The Housing Bubble

The San Francisco Chronicle reports from California. “In the Bay Area, mortgage companies recorded 18,516 notices of default, up more than 140 percent from a year ago. Foreclosures rose nearly 315 percent to 9,206. As the slowing economy made it more difficult for Carlos Amaya to find regular work as a truck driver, the Amayas fell behind on their payments. The couple remains several payments behind.”

“Representatives of the company have called several times, refused to alter the terms of the loan and threatened to begin foreclosure proceedings, she said. ‘It’s my house, my kids live there,’ said Amaya. ‘I don’t want to leave the house, I love my house, and I’m trying to coordinate with them. Everything is refused when I call.’”

“Banks offering workouts can do only so much to stem climbing foreclosures, said Michael Carney, director of the Real Estate Research Council of Northern California. That’s because plummeting home values often mean borrowers owe much more on their loans then their property is worth, an issue that interest rates can’t address.”

“‘The ethical thing to do is to keep paying on the loan, but the rational thing, if it doesn’t look like your head will be above water soon … is to default,’ he said.”

The Mercury News. “The number of Santa Clara County homeowners who lost their properties to foreclosure last quarter jumped more than 500 percent, while those facing that fate nearly tripled.”

“Marlene Santiago, a foreclosure intervention counselor at Neighborhood Housing Services in San Jose, said about 10 percent of the clients whose loans she submits to lenders for possible modification get approved.”

“Santiago said most of the homeowners she works with now owe more on their mortgages than they could get for their homes. Given that, many would rather stop making their high monthly mortgage payments and find someplace to rent - sometimes at half the cost of their monthly loan obligations.”

The Marin Independent Journal. “Default notices in Marin surged more than 140 percent over the past three months. Marin had 284 recorded notices of default, during the second quarter this year, up from the 118 default notices during the period last year. Statewide, the number of default notices doubled.”

“Marin has posted 702 properties in various stages of foreclosure in the past four months, according to ForeclosureRadar. Nearly half of those properties - 337 - are in Novato, with San Rafael accounting for 193 distressed homes.”

The Press Democrat. “Lenders seized a record 788 homes in foreclosure in Sonoma County during the second quarter, up 46 percent from the first quarter and nearly five times the total from a year ago, DataQuick reported. Every week, lenders took back more than 60 homes from borrowers who had stopped paying their mortgages.”

“Sonoma County’s housing market is saturated with bank-owned properties and by homeowners who are attempting to sell and avoid foreclosure. ‘I have never seen this many of them in the 20 years I’ve been in this business. There appears to be no change in the immediate horizon,’ said John Binns, a CPS agent specializing in selling bank-owned homes.”

“Every week, more than 100 borrowers in Sonoma County fell behind on payments or stopped paying mortgages, triple the number from a year ago.”

“‘Generally the banks try to price properties at market because they’re always taking massive, massive losses on these properties,’ Binns said. ‘We’ve seen a very dramatic decline in pricing. It took place fairly rapidly as opposed to being drawn out over several years.’”

The Sacramento Bee. “Foreclosures again climbed sharply in the area during April, May and June as 6,075 more households handed keys back to the banks. The new numbers mean that 21,402 homes have been foreclosed on in the region since January 2007, according to DataQuick.”

“‘We’re not seeing it slacken off at all,’ said Pam Canada, executive director of Sacramento’s NeighborWorks HomeOwnership Center.”

“Mike Lyon, head of Sacramento-based Lyon Real Estate, still worries about a coming wave of higher-end foreclosures tied to ‘Alt-A’ loans, a category between prime and the riskier subprime loans. Many of those loans involve houses worth $350,000 to $750,000.”

“‘A lot of people won’t qualify for that,’ he said. ‘There’s the potential pileup.’”

The Tracy Press. “Kim and Juliet Chapman earned a combined $120,000 income last year. Finances were in order until Juliet was laid off from her bank job in March, after 20 years in the business. Now, it’s up to Kim to pay the bills with the $60,000 annual salary he earns as a San Mateo County employee - exactly half what the couple used to make.”

“At the same time, their home’s value has dropped drastically since they bought it in 2005. Then they took out a second mortgage last year to help with their son’s wedding.”

