The Housing Bubble

The Marin Independent Journal reports from California. “Marin home sales continued to slide as prices dropped dramatically across the Bay Area last month. Though Marin remained the only Bay Area county with a $1 million median price for single-family homes, the median was down from $1,125,000 a year earlier. In May, the median single-family home price in Marin was $1,102,000.”

“Marin’s condominium market matched Bay Area trends. The median price dropped 26 percent to $410,000 in June from $470,000 in May.”

“‘Once again the quest for a bargain kept Bay Area home sales out of record-low territory,’ said John Walsh, DataQuick president.”

The San Francisco Chronicle. “With bargain-priced foreclosures glutting the market, the median price paid for a Bay Area home in June plunged below the half-million-dollar mark for the first time in four years.”

“The $485,000 median price for resale homes, new homes and condos was a breathtaking 27 percent drop from the peak $667,000 median reached just one year ago, in June and July 2007, according to DataQuick. It was the lowest median since March 2004, when the benchmark stood at $469,500.”

“Even pricey areas like Marin and San Francisco, which until now had seemed relatively immune to price erosion, saw prices decline by 11.1 percent and 11.3 percent, respectively.”

“Among resold homes, foreclosures accounted for 28.7 percent of all sales, up from 3.5 percent in June 2007. ‘The bulk of what is selling is distress stuff,’ said Andrew LePage, an analyst with DataQuick.”

The Mercury News. “Prices of homes sold last month in Santa Clara County were down 15 percent compared to June 2007. The median price of the previously owned, single-family houses sold in June in the county was $670,000, according to DataQuick, down 15.3 percent from $791,000 a year earlier. The last time the median price was so low was in March 2005, when the figure was also $670,000.”

The Milpitas Post. “Though Santa Clara County has remained insulated from much of the national fallout in housing, growth in the assessed value of county residential property has dropped to 5.5 percent.”

“The Assessor’s Office has taken what it called a ‘proactive’ approach to the decline in the housing market by voluntarily reducing the assessed value of 41,866 properties for a total reduction of more than $5 billion in value. Those figures include 2,310 Milpitas properties, totaling more than $466 million in reduced value.”

The Sacramento Bee. “Sacramento County’s 2,053 sales of existing homes was the highest since October 2005. Sales of new and existing homes combined were the highest since June 2006, up 45.7 percent from the same time last year.”

“Falling prices still tell much of the story. With bank-repossessed homes dominating sales activity, June’s median resale home price of $214,000 for existing homes in Sacramento County is the lowest since $210,000 in February 2003. Median prices for new and existing homes combined slipped to $220,000 in the county. That level was last seen in August 2002.”

The Recordnet. “Sales of existing homes - primarily foreclosures still - continued to climb in June in San Joaquin County for the fifth consecutive month while the median sales price slipped to the lowest level since spring 2002.”

“Jerry Abbott, president of Coldwell Banker Grupe in Stockton, said that because of foreclosures, prices have declined 41 percent in the previous year after a 36 percent drop the 12 months before that.”

“‘We needed a correction in the market,’ he said. ‘The foreclosures - even as painful as they are - are part of a correction that has to occur.’”

“Mike Collins, broker associate in Stockton, said the number of listings is dropping not only because foreclosures are selling so strongly but also because many traditional homeowners who would like to sell have either pulled out of this foreclosure-dominated market or aren’t bothering to list at all.”

The Bakersfield Californian. “To homeowner Ernie Montes de Oca, the Windermere development looked like the happiest place on Earth. But now, developer Castle & Cooke is proposing changes to the remaining unbuilt areas. Montes de Oca believes market conditions may be driving changes to Windermere’s concept.”

“‘At the end of the day, if they’re not making money, they need to somehow figure out how to make money,’ he said. ‘It’s understandable where we’re at in the economy; there’s lots of houses. It’s a bummer for us. We’ve spent our life savings on a product they’ve glorified, marketed (and) now they want to change it.’”

The LA Daily News. “A wave of foreclosures that flooded the market with homes for sale pushed down the median price from $502,000 in June 2007 to $355,000 last month across the six-county region, said DataQuick. The median price fell 4 percent from May.”

