 800 San Joaquin County homeowners each month received foreclosure notices. Attorneys describe jurors as the canary in the coal mine of the local economy, offering a glimpse into the tough times people are experiencing these days.”

“Ask San Joaquin County Deputy District Attorney Mark Ott, who recently picked a jury for a 21/2-month murder trial. Several people cited what Ott called ‘eye-opening’ financial hardships. That is a marked change from a trial just six months earlier, he said.”

“‘You think in your mind there’s no recession,’ Ott said. ‘Yeah, right.’”

“‘Times are tough,’ said Sam Behar, the San Joaquin County Deputy Public Defender, referring to the recent jury picked for his client’s trial. ‘You heard one story after the other. They said, ‘I just got a job, and if I sit here, I’ll lose it.’ Some people said they’re already losing their houses.’”

“For his part, Coon was quickly excused from jury duty…in the trial expected to run about 11 days. Coon has watched many competitors go out of business recently because so few new homes are going up.”

“‘It’s truly last man standing,’ Coon said. He doesn’t fear losing his own home, but he’s hopeful the economy will take an upturn in coming months.”

The Mercury News. “More than 1,000 California properties went up for sale in foreclosure auctions each weekday in April, a foreclosure data company said Tuesday. Last month’s foreclosure auction sales totaled 22,838 statewide, according to ForeclosureRadar. That’s an average of 1,038 sales for each business day in April, said company president Sean O’Toole.”

“In Santa Clara County, 500 properties were offered at foreclosure auctions in April, up 47 percent from March 2008, and up 585 percent from April 2007.”

“O’Toole said despite the fact that lenders are frequently offering big discounts at the courthouse-steps auctions, 98 percent of foreclosed properties in April failed to find buyers at auction, so the lenders had to take ownership.”

“Statewide, the average discount offered at auction was 25 percent off the value of the mortgage being foreclosed upon.”

The East Bay Business Times. “Lenders are adding foreclosed homes to the inventory of homes on their books 1.36 times faster than they can sell them, according to ForeclosureRadar.”

“Contra Costa County saw 1,793 notices of default in April, up 11 percent compared with March and a jump of 283 percent compared with April 2007. Alameda County, meanwhile, saw 1,506 notices of default, about flat compared with March but up 213 percent compared with March 2007.”

“‘We expected a significant increase in auction sales based on previous default patterns,’ said O’Toole. ‘Unfortunately the continued increase in defaults tell us that the worst is still ahead.’”

Some housing bubble news from Wall Street and Washington. Bloomberg, “The U.S. median price for a single- family home dropped 7.7 percent in the first quarter, the biggest decline in at least 29 years, as values tumbled in two-thirds of U.S. cities, the National Association of Realtors said. The median was $196,300, down from $212,600 a year ago, the largest decline in records going back to 1979. Sales of single-family houses and condominiums fell 22 percent to 4.95 million at an annualized pace, the slowest in a decade, the group said.”

“‘Prices have fallen in neighborhoods with a wide prevalence of subprime loans, because more foreclosed properties are being sold at discounted prices,’ said Lawrence Yun, the realtor group’s chief economist, in today’s report.”

The Associated Press. “In California, Sacramento prices plummeted 29.2% to $258,500 compared with last year and Riverside prices fell 27.7% to $287,100. Prices in Las Vegas fell 20.2% to $247,600 and those in Phoenix dropped 15.4% to $222,200.”

“The worst hit market was the Sarasota area, where condos dropped 35% over the past 12 months to $268,500. Sacramento condo price cratered 33.4% to $147,200. In Miami, prices fell 26.4% to $176,100.”

“Toll Brothers Inc., the largest U.S. luxury-home builder, reported its eighth consecutive quarterly decline in revenue as demand for new homes tumbled.”

“The company said it may incur pretax costs of as much as $375 million to write down the value of real estate, more than the $245.5 million it had last quarter. ‘The just-completed spring selling season was quite weak in most markets as buyers remained on the sidelines,’ CEO Robert Toll said in the statement.”

“Customers canceled 25 percent of contracts in the three months ended April 30, the lowest rate since the same quarter a year earlier, when they withdrew from 19 percent. The net value of contracts fell 58 percent from a year earlier. The order backlog, or homes under contract that have yet to be sold, declined 50 percent. The average price of the canceled contracts was $760,000 per house.”