“Now, they’re too deep in the hole to think of a way out. ‘Things have drastically changed,’ he said, citing burgeoning gas and food prices and a $3,400 monthly mortgage payment as ample reason to contemplate Chapter 11 as a way out.”

“‘We’re thinking of retiring and starting over somewhere else,’ he said, ‘probably in another state.’”

The Monterey County Herald. “Foreclosures in Monterey County continue to climb at a record pace, with 847 homes lost to foreclosure in the second quarter, reflecting an increase of 443 percent over the second quarter of 2007. Notices of default rose by almost 287 percent, said DataQuick.”

“Sandy Haney, CEO of the Monterey County Association of Realtors, said it isn’t surprising that the coastal regions are showing increased default notices and foreclosures. ‘Your coastal regions are always more expensive,’ said Haney, ‘and people sometimes stretch to live there.’”

“Monterey County’s rising numbers may reflect another trend: a delayed reaction as stretched homeowners who initially tried to hang onto their properties decide to throw in the towel.”

“‘I think there’s been a mindset,’ said Haney. ‘A lot of people are walking away because it seems like the thing to do, because they can.’”

“But inventories remain high. At the end of June, there were 2,768 homes on the market in Monterey County, and distressed sales continue to drive down median home prices.’

“‘The deeper we get into this and the deeper the economy goes, their fingernails get short,’ said Haney. ‘They can’t hang on any longer.’”

“In the lower end of the market, where the distressed properties are concentrated, some brokers are beginning to see multiple offers again. Anything in between - the $500,000 to $900,000 range - is in what she calls ‘the no-man’s land.’”

“‘We woke up one morning,’ said Haney, ‘and it looked different.’”

The Union Tribune. “Distressed mortgages continued to drag on the troubled economy in June, as a record number of homes in San Diego County went into foreclosure. Mark Goldman, who teaches real estate finance at San Diego State University, said lenders are awakening to the realization that they need to modify more loans to keep the shaky home-mortgage system from collapsing.”

“Countywide, nearly 40 percent of all homes sold in June had been foreclosed on within the previous 12 months, he said. In neighborhoods where vacant, bank-owned homes dot the landscape, the figure can exceed 50 percent.”

“‘I think we’re seeing more mitigation,’ he said. ‘I think the lenders are so inundated with properties they are becoming more open to modifications and forbearances.’”

The Orange County Register. “John and Grayce Coffman got a killer deal on their Fullerton home’s mortgage - just 1 percent interest for five years. It came after six months of complex, sometimes contradictory, negotiations with the nation’s largest home lender to avoid foreclosure. They couldn’t afford their previous loan.”

“Most borrowers probably can’t get as sweet a deal as the Coffmans. The reason: it was a mistake. It meant to offer 1 percent for the first year, with the rate increasing one percentage point for each of the next four years. It later decided to honor the error.”

“In an emailed statement, the company said: ‘A clerical mistake was made on the loan modification documents in favor of the Coffmans. Since it was our mistake and the erroneous documents had been signed, we are honoring the rate and modification terms for the full five years.’”

“The couple, who have owned their home since 1977, borrowed $552,300 from Countrywide in the summer of 2005. They got a loan that allowed them to select their monthly payment from four options. They repeatedly chose the cheapest option, which meant the balance they owed the bank grew.”

“By fall 2007, their debt to Countrywide had increased nearly $40,000. The Coffmans, who adopted six grandchildren (five still live with them) and are unemployed, admit they fumbled their finances. They refinanced several times, taking money out of their home and spending it on remodeling the house and on living expenses.”

“But they also said they were misled by Countrywide into a complex loan they didn’t understand - a charge the company disputes.”

“‘I have accepted 50 percent of the responsibility,’ Grayce Coffman said. ‘”But the other 50 percent? No way. These people knew what they were doing.’”

The Wall Street Journal. “As lenders rush to curtail their real-estate exposure and preserve sorely needed capital, they are triggering lawsuits from builders that say the banks have unfairly cut off their construction financing, stopped their projects midstream and forced their companies to the brink of bankruptcy.”

“‘Lender-liability lawsuits are coming. It’s only just beginning,’ says Michael Hackard, a lawyer in Sacramento, Calif.”

