The Housing Bubble

The Press Democrat. “State law enforcement officials are investigating whether 70 investors, most from Sonoma County, were swindled when they put up $6.4 million for construction loans on Malibu land that may be undevelopable. Many of the same investors also contend they lost $3.5 million on four Sonoma County land deals brokered by the same Santa Rosa lender.”

“They have filed a series of lawsuits against the broker, Charlene Goodrich. ‘We’re out a lot of money,’ said Fred Mann, a Cloverdale retiree and one of the investors.”

“Goodrich has denied the allegations in the lawsuits. ‘They were told in the documents that a portion of it could be used to pay for the land,’ she said. ‘It was a good idea when the market was good. Everyone was making money.’”

The Tribune. “In the latest move by regulators against troubled Paso Robles lender Estate Financial, the state’s Department of Real Estate has accused the company of misrepresentations and ‘dishonest dealing’ when investing in some of its projects.”

“Estate Financial had built a $340 million real estate investment portfolio with more than 3,000 investors-900 of whom live in San Luis Obispo County-over the past 15 years.”

“The firm pooled investors’ money to make high-interest loans to real estate developers.”

The Daily Bulletin. “Due to declining revenue, Ontario officials deleted 25 personnel positions from the city’s 2008-09 operating budget. This downturn is is clearly seen in development-related revenues, which have dropped by 54 percent from the 2007-08 adopted budget.”

“‘The biggest change is revenues are down somewhat, primarily in sales tax and development fees,’ said Greg Devereaux, Ontario’s city manager. ‘In the past few years, we had to worry about keeping pace with the growth.’”

“Rental prices for single-family homes keep climbing in the Inland Empire. But the spike over the last six months wasn’t as huge as some experts anticipated.”

“With a glut of homeowners becoming delinquent on their mortgages in early 2008, some property managers said troubled lenders would foreclose immediately, forcing ex-homeowners to frantically search for rentals to live in, driving up demand and prices for rentals.”

“I thought rates were going to skyrocket,” said Steve Thomas, co-owner of Rancho Cucamonga-based CIG Property Management and Investment. ‘As I get calls from tenants, I think I know why they’re not.’”

“One reason: Some of those delinquent homeowners are moving into apartments while renting out their homes, thus pouring rentals into the market.”

“‘It’s putting properties that would not necessarily be on the market, on the market,’ Thomas said.”

“But he doesn’t expect it to last long. Many of those delinquent landlords will eventually end up in foreclosure, and banks will pull those properties from the rental market.”

The Press Enterprise. “When Wildomar residents wake up today they will stop being county residents and become city folk. As residents and officials celebrate the incorporation, a cloud of financial caution hangs in the air. The housing market collapse and a slowdown in the overall economy have critics concerned about the future of the 24-square-mile city and officials anxiously awaiting a city budget.”

“‘If I didn’t have faith in this community becoming a city and dealing with this economy, I wouldn’t have run for City Council,’ said Councilman Scott Farnam. ‘Who wants to be known as the council that put their city into bankruptcy?’”

“Since the vote…more and more brown lawns — often signs of foreclosures — are seen across the newer tract homes in Wildomar. Farnam is a Realtor, so he sees the foreclosed homes in Wildomar. He said a search on the Multiple Listing Service in the past month showed at least 300 Wildomar homes in foreclosure.”

“Councilwoman Sheryl Ade said although not as many homes are being sold, commercial and office space continues to open in the city. ‘We even have a number of hotels interested in the area. We can be like La Quinta without the golf courses,’ she said.”

“Independence Day will have some competition in Corona, where city leaders this week kicked off a new ‘holiday’ for homeowners. During July and August, single-family homeowners will be able to add rooms and patio covers without paying hundreds of dollars in city permit and plan-check fees.”

“Mayor Jeff Miller proposed the program at the start of his term as a way for residents to combat the loss of home values during the housing slump.”

“‘The intent is to give people a break and help them bring their neighborhoods up,’ City Manager Beth Groves said. ‘In the end, we hope enough people will take advantage to help face-lift entire neighborhoods.’”

The Union Tribune. “A report issued Wednesday by the California Reinvestment Coalition says lenders are doing too little too late to help distressed borrowers avoid foreclosure. In the survey of 42 nonprofit loan counseling and legal services offices statewide, 90 percent of those polled said it was ‘very common’ for their clients to have received adjustable-rate loans they couldn’t afford.”

