The Housing Bubble

The Voice of San Diego reports from California. “The county’s housing prices logged a 22.4 percent drop compared to the same month a year ago, according to the most recent Standard & Poor’s/Case-Shiller index for April 2008 released Tuesday. Compared to the peak in November 2005, the county’s overall house prices were down 27.9 percent. Prices sunk to a level last seen in late 2003.”

“A total of 6,201 foreclosure-related notices went to county households in May, marking a 17 percent increase from the month before an 84 percent increase compared to May 2007, according to RealtyTrac.”

“Longtime real estate broker Jim Klinge’s listings are either for banks, who just want the repossessed properties sold, or for sellers who are willing to lower their prices to attract buyers, he said. He predicted the index will show another 20 percent drop in the highest tier by the end of the year.”

“‘That’s probably going to be a result of sales slowing to a crawl and the only things that are going to be selling are the things that are selling for nothing,’ he said. ‘Because that’s what everybody is willing to pay. Statistically, it’s a mess.’”

“Some sellers in the region have decided to wait, expecting better conditions in a year. But they might face a struggle if they’re expecting the statistical measures like the median price or the Case-Shiller index to support higher prices in a year, Klinge said.”

“‘They’re crazy, especially if they’re hoping for statistics to help them,’ he said, ‘because statistics are going to be showing the foreclosures.’”

The Union Tribune. “San Diego County foreclosures and defaults remained at historically high levels last month, with troubles spreading to previously untouched coastal markets, DataQuick reported. Foreclosures reached a record 1,556, up from 1,143 in April and nearly triple the 553 posted in May 2007.”

“‘It’s still mainly a problem for South County and certain inland areas,’ said DataQuick analyst Andrew LePage. ‘But it’s not as if the coast is clear. The problem is worsening a bit on the coast and in much of inland North County.’”

“Jan Terry faces foreclosure on a $935,000, 2,300-square-foot house she bought a couple of blocks from the coast in Carlsbad early last year.”

“Terry acknowledges that she made a mistake in getting a high-risk loan for the investment property, but she thought beach properties should have been a no-brainer money maker.”

“‘Based on the way I could see the market going,’ said the one-time real estate agent, ‘I would make a few bucks.’”

“But then the mortgage market tanked, her tenants left, she moved back in and her business partner skipped town. Terry now faces bankruptcy, eviction and possibly living on the streets.”

“‘My confidence level and credibility are probably shot,’ Terry said.”

The Monterey County Herald. “California’s foreclosure tide isn’t ready to start ebbing just yet. With additional waves of adjustable rate mortgages due to reset later this year, the state’s default numbers aren’t likely to level off in 2009, Leslie Appleton-Young, chief economist for the California Association of Realtors, said Tuesday at the Monterey County Association of Realtors’ annual meeting.”

“Come August, California will be three years into its down cycle, said Appleton-Young, and 2008 won’t likely be the bottom.”

“‘We still have a significant number of foreclosures ahead of us,’ she said. ‘We probably about about two years before we work ourselves through the foreclosure situation.’”

“In April) Monterey County median prices dropped to $399,900, a 7 percent decline from March and 47.4 percent below the median price in April 2007.”

“The numbers don’t indicate that property values in Monterey County are plummeting, said Appleton-Young. Rather, they’re an indicator of where the most sales activity has shifted, as first-time home buyers and investors begin to take advantage of deals at the lower end of the price spectrum.”

The San Francisco Chronicle. “A closely watched real estate market analysis found regional home prices fell at an accelerating pace in April, setting yet another record low, but some experts warned that the growing sales of foreclosed properties are skewing the numbers.”

“But the overall direction of the market remains clear: downward. A third study released Tuesday found that U.S. homeowners have lost more than $4 trillion in real estate wealth since the market peak, or about $50,000 each. Last month, foreclosures represented 43.3 percent of all home sales in Contra Costa County and 26.8 percent in Alameda County, according to DataQuick.”

“Case-Shiller is a repeat sales index, meaning it tracks only the actual price gains or declines for homes that have traded hands at least twice. In the current market, the homes that have done so recently increasingly tend to be foreclosed properties, said Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley.”

“‘It’s biasing the numbers in a way that makes it look a lot worse than it really is for the typical homeowner,’ Rosen said. ‘I’m a bear, so I’d go with it if it were true.’”

