The Housing Bubble

The Denver Channel reports from Colorado. “While Colorado property owners know their home values are falling, they may be surprised to learn that their taxes haven’t changed. The tax bills that are coming out now are based on evaluations done in June 2006. That was before the housing market collapsed and foreclosures drove home values down. JoAnn Groff, property tax administrator with the state of Colorado, said the system has a good and bad side for Colorado taxpayers. ‘When we are in a market that is growing dramatically and prices are going up fairly dramatically, then the lag time really does work to the advantage of the taxpayer,’ Groff said.”

The Arizona Republic. “Home sales and prices fell and foreclosures rose throughout northeast Phoenix as the nationwide housing slump continued through 2008. In all of Phoenix, home values dropped 33 percent from October 2007 to October 2008, according to ASU Professor Karl Guntermann’s Repeat Sales Index Report for January.”

“Northeast Phoenix dodged the bullet for a while, said Jim Belfiore of Belfiore Real Estate Consulting. But it is catching up now. He said condos especially are in trouble, with costs of land and construction far outpacing the prices developers can hope to get for their units. He said he expects several projects to fail in 2009. Foreclosures, which have driven prices down, rose in northeast Phoenix from 287 in the year that ended in October 2007 to 807 a year later.”

The Peoria Times from Arizona. “The housing drag on the economy will end, said Economic forecaster Elliott Pollack. But in its place, the commercial market ‘is about to fall in the abyss.’ ‘Is there anything left to shock us?’ he asked. ‘We have a one horsepower economy now.’”

“Even with the oversupply, Pollack said builders are still building. Today, 9,800 units are under construction - a two-year supply. ‘Affordability has greatly improved,’ he said. ‘The problem is excess supply.’”

“He blames most of where the economy is today on too much credit being extended between the years 2002 and 2006. When it comes to credit, he said, ‘Think about the 70s. When it comes to savings, think about the 50s.’”

The National Post on Arizona. “There are some great opportunities for Canadians to buy a place in the sun with homes prices across Arizona plummeting in the past year, says real estate agent Elisa Andreis. ‘Prices are down 30% to 35%, so it’s fantastic for buyers,’ says Ms. Andreis who is working with a handful of Canadians anxious to snap up vacation homes in the mountain community of Sedona.”

“Ms. Andreis has seen prices drop at both ends of the market, but says the deepest discounts are in the luxury side of the housing market. Sedona homes that previously changed hands for more than US$1.2-million are now selling for under US$800,000, she says.”

“When the property market began to slow in 2007, Bill Bohon decided not to sell and instead rented out his three-bedroom Sedona townhome until the market picked up. Fast forward to today, and things have gone from bad to worse. His 2,800-square-foot home, loaded with extras such as granite kitchens and baths, a private elevator and stunning red rock views, is now listed for US$525,000, down more than US$200,000 from its 2006 valuation of US$750,000.”

“‘Our economy here in Sedona is still quite strong, but people who want to move down here from the northern states can’t sell their homes there,’ says Mr. Bohon, a retired executive for the Ford Motor Co.”

The Arizona Daily Sun. “Flagstaff home prices continue to slide a bit — not enough to loosen up the market. According to figures from the Northern Arizona Association of Realtors, there were just 33 sales of single-family homes in the city in December. That’s down 25 percent from the same month a year ago and 46 percent from two years ago.”

“The median price saw a drop in December of 5 percent from a year ago, with single-family homes selling for $335,000.”

“Jim Snook, a Realtor with Dallas Real Estate, said he has seen his share of short sales as well in northern Arizona. Snook said short sales can be complicated by circumstances, such as when the loan has been bundled and sold to groups of investors or when the property has multiple owners. In either example, all parties must agree to the short sale in order to go forward. He said sometimes it is just easier to let a property go to the foreclosure stage than navigating the red tape and paperwork on a short sale deal.”

Deidre Craig, the new president of the Northern Arizona Association of Realtors, agrees that some short sales can be very difficult to complete. The seller might agree to the buyer’s offer, she said, but some banks can drag their feet. ‘I’ve got one that I am waiting for approval from the bank since October,’ she said.”

The Salt Lake Tribune from Utah. “The Utah Department of Financial Institutions on Friday declared Cottonwood Heights-based MagnetBank insolvent and stepped in to seize the three-year old state-chartered financial institution. Its fortunes were tied to the struggling commercial real estate industry.”

“‘We would have much preferred finding someone to purchase MagnetBank,’ said David Barr, spokesman for the FDIC. ‘But over the past weeks we had contacted more than 320 potential bidders and didn’t find anyone who was interested.’”

“The last time the FDIC was unable to find someone to take over a failed bank was in 2004, Barr said.”

“Utah’s economy contracted sharply in the final months of last year as mounting job losses that had been centered in construction finally spilled over to other sectors. For most of the year, most of the jobs lost in Utah were in construction. Beginning in November, economists saw evidence the losses were spreading to other sectors.”

“‘It’s expanded from residential construction to everything up and down the street, and that’s what we are facing as we go into 2009,’ said Wells Fargo bank economist Kelly Matthews.”

The Reno Gazette Journal from Nevada. “The majority of Washoe County residents think that house prices in Northern Nevada are still overpriced despite steep declines in home values last year. More than half of residents surveyed by a Reno Gazette-Journal/Channel 2 News poll thought that home prices in Washoe County are higher than they should be, with 38 percent saying prices are ‘too high’ and 19 percent saying prices are ‘a little high.’”

“In comparison, only 4 percent of respondents said home prices were either ‘a bit low’ or ‘too low.’ Twelve percent said prices are just about right while 21 percent said they were unsure.”

“The notion that house prices in Washoe are too high pervaded the survey despite reports showing area home values plummeting in 2008. A report released this month by Chase International found that median and average home prices dropped in the Reno-Sparks area by 19 percent and 21 percent respectively from 2007.”

“Survey respondents who said prices were too high also said so in relation to median incomes, which they believe is still lagging behind home values. ‘Obviously, prices have come down, but they haven’t gone down far enough because people can’t afford to buy a home because of their income,’ said pollster Del Ali, president of Maryland-based Research 2000, which conducted the survey. ‘It just shows you the dire straits that everyone’s in.’”

The Las Vegas Sun from Nevada. “Astoria Homes, one of Las Vegas’ largest private builders, announced it stopped constructing homes after lenders foreclosed on three of its neighborhoods. Astoria President Tom McCormick said the company didn’t miss any interest payments on its short-term loans, but its lenders in two developments in Aliante and the northwest were no longer interested in extending them — as is common — and foreclosed on the neighborhoods.”

“‘They told us they didn’t want to go forward so, ‘Pay us off, or get us out. We don’t want to build anymore,’ McCormick said. ‘We were selling homes and making payments on the loans. We told them, ‘There is no one to pay you off.’”

“Like Astoria, Concordia Homes has also stopped building homes, and housing analyst Dennis Smith says he wouldn’t be surprised if more builders take that route because of the lack of capital and inability to make a profit. Many builders have been operating that way for several quarters to keep people employed and generate cash flow to pay their expenses, Smith said.”