“Today loan servicers ‘continue to turn to foreclosure as their most common response to borrowers in distress,’ the report said. Sixty-eight percent of those who took the April coalition survey said foreclosures are a very common outcome for their clients.”

“Foreclosures in San Diego County hit a record 1,556 properties in May, while lenders started foreclosure proceedings by issuing notices of default on 3,139 dwellings.”

The North County Times. “Downward pressure on home prices in San Diego County is unlikely to ease soon, according to a report released Tuesday.”

“The PMI Group, a mortgage insurer, pegged the likelihood that San Diego County home prices would decline over the next two years at 78 percent, the 13th-highest probability of the 381 cities surveyed.”

“Also, investors are betting that future declines will be significant, according to recent activity on a housing futures index traded on the Chicago Mercantile Exchange.”

“But one local analyst is not buying the futures trading. ‘Look at what the stock market did with all their bets on the housing market,’ said Nathan Moeder, a principal with a San Diego realty analysis firm. ‘Everyone just thought it was going to go up, up, up, and now they just think it’s going to fall, fall, fall.’”

The Marin Independent Journal. “About 2,600 Marin properties have been reduced in value in the county’s biggest reassessment purge of the past several years. ‘We haven’t had large numbers over the last two to five years,’ said Richard Benson, Marin County’s assistant assessor.”

“He said 475 property values were reduced last year, and 421 properties the year before that.”

“Levi Swift, president of the Marin Association of Realtors, was not surprised by recent reductions. ‘It pretty much falls in line with the reduction in property sales and values we’ve seen over the past year,’ he said. ‘It’s not a leading indicator certainly. It’s a lagging indicator, catching up with the reality we already know.’”

“Prudential California Realty is closing its office on Lootens Place in San Rafael along with satellites in Fairfax and Woodacre. Prudential is one of several real estate companies that has closed or consolidated in Marin.”

“‘Rather than holding on to these offices and waiting for them to turn around, we decided to leave,’ said Cathy Harrington, director of marketing. ‘At this time we don’t have any plans to come back to Marin.’”

“As of May 31, the number of homes sold in Marin was down 34 percent from the same period in 2007, according to the Marin Association of Realtors. Levi Swift, president of the association, said the slowdown in sales is due to the credit crunch and failure of the subprime market.”

“‘The subprime market has come home to roost with a vengeance,’ Swift said, adding that the county has a lot of inventory that needs to be sold off.”

“He called the current situation a constriction of the industry that is forcing out agents who are new or dabble in the business part time. Swift said many of the agents who have gotten real estate licenses in recent years were taking advantage of a booming market.”

“‘I would call them opportunistic real estate licensees,’ Swift said.”

From The Argus. “All hands on deck! The Tri-City area’s unique pirate store plans to abandon ship after nearly three years on the stormy retail seas. Owner Don Hatcher said SeaWolf Trading Co. will raise anchor by Aug. 31, when the store’s lease is up.”

“‘We did great the first year, but we’ve been in the swamp for the past year, ever since the foreclosures started,’ he said. ‘We started to immediately see sales start slumping. People come in the store and they’re like, ‘Why are you closing?’ I don’t know if people don’t see what’s happening around them.’”

“Rather than struggle against the tide, Hatcher said he decided not to sink more money into the niche business. ‘We knew going into this that any business is risky,’ he said. ‘We thought we’d try to create something fun in Fremont. A more traditional business would be able to weather the storm better.’”

“Hatcher also was a vendor at last month’s second Northern California Pirate Festival in Vallejo. He said plenty of people attended but seemed to spend less than at last year’s fest.”

“He plans to sell off the décor, including an elaborate treasure cave, as well as the discounted wares before the store is sent to Davy Jones’s locker. ‘At first it’s shocking, you know,’ he said. ‘At a certain point you just kind of accept it and make plans for the next step.’”

Some housing bubble news from Wall Street and Washington. The Guardian, “After Taylor Wimpey’s shock warning today that it will take months to secure a rescue package from investors and that it could breach its banking covenants next February, analysts say there is ‘a very real danger’ that Britain’s biggest housebuilder by volume could collapse. Taylor Wimpey is burdened with £1.7bn of debt after it was created through the £5bn merger of Taylor Woodrow and Wimpey last year.”