The Press Democrat. “A year ago, Linda Elliott could only afford a condominium. On Wednesday, she closes on a foreclosed three-bedroom Santa Rosa home, paying $303,000 for a house that sold for $540,000 four years ago.”

“‘It feels wonderful. I don’t have to rent. I have security for my children,’ she said.”

“Elliott is not alone in finding deep discounts at the lower reaches of Sonoma County’s housing market where distressed properties dominate.”

“While she feels sorry for the family that lost the home to foreclosure, Elliott seized the opportunity, finding plenty of company among buyers looking for bargains. ‘If you don’t show up to make the offers on these homes, you’re not in the game. You’ve got to jump in,’ she said.”

“A frenzy of sales at lower price ranges has created bidding contests among first-time buyers and investors alike. Those who miss out on their first choices often find ample alternatives.”

“Elliott was outbid on two homes. The first time, the bank listed the home for $240,000 and it sold for $280,000. The second home was listed for $255,000 and sold for $279,000. The lender sought $299,000 for the home Elliott purchased for $4,000 more, a relative bargain in that price range these days.”

“‘I feared I missed the boat, but I didn’t,’ she said. ‘There’s more and more foreclosures coming on the market every day.’”

The Manteca Bulletin. “It’s REO Speedwagon, Manteca-real estate style. REOs - or foreclosed real estate owned by banks - are rocking the Manteca housing market just like the Midwestern band of the same name did the power ballad rock scene of the 1970s.”

“‘REOs are driving the Manteca market today, that’s the way it is,’ noted Sid Reams who has been tracking Manteca resale housing stats for almost a quarter of a century.”

“In the past week in Manteca…thirty-two of the 50 new listings were foreclosures. Eight of the 13 homes that went back on the market were foreclosures. Eighteen of the 29 homes that had reductions in prices were foreclosures.”

“Forty-three of the 53 homes that went pending were foreclosures. Twenty-seven of the 30 homes that closed escrow were foreclosures.”

“Of the 456 homes now available in Manteca, 165 are foreclosures and 199 are short sales which are, for the most part, essentially a step away from being repossessed by banks. Foreclosures account for 264 of the 375 homes that have closed escrow so far in Manteca this year.”

“Reams said he’s the busiest he has ever been with 10 sales pending. He noted that seven out of the 10 buyers are Manteca residents. ‘That was unheard of even 20 years ago,’ Reams said of the concentration of Manteca buyers thanks to the big drop in prices. ‘It’s a once in a lifetime opportunity for many Manteca residents to own homes.’”

The Sacramento Bee. “California Attorney General Jerry Brown filed a lawsuit Wednesday against the nation’s largest home loan lender, charging Calabassas-based Countrywide Financial Corp. with deceptively pushing homeowners into risky, mass-produced loans that have caused thousands of residents across the state to lose their homes.”

“Brown joined the state of Illinois, which filed a similar lawsuit Wednesday against the lender. Both states are alleging that Countrywide’s practices are liable for thousands of foreclosures that have damaged their economies and housing markets.”

“‘Countrywide exploited the American dream of homeownership and then sold its mortgages for huge profits on the secondary market,’ Brown said in a statement Wednesday.”

“Now thousands of borrowers across California are defaulting on those loans. The lawsuit notes that 20,000 Californians lost their homes in May alone and 72,000 were in default, meaning they were at least two months behind on payments, though not all were Countrywide borrowers.”

“The lawsuit also cited Countrywide’s own February 2008 records that 27 percent of its subprime loans were delinquent.”

“Six pages of the lawsuit deal with an especially risky type of Countrywide loan called pay option ARMs. The lawsuit says that 19 percent of Countrywide’s 2005 loans were pay option ARMs, many made in California.”

“In 2005, pay option ARMs were 18.7 percent of all purchase loans and refinancings in El Dorado, Placer, Sacramento and Yolo counties, according to data from First American Core Logic, LoanPerformance.”

“That rose to 26.7 percent of all loans in the first nine months of 2006, according to the firm.”

“Brown’s lawsuit alleges that Countrywide lowered its lending standards to place large numbers of its loans in the ’secondary market,’ a term for packaging them into profitable mortgage-backed securities and selling them to global investors. The suit alleges that the company set up a division in Texas to grant exceptions to even those standards.”