“Prices fell in all six markets, including a 23 percent drop in Los Angeles County, from $545,000 to $415,000. That means a house purchased just a year ago lost $130,000 in value.”

“Foreclosure sales have dominated the region’s market for months, and in June accounted for 41 percent of transactions. That compares with 7 percent a year earlier and 39 percent in May.”

“Leslie Appleton-Young, chief economist at the California Association of Realtors, said statewide sales appear to have bottomed out last October and have increased every month since then.”

“‘I think it’s a positive sign,’ she said. ‘I would just hate to characterize this thing as a V-shaped recovery.’”

“This turnaround will look like a U, with the bottom being very bumpy, she said.”

The Daily Journal. “Bob Hamidi, an Orange County-based real estate agent, said few of the potential buyers he represents have the spotless credit histories, large down-payments and other requirements now demanded by jittery lenders.”

“He said buyers who can’t afford to purchase houses outright or who don’t qualify for loans backed by the Federal Housing Administration are largely shut out of the market.”

“‘We’re getting limited to people who want to pay cash - who have put money aside and want to make an investment - or first-time home buyers who fit the guidelines of FHA,’ Hamidi said.”

The Union Tribune. “San Diego County’s foreclosure share in June was 39.8 percent, up from 37.5 percent in May and 11 percent in June 2007.”

“‘We’ve never been there before,’ said DataQuick analyst Andrew LePage, noting that the company’s records on foreclosures go back to 1995, when the region was in the midst of a real estate recession. ‘Foreclosures have a growing role in the market and we know they tend to sell at a discount. And with a growing share of sales, that helps pull the median down.’”

“Prices were down the most in San Bernardino County, off 34.2 percent to $240,000; Orange County was down the least, off 23.3 percent to $495,000. San Diego was down 25.3 percent to $370,000.”

“According to DataQuick, the typical mortgage approved last month throughout the region carried a monthly payment of $1,671, down from $1,713 in May and $2,430 a year ago.”

The Press Enterprise. “Riverside and San Bernardino counties in June saw the steepest year-over-year decline in median home prices in Southern California, while also posting the only year-over-year increases in home sales.”

“DataQuick analyst John Karevoll said home prices in the Inland market are ‘too low’ based on economic indicators, including household income and demand, and he predicted ‘the market will come back up once it reaches bottom.’”

“But Karevoll added that foreclosures are expected to keep coming.”

The Daily Bulletin. “There have been no offers on the five-bedroom, three-bathroom home at Church Street and Ramona Avenue. The 1950s steel-frame, single-level house has a huge playroom, a large kitchen and family room and a swimming pool.”

“‘This is a very rare piece of property because it is in the heart of Rancho Cucamonga,’ said real estate agent Michael Bushnell.”

“The property, which includes the 2,600-square-foot house, has been vacant for four years and on the market for about a year and a half. The original owners died, and their children have been tending to the home.”

“The original asking price was $1.3 million. Nine months ago, the family brought the price down to $960,000. It’s now at $795,000. Bushnell said the property received an offer of $750,000 when it was priced at $960,000 but the owners wanted at least $850,000 at the time.”

“‘They don’t owe anything on the house. Whatever we sell it at, they’re going to walk away with,’ Bushnell said.”

The Pasadena Star News. “Local credit unions are getting calls from panicked IndyMac customers seeking a safe haven for their money. Mike Theodore, CEO of E-Central Credit Union in Pasadena, said his company has already fielded a fair amount of calls.”

“And the tone of those calls? ‘Panicked,’ he said. ‘Normally when we have people call who are thinking about joining they ask what our rates are. But now it’s ‘What is your insurance?’”

“On Friday, the Office of Thrift Supervision revoked IndyMac’s charter and put the bank under control of the Federal Deposit Insurance Corp. ‘It’s bad,’ Theodore said. ‘It was greed related. That’s the difference between a for-profit company and a not-for-profit company.’”

The Daily Breeze. “In the second quarter, the Torrance apartment occupancy rate dropped by 1.8 percent to 95.5 percent, signalling a softening of rental demand.”

“Rent increases puttered out at the end of last year as rising inflation and stagnating personal income forced renters to tighten their belts, said Kyle Kazan, whose firm owns and manages apartment buildings throughout the South Bay and other parts of Southern California.”