“‘If you can’t make a profit, then why build?’ Smith said. ‘You have to face reality sooner or later.’”

The Review Journal. “An ailing real estate market could cause property tax revenue to stay flat or even dip in Clark County, a prospect that longtime officials say is unheard of and troubling. Las Vegas City Manager Mark Vincent said he’s not surprised that revenues are anemic.”

“‘I’ve seen as much as a 70 percent drop in land value,’ Vincent said. ‘Without a doubt it’s going to be worse.’”

The Las Vegas Business Press from Nevada. “Cash-strapped landlords are being pressured by banks to generate revenue, whatever the cost, resulting in lower rents and increased concessions, participants at a recent commercial real estate panel held by the Las Vegas chapter of the Society of Office and Industrial Realtors said. ‘There is a totally different degree of affordability,’ said Daniel Doherty, a senior vice president with Colliers International’s Industrial Division. ‘Activity is still a smidge of what it was. We are doing a lot more work for a lot less pay.’”

“Real estate brokers are increasingly working with banks, as opposed to developers, on property disposal and leasing space. Lenders want to recoup their investments as soon as possible. A foreclosed property is a liability on bank balance sheets; it’s something they want to avoid. Lenders, many of which have large mortgage-related losses, are forcing landlords to make speedy transactions.”

“‘Landlords are eager to do leases and realize a revenue income as opposed to nothing,’ said Soozi Jones Walker, a corporate broker with Commercial Executives. ‘Cash is king.’”

A new readers requested some advice from you at the HBB. “Hi Ben, I recently came to know your blog and have become a big fan. I bought my condo in Walnut Creek CA in Apr 2005 by stretching myself. So the situation is that this year I will see an income loss which will be bad for both of us and our 2 year old son, my wife is a stay at home mom.”

“I wanted to apply for a loan modifcation and wanted to ask you for some help. What are the ramifications of the new Obama stimulus plan for housing and since I am under the water big time. Will they do something for us in this plan or I should just go with loan modification?”

“We are cutting down our expenses but can’t do anything with my son’s needs so I would really appreciate your help.”

From Reuters. “Stopping the housing crash is central to fixing the economy, and halting foreclosures would be a big step towards that, according to Ken Rosen from Berkeley, who is notable as being one of the economists who was suitably gloomy last year in Davos. Foreclosures cost 50-60 percent of the value of the mortgage whereas you might be able to keep someone in their house for 30 percent, he said. A house with a modified loan isn’t sold on, which further depresses house prices and errodes bank capital.”

“‘What we need is a moratorium on foreclosure while we get a plan in place. We could have five to eight million more foreclosures in the U.S. if we don’t do something about this. Banks have already written down these mortgages,’ he said.”

“Big problem however is securities and contract law. Since so many of these mortgages are in complex mortgage securities it can be cumbersome or impossible to get everyone to agree to mods. The Fed is already moving to do just that on loans it has on its books from Bear Stearns and AIG and is encouraging other owners to do the same.”

The Las Vegas Sun. “The 4 percent loans are among several housing-related provisions Sen. John Ensign and Republican leaders in the U.S. Senate are developing as alternatives to President Barack Obama’s nearly $900 billion economic recovery plan now before them. ‘How many of you would like a 4 percent mortgage?’ Ensign asked this week in floating the plan. ‘You have to fix housing; otherwise I don’t think the economy is going to recover from this.’”

“Washington’s main response to the mortgage crisis so far has been last year’s landmark housing bill, which created the Hope for Homeowners program. The program was expected to help 400,000 homeowners work with their banks to write down loans to more affordable levels. The program has fallen short. A report to Congress last month said only 300 loans were being reworked.”

“Bert Ely, a banking consultant watching the debate, said ideas for a government-run program to offer low, fixed-rate mortgages surfaced late last year. But interest in it waned once the costs were considered. Republicans were not able to provide a cost estimate Thursday.’

“‘When you start getting into the numbers, you start to realize it would be very difficult to execute and could be quite expensive,’ Ely said. ‘You’re talking about millions and millions of mortgages.’”

The Wisconsin Biz Times. “‘The American people expect action,’ Obama said between meetings with House and Senate Republicans on Tuesday. ‘I don’t expect 100-percent agreement from my Republican colleagues, but I do hope that we can all put politics aside and do the American people’s business right now.’”

“Obama met this morning with several top corporate leaders to discuss the economy. Obama was surrounded this morning by several chief executive officers who are supportive of his economic stimulus plan, including: Steve Appleton, CEO of Micron Technology Inc.; David Barger, CEO of JetBlue Airways Corp.; Greg Brown, co-CEO of Motorola Inc.; John Bryson, CEO of Edison International; David Cote, CEO of Honeywell International Inc.; Debra Lee, CEO of BET Holdings Inc.; Anne Mulcahy, CEO of Xerox Corp.; Sam Palmisano, CEO of International Business Machines Corp. (IBM); Antonio Perez, CEO of Eastman Kodak Co.; Eric Schmidt, CEO of Google Inc.; Michael Splinter, CEO of Applied Materials Inc.; Wendell Weeks, CEO of Corning Inc.; and Ron Williams, CEO of Aetna Inc.”

Your West Valley. “A leading economist told hundreds of West Valley leaders Wednesday that Arizona remains a few years away from digging out of the recession and the reason isn’t solely about money, unemployment and a housing market gone bust. ‘The problem isn’t just financial now, it’s psychological,’ Elliott D. Pollack told those at Glendale Civic Center. ‘Even those who own homes, have steady jobs, have savings, are taking a step back and deciding not to spend any money.’”

“Much of Pollack’s presentation centered on how the economy in Arizona deteriorated in the first place. The culprit, Pollack said, was the real estate industry. ‘From 2001 to 2006, the Valley overbuilt. They did 10 years’ worth of building in six years, moved four years’ worth of employment into those six years, which is why job growth continued to look so good for that time. But now we have tens of thousands of excess homes that we need to absorb,’ he said.”

“Pollack said the problem is the same across the nation. While an average of 1.2 million homes usually sit empty, now there are approximately 2.2 million. ‘If the Obama administration really wanted to help, they’d go out and buy a million homes and burn them to the ground,’ Pollack joked.”

From The Times. “Alicia Smith has been bouncing from state to state trying to find a decent place to live. Evicted from her apartment, she found her way back to Markham with her two sons, age 8 and 10. Smith knew she needed a place for her boys to lay their heads down at night and feel protected.”

“‘I didn’t have any confidence then,’ said Smith, 33. ‘ just kept thinking … what am I going to do … where am I going to go?’”

“On June 30, Smith and her family found a local PADS - Public Action to Deliver Shelter - facility. Smith is reflective of the growing number of homeless. Illinois officials suspect the numbers are expected to grow as long as the economy worsens. Smith reflects a newer trend — families seeking shelter.”

“According to a recent report by Housing Action Illinois, 71 percent of state-funded shelters saw an increase in the number of homeless. ‘There are many people who are experiencing a loss of jobs and those same individuals are having a hard time finding affordable housing,’ said Bob Palmer, policy director for Housing Action Illinois. ‘I know of some service providers who are turning people away.’”

