The Housing Bubble

The Desert Sun reports from California. “Raul Vargas earns about a third of what he used to make before the recession. The husband and father of four’s entire take-home income, about $2,000 a month, goes to cover the $1,300 mortgage on their Coachella home and hundreds of dollars in utilities. ‘It all goes to house and bills,’ said Vargas, a Realtor-turned wind turbine repairman. If it wasn’t for the money his wife brings home, roughly another $2,000 a month, they would lose their house.”

“More than half of Indio residents, 57 percent, paid more than 35 percent of their income for housing. Many residents of La Quinta, Palm Desert and Indio are also paying more than $2,000 a month on their mortgages, an amount that reflects higher interest rates and houses purchased at the height of the market in the mid-2000s.”

“‘This market is suffering from people who bought homes they couldn’t afford,’ said Greg Berkemer, executive vice president of the California Desert Association of Realtors.”

“Palm Desert resident Bruce Domes, an automotive technician, and his wife net about $4,000 a month and pay a $1,500 for housing. Domes said he’s making $7 less per hour than he earned last year. ‘I have lost tools and my car due to a lower income,’ he wrote in an email. ‘We have nearly lost the roof over our heads. I ride my bike eight miles each way to and from work.’”

“Vargas said he used to earn nearly six figures as a Realtor. The family enjoyed vacations to Hawaii and Cancun. Then, the housing bubble burst in 2008. His in-laws — also a family of six — moved into their four-bedroom, two-bathroom home in 2010 after his brother-in-law’s construction company collapsed. Despite the difficult times, Vargas considers himself lucky, mainly because of his four kids.”

“‘Not one of them has said, ‘Mom, I miss my room,’ Vargas said Friday. “These kids teach me a lesson in humility. In a year and a half, no one has complained.’”

The Union Tribune. “Has the foreclosure crisis in San Diego peaked? We asked the U-T Housing Huddle, our group of real estate experts.”

“Kurt Branstetter, loan officer and mortgage manager at W.J. Bradley Mortgage in San Diego: Yes, but unfortunately there are many more to come. Foreclosures will only subside significantly when housing prices stabilize. Many homebuyers who purchased in 2004-2007 did so at the worst possible time at inflated prices with no money down and no income qualification loan programs that were readily available at that time (unfortunately.) Hopefully, a majority of those troubled properties have already thrown in the towel. Inventory levels and home prices have stabilized in some areas of the county and many homes are now selling at prices below the replacement cost.”

“Clemente Casillas, broker at South County Real Estate in Chula Vista.: No. I don’t believe the foreclosure crisis has peaked. At least not in South County. I recently did a BPO (broker price opinion) for a bank in the 91913 ZIP code. Of the 30 active listings in the area of similar type and model, 22 were short sales and three were bank-owned. This made up 70 percent of homes in pre-foreclosure. In addition, more than 50 percent of the market in South County continues to be a short sale. This is inventory currently on the market. I’m sure there are plenty of homes in pre-foreclosure status that are not even on the market. With continued unemployment not getting better, weak consumer confidence and expected government cutbacks, it is not going to get better tomorrow.”

The Tribune. “You all know the familiar gospel, ‘It’s the economy, stupid.’ But there is another level to the comprehension of our national problems that still is not being as fully addressed as it should be. It’s not only the economy. That’s far too broad a statement. It’s the housing market.”

“The president, members of Congress and the slate of Republican presidential hopefuls are obviously fully aware of the former, but they’re practically clueless about the latter. In what amounts to bailing water with a thimble, President Obama last week unveiled yet another attempt to right our economic ship, but it’s still too meager an effort.”

“One of the biggest problems with the latest program is it only applies to loans owned or backed by Fannie Mae and Freddie Mac. Everyone else — who lack the assistance of government muscle attached to their loans — is out of luck. Here’s my proposal: If you’re current on your payments and have not missed more than one in the last year and your loan is no more than 25 percent above the current value of your home, you qualify for refinancing — across the board.”

“For the banks, if there ever were a financial moment crystallized around ‘ask not what your country can do for you — ask what you can do for your country,’ it is now. So guys, are you with us, or against us?”

The Sacramento Bee. “When you examine President Barack Obama’s most recent plan to help underwater homeowners you can’t help but ask: Why is the federal government in the mortgage business? Hasn’t the loss of nearly half the value of our homes – thanks in large part to the federal scheme to make sure everyone owns a house whether they can afford it or not – been a lesson enough?”