“‘I’d say a lot of the juice was last year,’ Kazan said. ‘This year, I’m getting a lot of push back (from renters).’”

“Kazan expects a souring economy to force rental prices at his properties to remain relatively flat or even drop over the next year. As a result, the firm is trying to keep tenants from leaving by offering better service.”

“‘As a company, our management team is totally focused right now on keeping tenants happy, customer service and retention,’ Kazan said. ‘The feeling is the storm is already starting to shake the shutters.’”

The California Aggie. “Since January 2008, roughly 20 condos and single-family homes have entered the foreclosure stages in Davis, according to foreclosures.com. In Davis, only one foreclosure was documented in 2006. Six were documented in 2007, which is a small number but an exponential increase over a short period of time.”

“This can be attributed to different financial situations, according to Sarah Mohler, economic development director for the city of Davis. One scenario is when homeowners who ’sort of got into the market only paying interest [and having] no equity’ get caught with ballooning payments and can’t sell their house for what they paid for it.”

“‘People were doing anything to get into the market,’ Mohler said, and as a result were ’setting themselves up thinking the values are going to increase.’”

“The high rate of foreclosures will end up mitigating the instances of artificial inflation as seen in areas like Sacramento, said Tia Boatman-Patterson, special assistant to state assembly speaker Karen Bass.”

“‘The median income did not support the median price [of a] home, and so [some argue] this will bring housing prices down to a more affordable level,’ she said.”

“‘I don’t think Davis is immune to the housing bust at all,’ said economics lecturer Erick Eschker. ‘You just have to look at the rest of California and the Bay Area. The price of housing in Davis will be higher than West Sacramento and there might be some differences in how the prices come down, but the direction it’s going is clear.’”

“Eschker said his best advice was to look at the housing prices compared to renting in order to decide which option is more advantageous for you right now.”

“‘Especially if you’re considering to buy a house in California, renting is a wonderful thing to do right now, and buying a few years down the road,’ he said, ‘[then] you’re coming out ahead.’”

The Longmont Times Call reports from Colorado. “Home sales in Longmont are expected to surpass last year’s numbers, and experts say that’s one sign that the local market is healthier than many other parts of the country. ‘All real estate is local,’ said Marty Quigley, current president of the Longmont Association of Realtors. ‘Longmont is not San Francisco. We’re not Arizona. We’re not Las Vegas.’”

“But Longmont has not been immune to the national trends in the housing market. Home values have been falling in Longmont, just as they have everywhere else. ‘We saw too many builders coming into the area and building too many homes,’ said Reid Williams, president-elect of the Longmont Association of Realtors, said Wednesday.”

“There have been 327 foreclosures filed within Longmont’s 80501 and 80503 ZIP codes through June, according to Boulder County Public Trustee records. That’s on pace to surpass last year’s total of 574 foreclosures filed, which was a record.”

“Chris Hirai of Wells Fargo Home Mortgage, noted that for potential homeowners, interest rates remain near historic lows and there are still options for first-time buyers to get into the market. ‘It’s not like the last four years, where if you could fog a mirror you could get a home loan, but there still are some options out there,’ Hirai said.”

The Citizen Telegram from Colorado. “A number of homes over a half million dollars are on the market right now, two in Rifle and one on Silt Mesa. They’re going for pricey figures, anywhere from $605,000 to $780,000.”

“‘It’s definitely a buyers market right now,’ Realtor Andy Stanczak said. ‘We’re stuck on last year’s prices. There’s limited buyers out there, too. Not many people are in the market for homes of this caliber.’”

“Overall, there are a lot of listing for homes in the area. ‘Last year we had, maybe, 10 new listings a day. Now we have 30. Listing service books for Pitkin and Garfield Counties have been an inch thick and now it’s two inches thick,’ Stanczak said.”

“Stanczak said while there are homes on the market, it is a lot harder to qualify for mortgages because of all the stipulations. Last year, they offered ‘no-document mortgages,’ he said. ‘That sure isn’t the case now,’ he added.”

