The Housing Bubble

The North County Times reports from California. “North County housing deepened its slump in June as foreclosures dictated the market and high-end housing prices begin to show weakness. The median price for a home sold in June tumbled 26.5 percent from a year ago to $490,000, according to the North San Diego County Association of Realtors’ monthly report.”

“‘It just seems all the different indices and all the different reports are supporting the same story,’ said Robert Brown, a professor at Cal State San Marcos who prepares HomeDex. ‘You’re seeing more and more foreclosed homes and prices are falling even more to sell them.’”

“For the first time since the start of the housing downturn in late 2005, expensive homes began to feel the effects of a weak market. Sales of North County homes priced $1.5 million or more crashed by 50 percent in June from the same month a year earlier.”

“‘Ultimately, I don’t think anybody is going to be immune to the declining market,’ said Kris Berg, a real estate agent based in Scripps Ranch.”

“Fannie Mae instituted guidelines June 25 that limit the loans a homeonwer can secure when purchasing a second home. As home prices plummet in San Diego County, local real estate agents say more homeowners are looking to purchase similar homes for hundreds of thousands less and then let their original home fall into foreclosure.”

“‘It’s the duck and weave,’ said Christopher Thornberg, an economist with Beacon Economics. ‘You’re looking at (a similar house) down the block listed at half of what you bought (your house) for, so obviously the best move financially is to move from your house to that one.’”

“‘It’s definitely tightening the market because these same people pretty much need to come up with 20 percent down,’ said Dave Hopkins, a mortgage broker a brokerage firm in Rancho Bernardo. ‘And then, if they don’t have another $20,000 laying around, they’re just knocked out of the picture, so it’s definitely slowing a lot of really qualified buyers from coming into the market.’”

From Military.com. “The Marine Corps gunnery sergeant and his wife felt they’d found a little bit of paradise in the San Diego area in 2003 when they bought their $304,000 house and went to work transforming it into the home of their dreams.”

“That the 15-year-Marine could receive orders for a move didn’t trouble them. They would just rent out the home they loved — and, if absolutely necessary, they’d just sell and make a healthy profit. But it didn’t work out that way.”

“The Marine wife now trying to offload her San Diego house says that what is ‘most disturbing throughout the process [of dealing with their crisis] is I felt there was no one who could help us. Our lender treated us as if we were going into foreclosure … as if we owed back payments or something.’”

“‘All the advice we heard was ‘talk to your lender,’ she said, ‘and I’m trying to talk to the lender. They never take my phone calls, so I always leave a message, or [they] ask if I would like to speak to another person. And when I do talk to someone, it’s always, ‘it’s not our problem. There’s nothing we can do to help you until you’re behind two months [in mortgage payments].’”

The Daily Bulletin. “The owners of the home at 9140 Highland Ave. don’t have to sell their property. The Alta Loma home was built in the 1970s and has been on the market for about 90 days.”

“But they want to move to Arizona, and the ailing market has made it next to impossible for them to sell the house for the amount they believe it’s worth. So, they’re going to be here awhile.”

“‘They’re victims of a market that is dominated by a number of distress sales,’ said Craig Flint, real estate agent for the property. ‘If they don’t drop their price, their decision not to will create a situation where they’re going to stay where they are until the market heals.’”

“Flint is the third real estate agent the owners have brought on to sell the house. There have been no offers on the one-story, four bedroom home, despite it’s location in one of the most well-established neighborhoods the region.’

“The owners want to sell for $475,000. Flint said it just won’t sell unless it’s priced under $400,000.”

“‘I’ve been trying to convince them, but they’re an older couple, and they’re looking at their home as their nest egg,’ he said of the owners who are in their 60s.”

“The house is a block away from Beryl Park, Flint said, and is just over a mile from a Starbucks, Vons and Washington Mutual. On the downside, the home’s proximity to the freeway. ‘The only way a buyer would come to this home is if it has a lot of upgrades or if it’s priced reasonably well, and neither of those are happening now,’ he said.”