“The federal government’s role in financing residential housing ‘has increased dramatically since the outset of the crisis,’ according to a report by the inspector general for the Troubled Asset Relief Program, with the federal government and the organizations it backs ‘now guaranteeing or insuring almost all net new borrowings for mortgages and mortgage-backed securities.’”

“In other words, it states, the government ‘has done more than simply support the mortgage market, in many ways it has become the mortgage market, with the taxpayer shouldering the risk that had once been borne by the private investor.’Absent meaningful reform, it states, ‘we are still driving on the same winding mountain road, but this time in a faster car.’”

The Record Searchlight. “The federal government’s involvement in the mortgage business is the reason California homes have lost half their value? Well, that’s an argument to be made — and certainly the official blessing of looser mortgage credit helped pump up the housing bubble, leading to the subsequent bust. At the same time, since we’re talking about the federal government, it’s hard to see why the boom and bust was so selective. Some states saw neither run-up nor crash over the past decade.”

“In any case, back to the question: Why is the federal government in the mortgage business? Here’s the nickel version from a couple of finance professors in a 2005 paper, ‘The American Mortgage in Historical and International Context’: ‘Before the Great Depression, the single-family home mortgage was a very different instrument. Until the 1930s, residential mortgages in the United States were available only for a short term (typically 5-10 years) and featured ‘bullet’ payments of principal at term. Unless borrowers could find means to refinance these loans when they came due, they would have to pay off the outstanding loan balance. In addition, most loans carried a variable rate of interest. Bartlett (1989) presents a fine historical overview of the origins of the modern U.S. mortgage.’”

“‘Home mortgages typically had very low loan-to-value ratios of 50 percent or less and thus did not, by themselves, place substantial stress on lenders, because when borrowers were short of cash, their property could be sold if necessary to redeem their loan. But during the Great Depression in the early 1930s, property values in the United States declined by 50 percent relative to peak values. Holders of these mortgages, knowing their positions were insecure, refused to refinance loans that came due; as a result, borrowers defaulted, having neither the cash nor the home equity necessary to pay the loans back. A wave of foreclosures resulted–typically 250,000 per year between 1931 and 1935. At the worst of the Depression, nearly 10 percent of homes were in foreclosure. Financial institutions would in turn attempt to resell the properties that they repossessed, which placed even further downward pressure on the housing market.’”

“‘In response to these calamities, the federal government began intervening in the housing finance market. It created three particularly important institutions: the Home Owner’s Loan Corporation, the Federal Housing Administration and the Federal National Mortgage Association.’”

“In short, there was massive price deflation and a foreclosure death spiral — eerily like today’s — before the federal government ever got involved in the mortgage business.’

The Santa Cruz Sentinel. “Bruce Arthur is a former Capitola city councilman: ‘So more houses equals more opportunity to raise more revenue for the state. That, as far as I can see, is the only justification for the state of California to periodically require cities to adjust their housing numbers to accommodate more sardines in the can. Capitola is, for all intents and purposes, built out. There are just not enough vacant properties to accommodate even the amount of houses that they were required to plan for 15 years ago. Still the state wants more residents [taxpayers].”

“Never mind any more density would drastically impact our older neighborhoods. Secondary Dwelling Units seem to be the soup du jour that is going to save the cities. Not so fast. Capitola tried it two housing number allocations ago and found that not many people were interested in investing in the construction of the units. So now the state has told [not asked, but told] the city the Secondary Dwelling Unit ordinance isn’t working and we need to modify the lot square footage minimum from 5,000 square feet to 4,000 square feet. Oh, and reduce the rear- and side-yard setbacks for detached units. And, oh yeah, increase the height from one story to two stories.”

“At what point will the residents declare war on the politicians and demand a stop to this nonsense? Where are all these new residents going to work? Where are all these residents going to park? How is this increase in new commuters [see where are these residents going to work] going to make our air and traffic quality better?”

The Lompoc Record. “Lompoc will return $147,322 to the federal government that the city loaned in 2003 to the now-financially strapped Lompoc Housing and Community Development Corp. to buy property in the 500 block of North T Street. The location was to be the site of a five-unit condo complex for first-time homeowners, but the project never evolved because of a downturn in the economy, according to a city staff report.”

“Mayor John Linn said the city did not make a mistake in putting its faith behind LHCDC to do the project. ‘There was a plan in place (by LHCDC); the plan made sense moving forward, then the economics changed and it didn’t make sense,’ Linn said. ”

“This is not the first time the city has taken action on LHCDC projects. In April, the city initiated foreclosure on one vacant South K Street lot purchased for $375,000 in redevelopment loan funds administered by the city to LHCDC.”

