The Housing Bubble

The Times Press Recorder reports from California. “For Don and Rebecca Spendlove, just keeping a roof over their heads has taxed their mental, emotional and physical as well as financial capabilities. The Nipomo couple have found themselves in the same situation as millions of other Americans: Their homes are worth less than they owe, their mortgage terms are crushing their finances and the specter of foreclosure is looming.”

“The Spendloves bought their modest Nipomo home in 1993 for $153,000, and for almost a decade, everything was fine. Then six years ago, their lives fell into a long downward spiral. Don was at work one night in early June 2001 when a fire broke out in the 26-acre complex housing California Giant Strawberries.”

“‘We knew he’d be out of work for a time, so we refinanced and put some money away,’ Rebecca said. ‘When that was gone, we refinanced again. We had no idea (his disability) would be a permanent situation.’”

“When the refinance terms were set, the Spendloves found their payments would jump from $1,400 a month to $2,600 a month. ‘As we were doing the paperwork, I told them the payments were too much,’ she said. ‘They said, ‘No, you’ve got the income, and you’ll be paying off your credit cards. It worked out fine on paper.’”

“The Spendloves had also asked for $4,000 from the refinancing, Rebecca said, but the company convinced them to take $35,000. As it turned out, ‘We used that money to pay the mortgage,’ she said. ‘And our credit cards all went up again,’ Don added.”

“In a bid to make ends meet, the Spendloves emptied two bedrooms and rented them out. ‘We have no life, we have no privacy,’ Rebecca said. Rebecca also started selling Avon. She sold all her jewelry. They sold everything they could on eBay and in yard sales.”

“‘We bought this house for $153,000,’ she said. ‘Now we owe $416,000. Granted, we refinanced a couple of times, but we had equity, the market was good.’”

“‘If we could sell the house, they’d get their money,’ Don said, shaking his head. ‘We’ll have to walk away. I don’t know why they can’t understand this.’”

“Just across their street, a home has sat vacant for more than a year, the yard untended, the windows coated with dust. ‘Our neighbor … just walked away,’ said Don. ‘He said, ‘I’m not paying.’ He just moved away.’”

The Contra Costa Times. “Under water. Upside down. Negative equity. No matter the terminology to describe the erosion of home equity in the East Bay, the conclusion is inescapable: A local housing sector that once was remarkable for how high it could soar has plunged into the depths.”

“About two out of three East Bay homes that were bought since 2005 are now worth less than the mortgages on the houses, according to a Zillow.com study.”

“One Brentwood resident who bought a home in the Garin Ranch section of Brentwood said he and his wife have ridden a roller coaster of home values. Robert, who asked that his last name not be used, said they have been hammered both by falling home values and rising mortgage payments.”

“‘The first year and a half, the house’s value went way up,’ Robert said.”

“In late 2004, Robert and his wife paid $524,500 for the house. Now it’s up for sale for $369,000. A lender for the house, Citibank, has begun foreclosure proceedings on the financially distressed property, county records show.”

“This definitely has a ways to go,’ said Christopher Thornberg, an economist with Beacon Economics. ‘There is no sense this is anywhere close to being over. This thing is not over by any stretch of the imagination.’”

“‘You have the walk-away issue, where people see the house is under water and they give up,’ Thornberg said. ‘People will realize over time that it is ludicrous. They will ask themselves why keep making a mortgage payment.’”

“Robert, the Brentwood resident, said he and his wife are devastated about the prospect of losing their home through the looming foreclosure. He recalls how much time they spent fine-tuning amenities for the residence.”

“‘We picked our own tile and other options,’ Robert said. ‘We loved that house. It killed us to walk away.’”

The Mercury News. “Gregg Winchester and his wife, Cynthia, made an offer on the 2,430-square-foot, four-bedroom, three-bath house the same day they saw it.

“‘We felt now was the time to purchase something for our family now that prices had come down,’ he said. The couple bought the bank-owned house for $355,000.”

“According to the National Association of Home Builders/Wells Fargo Housing Opportunity Index…in the East Bay, 32.4 percent of residents could buy a home in the first part of 2008 as opposed to only 17.4 percent in late 2007. In San Joaquin County, it went from 16.9 percent of people to 35.5 percent, while those on the Peninsula who could afford a home rose from 7.9 percent to 12.7 percent. Solano County’s affordability rose from 20.4 percent to 35.1 percent.”