“It is the most indebted housebuilder alongside Barratt Developments which has similar borrowings.”

From Bloomberg. “Reeling from the worst housing slump in 30 years, Taylor Wimpey will close a third of its U.K. offices and cut 900 jobs, CEO Peter Redfern said. Shares of the 128- year-old company fell to their lowest in almost 16 years.”

“Annual U.K. house prices fell in June by the most since the end of the country’s last recession in November 1992, Britain’s fourth-biggest mortgage lender Nationwide Building Society said yesterday.”

“Taylor Wimpey said six-month home reservations, where a customer makes a deposit on a property, dropped by 45 percent. The company is currently trying to lure customers with offers such as paying half the monthly mortgage payments of U.K. buyers for the next two years if they reserve a home this month.”

“The average selling price of a Taylor Wimpey home in Britain was 8 percent lower than last year and margins there fell 5 percent, it said. The builder has also been hurt by collapsing sales and earnings at its Spanish and U.S. operations.”

“‘It’s a complete disaster,’ said Panmure analyst Mark Hughes. ‘It’s a lot worse than we expected.’”

“‘In the mortgage market, it’s almost a famine,’ said former Bank of England policy maker Stephen Nickell in an interview yesterday.”

From Hemscot News. “Taylor Wimpey said that it may breach its banking covenants in 2009 after it failed to raise money from investors. The group’s statement said: ‘Without an amendment to the terms of our banking facilities, in certain negative scenarios we might breach one or more banking covenants at the first testing date in 2009.’”

“The group’s US business has been hit particularly hard by the credit crunch and it has already written off £283m. The group as a whole sits on a valuable land bank, but with no demand for new houses, this is no use to it at the moment.”

From Introducer Today. “Data from the Building Societies Association (BSA) shows that net lending was down from £1,262 million in May to £125 million in June. This represents a decline of around 90 per cent.”

“Adrian Coles, director-general of the BSA, said: ‘The lending figures reflect the depressed state of the housing market. ‘With 74 per cent of respondents to the BSA’s property price tracker survey expecting property prices to fall over the next year, it is no surprise that demand for new mortgages remains low.’”

The Times Online. “The amount of money homeowners are borrowing on their houses has slumped by 64 per cent in the first quarter to a seven-year low as banks continue to withdraw cheap mortgage deals.”

“Housing equity withdrawal fell from £13.9 billion in the first quarter of 2007 to £5 billion this year. Today’s £5 billion figure is the lowest amount of money homeowners have raised since the second quarter of 2001.”

“Mortgage approvals in May also plunged, down 56 per cent on the same month last year to a new low of 27,986.”

From Aftenposten. “New figures indicate the latest decline in housing prices is the biggest so far, as sales slow to a trickle compared to recent boom years. The market is flooded with houses and condominiums for sale. Many properties aren’t selling at all, and owners are withdrawing them from the market.”

“Condominium prices were down 4.5 percent from last June. All told, residential real estate prices were reported as being down 2.7 percent. The figures were calculated by research firm Econ for Norwegian real estate brokers’ organizations and sales site Finn.no.”

“Finn Tveter of the real estate brokers’ association NEF..said condominium sales were especially sluggish, and it’s taking an average 25 days to sell a unit. That compares to sales that occurred almost overnight just a couple years ago. Tveter said there’s also an historically large amount of unsold units on the market.”

From France 24. “Prices of existing homes eased in France in the first three months of the year, suggesting that the tide may be turning in a country that’s stood largely aloof from the property slump afflicting neighbors such as Spain, Ireland and Britain.”

“France never really bought into the US-style property frenzy with the same zeal as Britain. The French have generally shunned variable-rate mortgages, with their element of unpredictability, and home-lending practices have toed a more conventional line. Nonetheless, a tide may be turning in France.”

“The real shock stats are to be seen in housing sales. Year-on-year sales of all homes plummeted some 17% in May in France. In Ile de France, sales tumbled some 21%.”

“Housing prices in Spain they are seen falling around 7%. France’s Les Echos daily says there’s a glut of about a million unsold homes on the Spanish market.”

“In Ireland, meanwhile, where the Celtic Tiger’s roaring growth has sputtered to a halt, GDP swung into reverse in the first quarter. Housing prices there have crumbled some 10%.”