The Arizona Republic. “Valley home prices continued their year-over-year plunge in April, dropping a record 18 percent as the impact of foreclosures and other economic factors exerted even greater influence, according to an ASU report.”

“The Arizona State University Repeat Sales Index, which tracks repeat same-home sales, reported an ‘off-the-cliff drop’ in home prices because, in large part, of foreclosures, which made up 20 percent to 30 percent of all April home sales.”

“ASU real-estate Professor Karl Guntermann said the Valley’s ‘northeast region,’ which includes north Phoenix, Paradise Valley and Scottsdale, saw its first-ever double-digit drop in home prices, down 10.2 percent from the previous April. Its year-over-year decline in March was just 4.3 percent.”

“The southwest region, which includes Avondale, Buckeye and Goodyear, had the worst year-over-year slide, as home prices plummeted 30.6 percent from a year earlier, falling even further from March’s 12-month decline of 22.9 percent.”

“Guntermann, who compiled the report, said the continued rise in foreclosures was significant, but that gas prices, interest rates, tougher lending standards and buyer psychology also took their toll.”

“‘It’s not just one thing,’ he said. ‘That’s what’s so depressing, in a way.’”

From KTAR.com in Arizona. “‘A 300,000-dollar house goes to $240,000,’ said Guntermann.”

“Guntermann said what is shocking is that the decline in home prices is spreading to Scottsdale, Paradise Valley, Fountain Hills and Cave Creek, which now are seeing double-digit declines for the first time.”

“The northeast ‘has been the one part of the Valley that’s been holding up fairly well, but it’s gone south as well, now,’ Guntermann said.”

“Guntermann sees no end in sight. ‘Given how much prices went up there for two, two and a-half years, they’ve really come down a fairly small percentage of the total increase,’ he said. ‘That suggests there are more declines to come.’”

“Three luxury retirement communities with a combined 850 units are under development in northern Scottsdale. Executives at all three say they are not worried about overbuilding these communities.”

“All three communities are going after so-called ‘go-go seniors,’ who play golf, tennis, hike and exercise regularly. ‘These people are not just waiting to pass on,’ said Jason Craik, whose company is building Arté.”

“Mark Myers, a senior VP for Marcus & Millichap, said…sales of luxury retirement units in Scottsdale will depend greatly on the recovery of the single-family housing market nationally. ‘Some of the go-go seniors are having trouble because they have trapped equity in their homes,’ he said.”

The Mohave Daily News from Arizona. “The Mohave County Assessor’s Office has sent out appeal notices for 2,160 assessed properties for 2009, which property owners should get by Monday. The assessed value of all property in Mohave County was $27 billion in 2008. That has decreased to about $25 billion for the 2009 calendar year, Assessor Ron Nicholson said.”

“Stick-built homes, or Mohave County homes that are not factory built, have seen a 15 percent drop in assessed value from the 2008 assessments. Nicholson said he does not expect the housing market to improve for another three or four years.”

“The number of foreclosure sales in the county, which are considered in the valuation process, is also ‘off the chart,’ Nicholson said.”

The Reno Gazette Journal from Nevada. “A federal bankruptcy judge appointed a trustee Tuesday to oversee the case of a Reno mortgage company recently taken over by the state after allegations of forged loan documents, possible fraud and questionable financing that has filed for Chapter 11 reorganization.”

“‘Over the past few years,’ said Cetus Mortgage owner Marcilin Benvin’s lawyer, Kevin Darby, ‘the real estate market, particularly the residential real estate market in Washoe County, Nevada, has suffered a dramatic and debilitating downturn. As a result, Washoe County has seen an unprecedented rate of borrower defaults. Cetus, and the loans it brokered, were not immune from the market crash.’”

“In the motion for an examiner instead of a trustee, Darby said Cetus has a plan for taking care of its financial problems that included having another company take over loan servicing obligations.”

“Darby’s argument ‘would be more persuasive if that willingness (to take care of investors) had been provided before posting a note on the door,’ said U.S. Bankruptcy Judge Gregg Zive. ‘There was no wind-down. They just simply stepped off the edge of a cliff.’”

The Record Courier. “Carole Thompson, executive director of the 185-member Douglas County Building Industry Association, said sales of new homes are still down. ‘Our members, mostly custom home builders, sold about five houses in June,’ Thompson said. ‘I can’t sit here and say it’s not bad. It’s bad, but we will gradually come back.’”