“Sean O’Toole, CEO of ForeclosureRadar in Discovery Bay, said that 22,324 homes reverted back to the bank in California in April. Of that, 954 were in Contra Costa County.”

“O’Toole, who also invests in real estate, said that the return on investment for buying distressed properties and renting them out is coming close to creating a positive cash flow. ‘We still have some people who are speculating that this is the bottom and they’ll be rich in two years, but those are the same folks who got into trouble the last time.’”

“Perhaps it’s the price drops that are tempting more buyers. Homes that previously were selling for $800,000 can now be bought around $400,000, and although inflated prices were arguably due to a housing bubble, many are still attracted to what they view as a bargain.”

“Bryce Ellsworth, a broker in Brentwood, said that homes that are priced well, especially foreclosures, receive multiple offers. And the majority buying are investors looking for positive cash flow, including himself. ‘Properties are being sold significantly below values. I think I’ll take my chances,’ he said.”

“As the housing slowdown and credit crunch metastasized through the economy, new vehicle sales in the state fell almost 19 percent in 2008’s first quarter compared to 2007’s first quarter, the California Motor Dealers Association said.”

“‘My family has owned this dealership for 71 years,’ said Bill Brunelli, director of operations at Central Chevrolet in Fremont. ‘I’ve been in the business all my life; I remember the oil embargo of the 1970s, and I’ve never seen anything like this. We used to sell 200 cars a month five years ago; now we may sell 20 or 30.’”

“‘Up until last year or so, money was much more free-flowing,’ Brunelli said. ‘Interest rates were very low, and people who typically would not have been approved for loans got approved. Just like the housing industry. If they couldn’t get a car loan they would refinance their house and buy a car.’”

“But now, Brunelli said, ‘lenders have tightened their purse strings and said, ‘No. We would have done it in those days, but that got us into trouble, so we’re not lending to that level any more.’”

From ABC 7.com. “It’s a sign of the times — some very hard times. Bankruptcy filings are up, and in Orange County they are skyrocketing. One development Eyewitness News visited in Orange County is supposed to be a sprawling collection of new houses and townhomes.”

“But the only thing sprawling these days across the empty fields are the weeds. The real estate market is withering.”

“‘You can probably drive around most of Southern California and see real estate development projects that have, frankly, just stopped,’ said bankruptcy attorney Jim Bastian.”

“Bankruptcy filings in Southern California are skyrocketing. The latest year-to-year numbers for April show bankruptcies in L.A. County are up 92 percent. In Riverside County, they’re even worse at 125 percent. In Orange County, statistics show bankruptcies are up a staggering 153 percent.”

“‘It’s going to get worse before it gets better,’ said Bastian. ‘Most of the people that I’ve talked to, and if you talk to experts in the industry, they’ll tell you it might be 2010 or 2011 before we see prices get back to where they were even three or four years ago.’”

“‘People who should not have been in this situation, where they’re buying a $400,000 or $500,000 house and having a mortgage payment of $4,000 or $5,000 per month, when they’re only making $25,000 or $35,000 a year,’ said Bastian.”

“That ultimately leads to bankruptcy court. As visits to court add up, developers work on their subtraction. Earth movers are moving nothing, new streets have no cars and housing lots have lots of nothing. What was once a real estate boom is now an unnerving silence.”

The Capitol Weekly. “The mortgage crisis hasn’t just led to a rising tide of high-profile foreclosures. It has also resulted in a near-flood of mortgage industry-related bills making their way through the Legislature.”

“Beating the deadline for bills to emerge from their house of origin, a trio of Senate bills supported by the California Mortgage Bankers Association had made it out of the Senate. Several other bills the group opposed either died or were amended.”

“Dustin Hobbs, communications director for the CMBA, said…that the subprime crisis has been somewhat overblown in the media, given that 78 percent of Californians who got subprime loans in 2005 and 2006 are still in their homes.”

“‘We don’t want to go back to the days when you had to put 20 percent down,’ Hobbs said.”

The LA Times. “Mortgage delinquencies and foreclosures reached record levels in the first three months of this year, driven higher by increasing housing woes in California and Florida, the Mortgage Bankers Assn. reported today.”

“‘The problems in California and Florida are extraordinary and they are the main drivers of the national trend,’ said Jay Brinkmann, the association’s VP for research and economics.”