“Countrywide and its affiliates was the largest home loan lender from June 2005 to June 2007 in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties. The lender made 34,304 loans during that period, 7.5 percent of all home purchase loans, refinancings and home equity loans, according to DataQuick ”

“About 20,000 homeowners in the region have lost their homes since the beginning of 2007, according to Foreclosures.com and DataQuick. Thought not all are Countrywide loans, the foreclosures have caused home prices to plunge throughout the region.”

“In May, more than half of all existing home sales in the region were heavily discounted bank-owned foreclosure properties, DataQuick reported.”

Some housing bubble news from Wall Street and Washington. MarketWatch, “Sales of new U.S. single-family homes tumbled 2.5% in May to a seasonally adjusted annual rate of 512,000 as sales in the West fell to a 26-year low, the Commerce Department estimated Wednesday. New-home sales were down 40.3% compared with a year earlier. The median sales price in May was $231,000, down 5.7% from a year earlier.”

“In all of 2007, 776,000 new homes were sold, down from 1.05 million in 2006.”

“The figures likely overstate the number of sales, because they don’t account for canceled sales. The report is based on contracts signed, not sales closed. Inventories are likely understated because of cancellations.”

From Bloomberg. “Purchases of new houses reached an almost 17-year low of 501,000 at an annual pace in March. The last time they were lower was in September 1991.”

“‘Housing still occupies a major place in this ongoing, rather unique and rather strange economic slowdown,’ David Seiders, chief economist at the builders’ group, said in a conference call last week. ‘I do expect the sales volume to erode somewhat further in the months ahead.’”

The Charlotte Observer. “Average Charlotte-area home prices have fallen for the first time over a 12-month period since 1991, figures released Tuesday show. Meredith Baker of Indian Trail has had to reduce the price of her three-bedroom house, which has been on the market since last July, she said. It’s listed for $173,500, about $10,000 less than originally priced.”

“The economy has made it difficult for would-be buyers to get loans, she said. The house was under contract at one point, but that fell through in late April, Baker said. Now her family, which is building a house nearby, is living with her mother and might have to move back into the old house if it doesn’t sell soon, she said.”

“‘Whatever has happened with the market, that has brought us to this stumbling block,’ Baker said. ‘We’d like to have this (new) home, but we’re over and done.’”

The Baltimore Sun. “Caruso Homes Inc., a homebuilder operating in Maryland and other Mid-Atlantic states, has filed for bankruptcy protection, blaming what it called the ‘double whammy’ of the credit crunch and falling home prices. The company said it has had to reduce home prices as a result of the nationwide housing slump, and couldn’t continue to pay its debt on land it owns as a result.”

“‘The recovery is slower than we expected, and just looking into the future it doesn’t look like the rebound in the market will be something we can withstand with the current pricing in the market,’ said Chris Block, VP of operations for Caruso.”

The Press Enterprise. “In a recent interview, Mike Van Daele, the CEO of Riverside-based Van Daele Development, said because he is one of the few remaining privately owned builders, he was free to go at a slower pace than the giant public companies who grew with abandon to please their shareholders and got caught with excess land holdings that have plummeted in value.”

“Q: So you are building houses rather than waiting to clear standing inventory?”

“A: We don’t have standing inventory because we are pricing our homes to where 30 to 40 percent of households can afford to buy them. It ultimately required about a 50 percent drop from our peak prices in December of 2005.”

The New York Times. “The Illinois attorney general is suing Countrywide Financial, the troubled mortgage lender, and Angelo R. Mozilo, its chief executive, contending that the company and its executives defrauded borrowers in the state by selling them costly and defective loans that quickly went into foreclosure.”

“‘People were put into loans they did not understand, could not afford and could not get out of,’ said attorney general, Lisa Madigan. ‘This mounting disaster has had an impact on individual homeowners statewide and is having an impact on the global economy. It is all from the greed of people like Angelo Mozilo.’”

“Madigan also asked that Mr. Mozilo contribute personally to the damages.”

“Former employees told Illinois investigators that Countrywide’s pay structure encouraged them to make as many loans as they could; some reduced-documentation loans took as little as 30 minutes to underwrite, the complaint said.”

“Even more surprising, Ms. Madigan said, was her office’s discovery of e-mail messages automatically sent by Countrywide to its borrowers offering complimentary loan reviews one year after they obtained their mortgages from the company.”