The Californian. “A few years back, Rosa Sanchez could enjoy gazing at the corner lot across the street. In 2005, the Laurel Heights property was sold to a family that couldn’t keep up with the monthly payments. Now, a bank owns the home. Because of the foreclosure crisis, empty, neglected homes are becoming more common in the Salinas area, according to city code enforcement.”

“‘It’s the first house people see when they come into the neighborhood,’ Sanchez said. ‘That used to be a good thing. Now look at it; it’s really bad.’”

“In the week of June 24 alone, Monterey County saw 126 foreclosures, the majority in Salinas and Seaside. So far this year, the county has had 2,032 foreclosures, up from 510 in the same period in 2007, said Carol Crandall, a real estate broker in Salinas, who has 67 bank-owned homes on the market.”

“‘We have never had this situation before,’ said Cliff Hylton, the city’s weed abatement officer. ‘Every day I go out, I’m seeing new properties with overgrown lawns.’”

“During a one-week period last month, Hylton had to contact more than 30 homeowners for fire code violations, most of them were banks. ‘I used to send these letters to people, but now I’m mostly sending them to banks in Pennsylvania and Florida,’ Hylton said.”

“‘Kids are having parties in vacant houses,’ Crandall said. Teenagers often find a vacant house to throw parties in for a few days, after which they leave the interior of the house in shambles, she said.”

The Contra Costa Times. “Without exception in the Bay Area, the number of foreclosures in June exceeded the totals for the same month the year before. For example, Alameda County and the Bay Area reported twice as many foreclosures in June 2008 compared with June 2007.”

“Contra Costa County had 50 percent more foreclosures on a year-to-year basis. The nationwide foreclosures were running 53 percent higher than the prior year. San Mateo County foreclosures totaled about 600 - nearly quadruple the levels of the year before and the biggest annual percent increase in foreclosures in the Bay Area.”

“The East Bay and the surrounding counties remained the worst of the worst in terms of foreclosure problems, the RealtyTrac report showed.”

“Jeff Michael, director of the Stockton-based Business Forecasting Center at University of the Pacific, said he has not witnessed much indication that the horrid housing market in that part of California has begun to improve.”

“‘The rapid decrease in home prices is still working its way through the system,’ Michael said. ‘I haven’t seen a real slowdown in banks taking back homes.’”

“Even worse, the marketing efforts by the banks have created a new downward spiral for residential values. ‘Banks have no such attachment to the home,’ Michael said. ‘They want to get rid of them. They are aggressively selling those homes.’”

The Riverbank News. “Foreclosures have hit Riverbank hard like every other place. Driving around town, you cannot help but notice the forlorn signs, the empty homes sometimes located several in a row, the once green lawns turning brown in the heat.”

“Estimating the numbers of foreclosures within the city is difficult. But the City of Riverbank has a map compiled from title company reports that attempts to show the number and approximate location of foreclosures.”

“‘We have 191 dots on this map. It needs updating. This is a figure from three weeks ago. There are more coming in every day,’ said City Clerk Linda Abid-Cummings.”

“While they appear to be clustered in the newest and most expensive area of residential development, foreclosures are scattered all over town. Some of the dots even lie in the long established River Cove subdivision and the oldest parts of the city to the northeast between the Stanislaus River and Patterson Road.”

“Estimating 3.5 people per household, that means 700 people or a sizeable chunk of the city’s 20,000 residents are looking for a new home, Abid-Cummings added.”

“Police Chief Tim Beck acknowledged some investment owners and property management companies have called about burglars and squatters and the police ‘deal with reports’ as they come in.”

“‘But there are so many foreclosed homes around, some have signs and some don’t, there are too many for us to patrol,’ Beck said. ‘We can’t be trying all the doorknobs. We tell them it’s their property and their responsibility.’”

“Paying a mortgage and preventing foreclosure also came up at a June 26 money management clinic sponsored by the City. The bank or other financial lender, they said, is as reluctant as the homeowner to foreclose and take the house back. There are so many houses on the market, prices are depressed and they will lose a lot of money on the sale.”

“‘They don’t want your house back. They cannot sell it. They are more than willing to negotiate,’ said one speaker.”