“California accounts for 13% of the country’s mortgages outstanding but is responsible for 21% of the homes that entered the foreclosure process in the latest period. The number of foreclosures started was the highest since 1979, as were the percentage of homes in foreclosure and the percentage in delinquency, the association said.”

“Two years ago, Patricia Prado worried that she would never be able to buy a house. Property values in this Central Coast farm town had been rising sharply, and Prado and her husband were burdened by $18,000 in debt from their credit cards and the loan on their Jeep Grand Cherokee.”

“She got a phone call from a mortgage broker who said she had heard her tale and had a solution: a mortgage loan that required no money down. ‘She made everything sound like it was going to be wonderful,’ said Prado.”

“A few weeks later, Prado bought a $412,000 house with a so-called 80/20 mortgage. Those mortgages are actually a pair of loans — one for 80% of the purchase price and another for the remaining 20%.”

“‘In some places, where house prices were running up 20% year over year, you only needed one year of that run-up for the package to become well-collateralized,’ said Stuart Gabriel, a UCLA real estate finance expert. ‘All of that was predicated entirely on the presumption, the expectation, of a continued significant house price run-up.’”

“Property values, of course, began falling sharply last year. And that left people such as Prado, who bought near the top of the market, owing more in loans than their homes were worth. Her home is set to be sold in a foreclosure auction next week.”

“Prado acknowledged that she stated her monthly income as $7,500 on the loan application — nearly double what she was actually earning in her job. Still, she was confident the payments would not be a problem. At the time, her husband was earning $20 an hour as a carpenter as builders turned the area’s broccoli fields into housing developments.”

“By year’s end, home values had flattened out, and then began dropping. That meant Prado would not be able draw on rising equity to refinance her mortgage, as so many planned to do during the real estate boom.”

“As home values plunged, new-home building slowed and her husband lost his job in 2007. Then this year, their monthly payment shot up by $450 to $2,650 as a higher interest rate kicked in, Prado said.”

“Financially, Prado says she hasn’t really lost anything, since she put no money down to get her mortgage. She’s looking for a place to rent. Houses like hers are now renting for between $1,300 to $1,600 a month, Prado said.”

“Her biggest challenge, she said, was trying to keep her children, a 10-year-old boy and 7-year-old girl, from figuring out what happened. To soften the blow to the children, Prado said she told them that they were only renting the home they had bought. In many ways, that’s true.”

Some housing bubble news from Wall Street and Washington. CNN Money, “More than one million homes are now in foreclosure, the highest rate ever recorded, according to a trade group which warned Thursday that number will continue to climb. The Mortgage Bankers Association’s first quarter report showed that a record 2.5% of all loans being serviced by its members are now in foreclosure, which works out to about 1.1 million homes.”

“There are 431,000 prime loans in foreclosure, a seasonally adjusted rate of 1.2% that is more than double the 0.5% rate a year ago. The report showed about 1.2 million prime mortgages are now a month or more past due.”

“According to Jay Brinkman, MBA’s VP for research and economics, the prime loan segment was hurt by so-called Alt-A loans, which didn’t require income verification for buyers with good credit.”

“California, Florida, Arizona and Nevada have been hit by a hangover after a home building boom in the middle of the decade, which was fueled by rising home prices and investors snatching up real estate using risky mortgages. Those four states have nearly 400,000 homes in foreclosure, or a third of the nationwide total. Roughly 3.6% of all of the loans in these states are now in foreclosure.”

“‘Clearly things in California and Florida are going to get worse before they get better,’ said Brinkman.”

From Reuters. “U.S. home builders, struggling under sinking demand and a credit crisis, now face a fresh obstacle: competition from a flood of homes in foreclosure.”

“‘In some regions, the supply coming to the market from home builders is now smaller than the supply coming from foreclosures,’ Deutsche Bank senior economist Torsten Slok said.”

The Kane County Chronicle from Illinois. “Rich Guerard prefers not to buck the market. That’s why he and his business partners have decided to hold off on building the Settlements of LaFox.”

“For years, Guerard and his partners have waited to sell the first of the 1,275 homes they are planning to build in their large development between Geneva and Elburn. If all had gone according to plan, the first homes could have been built this summer. But a slumping housing market has persuaded the developers to wait a little longer, Guerard said.”

“‘We believe the market is reaching the bottom,’ he said. ‘But it needs to improve from where it is before we go forward with this.’”