“Realtor Christianne Gordon said…one must consider declined home values. ‘If you are a seller, you may still be pining for prices of 2005,’ she said. ‘If you don’t absolutely have to sell right now, and simply can’t stomach the temporary market correction we are in, don’t.’”

The Las Vegas Business Press from Nevada. “Some Las Vegas condominium owners feel abused after buying units as investments only to see demand for the thousands of high-rise residences recently opened or under construction tumble.”

“Already, the Signature at MGM Grand has generated two very similar cases from buyers who claim they bought units based on exaggerated sales pitches. Now they want refunds.”

“‘The fact that a lot of buyers purchased condo hotel units with the expectation they would throw off enough cash to make a profit, combined with what’s going on with the economy creates an awful lot of disgruntled owners,’ said Dante Alexander, president of the National Association of Condo Hotel Owners in Scottsdale, Ariz.”

“In a statement, MGM Mirage, half-owner of the Turnberry/MGM Grand Towers joint venture that developed the three Signature towers, said it was in ‘full compliance with all applicable laws.’”

“The sales contracts, the company added, contained numerous disclaimers in capital, boldface letters that disowned any income projections. Buyers were required to initial each page that contained the warnings.”

“‘Unfortunately, it seems that some real estate speculators made their own assumptions, which were not realistic,’ the company said.”

“The Signature buyers filed as a class action. The prices paid by the named plaintiffs ranged from $425,000 to $745,000. The fundamental problem, Alexander said, was the mindset that prevailed during the real estate boom.”

“‘Condo-hotels are a lifestyle decision, a very cost-effective way to have a second home,’ he said. ‘Unfortunately too many buyers viewed them as an investment. And unfortunately, a lot of developers used that to their advantage.’”

“In spite of two misdemeanor citations against the Meridian Luxury Suites for renting rooms overnight, the upscale condo-development is continuing to take overnight guests, some residents contend.”

“The present Meridian conversion to condo hotel is sparking friction between the minority of owners who permanently reside there and the majority, all out-of-towners, that bought as an investment, and don’t want their units to sit idle.”

“‘I was just talking to a guy at the pool today, and he said he is staying here and leaving today. He arrived July Fourth,’ Meridian resident-owner Kathleen Mannix said. ‘He is staying here with his guy friends. The four of them are in from Chicago to celebrate his birthday.’”

“Southern Nevada had 3,192 new foreclosures in the first quarter, or roughly 35 a day, Clark County records show. It’s an 89.4 percent increase from year. Local home sales improved during that time as a result of a 28.5 percent price cut, but a year’s worth of inventory still remains, Greater Las Vegas Association of Realtors figures show.”

“And things could get worse. The number of homes undergoing foreclosure reached a new high of 6,165 in the first quarter, up 129.9 percent from 2007.”

“National builders are constantly pressured by Wall Street to trim expenses and increase profits. It has forced many firms to divest land holdings to improve balance sheets.”

“‘We have some of the biggest builders in the United States in this city. The big key is that development costs haven’t declined. They are selling lots today for less than it cost to develop them. Banks have been writing down lot values,’ said Dennis Smith, president of Home Builders Research.”

The Review Journal from Nevada. “New-home sales in Las Vegas have been consistently low over the past six months and appear to have reached the bottom of the current down cycle, a local housing analyst said Wednesday.”

“Dennis Smith of Home Builders Research counted 922 recorded escrow closings for new homes in June, bringing the total for the first half of the year to 5,747, a 45.1 percent decrease from a year ago.”

“Taking out 114 high-rise and mid-rise condos and 31 apartment conversions, sales of traditional single-family detached homes totaled 777, the sixth straight month under 1,000. The high mark of 3,233 came in June 2006.”

“The median price of all new-home product sold in June was $269,900, a decline of $54,000, or 16.7 percent, from the same month a year ago. Smith said he doesn’t see much of a drop in new-home prices.”

“‘They can’t build them for any less than they’re selling for now or they just won’t build them,’ he said.”