“Developer John Thomas says he had nearly finished building a 222-unit condominium and hotel project in Stockton, Calif., when his lender wouldn’t release the final $6 million from his $40 million construction loan.”

“The bank indicated on ‘multiple occasions’ that it would finish funding the loan, but never did, according to a lawsuit Mr. Thomas’s company filed against First Bank in Superior Court in Sacramento County. As a result, Mr. Thomas’s lawyer says, liens have piled up against the project, the condo units haven’t been completed, and the hotel has been taken over by a receiver.”

“J.P. Eliopulos Enterprises Inc., a home builder in the hard-hit housing market of California’s Antelope Valley, north of Los Angeles, is suing IndyMac Bancorp Inc. which is now under federal control.”

“The bank appraisal in December 2007 valued the project, the approximately 900-acre Joshua Ranch Development, at $17 million, down from an appraised value of $82 million in May of that year, says Andrew Eliopulos, the company’s CEO.”

“The bank estimated it would take about 18 years to sell 539 houses on the property, Mr. Eliopulos said.
That’s insane, he said. ‘I told them your appraisal is flawed. This bank is in trouble, and it just wants out.’”

“He says the bank had been pursuing personal guarantees that he, his wife and his 81-year-old mother signed when the builder took out the loans. IndyMac had been requiring that the builder pay the difference between the property’s $17 million appraised value and the $27 million loan balance, or pay off the loan in full, he says.”

“‘If banks want to get out of residential lending, that’s fine; let’s sit down and figure it out,’ says Mick Pattinson, CEO of builder Barratt American, based in Carlsbad, Calif. ‘But that isn’t being done. The rug is literally being pulled from under us and games are being played.’”

“Mr. Pattinson says Bank of America Corp. froze his $100 million credit line for seven months, while ordering a new appraisal of his properties. During that time, Mr. Pattinson says, his company paid down its credit line by $30 million, but then stopped making payments in March when Mr. Pattinson says he realized the bank was never going to unfreeze the loan.”

“Mr. Pattinson says that ‘after seven months, this country boy figured they weren’t going to allow us to use the credit line. I said, ‘No functioning line, no interest.’”

The Bakersfield Californian. “Two homebuilders unloaded residential tracts in Bakersfield last month for substantially less than they paid at the height of the boom, county records show.”

“The fire-price sales indicate some developers might be willing or eager to trim portfolios as land value here declines - declines that will be tallied in a matter of weeks, a county assessment official said.”

“Ennis Homes Inc., a regional builder based in Porterville, sold two southwest parcels for less than $1.5 million, county records show. Ennis bought the land in 2005 in a pair of transactions totaling more than $8.2 million.”

“KB Home, a national builder headquartered in Los Angeles, sold a northeast parcel for $765,000, records show. The company bought the land for more than $3.3 million in 2005. It’s at least the third such transaction locally since the market slipped.”

“The office is currently revaluing raw land and residential subdivisions held mostly by developers, said Tony Ansolabehere, assistant assessor. He expects ‘hundreds and hundreds of millions of dollars’ worth of property value to be shaved from the roll in the next few weeks.”

“Land that fetched up to $200,000 an acre during the peak is worth … well, it’s hard to figure, he said. If someone can get $50,000 an acre now, ‘they’re doing good,’ he said.”

“Some parcels valued at $20,000 an acre before the market run-up could sink back to that pre-boom value, he said.”

“‘Land prices have really fallen,’ he said, noting banks have foreclosed on vacant tracts and unfinished subdivisions, bringing down value further.”

The Denver Post reports from Colorado. “Real-estate agents note that resort communities have certain advantages over the Front Range and much of the nation: Foreclosures have not been a big problem, they remain attractive to retiring baby boomers, and the rich just keep on buying, which helps prop up overall sales. ‘We aren’t seeing foreclosures or the wholesale abandoning of value,’ said Doug Landin, managing broker at Eagle Ranch. ‘I think we are seeing maybe a little bit of a market correction.’”

“Summit County’s inventory of 1,955 homes for sale marks the highest point in three years. Meanwhile, the value of total Summit County home sales this year through May is down 22 percent from the same period last year.”

“Property in Eagle Ranch is still selling for at least 90 percent of asking price, Landin said.”