From CNN Money. “Housing might be in worse shape than we think. There is probably even more excess housing inventory gumming up the market than current statistics indicate, thanks to a wave of foreclosures that has yet to hit the market. The problem: Many foreclosed homes and other distressed properties that are now owned by banks have yet to be listed for sale. The volume of this so-called ‘ghost inventory’ could be substantial enough to depress already steeply falling prices when it does go on the market.”

“RealtyTrac looked at listings in four states, California, Maryland, Florida and Wisconsin, and found that they contained only a third of the foreclosures it has in its database. The scope of the problem isn’t clear, but it could be huge considering that RealtyTrac has a total of 1.5 million bank-owned properties on its site.”

“L.J. Jennings, a real estate broker in Oakland, Calif., sees plenty of evidence. ‘There are a number of properties in my area that have actually been taken back by the banks, but have not hit the market yet,’ he said. ‘Once a bank repossesses a property, in some cases, it can take more than six months to hit the market.’”

“He cites a handful of examples offhand, including a single-family home in Richmond seized in early October, a condo in San Ramon taken back the same month and a four-family building in Oakland that was repossessed in July. ‘Either lenders are overwhelmed and can’t get these properties back on sale quickly’ said RealtyTrac spokesman Rick Sharga, ‘or they’re deliberately slowing down.’”

Please visit the HBB Forum. Post off-topic ideas, links and Craigslist finds here.

It’s Friday desk clearing time for this blogger. “Every morning Joyce Reedstrom, 82, struggles to the stair lift that carries her from her second-floor bedroom downstairs for the day. At night, helped by her husband, Kermit, 86, she reverses the trip. Last summer, it looked like the couple had a solution: move from their New Brighton, Minn., townhouse to a one-story apartment for seniors. Then reality hit: A 20-percent drop in what they could get for their townhouse of 27 years has left them feeling houselocked.”

“Instead of eating a $45,000 loss on their townhouse, the Reedstroms chose to stay and pay $7,000 for the stair lift a month ago. They may try again next summer to sell, or they might invest another $7,000 in a second lift gliding to the basement garage - then wait until their declining health forces them to move to an assisted-living facility. ‘It’s not working out the way we wanted,’ said Kermit Reedstrom.”

“When John Stanley and his family moved here from Virginia last year, they bought a lot in a new Concord master-planned community. The Stanleys now live among a sea of red clay and empty streets. Only seven of 1,200 homes planned in The Mills at Rocky River were completed before the project collapsed.”

“The half-built amenity center is a daily reminder of how things went so wrong. ‘It looked like it was going to be such a beautiful thing,’ Stanley says. ‘But it has been such a disappointment.’”

“Reinaldo and Edith Gonzalez got their first taste of the Canyon Ranch Living brand while vacationing aboard the Queen Mary II. They made a $236,000 deposit and signed a contract for a $1.18 million unit. But as the project neared completion, the couple began receiving letters from the developer and soon realized they hadn’t bought a condo at a Canyon Ranch resort. Instead, they had bought a unit at the Carillon North Beach tower, which had an agreement with Canyon Ranch to provide spa services.”

“‘These [purchase] contracts are so grossly overly one-sided,’ said Robert Cooper, the Aventura attorney representing the Trump Tower buyers. ‘Contracts said that whatever the developer promised doesn’t matter and you can’t rely on it and he can do whatever he wants. Buyers thought they were going to make giant profits and everybody was so excited that they basically ignored what they were signing.’”

“The median sales price for homes in Maine fell by roughly 7 percent last year, from $194,000 in 2007 to $180,000. At the 2008 conference, Anne Weigel of Coldwell Banker Residential Brokerage in Portland, predicted prices would bottom out by last summer. That hasn’t happened. Weigel was on target in 2008, though, when she warned sellers to be realistic about pricing their homes in a buyer’s market. Referring to last year’s 7 percent statewide price decline, though, Weigel alluded to the drop in average stock values to offer some perspective for real estate developers.

“‘The good news is it’s less than the drop in the Dow,’ she said.”

“The entire state of South Carolina, like the nation, suffered greatly in the housing market in 2008. The credit crunch…was meddlesome for many potential home buyers, agents said. ‘Anybody that had a pulse before could get a loan. Now you actually have to have good credit,’ said Kellar Lawrence, of ReMax.”

“A large pool of homes on the market and low interest rates make this a great time to buy a house, agents said. ‘This is a freaking great time to buy a house,’ Lawrence said.”

“Driven mostly by the Salinas foreclosure market, home prices in Monterey County took a dramatic plunge last month, with the median sale price down 48.89 percent from the previous year. Carmel was down 40.21 percent. In Marina, the median price dropped by 32.38 percent year to year; in Soledad, prices were down 44.76.”

“‘Despite the economy, there is optimism out there,’ said Monterey County Association of Realtors CEO Sandy Haney. ‘If you don’t buy at this price, when are you going to buy?’”

“Was 2008 a good year for real estate? What a loaded question you might ask! However, I am talking about Louisiana and in particular, our Acadiana region. Remember the flurry of sales and rentals immediately after Hurricane Katrina in August of 2005 and then again in September, one month later? It was a crazy time in real estate and if you were a seller, there were people sometimes begging to buy your house. It was both a good time and bad time but primarily it was unrealistic to think it could continue at that pace.”

“Back to my original question and the answer is yes, it was a good year for those of us lucky enough to live in Acadiana. Prices are still good and interest rates are low. Now may be the time to consider investing in real estate. Ask you local Realtor…Of course, it all depends which viewpoint you choose. If you live in or have investments in California, Nevada, Michigan, Florida or some other states, you might think I was making a poor joke.”

“New home sales plummeted by nearly 15 percent last month as builders struggled to unload a glut of homes on the market, according to new government data. That month-over-month drop caps one of the worst years on record. ‘Resales prices are so low in a lot of markets, it is below the cost of what it costs the builder to build it,’ said Kenneth Wenhold, director of the Mid-Atlantic region for Metrostudy.”

‘Prices in the new home market can’t come down much more, said David Crowe, chief economist for the National Association of Home Builders. About 60 percent of builders surveyed by his association have said that they are no longer making a profit from home sales. ‘You’re paying people to take your house at that point,’ he said.”

“As many as 40 of the biggest 100 companies may collapse by 2011 as their debt- strapped assets default, according to a 2008 report which didn’t identify the firms in its study. ‘These guys had a sense they could do no wrong,’ says Paul Schaye, managing partner of New York-based Chestnut Hill Partners, which helps firms find deals. ‘They were the new masters of the universe. Now they’re going through a very sobering experience. They have to figure out how to survive this environment.’”

“‘The big fear for private equity is that the default rates go to an extraordinary level,’ says Roy Smith, a former Goldman, Sachs & Co. partner who now teaches at New York University. ‘The worst outcome is that we have such a high level of default that it makes the whole buyout scene a wasteland. This is part of the biggest bubble to burst in our history.’”