The Philadelphia Inquirer. “The average price for a new home contract signed in the quarter slipped to $590,000, from $711,000 a year ago, and $634,000 in the first 2008 quarter.”

“Toll Brothers attributed lower average home prices to several factors, including an increase in sales in lower-priced communities, and fewer sales in high-priced markets such as California and Manhattan.”

“Toll’s chief financial officer, Joel H. Rassman, said the builder expects to ‘continue to face challenging times.’”

“Orleans Homebuilders Inc. yesterday reported a hefty loss for its third quarter, with orders for new homes down 40 percent. The company saw its cancellation rate - buyers who back away from signed contracts before closing on the homes - soar to 31 percent from 20 percent a year earlier. The largest increase in cancellations was in Florida.”

“The company said that buyer confidence was extremely low this winter. Mortgages were at a standstill, and cancellation of new homes ’spiked up much higher than we had ever seen,’ it said.”

The Charlotte Observer. “Beazer Homes USA, formerly a major Charlotte-area builder, on Monday revealed more problems in its recently closed mortgage unit and said it suffered heavy losses last year as the housing market faltered.”

“Since last year, the Atlanta homebuilder has been the subject of federal investigations triggered by Observer reports that the company arranged loans some buyers couldn’t afford and violated federal lending rules.”

“Beazer said it lost $411 million in the year ended Sept. 30, compared with earnings of $369 million a year earlier. The losses included nearly $612 million for writing down the value of inventory and abandoning land options. Sales sank to $3.49 billion, down 35 percent from $5.36 billion the previous year.”

The BBC News. “The number of house sales in Northern Ireland during the first three months of 2008 dropped to its lowest in almost 25 years, a new survey has revealed. The University of Ulster quarterly house price index report said some of the 120 estate agents surveyed reported no sales at all.”

“The economist Alan Bridle, head of research at Bank of Ireland which produced the survey in partnership with the university, said the local housing market was ‘technically in recession’ for the first time since the early 1990s.”

“‘As an observation we may have something of a stalemate, with vendors looking to sell at 2007 prices and potential buyers deferring purchase in anticipation of lower prices and easier access to credit later in 2008 or 2009,’ he said.”

“In the latest survey from the Royal Institution of Chartered Surveyors (Rics), 82% of surveyors saw prices fall in the three months to April.”

“That figure was up from 66% in March, with all surveyors in East Anglia, and the North and North West of England, reporting price falls.”

“There was also downbeat news from two UK house building firms on Tuesday. Redrow said the number of reservations so far in 2008 was half that seen the previous year. while cancellations of reservations, which had been running at about 20%, had seen ‘a marked increase’ since Easter.”

“Rics said that regions where prices had still been rising until recently have now been caught up in the general decline. In Scotland, which had bucked the UK trend, the house price ‘balance’ also turned negative last month.”

“‘The real issue is the collapse in the number of housing transactions,’ said Rics spokesman Ian Perry. ‘Large numbers of distress sales - either repossessions or sales from those attempting to avoid the repossession process - have not yet appeared in the market place.’”

“‘This has very real implications, not just for the property industry but also the High Street and the wider economy,’ he added.”

“London’s property market had the most widespread price declines in at least 14 years last month as the slump in financial services deepened and banks curbed lending.”

“The number of residential property agents and surveyors saying prices fell in the capital exceeded those reporting gains by 94 percentage points in April, the lowest since records began in 1994, the Rics said today.”

“The U.K. capital has ‘caught up with the rest of the country,’ Simon Rubinsohn, chief economist at the London-based surveyors’ group, said in an interview on Bloomberg Television. ‘There has been a sea change, and it’s not wholly surprising given the impact of the financial-services industry.’”

“London banks will cut 10,000 jobs by 2011 after losses from credit-market turmoil climbed above $329 billion, an Experian Group Ltd. report last week showed. London will bear the brunt of 40,000 job losses in U.K. financial services in the next three years, a report by Experian, the world’s largest credit-checking company, showed.”

The Daily Mail. “The global credit crunch is claiming more than 300 jobs a week in the City. Some of the highest-paid executives in London’s Square Mile and Canary Wharf have been sacked as the world’s financial markets go into paralysis.”

“A total of 6,500 people will be axed by next month but more than 4,000 have already gone, according to analysis by London’s Evening Standard.”

“Junior staff have been casually dismissed in the office lift and whole trading departments have been ‘black bagged’ - told to clear their desks and marched out by security.”