The Independent. “The traumatic property experience of Japan. A monumental boom in the late 1980s and early 1990s reversed dramatically and house prices fell by 76.4pc from the peak.”

“Could it happen here? Will Irish house prices fall back to levels seen in 2000/2001 or even to levels seen last century? Will our house prices drop by 70pc before they stabilise?”

“The similarities between both Ireland and Japan are striking. One is the capacity for self-delusion and failure to face up to the magnitude of our crisis. It was the same in Japan 20 years ago.”

“The other problem for Ireland is the sheer extremity of the housing boom. Irish house prices have risen 380pc since 1996, compared with 260pc in the UK — the next frothiest market. As a result of this binge, Ireland is the most indebted nation in Europe.”

“In 1990, the land upon which the imperial palace in Tokyo was built was valued at more than the entire real estate of Canada, the second largest country in the world. When I read the silly valuations in the ‘Irish Times’ property section,…I am reminded of the Japanese Imperial Palace delusion. Clearly a two up, two down in Rialto is not worth the same as a seven-bedroomed house in the Dordogne.”

“Now that prices are falling rapidly, the idea that pokey Irish houses are worth more than French chateaux will look increasingly daft.”

The Province. “After years of listening to customers vent about soaring housing prices, says North Vancouver realtor Jackie Reid, it’s nice to see a return to days where buyers have more selection and bidding wars are scarce.”

“And in Victoria and Vancouver, there is new evidence of some prices coming down. ‘They [buyers] just couldn’t afford it,’ she said of the boom years. ‘Who can? Think about it; it is ridiculous.’”

“Consumers fell behind on loans secured by their homes at the fastest pace in two decades in the first quarter, signaling deeper distress in the U.S. economy, the American Bankers Association reported.”

“Home-equity lines of credit at least 30 days past due rose 14 basis points to 1.1 percent of accounts in the quarter. Late rates worsened in five of eight categories of non-revolving loans tracked by the group.”

“‘People overstretched to take advantage of equity in their homes, equity which may not be there anymore,’ said Nigel Gault, research director at Global Insight Inc.”

“Mountain 1st Bank & Trust Co. CEO Greg Gibson is ’standing on the brakes’ because Mountain 1st can no longer sell trust-preferred stock to raise capital for loans, Gibson said.”

“The bank, with $650 million in assets, is among more than 8,000 across the U.S. caught for the past six months in the shutdown of the $117 billion market for the securities, a hybrid of debt and equity.”

“‘The investment community is now extremely skittish about the magnitude of future mortgage losses and that is damping demand for raising capital through this particular channel,’ said Richard DeKaser, chief economist for National City Corp.”

From McClatchy DC. “Californians may be at the epicenter of the nation’s foreclosure crisis, but more than half of the state’s population lives in high-cost areas that could be denied aid under a proposed federal bailout.”

“Earlier this year, Congress temporarily set the loan limits at $729,750. But the Senate is now proposing to reduce it to $625,000. ‘These provisions are a serious blow to California,’ said California Democratic Sen. Barbara Boxer.”

“‘This isn’t about some ideological issue,’ she said. ‘This is about people being thrown out of their castles - their home - and thrown into the moat, and it is about communities that then begin to wither.’”

“During a Senate debate, Sen. Mel Martinez of Florida told the story of a man from Ruskin, Fla., who was approved for a $280,000 home even though he made only $12.50 an hour working with a lumber company in Bradenton, Fla.”

“‘These stories are all over the country,’ Martinez said. ‘There may be some parts of America that are untouched by this crisis, but I will tell my colleagues that Florida has been hit, and Florida has been hit hard.’”

The Herald Tribune. “Seeking restitution from Countrywide Financial Corp. through the lawsuits filed by attorneys general in Florida, California and Illinois might have seemed a fool’s errand when the big mortgage player was reeling toward bankruptcy this year.”

“That all changed Tuesday when Bank of America Corp. completed its purchase of the embattled company…putting it on the hook for the results of any suits. ‘There is technically a deep pocket. They’ve acquired them, they assume their liabilities,’ Florida Attorney General Bill McCollum said Tuesday in announcing his Countrywide legal action.”

“‘They knew very well these people didn’t qualify,’ McCollum said. ‘We believe Countrywide took steps they shouldn’t have … to allow people to own property that they could not reasonably be expected to have made payments on.’”