“About 65 percent of resale closings in June were real estate-owned, or bank-owned homes, according to the MLS. The number of homes sold by the bank has increased 18 percent over the past three months, Smith noted.”

“As more real estate-owned properties hit the market, they will drive prices down and cut into existing-home sales, said Robert Lee, CEO of Foreclosure Trackers. ‘Say you’ve got two three-bedroom, two-bath model match homes,’ he said. ‘One’s bank-owned for $300,000 and one’s a resale for $400,000. Which one’s going to sell?’”

“Lee, whose business is buying first mortgages from lenders when they go under, said a typical first mortgage might be $500,000 on a home that was appraised at $550,000, but an updated broker’s price opinion puts the value at $320,000.”

“‘You know what I’ll pay for that loan? I’ll pay $200,000,’ he said. ‘You’re selling me a defaulted mortgage. How about document deficiency? Whatever the broker’s price opinion comes in at, we’ll pay 55 cents on that, max. That’s the model.’”

“The median resale price in June was $218,000, a decline of $62,000, or 22.2 percent, from a year ago, Home Builders Research reported.”

“As the inventory of real estate-owned and short sales increased, roughly tripling in both categories since the beginning of the year, lending institutions have become markedly aggressive in pricing homes to sell, said Frank Nason, president of Las Vegas-based Residential Resources.”

“Who says real estate went bust? Mostly the media, argues the operator of a new Realtor-oriented Web site. The idea: to show that consumers and Realtors needn’t view the entire national real estate market as a downer. Nuggets of positive news exist virtually everywhere, even in Las Vegas, said the site’s founder, Leon d’Ancona.”

“‘The media latches onto sensationalism wherever possible,’ said d’Ancona, who’s also president of (a) Toronto-based real estate information firm. ‘People want to read about morbidity or whatever, but, for the sake of the real estate industry, we can look at some good things.’”

“D’Ancona’s Web site drew praise from at least one local Realtor. In an online forum, Prudential Americana Group sales broker David Boyer lauded d’Ancona’s premise that the media overlook market subtleties that paint a decent picture of the real estate market.”

“‘Leon is absolutely correct! Like politics, all real estate is local,’ wrote Boyer, whose brokerage enjoyed its own spot of happy news last week when it emerged from bankruptcy. ‘I wish the purveyors of doom and gloom understood that simple fact!’”

“Boyer’s analysis didn’t improve over the phone. You know it’ll be bad when the first sentence out of someone’s mouth is, ‘Please don’t take offense.’”

“The slow market is ‘not the media’s fault,’ Boyer said. ‘You’re just the easiest target, right ahead of Realtors. It’s the media’s fault only in that we have dumbed down the way we report and write the news.’”

“Portraying the market in broad strokes isn’t fair or honest, say d’Ancona and Boyer. It would be more accurate to home in on specific neighborhoods, districts and market segments that buck downward trends.”

“‘You don’t go into a restaurant and say, ‘All the food is good’ or ‘All the food is bad,’ d’Ancona said. ‘There’s good everywhere if you look at it. I don’t see anybody saying, ‘Hey, we know it’s bad out there, but at least there’s some good stuff out there.’”

The Lawrence Journal World reports from Kansas. “It would have been a good month - 47 new single-family homes springing from the Lawrence ground. But neither local builders, nor the economy, had that type of month. Instead, 47 was the total number of Lawrence single-family housing starts for the first six months of the year. ‘It’s bad,’ said Bobbie Flory, executive director of the Lawrence Home Builders Association. ‘The national homebuilders association says we haven’t had a downturn in our industry like this since the Depression.’”

“To put the recent numbers in perspective, the city for nearly a dozen consecutive years started more than 300 new homes per year. That level of building, however, hasn’t happened in the city since 2004.”

“Home sale numbers are not any more encouraging. Marion Johnson, the Douglas County Appraiser, said his office has recorded 927 sales in the county through June. That’s down from about 1,200 sales in the same time period last year, which was far from a record-setting season.”

“‘From where I’m sitting, I’m not seeing any signs of a turnaround,’ Johnson said.”

“It has left Flory to admittedly plead like a broken record to consumers. ‘I just keep saying that it is a great time to buy a home,’ Flory said. ‘Interest rates are low, inventory is high and builders are motivated to sell.’”