“‘Happy Anniversary!’ the e-mail messages stated. ‘Many home values skyrocketed over the past year. That means that you may have thousands of dollars of home equity to borrow from at rates much lower than most credit cards.’”

Final Call News. “Looking to capitalize off of someone else’s misfortune with a foreclosure sale? Don’t look in Philadelphia because Sheriff John Green has stayed the foreclosure sales and instead is offering help and hope to beleaguered homeowners.”

“‘More of our neighbors, our families and our friends are falling behind on their mortgages and losing their homes to sheriff’s sale. My staff and I watch the suffering every day and witness the heart-wrenching scenes as families lose their primary means of wealth-building and face eviction,’ wrote Sheriff Green. ‘In Philadelphia, the number of sheriff’s sale properties has increased from an average of 300 to 400 per month to more than 1,000.”

The Star Ledger. “Most home foreclosures being processed in New Jersey are illegal, a growing group of attorneys contends, because lending institutions cannot prove they own the debt they are trying to collect.”

“Judges in at least four New Jersey counties already have halted foreclosures, using a federal court ruling in Ohio as precedent.”

“‘This is starting to creep up all over the state and all over the country as people start to realize these banks don’t really know who owns the (promissory) note,’ said Peggy Jurow, a senior attorney at Legal Services of New Jersey.”

“There were 34,457 foreclosures filed in New Jersey in 2007. The vast majority, 96 percent, were processed by the State Office of Foreclosure with no answer from the defendants.”

“‘These lawyers are trying to grasp on the smallest legal issue, and they’re losing sight of the justice involved,’ said Ralph Casale, a Denville-based attorney who has represented lenders in foreclosure for more than 30 years. ‘It comes down to this: Were you given the loan? Have you paid it? If you haven’t paid it, doesn’t the person who loaned you the money have the right to collect?’”

“Every scandal needs a scalp. The subprime mortgage crisis, which has been elevated to prime and is still going strong, finally has a name and a face: Ralph Cioffi and Matthew Tannin, former hedge fund managers at Bear Stearns Cos. The duo was indicted last week.”

“‘The defendants and others led investors to believe that the High Grade Fund was only slightly riskier than a money market fund,’ according to the indictment.”

“‘What’s the difference between what Cioffi and Tannin are accused of and what a CEO or CFO might say’ suggesting the worst of the crisis is behind us? wrote Joan McCullough, macro strategist at a brokerage in Hauppauge, New York, in her June 20 daily commentary.”

“This isn’t hypothetical. Some Wall Street CEOs made rosy comments just weeks before they reported huge losses and headed to the market (sometimes more than once) for more capital.”

“‘The bigger issue to make securities fraud stick is the mispricing of assets,’ said Janet Tavakoli, president of Tavakoli Structured Finance in Chicago. In late May, early June, the hedge funds’ creditors (Wall Street investment banks) ‘challenged the April prices and asked for more margin,’ she said. ‘Yet they failed to mark down their own books that quarter.’”

“Instead, Wall Street’s finest continued to bring CDOs to market backed by the same distressed and depressed collateral. ‘They basically lied,’ Tavakoli said. ‘They knew or should have known’ the CDOs they were packaging were ‘over-rated and overpriced. They were obliged to disclose’ that to investors.”

“If she’s right, Cioffi and Tannin will turn out to be the tip of the iceberg, with more investigations and indictments to come. The bigger the carnage, the more scalps needed as a suitable sacrifice.”

From Fox 6 San Diego. “A Chula Vista resident sought by federal law enforcement agencies as part of a nationwide crackdown on mortgage fraud crimes turned himself in Tuesday at the FBI office in Kearny Mesa, authorities reported.”

“Angel Armendariz, 27, was among six people indicted in San Diego last week as part of a multi-agency probe dubbed ‘Operation Malicious Mortgage.’”

“In the early afternoon, agents acting on a tip tracked down another indicted Southern Californian, Rafael Santiago, 39, of Riverside, the FBI reported. Three other suspects in the case — Abner Betech, 27, Aviva Betech, 29, and Said Betech, 32, all of San Diego — were arraigned on Tuesday.”

“The sixth person indicted locally in the case — 25-year-old Chula Vista resident Lucette Montane — remains at large, according to the FBI.”

“The defendants allegedly failed to fund loans as promised, but nonetheless received commissions and other payments from lenders, sellers and buyers when the borrowing agreements closed.”