“The city has no ordinance requiring a lawn be kept green, noted Neighborhood Improvement Officer Michelle Garcia, only that weed and grass be no taller than six inches for fire safety reasons. ‘So, if they mowed just before they left, it will stay short and just turn brown,’ she said of neglected lawns.”

The Casper Star Tribune reports from Wyoming. “Federal data show that southwest Wyoming is bearing the brunt of the state’s population growth. ‘It’s not really surprising at all,’ Sublette County Planning Director Bart Myers said of the latest census figures, which are tied heavily to the development of the nearby Pinedale Anticline and Jonah fields, two of the nation’s largest natural gas fields.”

“‘The (natural gas) companies are telling us about 80 percent of the people that were going to be here for the gas exploration boom are already here,’ Myers said.”

“Myers said the county also tries to track real estate trends, and those trends are showing the beginnings of a slowdown in population growth. ‘I think we’re seeing for the first half of 2008 a leveling off, actually … We’re down about 100 building permits from where we were at this point last year,’ he said.”

“‘In June, there were about 300 residential lots on the market countywide … and I think just five or so sold and closed,’ Myers said.”

“‘And it’s the same thing with residential units already built,’ he said. ‘The inventory is increasing and demand seems to be dropping … so maybe we have seen the worst of the county’s population explosion. I think the lag time from when this first hit has shrunk or maybe even disappeared.’”

The Big Sky Business Journal from Montana. “Residential real estate closings in Billings are off by 16 percent for the first half of the year - pending sales are off by 24 percent - evidence that Billings is feeling the effect of the continued tightening of credit standards to get a home mortgage, according to real estate agent Howard Sumner.”

“‘There has been a substantial drop in the number and type of loans available,’ said Sumner. 50 percent to 70 percent of the decline of sales locally is due to the changed lending environment, said Sumner. The balance is due to ‘all the negative information about the home market.’”

“All that’s happening in the housing market might be a good thing, said Sumner - ‘It is wringing out any speculation that was going on.’”

From KTRV 12 in Idaho. “A sluggish economy doesn’t mean no one’s snapping up real estate. ‘Sales are good, believe it or not, but we’ve got almost 8,000 houses for sale in the area,’ said David Warrick, with Coldwell Banker Aspen Realty.”

“In the Treasure Valley, 700 to 800 homes are being sold a month, but many more are also coming right back on the market.”

“Meanwhile, some larger homes are going at a deep discount. ‘So taking a small hit on your smaller home, you’re going to make a large savings on a large home right now,’ said Warrick.”

“In typically more expensive neighborhoods, like north Meridian, Kuna, Star and even south Boise, for sale signs abound. Residents in those areas are left shaking their heads as prices continue to fall.”

“‘So that kind of bummed me out. Oh my gosh what I’d paid for my house has already gone down,’ said Karen Burden, a Star resident.”

“They’re also concerned about their future property values. ‘It’s frustrating because I know they’re going to get frustrated and they’re going to end up renting them out and, there’s nothing wrong with renters, but I hate to see it,’ said Burden.”

The Idaho Statesman. “The vacancy rate for single-family residential rental housing in the Treasure Valley spiked in the second quarter from the same quarter a year ago, according to an industry survey.”

“Industry members speculated that the vacancies result from struggling housing sales that have caused frustrated property owners to take homes off the market and rent them out.”

“According to Intermountain MLS statistics, 4,547 homes had listings that expired, were withdrawn or canceled during the second quarter. Some of the homes withdrawn from the MLS made their way into the rental market, said Mike Rampelberg of Greater Boise Property Management.”

“‘For some (homeowners), a rent of $800 is better than nothing when you have a $1,200 mortgage,’ Rampelberg said.”

The Olympian from Washington. “Thurston County home prices slid more than 9 percent from June 2007 to June 2008, the Northwest Multiple Listing Service reported, the steepest year-over-year drop this year and the largest decline South Sound real-estate experts could remember.”

“‘The is the first time I’ve actually seen (prices) drop, especially to this degree,’ said broker Doug Burger, who has spent nearly 30 years in real estate. ‘To take this kind of turn is surprising for everybody.’”

“After a period in which home sellers were unwilling to lower prices, they are starting to change their minds, Burger said. ‘They do that very reluctantly, but reality is hitting them,’ he said.”