“There was no escaping the harsh realities of the nation’s deepest recession since the 1980s at the annual economic outlook presented Thursday by the Las Vegas Chamber of Commerce. Former Labor Secretary Robert Reich came down on Wall Street for using ‘easy money’ to invest in fancy derivatives, creating a speculative bubble and leverage that was beyond control.”

“‘Wall Street was like a big Ponzi scheme. It was Bernie Madoff tripled,’ he said. ‘They handed out bonuses over $18 billion for bank executives in 2008. Does that strike you as realistic?’”

“There are more than 8,000 hedge funds, all run by professed geniuses who claim they can charge exorbitant management fees and still beat the market. There are thousands more private investment managers and advisors making the same bold claims, despite history’s repeated lessons that they rarely hold true. What if just 1 percent of these people are Ponzi-scheming thieves? What if the percentage is higher? What if it’s 3 percent or 5 percent?”

“As the recession rages on, the ghost of 1920s swindler Charlie Ponzi is everywhere. We are, after all, a Ponzi nation, relying on new investors to pay off the old, building up fortunes on paper, pretending the market can only go up…It’s not just a few whack-job conspiracy theorists who say this, but real market participants, including renowned money manager Bill Gross of Pimco.”

“‘The U.S. and many of its G-7 counterparts over the past 25 years have become more and more dependent on asset appreciation,’ he wrote in his monthly investment outlook for January. ‘We became a nation that specialized in the making of paper instead of things. … We have met Mr. Ponzi and he is us — all of us.’”

“An audience of more than 300 concerned business people crammed into the Ritz-Carlton, Grand Cayman, ballroom for an in-depth, all-day financial seminar. Todd Buchholz, former Director of Economic Progress at the White House, a managing director of the $15 billion Tiger hedge fund, and an award-winning economics teacher at Harvard…stressed that much of the problem was self-inflicted.”

“‘Millions of people in America were saying ‘Even though I’ve never saved any money in my life, I want a four-bedroom house and a Jacuzzi’ and too often the lenders were willing to do that. People were not even asked to show their incomes,’ he said.”

“Author Barry Ritholtz told the audience, ‘We never took the full hit, and the full effect, of the burst IT bubble back in 2000, and what has been happening recently is really the residue of that whole mess.’”

“Buchholz didn’t sugar coat his view of the current economic mess. ‘Retail sales in the US have almost collapsed. If you walk though some stores, they’re empty,’ he noted. ‘In the UK, I recently read that the Tooth Fairy was slashing her rates; before, she used to leave a Pound-twenty for each tooth, now it’s down to just a Pound.’”

“Our foreclosures are an embarrassment, totaling 7,196 in the four-county Tampa Bay area in December alone. Home construction is floundering. Tampa scraped together a record-low 932 housing starts in the last quarter of 2008. Even local apartment owners have gone begging for tenants.”

“Real estate insiders are pleading with Washington for help. Home builders hit the federal government up for a new $22,000 maximum tax credit for new home purchases. Real estate organizations press for universal 4.5 percent mortgage rates. Antiforeclosure advocates seek massive loan forgiveness for homeowners drowning in debt. But that’s the wrong approach.”

“None of these measures will cure what ails us. As we learned during the latest credit meltdown, somebody’s free lunch becomes somebody else’s starvation diet. Squeeze one end of the proverbial balloon, and the other end sprouts a tail. What we need is a restoration of confidence that comes with a cleansed market neither hobbled nor helped by fly-by-night government intervention.”

“The market doesn’t need more hot wiring but a cold water cure.”

Please visit the HBB Forum. Post off-topic ideas, links and Craigslist finds here.

I’ll have this post up daily to provide ongoing info on the Vegas meet-up. From the organizers: “It’s official! The first International HBB Meeting will be held in Las Vegas Friday, February 20th through Sunday, February 22nd! The meeting will officially start at 3pm Friday (check-in) and end at 11am Sunday (check-out), although we will probably plan a group lunch for around 11:30 Sunday if you want to catch a slightly later flight. ”

“This will be a chance for HBBers to meet, share info and just have some fun. As an added bonus Ben is expecting a German documentary film-maker to do some interviews. For more details, please check the comments.”

The San Fernando Valley Sun. reports from California. “Marta Sanchez and her husband bought their Panorama City house inApril of 2006, their hearts beaming with hope and high expectations. ‘We could finally say, ‘this is ours’ and stop throwing our money away in rent,’ Sanchez says, recalling the excitement at the time. Then her smile quickly fades. ‘If only we could have known what was coming. We didn’t know this catastrophe was coming - that property values would plummet and the economy would be like this.’”

“Almost three years later, the Sanchez’s are among thousands of San Fernando Valley families teetering on the brink of foreclosure. In the 28th U.S Congressional District, in the San Fernando Valley alone, more than 23,000 homes are in danger of foreclosure this year. Since their loan from Countrywide Financial adjusted last June, the Sanchez’s have not been able to keep up with the $5,000 monthly for their three-bedroom house.”

“‘We’ve only been paying interest on our home for the last two years. We haven’t even begun to cover the principle, so in a way it’s like renting. And for $5,000 we could be renting a house in Beverly Hills,’ she said.”

“Sanchez and her husband knew money would be tight and sacrifices would have to be made when they bought their home for $465,000 in 2006. Their housing payment would go up from a $550 rent to a mortgage of $4,049, but they felt confident that with their steady income they could pull it off. They also felt confident that, though their loan from Country wide would adjust up in two years, their home would go up in value and with equity in the property, they would refinance.”

“But their house is now valued at $274,000 and, not being able to refinance, their monthly payments have shot up more than $1,000 dollars.”

“Jose Hernandez is also hoping to save his parent’s three bedroom home where he lives with his mother and father, two sisters and three nieces. Hernandez’s mother bought the house for $488,000 in 2005. She put $100,000 as a down payment, part of the profit fromthe sale of the small townhouse where she lived with her family for more than a decade.”

“But Hernandez said his mother was steered into a negative amortizing loan. Today they owe more than $500,000 for their home, while at the same time, the value of their house has plummeted. In December…their monthly payment shot up to $3,900 from$2,300 the month before. Since then they haven’t been able to make the payments.”

“‘My parents came from El Salvador looking for something better and they did everything right. They bought something, they waited until they got equity, they sold it, they made a very good profit and they turned around and put a large sum of money as a down payment, and now they find themselves in this situation when they shouldn’t be. My mom feels awful. My mom has actually gotten sick from all of this,’ he said.”

The Ventura County Reporter. “It has been about four months since Tom Roth of Ojai listed a room for rent in his two-bedroom one-bath house. The last time he rented out a room, he paid for an ad in the local daily, and it was scooped up rather quickly. But that was four years ago, and times have certainly changed. Roth has been a cabinet maker for the last 12 years. This is the first time since he began his career in carpentry that it has slowed down to such a degree that he has had to rent out both rooms of his home. He said he has been living out of his vintage Airstream trailer in his backyard in order to make both rooms available.”

“Roth is one of the many homeowners who are trying to make ends meet in the volatile economy. ‘Just in the past year, it seems like there are a lot of rooms for rent,’ Roth said.”