“Builders are under a tremendous amount of strain, said Ray Budde, executive VP of the Homebuilders Association of the Greater Fox Valley. In North Aurora, for instance, several lots are set to be auctioned later this month in the Tanner Trails subdivision as part of Neumann Homes’ bankruptcy plans.”

“And in Sugar Grove, Kimball Hill Homes is selling all undeveloped lots in the subdivision as that company seeks to reposition itself after seeking bankruptcy protection earlier this year.”

The Australian Broadcasting Corporation. “New South Wales Opposition Leader Barry O’Farrell has used his Budget reply speech to announce a Coalition state government would co-invest in a house or unit for some first-home buyers.”

“Mr O’Farrell says the Coalition would fund up to 40 per cent of a property priced under $400,000 for people with a $90,000 maximum household income. ‘A shared equity scheme could provide access for as many as 4,000 singles, couples and families to buy their own home,’ he said.”

“BankWest found housing prices had risen by two-thirds across Australia since 2002. The average income had increased by less than half that amount over the same time.”

The Lancaster Guardian from the UK. “According to government statistics, 100 mortgage repossession orders were made at Lancaster County Court between January and March - a massive 163 per cent rise from the same period in 2007.”

“Mike Fisher, partner at Fisher Wrathall estate agents, said: ‘I think there’s been quite a lot of hypocrisy within the lending organisations over the last few years. “They have constantly wrung their hands about the affordability issue for younger people but their answer has been to come up with more and more innovative products which have been more and more expensive. That has fuelled house prices to a less affordable level, which has left the local housebuyer behind.’”

“Mr Fisher said many of the properties repossessed could be from the buy-to-let market. ‘If people are coerced into buying over-priced flats to let and then fail to carry out their financial obligations, it leads to problems,’ he said. ‘This is purely down to ill-judged excursions into the property market.’”

The Independent. “Many of Britain’s biggest housebuilders could be forced into deeply discounted emergency rights issues before the end of the year. More than £300m was wiped off the value of the country’s six largest housebuilders yesterday, with investors panicked into a sell-off by a doom-laden report on the sector from investors at UBS.”

“‘The speed of the collapse in April and May has been astonishing,’ said Mark Stockdale, UBS’s lead housing analyst. ‘This is as bad as 1991 - without a doubt. And the big difference is that I have never seen a housing market fall as fast as in the last eight weeks.’”

The Scotsman. “Housebuilders yesterday issued a call for a ‘drastic’ 0.5 per cent cut in interest rates from the Bank of England today as new analysis from investment bank experts revealed ‘extreme weakness’ in the housing market.”

“Home Builders’ Federation director of economic affairs John Stewart said: ‘We just cannot rely on lessons learnt and solutions based on past downturns as this is a completely new situation in which we find ourselves.’”

From Business Week. “Robert Toll and other builders suffering through the downturn think that homeowners need extra incentives to get off the sidelines.”

“Their pitch goes like this: If the government simply bails out people whose home values have dropped below their mortgage amount, or spends hundreds of billions of dollars on Federal Housing Administration loans, prices will continue to drop, and those government-subsidized loans also will end up under water. Better to urge potential home buyers off the sidelines and back into the market, so prices can stabilize.”

“‘I believe that this is the way to stabilize the economy,” Toll, CEO of Toll Brothers, said in an interview on June 4. ‘Before trying to straighten out the credit market, you need to straighten out the basis of the problems in the credit market. You want to look at the asset that backs up that credit.’”

“The problem for homebuilders is that few people are buying much of anything today, and builders say they can’t cut prices much more than they already have. ‘I think homebuilders have been lowering prices to the point where they are just trying to recapture some of the land costs,’ Toll said.”

“Of course, the government already subsidizes home ownership in numerous ways, to the chagrin of economists like Laurence Kotlikoff at Boston University. He calls the subsidies ‘distortionary.’”

“The government also encourages home buying through oufits like Fannie Mae and Freddie Mac, as well as the FHA, which attempt to expand the market for housing credit. Government regulators pressure banks to make affordable loans available to home buyers.”

“But is it up to U.S. taxpayers to stop the slide? Tomasz Piskorski, an assistant professor at Columbia Business School, calls the tax-credit proposal ‘an implicit subsidy to homebuilders’ that would keep home prices artificially high when they probably ought to be falling.”

“If builders and sellers would drop their prices, houses would start to move again, he said. A tax credit might briefly prop up the market but ultimately may just prolong the agony until real demand and supply find equilibrium.”