“These days, the South Sound home buyer is in control, said broker Jeff Crandell. Buyers are more discriminating, they are not afraid to ask for discounts or incentives, and they are not buying the first house they see, he said.”

“‘Turnabout is fair play,’ Crandell said. ‘Sellers had it their way for years, and now we’re seeing the results. The pendulum is swinging in the other direction.’”

The SnoValley Star from Washington. “In a series of interviews with local realtors, anecdotal evidence seems to indicate the high cost of the commute is starting to take a toll on real estate prices. Economists say people who once followed the strategy known as ‘drive until you qualify’ - are now being forced to rethink the cost of that decision.”

“Joe Cortright, an economist (in) Portland, authored a study that has sparked a number of recent media accounts. Cortright’s study argues that low, stable gasoline prices in the 1990s fueled the housing bubble.”

“‘We’ve seen a lot of folks who, by stretching their means to get into houses, took on the longer commutes,’ Cortright said, ‘and now they’re the ones who are taking the biggest hits.’”

“Cortright said such homeowners are now finding themselves victims of ‘a double whammy’ - forced to pay the price of a long drive to and from work and with a home that has fallen in market value, largely because buyers with similar portfolios are no longer willing to buy into the longer drive.”

“‘Their houses now look a lot less attractive,’ Cortright said.”

“‘There’s been a trend of ‘back to the city’ for some time now,’ said Glenn E. Crellin, director of the Washington Center for Real Estate Research at Washington State University, ‘as evidenced by the high-end condo activity in the bigger cities.’”

The Seattle PI from Washington. “Plans have been delayed to build a twin-tower, 43-story building on Fifth Avenue in Seattle as the developer waits out a lull in condo sales.”

“It’s been pushed back, and Alec Carlin, project manager for developer Hummingbird Advisors, couldn’t say until when. Financing for condos is tough to get now, because the market for condos is soft.”

“‘But we think the market will come back, and we’ll be poised for it in 2011-2012,’ he said.”

“Columbia Banking System Inc. became the latest Northwest company to be tripped up by growing problems in the region’s real estate market when it announced sizable increases in delinquent loans and the money it’s setting aside to cover potential losses.”

“‘Columbia is not immune to the instability in the residential real estate markets and mortgage-related industries, which already has affected other financial institutions in the markets we serve,’ Columbia CEO Melanie Dressel said in a statement. ‘Given the nature of these types of projects, it is unlikely they will be resolved in the immediate future. It is reasonable, therefore, to expect our provision for loan losses in the next few quarters to remain at elevated levels compared with prior periods.’”

“Columbia said the biggest areas of concern are homes that developers have built but haven’t been able to sell, mainly in Pierce County and Clackamas County, Ore., and in commercial real estate construction, primarily condominiums.”

The Seattle Times from Washington. “Washington state foreclosure filings were up 69 percent last month compared with the previous June and up almost 10 percent from May. The year-over-year jump statewide was worse than the national increase of 50 percent.”

“There were 2,742 new filings statewide last month, a 155 percent increase over new filings in June 2005. Of the three Central Puget Sound counties, foreclosures again hit Pierce County hardest. The state’s foreclosure hot spots last month were Cowlitz and Clark counties north of Portland, and Adams, Franklin, Pierce and Snohomish counties.”

“In May, there were 47 percent more properties on the market than in May 2007, MLS numbers show. 29 percent more houses and condos were for sale last month than in the previous June.”

“Counseling sellers, associate broker Vija Williams, tells them that ultimately the market sets the price for any house, and ‘when you’re getting multiple offers below listing, you have to listen.’”

“One Ballard seller is dealing with that issue now. ‘I definitely expect to get an offer below list,’ the seller says. He says he got one offer ‘that was laughable.’”

“‘I understand the buyers’ side of things,’ he said. ‘It’s scary to think you could buy, and the house will lose another 10 percent.’”

“But he thinks many buyers don’t realize ‘the reduced value is already priced into the list price,’ and sellers aren’t asking top dollar from the start.”

“It wasn’t just prices that convinced first-timer Ian Hoyt, a 20-year-old landscaper, that June was the right time to buy a three-bedroom North Seattle town house. It was the comparison with renting.”