“The complaint further alleges that Creative Financial Solutions Inc., a mortgage brokering company…obtained mortgage loans for unqualified or ‘unknowing’ borrowers by, among other things: concealing true purchase prices of homes by submitting false purchase contracts; submitting bogus loan applications; concealing the fair market value of homes; using misleading appraisals; and submitting false bank statements and income documentation.’”

National Mortgage News. “As Congress winds toward its summer recess, the mortgage lending and finance problems linger. With rising fuel costs, hints of inflation, record levels of both foreclosures and mortgage fraud - Washington lawmakers are considering a number of bills designed to shore up the sagging housing market.”

“As you recall from my last article, the New York Attorney General, Andrew Cuomo, has pursued an agreement with Fannie Mae and Freddie Mac relative to appraiser independence. However, as of this writing, the amendment has not been considered.”

“While Congress is poised to act, the question is how and when. With 90% of appraisers in a recent survey indicating that they had been inappropriately pressured, many in the industry see a clear correlation between the worsening mortgage crisis and the compromise of appraiser independence.”

“Lately, many are asking a simple question that continues to go unanswered: How much higher do foreclosure rates need to rise and mortgage fraud cases increase before Congress and regulators realize that appraiser independence is a real problem that affects the safety and soundness of our entire banking system?”

The Rocky Mountain News reports from Colorado. “Denver-area homes lost an average 4.7 percent of their value in the 12-month period that ended in April. Prospective home buyers are being cautious, said broker Diane P. Huttner. She said a large number of people are seeing negative reports in the media, and are reluctant to buy now, because they think prices are going to fall more.”

“Huttner said she recently sold two homes in which the sellers cut their prices. Many homes ‘just sitting around’ are priced too high, she said.”

The Denver Post from Colorado. “Independent real-estate analyst Gary Bauer said mortgage financing has remained tight, which has slowed closings. Boulder mortgage banker Lou Barnes said that tightness combined with a weakening economy made it premature to call a bottom.”

“‘Locally, we are closer to bottom than nationally, if only because our price peak passed in 2001,’ Barnes said. ‘Foreclosures here may soon stop rising, but the plague will be with us for another couple of years.’”

“Mortgage delinquencies rose again along the Front Range in the first three months of this year, a trend that could further delay a recovery in the housing market.”

“Cecil and Roberta Nevins of unincorporated Adams County, struggling with health problems, were somehow qualified for an adjustable-rate mortgage that consumed nearly 60 percent of their fixed income.”

“They managed to pay it, until the interest rate adjusted higher. ‘We can’t afford it with the payment on the mortgage going up every time you turn around,’ said Roberta Nevins.”

“Donald May, executive director of the Adams County Housing Authority, said rising mortgage payments combined with falling home values are leaving many borrowers desperate to find a way out. ‘We have not seen a lot of creativity on the lender side to take into consideration that the value of the home has dropped and to re-evaluate,’ May said.”

The Summit Daily News in Colorado. “Collapsing housing prices and mortgage-lending problems across the United States have temporarily stalled the development of a planned 6,000-acre, 577-housing-unit development in Spring Valley.”

James Lochhead, an attorney representing the company behind Spring Valley Ranch, attributed the delay to national housing and lending market.”

“‘The marketability of the project is dependent upon and affected by national market and financial conditions,’ he wrote. ‘The housing market at Spring Valley Ranch will be marketed nationally. As you are all aware, within the last year, the national housing and lending market has experienced extreme volatility, affecting the national economy.’”

The Aspen Times from Colorado. “Last week one of Aspen’s most prolific real estate agents, Rich Wagar, had to cut loose his nine associates, partly because of a local property market that is increasingly mirroring the national condition.”

“‘I think it was a surprise to everybody,’ Shael Johnson, one of the casualties of Wagar’s restructuring, told The Aspen Times.”

“Unsurprising, however, is that the local real estate market is underperforming when compared to the past few years. Call it a burst bubble, an industry recession, a slump, or simply a reflection of the national market, the real-estate landscape has proven that it is vulnerable, and businesses are having to adjust. Some real estate agents are being forced to take other jobs to make ends meet.”