“‘Let home prices fall to a level where they become really affordable,’ he said. ‘Once the prices are sufficiently low, there will be no problem selling homes, there will be no problem getting decent mortgages. Maybe it’s better that home prices fall faster.’”

“When Wachovia CEO Ken Thompson sealed a $24 billion deal to buy Golden West Financial in May, 2006, he bragged that he had bagged “a crown jewel” of the mortgage business. Two years later it’s painfully clear that Thompson bought the nation’s second-largest S&L at the peak of the housing bubble, a misstep that led to his ouster on June 2.”

“In most mergers, it’s the acquirers that exert their will. But right after Wachovia bought Golden West, executives from the S&L took control of all mortgage lending. And according to former brokers, they began pushing Wachovia’s sales force to steer applicants into its signature ‘Pick-A-Payment’ loans.”

“Analysts note that Golden West focused too much on appraisals and too little on verifying the income and assets of applicants. While this tactic helped ensure that Golden West could recover the full value of homes that went into foreclosure during up cycles, it didn’t anticipate that borrowers would simply walk away if a plunge in home prices left them underwater.”

“Analysts figure Wachovia could end up incurring losses of as much as $11 billion on Golden’s West $122 billion mortgage portfolio. ‘You’d be hard-pressed to find anything good out of this acquisition,’ says Terry Maltese, president of Sandler O’Neill Asset Management.”

From Bloomberg. ” MBIA Inc. and Ambac Financial Group Inc. may give up attempts to retain the Aaa credit ratings of their bond insurance units after Moody’s Investors Service put them under review for a second time this year.”

“The world’s largest bond insurers, which have raised $4.1 billion combined in the past six months, said they won’t seek more capital after Moody’s yesterday said the most likely result of its examination would be a downgrade of the companies’ top insurance financial strength rankings.”

“‘The ability of MBIA and Ambac to continue as viable ongoing companies is highly in doubt,’ according to a note from analysts at debt research firm CreditSights Inc. in New York. ‘How can a triple A be justified for a company that cannot sell its product, is facing mounting losses and has no access to the capital markets?’”

“Financial markets are in disarray. The global economy is throwing a tantrum that could spell recession for some nations. Central banks are publicly pumping billions of dollars into the money markets to keep the banking system afloat, and privately doing God knows what to avert the next Bear Stearns Cos. or Northern Rock Plc.”

“The importance of the finance sector to the global economy has swollen along with the bonuses it awards itself. Standards of behavior, however, have failed to mature at anything like the same pace. And, so far, nobody in banking has apologized for the chaos caused by lax lending standards and monumental hubris.”

“‘One of the innumerable problems with Wall Street and the City is that they never do seem to learn from their mistakes,’ says Tim Price, director of investments at PFP Wealth Management in London.”

“‘Finance is supposed to be a service industry, an aid to the business of genuine wealth creation,’ says Sean Corrigan, who oversees more than $8 billion in Lausanne, Switzerland. ‘Once we accord banks the sort of overblown importance they have enjoyed this past quarter of a century, we become hostage to the megalomania of their executives and head traders.’”

“Richmond Federal Reserve Bank President Jeffrey Lacker said the lending to securities firms that the central bank introduced in March may lay the seeds of further financial crises.”

“‘The danger is that the effect of the recent credit extension on the incentives of financial-market participants might induce greater risk taking,’ Lacker said in a speech to the European Economics and Financial Centre in London. That ‘in turn could give rise to more frequent crises,’ he said.”

“Lacker, heads a district that is home to two of the four biggest U.S. banks. A former head of research at the Richmond Fed, he alone dissented in interest-rate votes at the Fed in late 2006, wanting to continue raising them to stem inflation.”

“‘Establishing a new set of boundaries for central-bank lending is a high priority,’ Lacker said in the interview. ‘You would expect that’ the limits ‘aren’t going to be credible unless we let somebody fail in a costly way that is beyond that scope,’ he said.”

“Lacker in his remarks distinguished between ‘fundamental’ runs on financial institutions where creditors have good economic reasons to question their investments, and ‘non- fundamental’ runs typified by panics.”

“U.S. household wealth fell in the first quarter by the most in more than five years and borrowing slowed as home values and stock prices plunged and lenders restricted credit, Federal Reserve figures showed.”