“‘Rents are so high, so I did the math,’ Hoyt said. ‘Paying a mortgage is in the same ballpark.’”

“Hoyt says he’s unconcerned about future price declines. He saved intensively for his first home and got help from his parents. That and an FHA loan allowed him to buy his 3-year-old town home for slightly more than $300,000.”

“He intends to live in his town home for many years, happy he’s not paying rent to live in a place he doesn’t own. ‘The money will come back to me [in appreciation],’ Hoyt said.”

The Statesman Journal from Oregon. “A northeast Salem apartment complex once known as a hotbed of prostitution and drugs was renovated, becoming a condominium complex. But the site has fallen victim to the housing slump.”

“The units at 2401 Wayside Terrace NE were extensively revamped and marketed as condominiums but didn’t sell during the past few months. So they are reverting to apartments.”

“Candidates for the condos could not get approved for loans, making rentals the best options for the owners to recover the money they invested in a $2.3 million acquisition and remodeling loan, said Geoff Edmonds, the managing owner of Wayside Terrace Condos.”

“If someone did step forward, proposing a lease option to buy, it would be considered, however, he said.”

“‘Right now, to get any type of financing you essentially have to put a minimum of 3 percent down, but if you don’t have sufficiently high credit scores, you’re looking to put 10 (percent) to 12 percent down,’ said Mark Sullivan, a loan officer for HomeStreet Bank in Salem.”

“The gated, Spanish-style condos hardly resemble the apartments that were home to a gang shooting in 1998; declared a public nuisance in 2003; and for years were plagued by arrests for sexual abuse, drug-related offenses and prostitution.”

“The 38 two-bedroom apartments will rent for $645 per month, and the one one-bedroom will rent for about $550 per month. They could remain apartments until the housing market recovers - possibly in a year to 18 months.”

“To keep out undesirable tenants, all tenants will undergo a criminal-background check. Plus, site manager Crown Property Management of Salem hired on-site managers, who are moving in July 14, said Crown Property president Kent Mack.”

“‘I think it’ll be OK for the neighborhood that this (is) going to be apartments for the time being,’ Mack said.”

The Daily Journal of Commerce from Oregon. “Portland’s housing market may have slipped substantially this year, but luxury home builders that will be showcased in the Home Builders Association’s Street of Dreams tour next month say they’re managing to avoid the fallout.”

“The housing market has ‘tanked,’ said Dennis Derby, owner of Double D Development, and luxury home developers aren’t immune to the drop.”

“The latest addition to the tour and the largest home by far, is ‘Cherith Brook,’ a four-bedroom, six-bathroom, 11,000-square-foot home with views of Mt. Hood, Mt. Adams, and Mt. St. Helens. Built in a traditional style, the home features a library, wine cellar and an indoor pool and sauna, as well as numerous secret passageways between rooms.”

“Construction in Altamont could be complete in four to five years, though Derby says the current market is causing him to ‘dial back’ development. Half the lots are now sold and the developer expects to sell all of them within two years. Once this neighborhood is complete, Double D will move on to its last undeveloped area in Altamont, which contains 36 lots for luxury homes.”

“‘There’s only so much land, for starters,’ said Derby, ‘and only so much river and view.’”

The Sun Sentinel reports from Florida. “Twenty-six of the county’s 31 municipalities lost population and three of them - Hollywood, Coral Springs and Pembroke Pines - made the Top 10 list of fastest-shrinking large cities from 2006 to 2007, according to U.S. census estimates released today. The percentage losses - the worst of any Florida county - are an amazing turnaround from the 1990s, when Coral Springs and Pembroke Pines regularly ranked near the top of the country’s fastest-growing hot spots.”

“‘We’re seeing a lot of places in Florida that are going down as a result of the bursting of the housing bubble and the substantial slowdown in the economy and job creation,’ said Stan Smith at the University of Florida.”

“Jaime Shulman, owner of Hollywood-based 1st American Movers, said he’s busy moving Hollywood residents who lost their homes to foreclosure.”