“But a 10 percent discount off the asking price of a house, while typical in most real-estate markets, is a notable drop in a mountain community. A year ago, an offer that came in 10 percent below asking price could ‘insult’ the seller, Landin said. Soon, it could be welcomed, he said.”

“‘People who are waiting for it to hit the bottom are rolling the dice,’ broker John Trtanj said as he lounged at his open house for a $600,000 two-bedroom condo in Singletree. ‘We’ve been saying for 30 years, ‘It can’t get any higher.’ And every year, it does. And when it gets higher again, this will be the time that people look back and call the best time to buy.’”

The Steamboat Pilot from Colorado. “Recent changes to the city’s community housing guidelines will result in higher costs to developers and increased affordable housing in Steamboat Springs, city officials said Tuesday.”

“City Council President Loui Antonucci, who is also a Realtor, voiced concern about basing the number on home sales prices from last year - a time he considered to be a ‘bubble’ when homes sold for much higher prices than they are selling for now.”

“‘Are these numbers that accurate? Prices are coming down every week. I’m not sure we should base it on those prices,’ Antonucci said.”

The Grande Junction Sentinel from Colorado. “Residential and commercial real estate sales in the Grand Valley are down 28 percent from the same time last year, and home sales decreased by 18 percent, lending officials said last week.”

“‘We’ve had eight quarters of declining real estate sales, so that is more than a trend,’ said Bob Reece, district manager of Stewart Title Company. ‘That’s a reality of where we are today. Anytime you have a decline in the number of home sales, you know you’re going to have a softening of prices.’”

“Housing inventory available is at 2,236 houses right now, Reece said. He didn’t have the inventory numbers from a year ago but recalled ‘it was substantially less.’ Property values in Grand Junction went up so quickly in the past few years that the average buyer got reluctant to buy and borrow money, he said.”

“Moab, Utah’s days as a sleepy, hidden-gem destination with a population of 4,875, according to the U.S. Census, may be numbered. The largest resort development in the town’s history, the Lionsback Resort, is weaving its way through approval and annexation into the city.”

“Moab is under a housing crunch, said Jeff Reinhart, the city’s planning director. Vacation-home seekers are buying homes that would otherwise be affordable for full-time residents, he said, and that is driving up prices.”

”One in three homes in Moab is a vacation home,’ Reinhart said. ‘The growth in that market is killing us.’”

“Julianne Fitzgerald, however, says that market no longer exists. Fitzgerald, a real estate broker in Moab who opposes the development, said Lionsback most likely would sit empty and unsold. She claims the demand for vacation homes bottomed out four months ago after a peak in 2006.”

“‘Right now, we can’t give away homes at $100,000,’ Fitzgerald said. ‘How do they expect to sell $400,000 starter mansions?’”

The Deseret News from Utah. “Home values across the nation may be tanking, but that’s not the case in Salt Lake County. Although appreciation isn’t as high as years past, ‘the Salt Lake market still is fairly strong and robust compared to the national market,’ said Tom Leech, an economic and statistical manager at the Salt Lake County Assessor’s Office.”

“Lee Gardner, Salt Lake County assessor, said he’s not in the business of philosophizing why home values are going up or down, but said that high gas prices could be in play in the southwest corner of the valley.”

“The construction boom out there might not be helping either, Leech said. ‘There just hasn’t been the demand to move out there and occupy it yet,’ Leech said.”

From Utah Business. “Utah’s residential construction industry remains dismal, as home and condominium sales continued to slow during recent months, according to Newreach, a Salt Lake City-based real estate research firm.”

“The report states that the number of new home and condo closings in Salt Lake County fell to 550 units in the second quarter of 2008, down 48 percent from 1,058 closings in the second quarter of 2007. Lot and home prices have also decreased, according to the report.”

“And Salt Lake County isn’t the only county in the Beehive State experiencing a drop in home/condo sales. ‘We’re seeing a decline across much of the state,’ said Todd Cook, VP of housing at Newreach.”

“Salt Lake County currently has 944 complete unoccupied homes/condos on the market, an 8 percent decline from 1,037 units available in the fourth quarter of 2007. This drop is significant, as the state’s standing inventory during the fourth quarter of 2007 increased 205 percent when compared to the fourth quarter of 2006.”