“Net worth for households decreased by $1.7 trillion from the previous three months, the second straight decline and the biggest since the third quarter of 2002, according to the Fed’s quarterly Flow of Funds report today. Real estate-related assets dropped by $328.9 billion, the most since records began in 1952.”

“‘Households continue to face significant headwinds, including falling house prices, a softer job market, tighter credit, and higher energy prices,’ Fed Chairman Ben S. Bernanke said in a speech this week. ‘Until the housing market, and particularly house prices, shows clearer signs of stabilization, growth risks will remain to the downside.’”

The Associated Press. “The equity Americans have in their most important asset - their homes - has dropped to its lowest level since the end of World War II.”

“Homeowners’ portion of equity slipped to 46.2 percent in the first quarter from a revised 47.5 percent in the previous quarter. That was the fifth quarter in a row below the 50 percent mark, the Federal Reserve said Thursday.”

“The total dollar value of equity also fell for the fourth straight quarter to $9.12 trillion from $9.52 trillion in the fourth quarter, while Americans’ total mortgage debt rose to $10.6 trillion from $10.53 trillion.”

“A homeowner’s equity is the market value of a property minus the mortgage debt. And homeowners’ percentage of equity has declined steadily even as home values surged during the housing boom due to a jump in cash-out refinancing, home equity loans and an increase in 100 percent financing.”

“At the end of March, nearly 8.5 million homeowners had negative or no equity in their homes, representing more than 16 percent of all homeowners with a mortgage, according to Moody’s Economy.com Chief Economist Mark Zandi.”

“By June 2009, he estimates that will increase to 12.2 million, or almost one out of every four homeowners with a mortgage.”

“But to put that number in perspective, one out of every three homeowners own their properties free and clear, with no mortgage at all.”

“Still, Zandi said, ‘For most, their home is their key asset. If they have no equity in their home, likely their net worth is negative too. Their entire balance sheet will be underwater.’”

“Prices nationwide are at levels not seen since the third quarter of 2004.”

“Homeowners with no or negative equity are more likely to fall behind on their mortgage payments or, in frustration, mail the keys to the lender and walk away from their mortgages, a phenomenon more lenders are seeing. This will only increase foreclosures, which have been surging the last two years, and further exacerbate the housing downturn.”

A report from the Idaho Statesman. “The number of Treasure Valley homes entering the foreclosure process in May was down 17 percent from the previous month, according to statistics released Wednesday. A total of 345 notices of default - the first step in the foreclosure process - were filed in Ada and Canyon counties in May, compared with a yearlong peak of 415 in April.”

“The 345 filings were still 141 percent ahead of the 143 default notices filed in May 2007. Moreover, the Valleywide total of 1,843 default notices filed between January and May of this year represents a 139 percent increase over the comparable period a year ago.”

“Charlie Nate, president of IdahoDataProviders, which compiled the statistics, said the lull in May was because banks are being swamped with repossessed properties. As a result, he said, lenders have become reluctant to pull the trigger on a foreclosure, choosing instead to try to negotiate a ’short sale.’”

“‘Lenders are more likely to go along with a short sale now,’ Nate said. ‘They already have a ton of properties on their books. So, they might wait (on foreclosure) to see if they can get a short sale approved.’”

“‘I think two out of every three homes in foreclosure are upside down,’ he said.”

“Shaun Tracy, an associate Realtor in Boise, said the decline in foreclosures last month isn’t necessarily a sign that the local real estate market is turning around. ‘I’m not sure that the public is really aware just how many foreclosures there really are out there,’ Tracy said.”

“But it may convince consumers sitting on the fence that home prices will not fall any farther and that this is the time to buy a home, Tracy said.”

“The slowdown in home sales during the past year resulted in May’s bankruptcy protection filing for Hunter’s Point, a subdivision of more than 500 housing units encompassing a golf course in Canyon County.”

“However, a developer and real estate professionals say Eagle’s Legacy, with about 1,300 homes, surrounding golf, tennis, swimming and soccer facilities, has great potential because of its upscale 1,800- to 4,000-square-foot homes that range in price from $249,000 to $449,000, and its prime Treasure Valley location.’

“‘When you look at Eagle, that is a very attractive price,’ said Shaun Tracy, an associate Realtor in Boise, who is not connected to the Legacy project.”

“During the first quarter of the year in Eagle, only three new homes sold for an average price of $484,000, according to the Intermountain MLS. And only 13 of the 78 homes listed for sale around $250,000 are 2,000 square feet or more, and only six of the 13 are new construction, Tracy said.”