The Ventura County Star. “When the housing market began to slow down, Bill Wilson thought it would be temporary, citing a low unemployment rate and strong economy. A licensed Realtor and real estate investor, Wilson of Camarillo was telling people to grab deals while they lasted, which he thought would be until the end of 2007. Wilson laughs at that advice today.”

“Ventura County’s median sales price for existing detached homes fell to $370,750 in December, or 38.7 percent, from $604,730 for the same month the previous year, the California Association of Realtors reported.”

“Wilson is waiting for…some kind of indication the market is turning around. ‘I might start investing in six months,’ he said. Wilson sidestepped any attempt at prognostication this time by noting he has ‘no idea’ if that might be the tipping point.”

“He admitted he doesn’t want to take a risk in case prices fall an additional 10 percent to 20 percent. ‘It’s tough to part with money and throw it at real estate, because you don’t know if the economy is going to keep slumping,’ Wilson said.”

The Recordnet. “Former Mayor Ed Chavez, who left office in December for a home he had built in Indio, has put his Cavendish Square condominium on the market in a short sale, another in one of the nation’s cities hit hardest by the foreclosure crisis. The two-bedroom, 21/2 bath home has hardwood floors, plantation shutters and a wet bar. It is listed for $160,000. Chavez paid $332,000 for it in 2005.”

“‘I guess it’s kind of the ultimate in symbolism, isn’t it?’ former City Councilman Clem Lee said. ‘The mayor of Ground Zero going through the same thing.’”

“Chavez’s real estate agent, Michael Chacon of M.C. Real Estate of Fresno, said he believed the property has been on the market since November. In a real estate market that has tanked, he said, ‘If you have an investment that is not worth it, … why would you keep paying into it?’”

The Santa Cruz Sentinel. “Bill Brooks has been a residential developer for 30 years and never seen a slower time for development. Brooks…who is just finishing Westlake, a 22-unit town home and condominium project near UC Santa Cruz, said the project will not turn a profit and investment partners will be getting 75 cents on the dollar.”

“Slatter Construction, which scrapped plans to build a condo development in Santa Cruz and switched to a hotel, is steering clear of residential. Details of the new hotel won’t be available for a couple of weeks, but Michael Bethke of Slatter Construction, said it was a market-driven decision.”

“‘I won’t even touch a condo project right now,’ Bethke said.”

The San Francisco Chronicle. “Foreclosures and default notices hit new highs for California and the Bay Area in 2008. In the Bay Area, 61,347 households received (default) notices. Numbers were about 60 percent higher than a year ago. Agencies that counsel troubled homeowners say that loan modifications are becoming slightly more common, but still rarely provide a permanent solution. A report released last month by the Comptroller of the Currency found that 58 percent of modified loans fell delinquent within eight months.”

“Pacific Community Services in Pittsburg counseled about 900 families about mortgage problems last year, according to Thomas LeFleur, executive VP. Of those, 68 received a loan modification. Of all the clients, only three had their principal balances reduced. ‘Everybody’s dreaming of principal reduction because they say their house is worth half of what they owe,’ LeFleur said. ‘That has not started to happen.’”

“At the same time, he said, more homeowners are deciding against paying a mortgage if they are underwater - owing more than their home is worth. ‘We have clients who say, ‘I can afford to make this payment but I don’t know if it makes sense that I should, maybe I’m hurting my family by doing this,’ he said.”

The Press Democrat. “The unprecedented wave of foreclosures that swept over Sonoma County began to ebb at the end of 2008, the first drop in three years, but analysts warned another tide may be building. Some of the decline was likely caused by a new state law aimed at slowing the foreclosure process. Already, there are signs that foreclosure activity is rising again.”

“Real estate agents who sell foreclosed homes for banks said lenders have been holding back on foreclosures. ‘They just pulled the throttle back in the foreclosure process,’ said James Madison, a foreclosure specialist at Coldwell Banker in Santa Rosa. ‘Most of my clients are saying the floodgates are going to open again in February.’”

“Homeowners who once seemed immune to the housing downturn now face having to sell to avoid foreclosure, said Beth Robertson, a Rohnert Park real estate agent. ‘I have gotten a couple of calls from folks that are in trouble that I would never have thought would get in trouble,’ said Robertson.”

“Robertson’s clients are not subprime borrowers. But they now can’t afford loan payments after losing jobs or seeing incomes fall and can’t refinance because their mortgages exceed what the homes are worth, she said. ‘I think we’re going to move into a whole different group. I think foreclosures are going to creep into the upper income brackets,’ she said.”

Palo Alto Online. “The dizzying days of rapid sales with competing offers, plentiful loan money and no contingencies are long over, but the housing market is far from dead, panelists agreed at a community forum Tuesday night. Gone are the days of slapping on a coat of fresh paint, setting out some potted plants and offering a home ‘as is.’ Instead, sellers need to assess what work needs to be done and either fix problems before the house goes on the market or be prepared to fully disclose any issues, the panelists said. ‘This is the most difficult real estate market I’ve ever seen,’ said Steve Bellumori, a Realtor with more than 30 years’ experience.”

“Although the economic fortunes of this area are heavily tied to the stock market, ‘up to this point we’ve been an island of resiliency,’ he said. Bellumori pointed to the lack of land, strong entrepreneurial business climate, good public schools and great weather as key selling points for real estate.”

“But much of his job today is serving as ‘a reality versus a realty broker,’ he said.”

“Although plenty of money is available, the guidelines for lenders have firmed up, Tracie Southerland, financial and mortgage advisor for Opes Advisors, said. Southerland compared housing accessibility in 2003 versus 2009, using a $1.5 million house as an example. In 2003, with 10 percent down, a 4 percent loan on $1.2 million and a second 3.5 percent loan on a $150,000 line of credit, one would need a $143,000 income to qualify. Today, with 25 percent down and higher rates on the jumbo loan, one would need to earn $228,000 a year to buy the same house.”

“‘The buyer pool has shrunk,” she said.”

The Desert Sun. “With foreclosures topping 236,230 across California in 2008 and no economic recovery in sight, a Los Angeles economist advised Palm Springs real estate officials to brace for a ‘mixed bag’ in 2009. ‘This is probably the worst recession we will go through in our working lifetime,’ Robert Kleinhenz, deputy chief economist for the California Association of Realtors said Wednesday.”

“The California Association of Realtors has reported that the median price of existing detached homes in California was $281,100 in December, down 41 percent year over year. In the Palm Springs region, Kleinhenz said, the December median stood at $169,730. That’s nearly 57 percent lower than the median in June 2005 when the market was at its peak at $393,370, he said.”

“Becky Bowles, association president, said the prospect of increased affordability is great news. ‘We can help buyers who have not been in the market for years,’ she said. ‘It’s great to know we’re in a better position to provide housing opportunities to people in areas where they work.’”