“Jason Eldredge, executive VP of sales at Newreach also noted that there are still development opportunities in the state. ‘Every place isn’t oversupplied; you just need to be sure that your location and prices are right,’ he said.”

“Eldredge reminded developers to be mindful of gas prices and other rising costs when searching for a location to build. ‘People can’t afford to buy on the outskirts because the money that they’re saving by buying there is lost in how much they have to spend on gas.’”

The Arizona Republic. “Metropolitan Phoenix’s foreclosure problem has spread. Many Valley neighborhoods closer in, particularly in south, west and central Phoenix, now have the highest foreclosure rates, according to an Arizona Republic analysis.”

“Foreclosures across metro Phoenix number 16,647 for the first half of the year compared with 9,966 during all of 2007 and 1,070 in 2006.”

“Many of the homes going into foreclosure were bought or refinanced during the peak of the housing boom in 2006, according to property records. Home prices are down almost 30 percent from that time, so many people struggling now owe much more than their home is worth.”

“‘It has become more of an equity problem than a subprime problem,’ said Tom Ruff, a real-estate analyst with Information Market.”

“Notice of trustee sales, or pre-foreclosures, also continue to climb. There were 35,111 pre-foreclosures filed in Maricopa County through July. That compares with 30,166 for all of 2007. When pre-foreclosures stop climbing, foreclosures could peak a few months later, Ruff said.”

“As long as foreclosures continue to rise, home prices are likely to fall.”

“‘Foreclosures are a problem for almost every neighborhood of the Valley now,’ said Margie O’Campo de Castillo of Arizona Dream Realty. ‘The problem has trickled in and will continue to get worse as people lose jobs and struggle in this economy.’”

“Real estate experts say investors and speculators opened the spigot on the foreclosure crisis but now it’s the typical homeowner who is paying the price as the result of job losses in a struggling economy.”

“During June, 40 percent of Mesa’s recorded home sales were foreclosures, 27 percent of Chandler’s were foreclosures and 20 percent of Tempe’s were foreclosures, said Jay Butler, director of real estate studies at Arizona State University.”

“‘My big concern is we’re getting change from the investor-driven to properties that were owner occupied because of job losses’ and other factors, Butler said. ‘No one sees a quick turnaround from the economic issues that the Phoenix area has been having.’”

“He said the Arizona economy has lost 26,000 jobs on a year-to-year comparison basis.”

“Bill Ryan, a broker with RE/Max Elite, which specializes in the Southeast Valley, estimated that about three-quarters of the houses being purchased are foreclosures ‘I have not personally seen a lot of properties go into foreclosure from unemployment,’ Ryan said.”

“The primary reason is that homeowners are giving up on their properties because prices are so low that they can’t envision making money off their home for at least five years, he said.”

“‘Everybody has got to get back to the mindset that you buy a house to live in,’ rather than turn a quick buck, Ryan said.”

In Business Las Vegas from Nevada. “Despite the housing slowdown that has dropped median prices more than 20 percent in the past year, affordability remains a long-term problem that could stop industries and workers from moving to Southern Nevada, according to a study done on behalf of local governments.”

“Even with the price drops, about 45 percent of the market was priced above $300,000, but homes need to be priced between $212,000 to $276,000 to be considered affordable, the study said. Between January and April, 57 percent of the housing units sold on the MLS were priced $250,000 and below.”

“The bigger concern about the housing market, however, is not prices, but the availability of credit, said Steve Schauer, a loan officer with Flagship Financial Group.”

“‘I don’t think the prices are the issue but the stricter loan guidelines,’ said Schauer. That has prevented many buyers from getting loans without putting down 3 percent to 5 percent, he said.”

“Eric Trump, VP of development and acquisitions for his dad’s company, has been coming to Las Vegas every two to four weeks overseeing the 1,282-room Trump International Hotel.”

“The Trump tower in Las Vegas has been deemed a success with 98 percent of the 1,282 units sold. The closings have been slowed by the credit market making it tougher on buyers to wrap up loans. It’s a matter of paper pushing and will take at least six more months to move closings along, he says.”

“‘It is no secret the market conditions have changed,’ Trump says. ‘Eighteen months ago, you could write a FICO score on a cocktail napkin and get what you want. Now with the subprime and overall economy, loans are being more scrutinized.’”