“‘At the $250,000 price point, they (Legacy) have no competition,’ he said.”

“But at a time when high-end home sellers and builders are struggling, how did Legacy finance and maintain such a development? The development was in the planning stages five years ago, before land prices soared, Legacy developer Todd Santiago said.”

“Legacy also partnered with Holmes Homes, a Utah-based company that has built more than 16,000 homes in Idaho, Utah and Arizona. ‘They came in with a far better price point than most builders, and that allows a home to be priced more aggressively,’ Santiago said.”

The Bellingham Herald from Washington. “Until recently, Bellingham and Whatcom County bucked national trends when it came to residential home prices. However, in the first quarter of 2008, the median price of a home dropped 3.4 percent compared to the same period last year. Also, home sales are down 14.1 percent, according to Lylene Johnson of The Muljat Group South office in Fairhaven.”

“‘Homes were on the market sometimes as little as 15 days in previous years are now taking 100-200 days to sell,’ says Tom Follis, managing partner in Wm. T. Follis Realtors.”

“So what is the future going to bring to our local commercial real estate market? One trend that has become quite prevalent here particularly in Fairhaven is the mixed-use buildings, combining commercial and residential units.”

“‘It is, in many respects, the wave of the future,’ says Follis. ‘With more people living in the core areas like downtown Bellingham and Fairhaven, it has tremendous appeal to business owners. They have instant customers living right above their business.’”

“People in the industry say that the market has shifted some. There are fewer spec homes being built. With the market for work on new homes slowed from the high of the last five years, many business people are hunkering down expecting a decent, but not busy, summer season this year, followed by a much busier 2009.”

“Del Jacobson, president of the Building Industry Association of Whatcom County, said he hears stories about contractors who were building spec homes and are now stretched thin. And he said most business owners are worried that the perception that things are bad, reinforced by national news stories, will lead to more of a slowdown.”

“‘I think we are all a little nervous,’ Jacobsen said. ‘But from what I can see, compared to the national side of things, we are doing a lot better here in Whatcom County.’”

“Pat Rose, owner of Rose Construction, said her sign of how things are going comes from her phone. She is getting fewer calls this spring than the last few years, and the phones were basically silent during the winter - silent, that is, with the exception of sub-contractors calling her to see if she had any work.”

“Those kinds of calls almost never came during the super-busy times the last three or four years. ‘I talked with other remodelers I know and there is a definite, significant lull in the winter,’ she said. ‘But it’s now picking up some.’”

“The perception that things are worse than they really are can be blamed on two phenomena, those in the industry say. First, any slowdown would seem bad compared to the frantic times in the industry in the past five years.”

“‘It was really amazing, and it went on for so long,’ said Rose, who has been in business for 22 years. ‘It got so crazy. Any lull would seem like a change for the worse after that.’”

“Even locally, the largest failures tend to get the biggest press. So residents are reading about developers who are giving up on would-be housing projects or residents facing mortgage problems or that Washington Mutual closed its Bellingham Home Loan Center in response to the market struggles in California.”

“‘We are not running at the pace we were two or three years ago,’ said Jim Wynstra, president of Homestead Northwest. ‘But those were remarkable periods.’”

“In support of the industry, the Building Industry Association of Whatcom County has been running an advertising campaign trying to persuade potential customers that now is a great time to buy or remodel.”

“Still, said Bill Quehrn, executive officer of the BIAWC, things have slowed a little. He said the builders he talks to and works with know that and most are prepared to weather the storm.”

“‘We have been in a boom cycle, no one would argue that,’ he said. ‘If you are fairly new in the business you might just think that’s where our market is. But most veterans would say we have just come back now to where our market usually is.’”

The Heraldnet from Washington. “A sign of sinking home prices in Snohomish County is on its way in the mail. New values issued this week by the county assessor show an unprecedented 2 percent drop from last year.”

“‘I don’t think I can remember a year where we’ve decreased residential values countywide since I started working here in 1987,’ county assessor Cindy Portmann said. Her chief residential appraiser, Steve Lightle, said it hasn’t happened in his 35 years with the county.”

“The drop comes after issuing years of double-digit increases in property values. Homeowners have seen double-digit increases in property values each year since 2004. The new assessments are based on property sales in 2007, which steadily declined starting last June. They’ve continued to slide.”