“‘Countrywide in my opinion led the charge in exotic mortgage traps that resulted in mounting cases of mortgage fraud,’ said Jack McCabe, a Deerfield Beach-based real estate analyst.”

“McCabe also said it is possible criminal charges will arise against certain top executives at Countrywide. The mortgage market needs to see prosecutions of those who had a large hand in creating the current crisis, he said.”

“Thomas Luzier, a real estate attorney with Sarasota’s Dunlap & Moran, said that…his own experience was that many borrowers he counseled knew the mortgages they were getting into were risky, but thought they had it covered.”

“‘The typical response was, ‘I have a plan,’ Luzier said. ‘They would say to me, ‘The market is great, this investment is going to pay off for me.’ And later on if they got into trouble they could always refinance, they thought.’”

“Of course being able to refinance depended on one major assumption: that prices would continue to rise. When they started dropping, those borrowers were stuck.”

“Now, Luzier is getting calls almost daily from those looking to find a way out. ‘It’s the flip side now,’ he said. ‘People admit they took a risk, they know they got in over their heads. Now they need help to minimize the damage.’”

A report from Crains New York. “Manhattan’s residential real estate market frenzy is fizzling. The number of apartment sales fell during the second quarter from the year-ago period, according to reports released Wednesday by four major brokerages. Two of the firms also reported a sharp increase in inventory. The average apartment price hit $1.7 million during the second quarter, down 3% from the first quarter of 2008, according to Prudential Douglas Elliman.”

“It also said the number of sales dropped 22% to 2,282 during between April and June, compared to the year-ago period, while inventory surged 31% to 6,194 units.”

“Brokers say the fall off in prices from the first quarter isn’t unexpected. They note that JP Morgan’s recent purchase of Bear Stearns Cos. in a fire sale, which threw about 7,000 people out of work, took a psychological toll.”

“‘This year we have a Bear Stearns hangover,’ said Pam Liebman, president of Corcoran Group. ‘There is a lot more news to make people more hesitant (about buying) than they were before.’”

“Ms. Liebman notes that the price of a one-bedroom apartment on the Upper West Side reached $998,000 during the second quarter. ‘That is a big number. You’ll get a lot more push back from buyers in those [apartments,]‘ Ms. Liebman said.”

Bloomberg on New York. “Transactions are declining as financial firms have announced plans to cut almost 90,000 jobs after taking more than $400 billion in mortgage-related losses and writedowns. Those companies may lose as many as 175,000 employees by next June, according to executive recruiters such as New York’s Gerson Group, casting a pall on a property market driven by Wall Street compensation.”

“‘People are asking: ‘Am I going to have a job?’ said Liebman.”

“About a third of second-quarter closings were new condominiums, some of which went into contract before turmoil hit the credit markets last August and September, said Gregory Heym, chief economist for Terra Holdings. Once the remaining units in Stern’s building and the Plaza close, average prices may drop as much as $200,000, Heym said.”

“‘Real estate markets go up and down, and when it comes to New York City, it’s an island. There’s not a lot of land, and it’ll survive,’ said Dottie Herman, CEO of Prudential Douglas Elliman. ‘I think we need to kiss the ground because we live in New York.’”

The New York Times. “One month’s free rent. Two months’ free rent. No security deposit. How about a year’s worth of storage at Manhattan Mini Storage or an appointment at a doggie day spa for Rover on moving day?”

“As the rental market in Manhattan has softened in recent months, these are some of the incentives that owners of high-end buildings are offering to lure tenants.”

“‘We definitely have seen a shift in the dynamic of the marketplace,’ said David J. Wine, a vice chairman at the Related Companies, which owns and manages about 5,000 rental units in New York City. ‘The frenzy of a year or two ago has abated, and we’re seeing renters be a lot more thoughtful in their rental decisions.’”

“‘A lot of landlords were getting ready to increase rents for the busy season, but they’re finding that those projected rents aren’t attainable,’ said Daniel Baum, the chief operating officer at the Real Estate Group New York, a Manhattan brokerage. ‘No one anticipated having problems on the rental side, and it’s definitely forcing property owners to take a second look at marketing and to rethink their pricing.’”

“Looking ahead, Mr. Wine of Related said that a year from now, the Far West Side of Manhattan between 37th and 42nd Streets may be one of the busiest areas in the city for rentals.”