“‘It’s very simple,’ he said. ‘People can’t afford living here. Everything is expensive and Hollywood has a lot people who are not wealthy.’”

The Orlando Sentinel. “Winter Park, a once-coveted address near Orlando’s urban center, ranks near the top of the big-loser list. It’s second only to Altamonte Springs, which took the biggest hit in population from July 1, 2006, to July 1, 2007. Cities that were once housing hot spots saw population losses in the year ending July 1, 2007. Altamonte Springs lost 553 residents, and Winter Park shrank by by 340.”

“The price of housing was the major factor driving the 2007 numbers, said Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida.”

“‘While the region is growing as a whole, places that used to have a desirable ZIP code are losing residents,’ he said. ‘Housing prices are squeezing them out.’”

The Bradenton Herald. “Manatee County’s population boom is over. The county’s population grew anemically from 2006 to 2007, with modest gains in unincorporated Manatee and Palmetto offset by continuing losses in other cities.”

“Demographers and local officials blamed the slowdown on several factors stemming from the housing slump, from would-be retirees unable to sell their Northern homes to fewer construction jobs available locally.”

“‘You’re more likely to lose (people) when things are tough,’ said Scott Cody, a University of Florida demographer. ‘I would not be surprised if growth slows down even more this year.’”

“Growth could last only as long as the housing industry remained healthy, a Manatee County commissioner said. Now, fewer new homes means fewer new people, Commissioner Joe McClash said.”

“‘Much of that (earlier) growth was artificial because it was an artificial (housing) market that couldn’t sustain itself,’ he said.”

“Anna Maria, Holmes Beach and the Manatee portion of Longboat Key lost a total of 58 residents during the year. It was the third straight year each city’s population has fallen. Anna Maria Mayor Fran Barford said she couldn’t immediately explain why her city’s population is shrinking but suspected the economy is a culprit.”

“‘I’m sure it’s all of those economic factors,’ she said. ‘We all are living in a time of trial.’”

From USA Today. “Shelby Morrow is a typical 16-year-old. She likes hanging out with her friends, dreams of getting her own car and enjoys writing short stories in the bedroom of her wood-frame house in Palm Harbor, Fla.”

“But in the past few months, she’s been grappling with a financial reality that most teens don’t face. The home she shares with her mother, Melody, and younger sister, Lindsey, is falling into foreclosure.”

“Melody Morrow never thought foreclosure would strike her middle-class family. But as her employer struggled financially, Morrow, a divorced mother of three, says she had to absorb repeated pay cuts. Eventually, she couldn’t pay her homeowners insurance. Then she put her home up for sale. She hasn’t found a buyer, and now it’s entering foreclosure.”

“‘I’m trying so hard right now not to cry,’ says Morrow. ‘My daughters are going through a lot. They’re feeling the stress of everything. They ask questions out of frustration, like, ‘Mom, why did you get us into this situation?’ I just say, ‘God, what lesson do you want me to learn from this?’”

The Herald Tribune. “The number of foreclosures filed in Southwest Florida rose again last month. All told, foreclosure filings in the three-county area hit 2,240 in June, a 3.7 percent increase from the 2,161 the previous month and up 164 percent from the 848 filed in June 2007, data provided by RealtyTrac shows.”

“Toni Trafford, who moved to North Port two years ago from Pennsylvania, said she has been trying to refinance her adjustable-rate mortgage for more than a year, but cannot reach her lender on the phone.

Trafford paid $210,000 for her house, contributing $40,000 of her own money and getting a $170,000 loan from Option One Mortgage. Trafford had to pay a relatively high rate because she and her husband did not have jobs at the time, but she was assured that she would be able to refinance once she found work.”

“Trafford has a job now. But Option One, which was sold to American Home Mortgage in June, was not willing to make her a new loan. When she finally got through, Trafford was told that Option One was not doing any more refinancings.”

“‘I was trying to work with these people, but I can never get anyone on the phone,’ Trafford said. ‘Now I’m behind on my loan.’”

“Ken Stevens borrowed $484,000 against his Sarasota home during the recent housing boom and used the money to open a second men’s clothing and tailor shop in Tampa. When the downturn hit, his income dropped by 80 percent and Stevens was unable to make loan payments.”