“Citing economic reports, Portmann said the overabundance of cheap credit caused a housing bubble that inflated the price of land and housing and caused many developers to build more homes than there were buyers.”

“The 2 percent decrease seems to accurately reflect last year’s slide in prices, said Nathan Gorton, executive officer for Snohomish County-Camano Association of Realtors. Overall, housing prices are about 5.5 percent lower than they were 18 months ago, he said.”

“Based on sales figures, Snohomish County median house and condo prices dropped to $330,000 in April from $350,000 in November.”

“A decrease in property value shouldn’t worry homeowners, Gorton said. ‘If you look at it like a stock, then, yeah, you might panic a little bit,’ he said.”

“Homeowners who hang onto a property for five to seven years will probably make money, and some statistics show the price of a home doubles every 10 years, he said.”

“‘We’ve got to get away from looking at houses like the stock market,’ Gorton said. ‘There’s intrinsic value. You live there. You raise a family there. You make memories there.’”

Salem Monthly from Oregon. “In March, Salem Monthly reported that Salem was weathering the real estate woes that were facing other parts of the country. But recently the Willamette Valley MLS released statistics showing a decline in the average sale price in the Willamette Valley compared to this time last year.”

“Melina Tomson of Tomson Burnham, a real estate agency in Salem, says there are two main reasons for the decline. One is the oversupply of newly constructed homes, which raises housing prices because they are generally more expensive. Second, she cites the lack of sales of luxury homes in the area.”

“‘It really comes down to supply and demand,’ Tomson said. ‘We have little demand and a lot of supply. As such, buyers are demanding lower prices and when sellers are willing to come down, buyers are buying.’”

“Prospective sellers should be aware that multiple sources have called it a ‘buyer’s market.’ But Tomson does not believe there is a best time to buy or sell.”

“‘I think if someone is planning to live in a home for a short period of time, renting might be a better option due to the increasing inventories and difficulties in the lending market. I think sellers need to be realistic about the change in the market,’ she said.”

From KTLV 10.com in Oregon. “Home Appraiser Roy Wright is considered by many in the Jackson County real estate business to be the expert when it comes to tracking market trends. Wright says the Ashland housing market tends to be an indicator of where the rest of the county is heading, which could be good news for sellers.”

“‘I believe we are seeing the beginning of the end,’ says Wright, after three years of a struggling housing market.”

“‘We’re not out of the woods. But we definitely see a light at the end of the tunnel, and it’s not a train coming at us, you know, hopefully. The light is definitely there,’ he says.”

“Wright says more than 300 fewer homes were sold this year than during the first 5-months of last year. He also says foreclosures are expected to continue which is devastating news for those losing their homes, but is promising for first-time home buyers looking for better priced houses.”

The Tigard Times from Oregon. “Tualatin resident Jon Hanson could be a motivational speaker. He could be a politician or financial investor. But instead, he is a real estate agent, which sort of pulls all these facets of his personality together.”

“Only a handful of months into his career as a real estate agent with Keller Williams Realty in Oregon and Northwest Properties Brokers Network in Washington, Hanson brings a refreshing perspective to the housing market.”

“For 24-year-old Hanson, a love of houses and people came naturally. ‘I’ve always had an interest in houses because there are unlimited possibilities,’ said Hanson. ‘Who doesn’t love real estate? People always love to tell their real estate stories, whether it’s the house they should have bought or if they are just asking about the market.’”

“Despite nationwide murmurs about the real estate market’s downturn, Hanson insisted the Portland market is ‘relatively wonderful.’”

“With lower interest rates and competitive home prices, Hanson said now is the time to buy. ‘After we come out of this downturn,’ Hanson said, ‘people will realize they should have bought at a discount a year ago.’”

“Jeff Barram purchased his first home in Vancouver, Wash., with Hanson’s help. The process, Barram said, ‘was really nice because we didn’t really have to do very much at all. He ran everything. Being first-time homebuyers, we didn’t know anything. There are so many forms.’”

“‘I have goose bumps thinking about the opportunities out here for people,’ Hanson said. ‘Right now I’m working with a number of buyers. They see that real estate might not be this affordable again.’”

“‘Every day when I leave my house,’ he said, ‘I’m not in the real estate business; I’m in the trust business.’”

“And in his business, Hanson said, he must eliminate the fear of failure. ‘Failure does not exist’ he said.”

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