“The bloodletting began in earnest in December when global giants such as Citigroup lost billions on bad mortgage debts in America. Thousands of jobs were lost as companies frantically reduced their workforces, dismissing everyone from heads of department down to junior traders.”

“Now the second wave is beginning to bite amid the renewed fallout from the US subprime crisis. Top executives such as £1-million-a year Barclays boss Edward Cahill have also been hit by the most dramatic job cull in decades.”

“People working in complex types of debt related to sub prime, such as Mr Cahill - in charge of ‘collateralised debt obligations’ - were among the first to go.”

“There has been a general policy of last-in-first-out, such as the case of Charlie Roast, who was hired as an executive by Merrill Lynch from Deutsche Bank a year ago and touted as a hotshot only to be ditched last week.”

“One managing director at JPMorgan said: ‘The mood is pretty bad - no one really knows what is going to happen. Last year, when the credit crunch began, we still knew we were going to get decent bonuses because overall 2007 had been okay. This year everyone knows it’s going to be terrible. What I fear is working until November and then being laid off, just before bonuses are due.”

The LA Times. “Investors are increasingly throwing in the towel on Southern California-based savings-and-loan mortgage lenders IndyMac Bancorp, FirstFed Financial Corp. and Downey Financial Corp.”

“Defaults keep climbing on the nontraditional mortgages made by the companies, and bond buyers still shun securities backed by such loans. The lenders are awash in red ink, and their stocks are down by about half or more since the beginning of the year.”

“But the losses keep coming. On Monday, Pasadena-based IndyMac reported a loss of $184.2 million. To conserve cash, the company suspended dividend and interest payments on some preferred securities.”

“Although CEO Michael Perry declined to predict when IndyMac would again turn a profit, he portrayed the thrift as on the upswing. Keefe, Bruyette & Woods analyst Frederick Cannon expressed skepticism, citing previous optimistic predictions by Perry, some of which have not come to pass.”

“‘Mike said today that they’ve turned the corner,’ Cannon said. ‘But he’s said that so often that by now they’ve gone around the block at least once.’”

The New York Times. “Kenneth C. Griffin, who runs one of the biggest and most successful hedge fund firms, has a blunt assessment: ‘We, as an industry, dropped the ball.’”

“The breakdown happened, Mr. Griffin contends, when big investment banks gambled away money and jobs during the late great credit boom. The bosses let all those young gung-ho traders take far too many risks and now everyone is paying the price.”

“‘As an industry, we have a responsibility to manage risk in a way that is prudent,’ Mr. Griffin said matter-of-factly.”

“He is upset that the investment bank Bear Stearns ran aground. He is annoyed at the big-name chief executives who took too much risk and then watched as billions of dollars of value vanished from balance sheets. He is anxious about high-priced finance jobs moving abroad.”

“And he is particularly galled with regulators in Washington who have overseen what he calls ‘the great depression on Wall Street.’”

“‘When you read that UBS did not even view parts of its mortgage portfolio as having market risk, it becomes very obvious that a number of firms were not dotting the i’s and crossing the t’s when it comes to risk management,’ he said while on (a) panel to a packed room.”

“A problem, he says, is youth and inexperience — and that’s coming from a former child prodigy. ‘Walk across any of the trading floors — they are full of 29-year-old kids,’ he said. ‘The capital markets of America are controlled by a bunch of right-out-of-business-school young guys who haven’t really seen that much. You have a real lack of wisdom.’”

“On top of that, many CEOs of big universal banks, the ones that combine all sorts of financial services under one roof, ‘only understand a small part of the business,’ Mr. Griffin said, suggesting too many of them come from sales backgrounds. Put those two things together, the traders and the chiefs, and you have the making of an outright debacle.”

“The problem is compounded further by weak government oversight, he said. ‘The unwillingness of the Federal Reserve and the S.E.C. to require working capital’ limits, he said, only exacerbates the risk-taking environment because the banks are playing the equivalent of no-limit poker.”

“‘The sad truth of the matter is it didn’t have to be this way,’ he said.”

The Tennessean. “Homebuyers are finding it increasingly difficult to qualify for conventional mortgage loans in the Nashville area as mortgage insurance companies tighten their underwriting standards.”

“MGIC Investment Corp., one of six major mortgage insurance companies in the nation, will further clamp down on borrowers in the Nashville area in June after adding the entire metropolitan statistical area recently to its list of restricted markets.”