The Review Journal from Nevada. “Short sales have become increasingly prevalent in Las Vegas, where home values have dropped by more than 20 percent in the past year and some 5,000 homes are headed for foreclosure.”

“While more than half of all home sales in Las Vegas have been reported as foreclosures or short sales, the figure is actually closer to 80 percent in the past few weeks, a home loan consultant said.”

“About 26 percent of available inventory in Las Vegas, or 5,800 units, are listed as short sales, reported Applied Analysis.”

“Most buyers get frustrated and go looking for another house, Jo-Anne Guderian of Coldwell Banker Premier Realty said. ‘I had one property in escrow for three months and the buyer walked away,’ Guderian said. ‘They got tired of waiting. I put it back on the market at $325,000 and got an offer immediately.’”

“The problem, she said, is that the lender, Countrywide Mortgage, keeps coming up with a higher price than the market will bear. Countrywide just sold a two-story, 3,758-square-foot model match in the same area for $295,000, she said.”

“Applied Analysis principal Brian Gordon said there’s a ‘disconnect’ between the 26 percent short-sale listings and the 6.7 percent short-sale closings over the past three months.”

“Many agents believe the closing ratios for short sales under contract could be as low as 10 percent to 20 percent, Thomas Taylor of Desert Classic Properties said.”

“‘If this is the case, or anywhere near the case, there are hundreds of buyers being put on hold from a very clogged-up, nonperforming system,’ he said. ‘There is a rumor that Countrywide has decided to not do any short sales for four to six months. This can have a big impact on the market.’”

“KB Home is moving forward with construction and sales of affordable townhomes at Inspirada, a master-planned community in west Henderson. The Monet collection, as it’s being called, are priced from the $140,000s for 1,087 square feet.”

“‘Our home designs and floor plans are driven by market demand and today’s economics are driving some homebuyers to choose smaller, more affordable floor plans,’ KB spokesman Craig LeMessurier said.”

“KB’s larger Rembrandt townhomes at Inspirada start around $190,000 for 1,643 square feet.”

“Tim Sullivan, president of San Diego-based Sullivan Group, advised real estate professionals to watch out for the under-$200,000 segment of the housing market. He counted 21 active subdivisions in Las Vegas with at least one floor plan under $150,000.”

“The percentage of homes selling for under $250,000 went from 28.2 percent in 2005 to 42 percent in 2008 and the percentage of homes under $300,000 went from 44.8 percent to 63.5 percent during the same period.”

“Las Vegas’ housing opportunity index, which measures what percentage of median income households can afford a median-priced home, has gone from 64.4 percent in 2000 to 25 percent in 2007, Sullivan said at a recent seminar.”

The Las Vegas Sun from Nevada. “For more than a decade, Las Vegas has been the envy of the nation in at least one regard: its explosive growth. It’s a story Nevadans have grown accustomed to hearing. And its repeated tellings have fed the belief that such growth would never end, that Las Vegas was immune from the economic pressures that affect the rest of the country.”

“In the past week, several signs, read together, show that long-held assumptions about growth in Southern Nevada could be fundamentally changing.”

“In his previous job, when he compiled Clark County’s population estimates during the 1990s, Jeff Hardcastle said people often approached him with the same question regarding the region’s growth: ‘How long can this go on?’”

“As long as four factors remained in place, Hardcastle would reply: the relative monopoly held by Nevada’s gaming industry; the lower cost of housing, especially compared with neighboring California; the stable local and national economies; and the availability of natural resources such as water and land on which to build houses.”

“‘Since 2001, pretty much all that’s been changing,’ Hardcastle said. ‘And now we’re seeing the culmination of some of these changes.’”

“Commercial development here - which is driven by travel and tourism - has slowed dramatically. Associated General Contractors reported the value of commercial projects permitted during the second quarter of 2008 dropped 66 percent, to $131 million, from the second quarter of 2007.”

“‘Those decisions to build 30,000 hotel rooms were made several years back,’ when times were good, said Linda Macey, properties manager for Southwest Airlines. ‘We’re not sure if anyone knows whether all those rooms will be filled.’”