“‘For someone who goes from $40 million in total sales volume to $10 million [in one year], that can be pretty traumatic,’ said Craig Morris, a name partner with Aspen realty firm Morris & Fyrwald. ‘It’s the first time in 10 years I’ve seen a number of people in the business really looking elsewhere to supplement their income.’”

“‘In the past, people could price their property at or above the market value, but they cannot now. There are many sellers that chose the price of their house on their own - and they typically have an inflated opinion of value - and their property sits on the market and doesn’t sell,’ he said.”

“The answer, Morris said, is quite simple: Lower the price. Morris noted that he has one property listed for $7.995 million that he considers about 15 percent above its market value.”

“‘If that property were to come down $1 million it would be very sellable,’ he said.”

The Daily Sentinel from Colorado. “According to the Colorado Legislative Council, the number of building permits issued in Mesa County fell 31.2 percent during the first four months of 2008 compared to the same period last year. The number of permits issued in Montrose County fell 57.2 percent during the same period.”

“The governor’s Office of State Planning and Budget estimates the building slowdown will be exacerbated by a decline in second home sales to non-Coloradans. ‘Fewer people will be able to travel to or buy second homes in Colorado,’ the report said.”

The East Valley Tribune from Arizona. “The Valley’s swelling number of foreclosures spurred a first-ever double-digit drop in average home prices in the past year. Prices fell an average of 13 percent from March 2007 to the same period this year, according to an Arizona State University study. That’s up from a 9.3 percent year-over-year decline registered in February.”

“‘What’s going on now is unprecedented,’ real estate professor Karl Guntermann said. In the last major housing downturn during the early 1990s, the most severe year-over-year decline on record was a 5 percent drop recorded in February 1990, the ASU report shows.”

“Easy money doled out through risky loans amplified the dramatic upswing in prices during the latest boom, Guntermann said. Prices shot up 76 percent from January 2004 to July 2006, with the annual rate of appreciation peaking in September 2005 at 44 percent.”

“‘The faster and higher they went up, the faster and farther they’ll fall,’ he said.”

“Every region of the Valley has been hit. The southeast Valley plummeted 13.8 percent from March 2007 to the same month this year. The southwest Valley experienced the harshest drop, at 22.9 percent.”

“‘In outlying areas, homes are getting crushed in terms of pricing,’ said John Vatistas, co-owner of Russ Lyon Sotheby’s International Realty.”

The Arizona Republic. “The financial storm brewing around Mortgages Ltd. has touched two key downtown Phoenix projects, a blow to ongoing efforts to reinvigorate the city’s heart. And it was unclear if other downtown projects could be next.”

“It’s unknown what developments are among the estimated 70 loans in the embattled Phoenix company’s $925 million loan portfolio.”

“Mortgages Ltd., the state’s largest private lender, filed for Chapter 11 bankruptcy Monday. On Tuesday, Judge Randolph Haines granted Mortgages Ltd.’s motion to convert the case to voluntary Chapter 11, but tabled a request…to appoint an independent trustee to take over the lender’s operations.”

“Mortgages Ltd. has made several changes to its business, prompted by the apparent suicide of Chairman and CEO Scott Coles on June 2. The company financed commercial real-estate projects for developers using money it raised through accredited investors to fund the loans.”

“Since Coles’ death, the company said it is no longer making loans or accepting new money from investors.”

MSNBC on Arizona. “In hard-hit neighborhoods, the glut of foreclosed homes has not only sent prices crumbling - the houses themselves are also falling down, according to a number of readers from around the country.”

“‘My neighborhood is filled with renters who could care less about the parks or the appearance of the homes,’ wrote Joe Brogdon, of Queen Creek, Ariz. ‘There is a smaller home near mine that has no windows and it is barricaded with plywood to prevent any more vandalism to the house. Many of the lawns are not being taken care of, which does not help the situation for resale or pride of ownership.’”

“In some communities with high foreclosure rates, lenders are having a tough time selling the properties they’ve taken over. The problem is apparently most severe in large developments that were under construction when the housing bubble burst.”

“‘There are well over 500 houses for sale in an area with approximately 5,000 homes,’ said Rick from New River, Ariz. ‘Most are spec homes for sale with sale prices dropped from $100,000 to $200,000. Banks can’t even find buyers at auctions.’”

“Some readers reported they were benefiting from foreclosure’s fallout - including dozens who said they were now able to afford a home in a buyer’s market.”