“The company’s growing blacklist…now also includes parts of Utah, Connecticut and Kentucky. A second national mortgage insurance company toughened up on Clarksville recently.”

“‘There’s no doubt that due to the mortgage crisis, everything has tightened up,’ said the president of the Greater Nashville Association of Realtors, Mandy Wachtler. ‘A year ago, if you could fog a mirror, you could get a loan.’”

“Months ago, mortgage insurance companies began refusing to insure home mortgages for borrowers with no money down. Now, many of them are further tightening standards to require 5 percent down payments or making other changes.”

“For instance, in some cases homebuyers must come up with 3 percent down payments from their own funds, not gifts from the seller or family. Others are refusing to insure investment property or second homes in certain areas. Most are demanding more documentation, such as proof of income and more bank statements.”

“One borrower described the process of getting a home loan these days as a colonoscopy, said Tim Davis, a mortgage broker in Nashville. ‘If you’re getting a mortgage these days, you better have the patience of Job,’ he said.”

WBUR reports from Massachusetts. “More than 9,000 homes around Massachusetts have gone into foreclosure so far this year. That’s 38% more than the same period a year ago, and according to Foreclosuresmass, the trend has spread to three quarters of the state’s communities. ‘Claudia Sierra’s condo sits in a triple-decker along the waterfront in East Boston. WBUR’s Bianca Vazquez Toness reports. ‘Sierra bought the property in March of last year. She worked then as a real estate agent making more than $80,000 a year. That’s until she got sick and couldn’t work for six months, then the real estate market started slowing down.’”

“After missing a few payments, she did what lenders say you should do if you can’t pay your mortgage: She contacted her mortgage company.”

“Sierra: ‘This is my home, I have no other where to go. So I told them, ‘Tell me the income figure that I need to be at in order to qualify. What did you consider my fixed expenses to be? And I’ll make the numbers work.’”

“Sierra made the numbers work by letting the bank repossess her car. She also sent her kids to live with relatives so they wouldn’t be counted as an expense. That way Sierra could use her now much smaller paycheck to cover three monthly payments of $3,200.”

“Virginia Pratt is a foreclosure counselor at a Boston nonprofit specializing in protecting home ownership. She says if a client is lucky enough to get a repayment plan, it’s often unrealistic for the homeowner.”

“Pratt: ‘They take it and are struggling to make their payments at the expense of everything else. I have a family who has been without heat for like six months because they decided to stick to their repayment plan, but have not been able to pay their gas bill to keep their hot water on.’”

“And she says that’s a problem since many of these loans were written based on wildly inflated incomes. Or, in Claudia Sierra’s case, on an income that didn’t last.”

“Sierra: ‘I was referred to an attorney and they advised me to file for bankruptcy. And I thought that’s not how to deal with it. I mean, I owe this money to the bank. I’m going to work with them. And I’m just going to pay it. But sometimes I feel like, especially my daughter being away from me just so I could qualify for this, I just thought it was not even worth it.’”

“It appears Sierra’s lender will foreclose. And despite a repayment plan, her home will be auctioned off on June 2.”

The Boston Globe from Massachusetts. “Three times, Thomas and Tracy Barboza found a path out of foreclosure. Three times, their lender failed to help them.”

“Unable to afford their mortgage, the Barbozas are trying to sell their home. They have received three offers since last summer. But because the offers - between $220,000 and $225,000 - are less than their $320,000 mortgage, their loan company, Countrywide Home Loans, would have to sign off on the deal and accept a loss.”

“Countrywide has either rejected or ignored the offers and foreclosure seems imminent. ‘It’s like they want things to go sour,’ Tracy Barboza said, sitting at the kitchen table of their home, stripped bare of other furniture after they moved into an apartment in anticipation of a sale.”

“The longer troubled properties languish, the more they undermine other homeowners trying to sell into a market of mushrooming inventories. ‘It’s killing the market,’ said the Barbozas’ agent, Tina Golant.”

“To move on with their lives, the Barbozas rented an apartment from a cousin. Yet they’re latched to their property, maintaining and heating it for the second-floor tenant.”

“Thomas Barboza is incredulous about their circumstance. ‘I either get extremely angry, or I start laughing,’ he said.”

The Boston Herald from Massachusetts. “These are tougher times in the real estate market, even for the super-wealthy. The number of mansions sold in some of the state’s toniest towns - Weston, Wellesley and Brookline - has plunged more than 30 percent during the first four months of the year.”