The Chicago Journal from Illinois. “This July, Julie Marburger owes the property manager of her condominium building at 1717 S. Prairie a check totaling $5,226. And, as Marburger put it, ‘the big one’s looming.’ Next year, Marburger, the owner of a one-bedroom unit in the building since 2004, will owe an additional $26,015 to complete her share of the $6.5 million assessment.”

“The building was constructed in 2002 with the first residents closing on units in November 2003. The developer turned the building over to the newly constituted board in August 2004. It wasn’t long after that turnover that the problems started emerging at the building.”

“Marburger has stopped shopping like she used to. She’s not eating out and has skipped vacations to brace for the payments. If she drains her savings account to pay for the assessment-her bank recently declined to extend her home equity loan-she will be living paycheck to paycheck.”

“‘Here I am a first-time homeowner. You can imagine how disheartened I am,’ Marburger said recently. ‘And here’s the bottom line: It is forcing people into foreclosure. I am not there. I am not close to being there. But the thought and fear of that is just devastating is to me. I love this building. But our developer has totally devastated us.’”

The Sandusky Register from Ohio. “Realtors say in spite of major slumps elsewhere and a sluggish economy, the housing market in the Sandusky area is holding steady. Not everyone is buying into it, however.”

“In the most recent year, 525 houses sold for an average sale price of $135,000. As of Thursday, there were 676 houses for sale in the county, with an average listed price of $209,000. Huron appraiser Jim Delahunt said he views the statistics as a sign of a market that is still ’somewhat fragile.’”

“‘I don’t know that we’ve hit the bottom yet, but it looks like property values are stable from year to year,’ he said. ‘Compared to two years ago, though, they’ve dropped.’”

“Others say if the price is right, the buyers will still take the bait. ‘I think people think they’ll take a big hit on their home if they sell it, but really if they’re buying in the same market, they should do just fine,’ said Sally Routh of Coldwell Banker Routh Realty. ‘This is the 11th-best year in the housing market in 50 years.’”

The Niles Daily Star from Michigan. “Figures by the Board of Realtors for the Niles-Buchanan and Galien area for June show…dollars fell 34 percent from over $7 million in June of 2007 to $4.7 million last month. There was a 27 percent drop in units sold with 46 units sold last month - down from 63 in 2007. Average sale prices are down 9 percent.”

“When asked if the market is really as bad as it seems, Jan Luke, a Realtor in Niles said ‘I believe that’s a misconception. I think for the buyers it’s a good time, because the sellers are more negotiable,’ she added. ‘And they need to be.’”

“Buyers in the past may have been able to get themselves into homes that they couldn’t necessarily afford, explains Peggy Roberts, mortgage and loan officer with Chemical Bank in Niles.”

“Now, with the economy in its current state of struggle and flux, ‘I think you’re finding that lenders are being … more conservative,’ Roberts said. ‘Qualifications for a customer are very, very strict..’”

“It would seem that buyers buying smart is about more than just a good deal on a home - but a new tactic in gaining on the negative numbers. In a struggling economy - it may just come down to a test of wills. The will to shift focus from extravagant buying to economical buying.”

“‘You don’t want to live for your house payment,’ said Roberts. ‘If you’re going to be living to make your house payment - life’s too short for that.’”

Minnesota Public Radio. “It was only about 10 months ago that talk of a recession in this country started heating up. But the beginnings of the slowdown in Minnesota can be traced back several years.”

“In order to nail down when and where the trouble really did start showing up, we actually have to go back several years to housing’s boom times, when builders and others were laying the foundation for the downturn. For that, we’re heading for the Twin Cities suburbs — and 2003.”

“Builder Todd Bjerstedt says at the start of the decade, before the boom, builders were framing up an average of 12,000-13,000 new houses per year.”

“‘And it just kind of snowballed in the years of 2003 and 2004, building in excess of 23,000 homes per year,’ Bjerstedt said. ‘So we had in those two years alone, almost a 10,000 (homes) per year jump in new construction.’”

“”Diana Carter founded her company, WinStar Mortgage Partners, seven years ago, after years in the mortgage business. Carter found the good times in her industry profitable but nerve-wracking as well. Doubts kept nagging at her.”