The Press Democrat. “The nation’s home builders are still singing the blues, but in Sonoma County the tune is now sung by a new set of builders. Several local builders have closed their doors. ‘There aren’t many locals left,’ said Chris Peterson, president of Rivendale Homes in Santa Rosa.”

“It’s quite a change from the days when smaller, local companies like Christopherson Homes and Pinnacle Homes oversaw the work of turning the county’s bare ground into brand-new communities with hundreds of homes. Eventually more home buyers will return and building will resume, Peterson said. But today construction loans are nearly impossible to get, foreclosures have pushed prices far too low and new home building still contains too much risk.”

“This year is on track to end as the worst in a half-century for single-family home construction. The National Association of Home Builders last week predicted the U.S. will add only 422,000 houses this year, down 10 percent from 2010. In 2006, that figure peaked at 1.7 million houses.”

“Similarly, the Research Board predicts that California builders will construct a record-low 21,500 single-family houses, down 16 percent from last year. In Sonoma County, the downturn forced the bankruptcies of prominent landowner Clem Carinalli and developers Wendell Nordby and Orrin Thiessen. Pinnacle Homes filed for bankruptcy protection earlier this year for two limited partnerships with homesites in Sonoma and Mendocino counties. And Christopherson Homes last year lost two partially completed subdivisions in southwest Santa Rosa to a foreclosure auction and a court-ordered sale.”

“‘We expected some improvement this year and it didn’t show up,’ said Ben Bartolotto, research director at the Construction Industry Research Board.”

“Miami-based Lennar paid $7 million for one Christopherson project, Linwood Village. The amount owed the lender was $12.7 million. Meritage Homes of Scottsdale, Ariz., bought the other, Ragle Ranch, for $12 million. Public records showed the lender was owed $22 million. Both builders now have homes for sale here, as does KB Homes of Los Angeles at its Quarry Heights Project in Petaluma. Observers say these builders have substantial capital for buying stalled projects and for building.”

“Eduardo Martinez, a senior economist who studies California for Moody’s Analytics predicted somewhat better days ahead for the county’s home construction industry. ‘It’s going to be a gradual increase,’ Martinez said. He expects to see ‘meaningful” growth in 2013, but he cautioned that it could take several more years for the county to get back to a rate of 1,500 new homes a year — about half the number built in 2005.’”

“Randy Waller, a broker/owner of W Real Estate, says most of the current housing projects pencil out because they were taken back by banks and later sold at steep discounts. In other cases, the builders took a tax write-off by slashing the stated value of land bought before home prices plunged. Waller said it’s still far from clear how the county’s home building industry expands after these ‘broken’ projects are completed. Experts aren’t predicting a big rise in home prices or a big drop in building costs, he said.”

“‘So why are we predicting an increase in construction?’ he asked.”

Southern California Public Radio. “A pair of creative video artists are using foreclosed homes in Riverside as the backdrops for their latest work. Jeff Foye and Gordon Winiemko created the show ‘Jeff and Gordon Play Against’ on display at Riverside’s Sweeney Art Gallery. Winiemko says the artists also use the game of squash, typically associated with wealthy people, to explore the tensions between competition and cooperation in today’s economy.”

“‘That tension that we’re playing, and there are rules that we agree on but we’re out to beat the other guy. Our exhibition is meant to look at the kind of underlying attitudes that give rise to a catastrophe like that, where there are so many people that end up losers,’ Winiemko explained. ‘These pieces also exemplify the desire of the 99 to be the 1 percent,” he added, referencing the Occupy movement.”

“Foye agreed. ‘Here we are maybe wearing the clothes or adopting the role of the 1 percenters. And the fact that we’re doing this at foreclosed homes is, we’re trying to carry on as if everything is just fine. We’re just temporarily embarrassed, you know?’ Winiemko said.”

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Readers suggested a topic on how things might have been different. “Does anyone want to talk about what would have really happened if the banks hadn’t been ‘rescued’ in the manner they were all those years ago? My basic idea is what would have happened if, instead of giving Hank Paulson a completely blank check to save the banks, Congress had given him authority to split them up, sell off the depositor and solvent commercial lending bits, and then made the shareholders and unsecured bond holders and CDS counterparties and all the other speculators take their lumps to the extent necessary to wind it all down.”

“I think there was more than enough money sloshing around the system in hedge funds and private equity funds to take over the basic banking functions, though I don’t know if they would have wanted those businesses. Smaller banks could have taken the accounts relevant to their areas. It would have taken some time. They would have been nationalized for at least a few months.”