“And sellers of luxury homes are having to bargain in order to cut a deal. Just take the 20,000-square-foot, 20-room and nine-fireplace palace constructed by Dr. John Meola, a wealthy dentist. At one point, he hoped to get $18 million.”

“After years on the market, the Weston mansion is finally under agreement with the listing price at a mere $10.9 million.”

“‘At its asking price, you couldn’t replace this house,’ said one real estate executive familiar with the deal. ‘It’s a bargain.’”

“One key to the slower times on mansion row is the recent financial market turmoil. With the collapse of hedge funds and roller-coaster stock prices, even those at the top of the economic pyramid are feeling the pain. ‘I would say that end of the market is no longer escalating the way it once did in terms of price escalation,’ said Peter Casey, former president of the Massachusetts Association of Realtors.”

Hartford Business from Connecticut. “Home building permits in Connecticut dipped 15 percent in the first quarter. Bill Ferrigno, president of the Home Builders Association of Connecticut, said the state is poised to recover quicker because it avoided the traps the robust market set.”

“‘It’s not a huge bubble that burst,’ Ferrigno said. ‘The builders in Connecticut, in a nutshell, saw what was going on and adjusted accordingly.’”

“‘The permits have slowed, but that’s because a number of builders have already been approved for projects,’ said Eric Person, executive officer for the Home Builders Association of Hartford County. ‘People were watching the news and got a little nervous. It’s really more of a regional thing because the eastern part of the country, for the most part, avoided that huge run-up on real estate.’”

“‘There are signs out there, especially that we have a lot of traffic at open houses,’ Ferrigno said. ‘The buyers are out there. They’re just waiting.’”

“As the remnants of failed mortgages begin to pile up, companies are looking for opportunities beneath the wreckage. That is evident by the Real Estate Investment Road Show scheduled for May 17 — a bus tour of several foreclosed properties in New Britain.”

“In March, Connecticut had 2,126 properties with foreclosure filings, according to RealtyTrac. That figure was up 40 percent from March 2007.”

“‘There are a lot of ramifications from foreclosures, and if too many properties remain out there, it hurts the market and lowers prices,’ said Gary Kulik, VP of marketing for McCue Mortgage. ‘The hope is to get more people informed and get these properties sold as soon as possible.’”

The New York Post. “Homeowners in the some of the toniest ZIP codes in the Hamptons are facing a frightening reality - they can’t afford to foot the bill for their high-priced homes, The Post has learned.”

“In the first three months of this year, banks have launched preliminary foreclosure actions - known as lis pendens proceedings - against a record 120 borrowers in East Hampton and Southampton towns.”

“Corcoran broker Susan Breitenbach said young Wall Streeters who gobbled up trophy properties in recent years are starting to suffer. She recalled getting calls from Bear Stearns employees desperate to unload their East End homes after the company’s recent implosion.”

“‘These are people who are used to success,’ Brady said. ‘There is a level of denial and embarrassment when I have to call [people] to ask about mortgage problems.’”

Newsday from New York. “Long Island Foreclosure Tours was launched after Sheri Cambareri, an agent in Mineola, noted to her boss last month that the traditional way of house selling and buying is so inefficient. The agent takes one client to look at one house and if there’s no sale — often the case in this slower market — one takes in no money.”

“The two helped set up Foreclosure Tours International, which will start trips in New York City next month and has a north New Jersey one in the works.”

“The tour, originally $50 per person, has been reduced to $25 for the final seats.”

The Press & Sun Bulletin from New York. “Foreclosure activity affected more than double the number of Broome County properties from the second quarter of 2007 to the subsequent quarter and kept rising, according to RealtyTrac.”

“In the second quarter of 2007, there were 24 home foreclosure filings in Broome County. By the third quarter of 2007, that number had jumped to 50. In the first quarter of this year, 74 properties were in foreclosure.”

“Randy Templeman, regional VP of the New York State Association of Realtors cited one reason for the increase: homeowners who think their properties in the trichloroethylene, or TCE, plume area of Endicott have less value. He said in many cases, their attitude is, ‘Why make payments if you can’t sell?’”

“Entry-level homebuyers sometimes use various loans and other credit to buy the home and make repairs and upgrades, which can lead to a significant debt load, broker Jim Trevitt said.”

“‘Typically, you have first-time buyers with low-equity positions, and as a result they don’t have as much room to play with,’ he said. ‘They’re not as established financially in many cases. … There’s no safety net.’”