The Daily Nexus. “With the recession wreaking havoc on the national housing and credit markets, professor Morris A. Davis traveled to UCSB yesterday to breakdown the key components of the economic meltdown. At his lecture in Corwin Pavilion, Davis - an assistant professor in the Dept. of Real Estate and Urban Land Economics from the University of Wisconsin-Madison - traced the string of events that led to the current financial crisis. The presentation asserted that the failure of real estate value, mortgages, Wall Street, the economy and monetary and fiscal policy are all interrelated.”

“Davis said that prior to 2005, economists and homeowners were not conscious of this bubble, leading to negligence on the part of scholars and investors alike. ‘What happened to the housing market was a historical anomaly,’ Davis said. ‘The society as a whole caused the housing market boom, because people were wildly optimistic about the market.’”

“In 2000, the subprime purchase percent was 2.43, opposed to 2004 when it rose to 14.81 percent - an unheard-of rate of inflation, according to Davis. Davis said average buyers were allowed to take economic risks in housing because it was seen as a risk free investment to the individual buyer. Additionally, when a foreclosure occurred, homeowners did not have to take the loss - the loss rested on the shoulders of the bank.”

“Davis said that American society had been irresponsible as a whole and surmised that the value of homes would not decline in the near future. ‘There was a denial in the market until we were neck high in the muck,’ Davis said. ‘You make one bad bet - that home values don’t drop - and you lose a trillion dollars.’”

“Third-year Spanish major Laura Lozano said the current outlook provided by Davis on the economy is alarming. ‘His presentation was eye-opening,’ Lozano said. ‘It frightened me because I’m about to go out into the workforce. He said the best thing to do now is to buy a house, but I can’t do that.’”

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The Naples News reports from Florida. “In Marco Island, existing single-family home sales rose 27 percent to 415, up from 328 a year ago, according to the Florida Association of Realtors. In Fort Myers-Cape Coral, they grew 43 percent to 8,217, up from 5,753 in 2007. Last month, Fort Myers-Cape Coral had 1,064 single-family home sales, up 146 percent from 432 a year ago. The median price dropped 50 percent to $106,900, down from $215,200 last year. Homes that sold for as much as $300,000 a few years ago in Cape Coral are now going for less than $100,000.”

“‘There are some real bargains out there,’ said Bruce Barron, general manager for Century 21 J.B. Novelli in Fort Myers. ‘The price ranges are totally different than they were two or three years ago.’”

The News Press. “Buyer Mike Dascoli, 23, of East Amherst, N.Y., recently worked with Valerie Busic, a Realtor with Busic, Chesser & Associates, to buy a foreclosed home in northeast Cape Coral as an investment property. Dascoli paid $83,000 for a home that sold for $240,600 a little more than three years ago.”

“‘I’ve got it rented out and it’s doing well,’ Dascoli said. ‘I will probably turn a little cash flow on it and when the market turns around, even if it is five years from now, I should be in good shape.’”

The Herald Tribune. “The December median price hit $160,000 in Sarasota-Bradenton, harking back to April 2002. December’s median was a drop of $82,000 from where it may have been under a projection developed by the Herald-Tribune, one aimed at determining where prices would be with a generally accepted 6 percent annual appreciation rate and no three-year housing boom.”

“The median in Charlotte County-North Port was $102,400 last month, up 4.8 percent from $97,700 in November, but down 37 percent from $163,200 a year ago. The $97,700 figure was on par with June 2001. The foreclosure phenomenon is having one positive effect, said Joel Ament, a broker with Port Charlotte-based ERA Advantage Realty, which manages more than 300 rentals. The fourth quarter saw a 35 percent increase in annual rentals when compared with a year ago.”

“‘The city that we’re dealing with the most right now is North Port. It’s very hot for rentals,’ Ament said. ‘It was ground zero during the boom, so a lot of those homes are coming back around as rentals. You can get some pretty good deals.’”

“A 1,400-square-foot, three-bedroom, two-bath home in North Port can be rented now for $850 to $900. During the boom, that same house would have commanded $1,200. ‘There has been a lot of downward pressure, and these rentals are very aggressively priced,’ Ament said. ‘They have to be, because there’s so much inventory out there.’”

“‘We had one hell of a party for a lot of years. Guess what? Now we’re dealing with the hangover,’ said Dennis Black, a Port Charlotte-based appraiser. ‘And there’s only one thing that will cure the pain — that’s time.’”

From Florida Today. “A day after Mercedes Homes Inc. filed for Chapter 11 bankruptcy, subcontractors emerged Tuesday to voice concerns about unpaid work and other Brevard-area builders assessed their own finances amid the troubled economy. Almeida Enterprises of Brevard Inc. is owed at least $70,000 for soffit and gutter work done on Mercedes’ Brevard homes, according to Dawn Almeida, who owns the small Palm Bay company with her husband.”

“She said Mercedes representatives continuously reassured her that business was simply slow and that the company was on solid financial ground. Almeida said she and her husband now face having to file for bankruptcy if that money isn’t forthcoming.”

“‘We’d been asking them for months, ‘Are you going to file for bankruptcy? Do we need to slow production?’ Almeida said. ‘They told us there was nothing to worry about. I am just livid.’”

The St Petersburg Times. “In the Tampa Bay area, 23,615 homes sold last year at a median price of $169,580. Local home prices have crashed 39 percent since topping out at $239,600 in June 2006. Tampa real estate broker Jim Knetsch said foreclosures make up close to half of sales in some areas. He expects a further wave of foreclosures to hit the market as banks find agents to list homes they’ve already repossessed. Until more homesteaders appear to suck up the surplus, Knetsch expects home prices to remain strained.”

“‘It’s just a race to the bottom right now,’ Knetsch said. ‘Where the bottom is, I don’t know.’”

The Orlando Sentinel. “Lake Buena Vista Resort Village & Spa is hoping the lure of permanent U.S. residency will eventually persuade well-heeled foreign investors to help it expand near Walt Disney World. The condo-hotel resort received government approval several months ago to serve as a ‘regional center’ for foreign investment. Under federal immigration policy, an approved foreigner whose investment is supposed to create 10 full-time jobs in the U.S. can get a conditional visa to live here — and can ultimately secure a regular ‘green card’ good for permanent residency.”

“So far, it has no takers for its million-dollar-visa offer. The recession and global financial turmoil have taken ‘a bit of a bite’ from the program’s potential, said Larry Behar, an immigration lawyer working on the project. ‘There seems to be less interest of people immigrating to the United States,’ Behar said. ‘When you compound that with a million-dollar investment, it becomes complicated.’”

The Sun Sentinel. “Sales of existing homes in Broward County skyrocketed last month, but it wasn’t enough to offset the worst year for housing in South Florida in more than a decade. Broward sales jumped 52 percent in December, as buyers rushed to take advantage of falling prices, the Florida Association of Realtors said. The county’s median price of an existing home last month was $217,700, down 34 percent from December 2007.”

“Mortgage rates have plummeted to near 5 percent and sellers are offering major concessions, but many potential buyers still are holding off. Some can’t qualify for mortgages, and others fear for their jobs. There’s also the belief that prices will keep falling.”

“Ed and Bobbi Miller want to move to the Ocala area, so they put their two-bedroom house west of Boynton Beach on the market in November. Their real estate agent, Bob Melzer, says the property is competitively priced at $289,000, and it gets plenty of showings, but they’re still waiting for a buyer.”