“Dusty Dickens retired in 2005 after 10 years as director of zoning, demographics and real estate for the School District. Even before her retirement, Dickens said, there were indications growth was slowing. During the peak of the housing boom, teachers and families were selling their homes and relocating to cash in on the bonanza.”

“‘Now you flip it the other way, and families are leaving because they’ve lost their homes,’ Dickens said. ‘Did we see this coming two or five or seven years ago? I don’t think anyone would have seen this sharp a downturn was coming.’”

The Journal News reports from New York. “Second-quarter housing trends continued to track a dismal path in Westchester and Putnam counties, a function of tougher credit requirements, unemployment and other factors, a regional real estate group said yesterday. Sales of housing of all kinds fell by double-digit percentages in both counties, compared with the second quarter of last year. Inventories for most kinds of housing in Westchester were up sharply.”

“The market was overdue for a correction following a nearly 10-year run-up in pricing starting in 1996, the MLS said. Large layoffs on Wall Street, and reduced bonuses, ‘do not bode well for the market,’ the report said.”

“Harding Mason, president of the Westchester County Board of Realtors, said the local housing market is being ‘held hostage’ by economic issues. ‘All of the factors are hitting us at the same time, just like everybody else,’ he said.”

“John Occhipinti, a retired police officer who dreams of moving to the Caribbean, said he’s thinking of reducing his price on a four-bedroom, three-bath Tudor-style house he bought in Croton-on-Hudson 10 years ago. He listed it at $829,000 six weeks ago, a price he felt was fair, given the substantial improvements that he and his wife made on the property.”

“There have been a couple of showings but no offers yet, he said. Occhipinti said he thinks that by lowering the price below $800,000, he might get the property exposed to more prospective buyers. ‘The reactions are great’ when buyers come looking, said his wife, Trish Occhipinti. ‘That’s why we’re surprised. We don’t get that follow-up phone call.’”

“Shenaaz Khalfan wants to sell her three-bedroom house in the town of Ossining for $630,000 and join her husband, who has taken a job in Australia and bought a house there. She doesn’t know how long the family can pay for two properties.”

“‘It’s a dead market,’ she said. The house was first listed for $799,000 in September and has been lowered at least four times since then. Her broker warned her the initial listing price was too high, she said, but she remembered how hot the market was just three years ago.”

“‘Lousy, dinky little houses were moving so fast, but not anymore,’ she said. ‘They’re looking for bargains out there.’”

“The MLS said more sellers were being forced to enter the market sooner by family or employment considerations. ‘I think the buyers have great opportunities in this market,’ Mason said, ‘but that doesn’t mean that sellers are going to give their houses away.’”

The New York Times. “For several years, it seemed that prices for Manhattan office buildings would never stop climbing. But now, in perhaps the clearest demonstration so far of how commercial real estate values have deteriorated in the last year, 1372 Broadway, a 21-story brick building in the garment center that was one of the last to sell before the credit crisis, is under contract to change hands again at a loss of $41 million.”

“‘We haven’t seen sellers take back financing to this degree since the early 1990s,’ said Robert M. White Jr., the president of a New York research company.”

“In June, Risanamento, a real estate company in Milan that has struggled in recent months because of the credit turmoil, announced that it was putting the 14 floors of office space at 660 Madison Avenue on the block.”

“The Wall Street Journal reported in April that Luigi Zunino, the chief executive of Risanamento, is also trying to flip a 10,000-square-foot condominium at the Plaza Hotel even before he takes possession of it.”

“The General Motors Building…languished on the market for several months before being sold with three other buildings also owned by the embattled real estate investor Harry Macklowe for a total of $3.95 billion.”

“Some real estate specialists say the three buildings, which Mr. Macklowe bought as part of a portfolio, have declined in value by 20 percent or more. But Scott A. Singer, the executive VP of a real estate finance and brokerage company that represents a number of family-owned real estate companies in New York, said the sale of the Macklowe buildings was not a good benchmark for future sales.”

“‘It was a forced sale,’ he said.”

The Glouchester Daily Times from Massachsuetts. “A foreclosure auction of the last, unbuilt piece of Pond View Village - aimed at giving the chief lender a saleable title free of more than $1.5 million owed to contractors for the state and defaulting non-profit developer - was postponed yesterday almost before it began.”