“Related and several other major developers plan to open buildings that are expected to add 1,500 to 2,000 new apartments to the area.”

“‘In that submarket,’ he said, ‘there will probably be incentives for renters. Or maybe the timing will be great for the market to absorb it - it will be a very interesting time when all those buildings come online.’”

The Hartford Courant from Connecticut. “The decline in the median sales price of single-family houses in Connecticut gained momentum in May, plunging nearly 11 percent, the deepest decline in five straight months of eroding sales prices.”

“It was also the biggest drop since 1992, when the state was digging out of a deep recession. Meanwhile, the number of house sales tumbled more than 24 percent in May, continuing a slide that is now in its third year, according to The Warren Group.”

“The state’s median sales price, where half the sales are above and half below, was down 10.8 percent, to $272,000, from $305,000 a year ago. Donald L. Klepper-Smith, an economist at DataCore Partners Inc. in New Haven, said Tuesday’s report shows the declines will continue. The price decline in May, for example, exceeded the 8 percent price drop for the first five months of this year, he said.”

“‘That shows an acceleration to the downside,’ Klepper-Smith said. ‘There’s no sign that we’re going to see bottom any time soon.’”

“Affluent Litchfield and Fairfield counties took the brunt of the price declines in May. In Litchfield County, the median sales price of a single-family house plunged 17 percent in May to $250,000, from $302,000 a year ago. Sales plummeted nearly 31 percent.”

“Fairfield County saw the median sales price fall 13 percent in May, from $627,500 a year ago to $545,000. Sales plummeted 35 percent.”

“Todd Martin, a Fairfield economist, said the slowdown in Litchfield and Fairfield is being driven economic by troubles on Wall Street. ‘And there’s lots and lots of inventory,’ Martin said.”

From The Day in Connecticut. “The same steep housing slump that has taken down markets in Rhode Island and Massachusetts has finally caught up with New London County and Connecticut. What’s more, there’s ‘no way out’ in the near future, said Vincent Valvo, group publisher of the Warren Group.”

“In New London County, single-family home sales were off 21 percent in May compared to a year earlier, numbering 195 instead of 247. Median prices were down 7 percent, from $270,000 to $249,900.”

“For some time, New London County was showing resilience in the face of a housing downturn across Connecticut, but no longer, Valvo said.”

“‘The numbers you’re seeing in New London County are tremendously off,’ he said. ‘It shows very clearly that home sales are sliding and median prices are decreasing and that the county isn’t immune to the problems affecting the rest of the state.’”

“The dropoff mirrors what happened 16 years ago, in 1992, with one startling exception: The country was emerging from recession then, whereas the nation is now heading toward a recession, Valvo said.”

“‘The only real way to look at this is to realize we aren’t seeing a short-term economic downturn,’ he said. ‘What we’re seeing is a fundamental change in the market. This isn’t an aberrant market, it is the market.’”

The New Haven Register from Connecticut. “‘Last time prices in Connecticut fell more than 10 percent in a month, it was July 1992,’ said Timothy Warren Jr., CEO of The Warren Group.”

“‘But there was a difference then: the state was already pulling out of its housing slump, and sales during that month increased by more than 7 percent. But there was no sign of such a silver lining this May,’ he said.”

“‘Buyers are pushing (the median) down a bit, without question,’ said Sam Ratner, owner-broker at Keller Williams Realty Central Connecticut in Cheshire. With buyers taking their time looking around the market, sellers have been forced to set more realistic asking prices, he said.”

“‘When they over-list the price, they wind up getting less than if they priced it correctly from the beginning,’ he said.”

The Connecticut Post. “Today, it’s the lack of credit that’s driving down prices and sales, Valvo said. Lenders are not only reviewing borrowers’ histories more closely but are also requiring down payments, usually of 10 percent, he said.”

“That means to buy a $500,000 house, Valvo said, a buyer would have to be able to come up with $50,000 for a down payment. That doesn’t include the $10,000 to $20,000 in legal fees, inspections and other costs that pile up as part of the transaction, he added.”

“‘You’ve got economic gravity working against you,’ said Valvo.”

“Donald Klepper-Smith, chief economist of New Haven-based DataCorps Partners, said the real estate market, like the state and national economies, is a mix of good and bad news.’