“‘This may be a long-term effect related to national, financial trends. We’re not immune to what’s going on around us,’ Trevitt said. ‘We traditionally appreciated 5 or 6 percent a year without exception. But nevertheless, we did have lenders who were making loans on very liberal terms and buyers who maybe overextended themselves in anticipation that the market would keep on rising, even at a modest rate.’”

“Homeowners lack understanding about the housing market, he said. When put in a position where they can’t make mortgage payments, they give up.”

“In some cases, ‘people don’t want other people to take advantage of their misfortune,’ Templeman said. ‘If someone is losing their house, rather than let someone else get a good deal, they’d rather be foreclosed on. They’ll even go so far as damaging or destroying the house to reduce its value.’”

“He said he’s been in foreclosed homes where the homeowner has punched holes in the walls, taken cabinets or appliances, or urinated or defecated on the floors.”

“‘Most people are in denial that they will get their job back, they will get their spouse back, they will get their health back,’ Templeman said. ‘We know that because the lender sends many notices to the borrower in default. … We end up in the houses and find the letters unopened.’”

“Templeman said the easiest way to avoid foreclosure is for the homeowner to sell the house. Most homeowners facing foreclosure opt not to sell the house, he said.”

“‘When I check foreclosures that are coming on the market, I check to see if they were on the market previously,’ he said. ‘Over 90 percent of the houses that are foreclosed on, the owners never attempted to sell the house prior to foreclosure.’”

“‘We have more homes available on the market than we do buyers,’ Trevitt said. ‘As a result, sellers need to get more realistic and more aggressive with their pricing.’”

“Last year, the average absorption rate — how long it takes to sell the house inventory — was six months, he said. Now, it’s between 10 and 10 1/2 months. ‘We may be looking at a buyer’s market,’ Trevitt said.”

The Brick Times from New Jersey. “The face of realty is changing overnight. Sales volumes and housing prices have fallen, new developments are few and buyers have become more focused. ‘It’s absolutely tougher to make a sale, there’s so much inventory,’ said Carole Kuiken, a 25-year veteran of the business.”

“Kuiken said the number of sales is down and the average price of a home sale generally is down, but she blames the media for a false sense that the industry has collapsed. ‘We tend to run in 15-year business cycles and we’re on level ground now,’ she said.”

“‘The speculators and the ‘flippers’ are long gone,’ said Donna Walesiewicz, an agent in Toms River. ‘Banks with a number of properties on their books don’t want to be in the real estate business, so they’re willing to make a deal. People make the market and this is a great time to be a buyer.’”

“Lori F. Peterson of Ann Schuld Realty in Bayville senses a pick up in interest with warmer weather, more realistic pricing and the sense that an election year brings a change in attitude.”

“‘Things were pretty slow at the beginning of the year,’ Peterson said. ‘Waterfront properties are a different animal, of course, but sellers have become more realistic. Otherwise, they might be sitting on a house for months.’”

“Walesiewicz agreed. She said Beachwood is a typical case with 73 properties listed for sale, but 14 have gone to contract and 17 have been sold this year.”

“‘It becomes an epidemic,’ she said. ‘One sign goes on a lawn and three or four get ’sell fever’ in the same neighborhood. Some already sold high and bought higher and now need a bigger home. But everyone gets nervous that they’re missing out. It is what it is.’”

“Demicco said throughout Ocean County, there are housing clusters that underscored the ‘flippers’ market’ gone bust. In Manahawkin, she said, you can get a three bedroom house never lived in before for $350,000, but there’s a catch.”

“People are resistant because they want their home to be built to their wants and needs. These houses were built on speculation and some builders learned the hard way not to anticipate the buyers’ desires,’ Demicco said.”

“‘This is typically the busy season,’ said Sonny Yannon of Beachcomber Realty in Brick. ‘The number of housing starts would seem to indicate we’re in recession, but nobody wants to declare where we’re going.’”

“He said this time last year business was brisk but it died off during the winter months. A lot of inventory has gone unsold even when sellers have reduced the asking price.”

“Yannon agreed that sellers are becoming more realistic now, and prices are settling where they were before the buying frenzy of the past few years.”

“‘Sometimes, you think, ‘Hey, my neighbor got such-and-such for his house, why can’t I get my price’ but it doesn’t work that way,’ Yannon said. ‘The lower price increases the possibility of selling right away, so you have to be realistic.’”

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