“‘I just moved here, and I picked up a nice house for half of what it sold for in 2005,’ wrote Doug, from Phoenix, Ariz. ‘Thanks, Arizona.’”

The Las Vegas Business Press from Nevada. “Southern Nevada’s commercial real estate market has softened somewhat as a result of the housing downturn and the resulting tightened credit availability for land-secured loans. There were 987 home foreclosures last month or the equivalent of 32 per day.”

“Another 5,117 homes were undergoing the foreclosure process in May, which is 20 percent more than 12 months ago. Meanwhile, Las Vegas building permit activity dipped 38 percent for the first five months of 2008 versus the same period last year. There was only $59 million in commercial construction through May, 80 percent less than in 2007.

“Southern Nevada’s office market had a 13.4 percent first-quarter office vacancy rate, 2.5 percent more than a year ago, and higher than the 2001 recession peak vacancies, Colliers International Las Vegas reports.”

“‘There is no doubt that the Las Vegas office market is struggling through the current sluggish economy,’ Colliers’ managing partner Michael Mixer said. ‘In 2007, office employment in the Las Vegas area decreased by 4,000 jobs.’”

The Review Journal from Nevada. “Henderson-based Slade Development filed for bankruptcy protection Friday on Vantage Lofts, a $160 million condominium complex at Gibson Road and Horizon Ridge Parkway.”

“Construction was halted in February and the sales office was closed after more than $17 million in mechanics’ liens were filed by subcontractors who hadn’t been paid for their work on the project. Slade listed debts of about $72 million and assets of about $45 million.”

“‘I’ve been in this town for 50 years, and we’ve never had a responsibility to subs that we couldn’t meet, so this is new,’ Slade Development Chairman Stacy Slade said.”

“More than 20 buyers remain under contract, he said. Prices for the urban-style lofts ranged from $450,000 to $1.6 million, or about $450 a square foot. ‘The lack of sales in the market, because of the downturn, it’s no surprise, especially in the condo market,’ Slade said. ‘It’s been a real battle.’”

“U.S. home prices, led by sharp declines in Las Vegas and Miami, tumbled in April at the fastest rate since a widely followed index was begun in 2000, with all 20 metropolitan areas surveyed posting annual declines for the first time.”

“Las Vegas and Miami both continue to post the largest declines, falling 26.8 percent and 26.7 percent, respectively.”

“Las Vegas-based Home Builders Research reported a median price of $225,000 for 2,606 existing-home sales in May, a decline of $53,000, or 19.1 percent, from the same month a year ago. It’s down $65,000, or 22.5 percent, from the peak median in October 2006.”

“‘In our opinion, the unknown factor that can affect the resale prices during the upcoming months is the short sales,’ Home Builders Research President Dennis Smith said.”

“About one-fourth of available home listings in Las Vegas are short sales, offered at less than the mortgage owed, which means they must be approved by the bank before closing escrow.”

“‘And by now, most have heard the stories about how long that can take,’ Smith said.”

The Reno Gazette Journal from Nevada. “The Washoe County housing market showed signs of life from April to May, spurred by sales of new single-family residences and condominiums. Despite the increase in sales of new single-family residences, home sales still were down 1.2 percent overall as sales of existing single-family homes dropped 4.2 percent from April to May.”

“Sales of new and existing single-family residences remain significantly down from last year, reporting a 48.8 percent decrease. The median sales price for new and existing homes also was down 8.3 percent from last year’s price of $327,000.”

“The boost in new property sales is likely the result of ongoing efforts by builders to offer strong incentives to home buyers, said Wayne Capurro, president of the Reno/Sparks Association of Realtors. But although the sales of new properties are encouraging, sustaining those numbers will be difficult if the existing home market does not bounce back.”

“‘Prices have gotten too low, and I just don’t see how they can build these new houses and sell them without losing money, especially with the higher cost of fuel and everything else,’ Capurro said. ‘The existing home market has to improve first.’”

“Short sales and bank-owned properties also remain an issue. Such properties account for 40 percent of inventory in the market but two-thirds of all sales, which should push down median sales prices for two to three more months as they go through the system, Capurro said.”

“‘I believe that we’re kind of bouncing along the bottom,’ Capurro said. ‘Even with the uptick in unemployment and interest rates, it’s still a relatively good environment for buyers. The affordability of homes hasn’t been better than it is right now in approximately five years.’”

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