“‘It depends on which side of the equation you’re on,’ Klepper-Smith said of falling prices. If you’ve already got your house, this is terrible news because your equity is being eaten up. If you don’t have a house, it means you might finally get one you can afford.”

“Mark and Bonnie Fodor were content on Jennie Lane. After moving here from Norwalk in 1999, the Fodors sank thousands of dollars into practical improvements. So when Mr. Fodor developed health problems that left him partly disabled, the couple struggled with the decision of whether to sell their home.”

“They finally decided to sell, thinking the house would quickly attract interest. But they found themselves stuck in a market so unkind that they are still looking for a buyer a year later. ‘We can’t believe it’s taking this long,’ Mr. Fodor said. ‘I thought I would be more insulated in the town of Westport. We thought Westport would have a buffer.’”

“The Fodors tried to negotiate with the one buyer who made an offer on their three-bedroom house, but they couldn’t come to terms. Since the property went on the market in May 2007 they have gradually lowered their $1.199 million asking price; it has now reached $879,500.”

“Even with that reduction, however, many buyers still won’t look beyond the dated kitchen, said the listing agent, Debra Kandrak. ‘If they don’t have their remodeled kitchen or remodeled baths,’ she said, ‘they’re just moving on to the next property.’”

The Worchester Business Journal from Massachusetts. “The number of foreclosure deeds filed in May reached an all-time high in May, rising 107.5 percent over May 2007, according to The Warren Group.”

“The Warren Group said 1,405 foreclosure deeds were filed in May. Not only is that up from 677 in May of last year, it’s up 5.3 percent from the 1,334 filed in April. And year-to-date, 5,576 foreclosure deeds have been filed, a 139.6 percent increase over the 2,327 filed in the first five months of 2007.”

The Cape Cod Times from Massachusetts. “Foreclosures on Cape Cod this year have increased more sharply than in any other county in the state. As of the end of May, 261 foreclosure deeds had been filed in Barnstable County, a jump of nearly 175 percent over the 95 foreclosures completed in the first five months of 2007.”

“Particularly hard hit were the towns of Falmouth, which saw a 725 percent increase in foreclosure deeds; Centerville, with an increase of 383 percent; and Hyannis, with a 350 percent increase.”

“Across the state, the number of petitions fell from 2,158 in May 2007 to just 390 in the same month this year. This decrease is due to a new state law, which took effect May 1, that requires lenders to give struggling borrowers 90 days before filing a petition to foreclose.”

“This drop-off in foreclosure petitions, however, is unlikely to signal the end of the foreclosure crisis, housing experts said.”

“‘Many of the people who had problems paying their mortgage up to the foreclosure are still going to have trouble paying their mortgage,’ said Pam Parker, a mortgage foreclosure counselor in Hyannis.”

The Boston Globe from Massachsuetts. “There is no glaring reason that this five-bedroom Colonial in Waltham has been on the market for three years. It could be any large house in a groomed Boston suburb.”

“The problem, said Glenna Gelineau, a Waltham real estate agent who has watched the tortuous history of the house, was that its initial list price was too high. When the real estate market began falling, it never caught up. It was first listed for $849,000, at a time when the sales market was still strong. Despite 15 downward price adjustments, the house apparently never hit the right number.’

“‘They’ve been chasing the market down ever since,’ she said. Gelineau, who has been inside the house, said it ’shows nicely.’ But, at some point, properties that languish that long without a sale are stigmatized among buyers and agents and become ’stale.’”

“The seller has now cut the price again, the 16th time, a $10,000 reduction to $534,900. Dave DiGregorio, the listing agent for the property, predicted the new price would attract an offer, because it’s now priced ‘below market value.’”

“In this challenging market, which is flooded with properties for sale, setting the ‘right price’ is, paradoxically, more critical - and more elusive. Last month only 3,739 single-family homes sold in Massachusetts, the lowest sales activity for the month of May since 1990.”

“‘The majority of things, unfortunately, are staying on the market way too long,’ said Marybeth Muldowney, owner of TradeWinds Realty Group in Norwell.”

“And buyers know they have the advantage. ‘You’re either going to take my offer or I’m going to walk’ was the attitude of Steve Pelland and his wife, recent buyers in Holliston. ‘We had set a budget, and that was it. I wasn’t going over that by a dollar more,’ he said.”

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