“Stevens’ house on Osprey Avenue is now on the market for $299,000 and he is hoping to work out a short sale with his bank that will let him out of his mortgage without blemishing his credit.”

“‘If I can find someone willing to pay at or close to my price, the bank may forgive the balance,’ Stevens said. ‘It’s embarrassing to have a house up for short sale, but a lot of people are in this situation.’”

From Wink News. “Real Estate agents in Lee County say home sales in the area have been going up over the past 6 months. Experts say the sudden surge in sales is fueled by home prices dropping.”

“‘It may not be what sellers want to hear. We’ve gotten starry-eyed with all these prices, which are market couldn’t bear for a long term,’ said Suzanne Sherer, President-Elect of the Realtor Association of Greater Fort Myers.”

“Last month, the average price of a Lee County home was $158,000. In June 2007, it was more than $239,000.”

“‘If you go back to the normal appreciation of our market, we’re right back in line with where we should have been all along,’ Sherer said.”

“Though homeowners may owe more than what they’re selling it for, it boils down to simple supply and demand. Real Estate Agent Brett Ellis says it’s a necessary evil for everyone to eventually come out on top.’

“‘I think the market has to come down in price so we can even out and I think that’s what’s happening. That’s what’s healthy for the market and ultimately that’s what’s going to heal this market,’ Ellis said.”

The Miami Herald. “Although it was the first open house she had hosted at the West Kendall home, real estate agent Ana Escoto sensed her chances of snaring a buyer were more than a little slim.”

“The price was still too high, Escoto said of the three-bedroom house — especially in a neighborhood that has lost appeal. ‘People aren’t looking here — the gas, the traffic,’ Escoto said.”

“Only three homes sold in West Kendall in May, according to the MLS. May numbers showed the median priced existing home in Miami-Dade and Broward counties dropped roughly 20 percent compared to a year ago. In Weston, prices fell 30 percent.”

“Rapidly sinking property values in those areas offer a silver lining: Hundreds of homes are being recycled to buyers who were sidelined by soaring prices during the boom.”

“In Broward, about 651 houses and condos listed for less than $199,000 exchanged hands in May, more than in any other price range.”

“In Miami-Dade, sales are registering in well-established areas such as Coral Gables and Pinecrest, according to Butler, though price declines have been steep. In Coral Gables, for instance, the median in May was down 35 percent to $655,000.”

“Investors will have less to do with stabilizing the market region-wide than they did in fueling South Florida’s boom, according to Jack Winston, a real estate analyst.”

“‘Investors are looking for isolated bargains, and there is not enough of that going on to really influence the dynamics,’ Winston said. ‘The dynamic of the market now is for primary housing, for people who have jobs who can qualify for mortgages.’”

“Several Key Biscayne-based hedge funds hit by the subprime mortgage bond crisis last year have been wiped out, leaving investors with nothing.”

“Funds run by flamboyant trader John Devaney that were worth more than half a billion dollars last year have been wiped out.”

“‘Most of the investors were institutions. Some are friends and family who were not solicited to invest,’ Devaney said in an interview Wednesday. ‘There were a few high-net-worth individuals who had losses. I was the second biggest investor in the fund.’”

“Devaney, 38, a prominent bon vivant, put his personal losses at more than $100 million. Before his funds began to sour, he owned multiple homes, yachts, a $35 million Gulfstream jet and a collection of Impressionist art.”

“Troubles first surfaced last July when Devaney took the extraordinary step of halting withdrawals, citing a rush to the exits by investors amid subprime mortgage woes. At that time, Devaney told investors he wanted to avoid selling off the investments at fire-sale prices in hopes they would rebound as the bond market normalized. But the bond market hasn’t come back.”

“After freezing the funds last July, Devaney began selling off personal assets, including a 142-foot yacht called the Positive Carry, and the jet. He also put up for sale a 16-bedroom Aspen, Colo., vacation property and listed for sale a number of waterfront residential properties on the key.”

“‘We put a lot of properties on the market — my father-in-law’s, my mother-in-law’s, my sister-in-law’s, my mother’s,’ Devaney said. ‘My home is not for sale.’”

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