“‘This is artificial, this is not real. Is there going to be a bubble? What’s going to happen?’”

“While Carter did not offer high-risk subprime loans, she did sell…the in-between mortgages called ‘Alt-A loans.’ She got pressure to offer those loans from the national mortgage lender Countrywide.”

“Countrywide would buy some of WinStar’s loans, bundle them with other loans into bonds, and sell the bonds to investors. Those investors were hungry for new, potentially lucrative places to put their money. So they were asking mortgage lenders to keep sending bundles of mortgage debt their way — even risky mortgage debt.”

“Countrywide obliged, and pushed Carter to get on board with those risky Alt-A loans.”

“‘Some of their top executives were saying, ‘You need to look at expanding your product mix if you’re going to increase your profit margins. This is a really important part of the business. You have to look at doing this,’ Carter said. ‘And I’m thinking, ‘I don’t think so. No, I don’t think so.’”

“But Carter says she eventually felt like she had to do Alt-A loans to compete in the marketplace. So she started to offer them and did well initially. It was a move she would later regret. ‘We basically put a target on our chest and said, ‘Here, hit me,’ Carter said.”

“‘I was in that model here on your right when I first started to hear about the incentives being tossed around in the marketplace,’ Bjerstedt said. The incentives he mentions were a sign the market for new homes was starting to collapse.”

“But Bjerstedt couldn’t afford to cut his prices to match other builders. ‘My sales went from roughly 20 homes a year to one or two a year, almost overnight,’ he said.”

“At the time, Bjerstedt was totally baffled. Builders were still pulling plenty of permits to start new homes. The housing market looked really robust. ‘Somebody called a timeout, and I wasn’t ready,’ Bjerstedt said.”

“Keep in mind: This is spring of 2005 — way earlier than when most people usually associate with the housing downturn. Job growth in residential construction went negative in Minnesota in mid-2005. That’s about a year and half earlier than the national average.”

“By 2006, the subprime market was faltering under a crush of loan defaults and foreclosures. But the Alt-A market didn’t look so bad yet. So Diana was upbeat about her business. ‘Even in December of 2006, I was working with my staff to invest in growth, to add more sales people to really increase what we were doing,’ she said.”

‘Despite that optimism in 2006, Carter says things started to unravel in early 2007. Investors were getting skittish. By the spring of 2007, the investment banks, which had acted as intermediaries between investors and lenders like WinStar, wanted out. And when the investment banks pulled back, Diana Carter had a big problem.’

“‘There may have been 15 places I could sell the loan on January 1. At the end of March, there was either zero places to sell them or one place to sell them,’ Carter said.”

“One day in March 2007, one of Carter’s managers came into her office. Carter recalls him telling her, ‘We have $4 million of unsalable mortgages.’”

“T’he unsalable loans kept piling up. They went from “$8 million, to $10 million, to $14 million to $20 million of loans that we could not sell,’ Carter said.”

“Today, Carter only sees her WinStar office from the outside looking in. All the walls have been torn down, and the desks are long gone. Carter closed WinStar a year ago, after a wave of default and foreclosure notices swamped the business. WinStar wasn’t alone.”

“By 2007, lenders nationwide had accumulated hundreds of thousands of foreclosed properties on their books — with about 38,000 of them in Minnesota. At a recent foreclosure auction in north Minneapolis, bidders could snap up neighborhood properties for prices as low as $30,000.”

“It turns out that in Minneapolis at least, more than half of those foreclosed properties belonged to investors.”

“Last July, one of the big investment houses on Wall Street got scorched. Two Bear Stearns hedge funds laden with subprime mortgages had pretty much lost their value. ‘The first week of August last year, suddenly the phone started ringing,’ recalled Ed Padilla, the CEO of Northmarq Capital Partners. ‘It was just one call after another. And there was not any question that something was going on in the marketplace, very dramatic, and happening very rapidly.’”

“Despite that beating, it’s clear Padilla hasn’t lost his sense of humor about it. He laughs when asked what he told his wife that week. ‘I think it was something along the line of, ‘The party’s over. It’s time to change our perspective,’ Padilla remembered.”

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