“‘Everybody walks in and says, ‘Your house is immaculate and wonderful, yada, yada’ and then I never hear back from anybody,’ Bobbi Miller said.”

“Another factor that could hammer housing this year: Two weeks ago, lender Fannie Mae imposed new requirements on mortgages for Florida condominiums. Fannie says, for example, that it won’t approve loans for buyers in a condo building where more than 15 percent of the owners are delinquent on association dues.”

“That’s likely to include many buildings in South Florida where the housing bust has ravaged the condo market because of the investor-led buying frenzy during the boom years.”

The New Times. “His thin, 81-year-old frame draped in a tan suit, his sharp eyes shaded by wraparound sunglasses, Tibor Hollo stands before a rusted fence bearing a spray-painted ‘No Trespassing’ sign. Beyond the chainlink, strewn with weed-choked bottles and crushed cans, two of the finest acres in Miami stretch to the edge of Biscayne Bay, where turquoise water laps against a concrete barrier and Fisher Island swims on the horizon. Hollo has just given it all away. For three years, the city gets the land for $1 a year and the promise to maintain a public park there.”

“No moment better captures the Zeitgeist of the South Florida condo bust than this, the legendary developer handing over land that his competitors would have killed for a few months ago. It’s now nearly worthless, sunk by a burst bubble so profound that entire 30-story condo buildings rise dark above the bay and more than 25,000 units languish on the market.”

“South Florida has seen more than $14.2 billion worth of property foreclosed in the past year alone — an all-time record. Owners sold a laughable 3 percent of more than 22,000 condos on the market in Broward County in the last months of 2008. Statewide, banks foreclosed on more than 261,000 homes last year.”

“In places such as West Kendall and Miramar, whole blocks sit empty, spray-painted plywood slapped over windows and saw grass creeping over driveways. Squatters and prostitution rings have moved into vacant homes. Companies hired to clean out abandoned residences pile belongings in front yards, letting neighbors pick through remnants of someone else’s life.”

“Condo owners and developers, desperate to get the cash flowing to keep mortgages and construction loans intact, are trying everything: giving away Lamborghinis and Mini Coopers with purchases, slashing prices in half, selling units in bulk packages to vulture firms or equity groups. Condo owners who bought at the top of the market, meanwhile, steam while their neighboring units are rented out at pennies on the dollar and their condo associations struggle to scrape together enough cash to keep basic services such as garbage collection and maintenance.”

“The ones most at fault in this bust, Hollo says, are the inexperienced and the unscrupulous who flocked in droves to the region during the middle of this decade as subprime loans, lax oversight, and outright fraud pumped America’s housing bubble to increasingly absurd heights.”

“‘There are lots of professional developers in the industry, and some of them are very good,’ Hollo says. ‘But there are also lots of what I call ‘dentists from New York’ who don’t know a damned thing. They could see people were making money here, so they buy land and they jump into business without knowing anything.’”

“‘You know those animals in California who can sense an earthquake coming before it happens?’ asks Tibor. ‘This is the ninth time I’ve been through this cycle, and back in 2006, I got that feeling: Something is not right here.’”

“‘It was the perfect storm of hype, fluff, and optimism, coupled with greed, avarice, and fraud that artificially inflated values and produced this overdevelopment,’ says Jack McCabe, a real estate consultant and researcher.”

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A report from the Virginian Pilot. “Two years ago Maurice Watkins’ budding career as a real estate agent seemed off to a good start. Listings sold quickly, and buyers were aplenty. Now, the 28-year-old Norfolk resident spends hours each day in his apartment trolling career Web sites in search of a job. Watkins is among nearly 900 Hampton Roads real estate agents who called it quits last year amid the most sluggish housing market in more than a decade. ‘At the end of 2007, you saw a real drastic change,’ he said. ‘The market transformed. My client base was dwindling; I wasn’t making any money.’”

“Kevin Barklage of Virginia Beach, spent 18 months working full time as an agent during the sales boom. ‘It was crazy for a while,’ Barklage said. ‘I was working with friends and family mostly. It wasn’t that hard to find people who were buying, regardless of the rising prices. Then, everything started to melt down.’”

“Norfolk resident Sissy Deaton spent four years as a real estate agent before returning in November to work 40 hours a week as a bartender in Ghent. Deaton now works part time as an agent for Prudential Towne Realty. ‘I actually rode the wave a little longer than I should have,’ she said. ‘I probably should have gone back to bartending six months earlier.’”

“Deaton said that as her sales volume began to fall, she was faced with finding a way to make ends meet. ‘There was no choice in the matter,’ she said. ‘I’m not going to lose my house working in real estate.’”

“The Norfolk Redevelopment and Housing Authority…officials said that as the economy has weakened, participation in its first-time home-buyer program has dropped more than 70 percent in the past 18 months - despite offers of down-payment assistance and ultra-low interest rates for low-income buyers.”

“‘People are just not buying homes,’ said John Allen, VP of housing and financial services for Norfolk’s Up Center, which provides home-buyer classes. ‘It’s all because of the economy.’”

“Still others, said Sharon Prescott, the city’s housing development administrator, racked up so much debt during the boom years that they now don’t qualify for loans under stricter lending standards. ‘There’s a lot of interest, but people have such serious credit card debt. They can’t qualify,’ she said. ‘It’s very frustrating. If people would pay down some of that debt we’d have some winners here.’”

The Free Lance Star from Virginia. “Foreclosure and short sales jumped sevenfold in the immediate Fredericksburg area last year, with the Aquia Harbour and Lee’s Parke subdivisions leading the way, a report shows. Neighborhoods that saw the highest volume of sales during the peak of the housing boom have had the hardest time lately, said Rosemary deButts, a senior consultant with Fairfax-based Fulton Research and Consulting.”

“‘Now they can’t get easy money anymore,’ she said.”

The Daily Press from Virginia. “Charlee Gowin, who chairs the Hampton Roads Realtors Association board, said the region is back to levels before the heated real estate market peaked in 2005. ‘We’re calling it back to normal,’ Gowin said during a Virginia Association of Realtors conference call Monday.”

“Some buyers — overwhelmed with the number of available homes — have been slow to put a contract down on a house. Others are coming in with bids 10 to 15 percent below the asking price, hoping to get a deal, said Rick Brandt of RE/MAX Peninsula. ‘While they are trying to get deals, if you get too aggressive, you may not get the property they want,’ he said.”

The Washington Post. “Benjamin McNelley said he loathed the idea of walking away from the mortgage on his four-bedroom, two-bath house in Fauquier County, Va. But when both his father and his stepfather fell ill last summer in South Carolina, McNelley said, he had no choice but to quit his job and move. By then, the new house he had bought for $214,000 in 2003 and then refinanced twice during the boom years was worth far less than his mortgage, which exceeded $400,000. Selling the property proved difficult. He grew anxious.”