“But the move has sparked new questions regarding the status of the developing agency, Cape Ann Housing Opportunity, that grew out of Wellspring House in 2002 as a means of creating more affordable housing in the region.”

“Auctioneer Paul Saperstein opened the advertised event only to announce the auction was being pushed back to Aug. 18. The only potential bidder represented at the heavily subsidized, two-thirds finished community housing development was the lead investor, the Massachusetts Housing Investment Corp.”

“Massachusetts Housing Investment Corp. CEO Joseph Flatley said the auction was postponed in the hope that a buyer other than his corporation would appear to bid on the property. ‘Our first choice is to be fully repaid,’ said Flatley, explaining the move to go to auction.”

“‘MHIC is owed a pile of money,’ said Fran Hogan, an attorney representing the investment corporation. She described the auction as a legal maneuver to remove the liens. ‘The auction wipes out everybody behind you (in line for repayment),’ Hogan said.”

“Massachusetts Housing Investment Corp. last year took over ownership of 33 unsold Pond View condominum units when the developer - Cape Ann Housing Opportunity - ran into a crumbling condo market and was unable to repay $8.57 million of $9.2 million in loans from the corporation’s big bank investment pool.”

“The auction would rub from the deed the claims of the general contractor, Worcester-based Cutler Associates, which is owed slightly more than $1 million, and those of a number of subcontractors who sued Culter and Cape Ann Housing Opportunity after it stopped paying Cutler in the project’s final days last year, when the glut of housing and the disappearance of easy credit brought a decade-long housing boom to an end across the region.”

“The ‘crown jewel’ of Pond View Village - as Christine Cousineau, Cape Ann Housing Opportunity’s former executive director, described the high rise - was to have included mostly market-priced units with views of the Annisquam River estuary. That portion of the project was designed to produce a back-end cash flow that the business plan depended on to pay off lenders and contractors and make the project whole.”

“Joining the Massachusetts Housing Investment Corp. team at the auction site was one subcontractor. Peter Grammas Jr., president of North Shore Construction, which installed the sewage system for the entire project and sued Cape Ann Housing Opportunity and Cutler for about $100,000.”

“Grammas said he was looking at the auction as the act of eliminating him from any chance of being paid.”

“‘I had to take out a second mortgage on my house,’ Grammas said, ‘but everybody (working for him, material suppliers and subcontractors) was paid. We got screwed.’”

“The Massachusetts Housing Investment Corp. has ‘been hurt, too,’ said Hogan.”

From The Day in Connecticut. “Revenues that cities and towns receive from real estate sales have plummeted in recent months, leaving red ink in some municipal budgets. New London, Montville and Norwich have seen the biggest drops in conveyance tax revenues in the past year. New London saw a 49 percent decline, Montville a 45 percent drop and Norwich a 35 percent dip in conveyance tax revenues from fiscal year 2006-07 to 2007-08.”

“Donald Goodrich, the New London finance director, spent the last few months trying to figure out how low the conveyance tax revenue would go. He started the year projecting $600,000, and revised it in March to $350,000. He soon realized ‘we’re not going to get there,’ and revised it in June to $325,000. The city ended the fiscal year with $320,793 in conveyance tax revenues.”

“Goodrich estimated $350,000 in revenues in the new budget year but admitted, if the trend continues, the city will fall way short of that total. ‘It’s the economy. It’s the housing market,’ he said.”

“Salem First Selectman Bob Ross remembers a dismal previous year. In the 2005-06 fiscal year, Salem received $78,736 in conveyance tax revenues. The next year, it dropped dramatically to $57,603, and last year rose to $66,760, still $12,000 short of the high two years ago.”

“‘We probably had a worse decline than most back in 2006-07,’ Ross said. ‘Things are hard everywhere. The problem is, like any other municipality, we have relied on this revenue, and at the end of the year, the state legislature had to break a promise to someone, either to the real estate industry or to the towns for not giving us anther tool for replacing it. If you’re a homeowner in my town, there’s a direct impact on your taxes if the conveyance tax goes away.’”

“‘We’re seeing fewer sales,’ said Groton Town Clerk Barbara Tarbox. ‘Most new subdivisions have been there for a few years, and there aren’t any new sales of condos.’”

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