“In July, McNelley decided to quit paying his $2,300 monthly mortgage. He said he sent his lender, Countrywide, a letter explaining his situation, that he had moved and quit his job. Countrywide has yet to foreclose on the property, he said, and McNelley is also exploring the option of a short sale. But he sees none of these options as particularly attractive. The home is sitting empty.”

“‘I already have a ‘90 days past due,’ McNelley said. ‘It’s going to be six of one or half a dozen of the other. My credit is shot, so either way you look at it, it is not going to matter much.’”

“‘The prevailing sentiment over the last five to six years has been that a home is primarily an investment and secondarily a place to live,’ said Guy Cecala, publisher of Inside Mortgage Finance in Bethesda, Md. ‘If that is in fact your thinking, it makes it very difficult to make a decision to continue paying your mortgage if you don’t think that investment is going to increase over the next five years.’”

The News Post from Maryland. “The downturn, which began nearly four years ago, has typically pushed home prices down 20 percent from peak values. The price of a home sold in Frederick County in November, the latest figures available from the Maryland Association of Realtors, was $276,594, down 19 percent from November 2007.”

“Steve Maszoros, president of the Maryland Association of Realtors, said predictions of a turnaround in the housing market by mid-year ‘may be a bit of wishful thinking.’”

The Baltimore Sun from Maryland. “Another huge wave of layoffs hit workers yesterday, with major U.S. employers planning to cut almost 60,000 jobs across various industries in the latest sign of distress in the labor market. In Maryland, several private employers notified the state earlier this month of pending layoffs and closures that affect more than 600 workers, starting in March.”

“In Maryland, 296,652 people filed new claims for unemployment benefits last year, up nearly 34 percent from 2007, according to Thomas Wendel, the executive director for the state’s office of unemployment insurance. ‘We’re watching a train wreck in slow motion, and it’s very difficult for us who have to watch, but that’s occurring,’ said Charles W. McMillion, chief economist for MBG Information Services in Washington.”

“Federal banking regulators have told Crofton-based Suburban Federal Savings Bank that it must be sold by Friday or face a possible government takeover. The 53-year-old thrift has been trying to recover from losses on soured real-estate loans. If Suburban were to be seized, it would be the first bank to fail in Maryland since 1992.”

“Bert Ely, a banking consultant in Alexandria, Va., said it will difficult to find a buyer for Suburban. ‘It’s absolutely amazing they’re still open,’ Ely said. ‘The capital at the end of September was almost exhausted.’”

From North Jersey Media Group. “Developers wouldn’t have to pay a fee that generates funds for affordable housing projects for 18 months under economic stimulus legislation cleared Monday by a state Senate panel. Governor Corzine called for a one-year moratorium on the development fee — enacted in July 2008 as part of overhaul of state affordable housing policies — during his State of the State address earlier this month.”

“The bill that passed Monday, sponsored by committee Chairman Ray Lesniak, D-Union, extends the moratorium six months beyond Corzine’s proposal. ‘We are at a tipping point,’ Lesniak said. ‘If we fall over, we are not going to be able to get this economy back up at all.’”

The Star Ledger from New Jersey. “For decades, the massive steel structure dominated the shorefront skyline of Asbury Park. In the spring of 2006, about 80 pounds of plastic explosives finally leveled the 12-story skeleton of a redevelopment scheme that had begun 20 years earlier. The town fathers gathered for the demolition and everyone was optimistic about a new era for Asbury.”

“All the parts seemed to be in place for a town ‘where a new golden era is just beginning’ as the for-sale sign says on the luxury North Beach condo complex. Unlike in the ’80s, hundreds of units actually got built in this boom. Many remain unsold.”

“Timing is everything, they say. In Asbury Park, it’s bad timing. The town has a habit of planning its redevelopment projects so that they get underway just as a housing bubble is about to burst. ‘We thought we were right on target with it, but we missed it by about two years,’ says Deputy Mayor Jimmy Bruno.”

“‘We’re working on a new design,’ said developer Dean Geibel, who is with Metro Homes based in Jersey City. The original design called for 224 ultra-luxury units that would have been sold for as much as $2.5 million to people who would in all likelihood have used them as summer homes. But Geibel said the new plan will produce cheaper units that might be bought by people who want to live in town year-round.”

“Cindy Curto recently moved south from Wayne and opened up a dog-grooming service on Bangs Avenue downtown. She described to me some of the businesses near hers. ‘They have a great paranormal store. They have a great antique store’ she said. ‘But the stores are open weird hours so people don’t know when they’re open.’”

The Erie Times from Pennsylvania. “Two local real estate appraisers could have their professional licenses revoked or suspended by the Pennsylvania Department of State for their appraisals of houses involved in the federal criminal probe of widespread mortgage fraud in Erie.”

“The state claims that between 2003 and 2005, Natalie Rose Hurlburt, of Cambridge Springs, and Kristopher M. Porter, of Edinboro, set values for the houses in question that were as much as $28,000 higher than a state-hired appraiser says those homes were worth at the time.”

“In documents filed with the state’s Board of Certified Real Estate Appraisers, the state claims that in some cases, appraisal reports prepared by Hurlburt and Porter indicate significant, short-term jumps in value for some of the properties. In one case, a property purchased for $15,000 was appraised at $72,000 five months later, the state claims.”

“The properties that were appraised, in nearly each case, were sold to private buyers by local home-redevelopment firms investigated by the FBI as part of the fraud investigation. Those firms include RLD Enterprises, owned by fraud defendant Robert L. Dodsworth; and K&D Enterprises, owned by Dodsworth and Frank Kartesz II, also a defendant in the fraud case. Both Dodsworth and Kartesz pleaded guilty to fraud and conspiracy charges related to their roles in the housing scam, and each is now serving a federal prison sentence.”

“Property appraisals became a central piece of the mortgage-fraud probe because the FBI and other agencies investigated if the sales of nearly 200 properties — nearly all of them within the city of Erie — involved inflated appraisals or other fraudulent information that led buyers to pay more than market value for their homes.”

Crain’s New York. “The Hamptons’ residential market took another beating from a floundering economy in the final quarter of 2008, with prices and sales volumes both dropping significantly from levels in the fourth quarter of 2007, according to a report released Tuesday.”

“‘What you are seeing here is similar to parts of the city,’ said Jonathan Miller, president of Miller Samuel, adding that for the last four years, with the exception of one quarter, there has been a decline in transactions. ‘The drop is attributable to the credit contraction and uncertainty with Wall Street in terms of unemployment and compensation.’”

“The region has long been popular with affluent New Yorkers looking for summer homes near the water. The problem now is that mortgages are even harder to come by than East Hampton parking spaces in mid-July. That is doubly true for people looking to finance their second or third homes, according to Dottie Herman, CEO of Prudential Douglas Elliman.”

“The area south of Route 27, known for its oceanfront properties…held up amid the market turmoil. Median sales price for houses in that area soared 22.4% to $1.1 million. Mr. Miller said the uptick was a result of a lot of high-end sales that were completed during the fourth quarter. Meanwhile, median sales prices for houses north of the highway were down 3.2% to $692,500.”

“‘Oceanfront property is prime,’ said Ms. Herman. ‘There is only so much of it.’”

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