A reply, “We’d be dealing with a nascent civil war. A whole lot of government and private paychecks would be irredeemable, goods and services un-purchased or unpurchasable, and credit cards and retirement funds rendered useless. If no one accepts the coin of the realm, and no one is willing to grant credit, things could get pretty messy pretty quickly.”

“I suspect unemployment would be ahem, significantly higher than the 20% it is now. A whole lot of chronically ill poor folks and oldsters would be dead or in end-stage decline. Global exports (our food sources among them,) would dwindle, as would our supply chains. OWS would be armed. Tax revenues would be not only withheld, but uncollectible. De facto war lords, er volunteer peace officers would enforce the local order. Ta-taa to the court, contract, and title system. And what about that pesky unpaid military?”

“But Craig’s list and eBay would be thriving. And lawyers would be having a field day….”

Another said, “A replay of the Great Depression, with rolling large scale bankruptcies and an eventual bank holiday or nationalization. The question is, whether that is better or worse in the long run than what we are facing now.”

The St Augustine Record. “The recession has been brutal in Northeast Florida, according to Census data released today showing that income is down, poverty rates are up and more and more people are looking for help. ‘We’re seeing a new face on poverty that, quite frankly, we haven’t seen in the last 30 years,’ said John Edwards, executive director of the Northeast Florida Community Action Agency, which assists low-income people.”

“Bruce Ganger, executive director of Second Harvest North Florida, which supplies food banks, tells of a well-educated, professional woman who had joined her husband in the ranks of the unemployed and struggling. ‘She said to me, ‘Bruce, you have to understand, I stand in line now to get food, crying: How did I ever get here?’ Ganger said.”

“Comparing the report’s numbers to the 2005-2007 survey — just before the major effects of the recession hit — the affect of the downturn is easy to see. In the earlier report, just 14.2 percent of families in the area made less than $25,000 a year. In 2010, that jumped to 22.1 percent. Median household income dropped from an inflation-adjusted $70,984 to $68,189. The percentage of people living below the poverty line went from 11.2 percent to 13.4 percent. Unemployment in the civilian labor force jumped from an average of 6.1 percent to 9.7 percent.”

“More houses are vacant, and both homeowners and renters are spending a bigger chunk of their shrinking income just for shelter. ‘If anybody thinks this economy is improving, just look at those numbers,’ said Susan King, who starts Monday as head of the Beaches Emergency Assistance Ministry. ‘There are so many people coming out of the woodwork who’ve never needed help before.’”

US News and World Report. “Data from the Labor Department shows that the U.S. economy is a much changed place from past recessions. Despite small recent gains, manufacturing employment is down more than 37 percent since the last major recession, in the early 1980s. Healthcare is a bigger share of the economy than ever, and has continued to grow unfazed by downturns of any size. And construction has shrunk considerably, having experienced its biggest dip in employment on record since 2007.”

“The low interest rates that helped boost housing and the U.S. economy after the early-2000s recession (and eventually created the bubble that caused the Great Recession) have been ineffective this time around. ‘If you look back at, say, for example, recoveries that were more robust–following the recessions in the mid-1970s, the early 1980s–those were recoveries that were a lot more responsive to monetary ease,’ says Conrad DeQuadros, senior economist at RDQ Economics. When the housing market recovered after the 1980s recession, he says, that spurred a ‘very significant pickup in job growth.’”

“With the federal funds rate at near-zero for nearly three years now, not to mention historically low mortgage rates, the Federal Reserve has been scrambling to find ways to fix the economy from the monetary side, providing monetary easing and altering its balance sheet. However, such policy is proving ineffective. ‘[A monetary fix is] not going to happen this time,’ says DeQuadros. ‘It’s not the level of mortgage rates–that’s not what’s holding back housing market. It’s the excess supply of homes, the backlog of foreclosures. Those aren’t issues that can be addressed with monetary policy.’”

From RT.com. “With all eyes on the debt crisis engulfing America and Europe, few have noticed the depths to which Japan’s once-triumphant economy has sunk. With Tokyo reduced to wringing its hands, could Japanese economic dominance be dead in the water? Stagnant growth, the strong yen, and a massive national debt – some economists fear that Japan may only be a few years away from its own major economic crisis.”

“‘Japanese industry can probably endure the current 75-yen-to-the-dollar level for a little while,’ says House of Councillors member Yoichi Kaneko. ‘But if this situation doesn’t change over a longer period, I think we’re going to see Japanese factories and large companies move their operations overseas – to places like Vietnam, Thailand, or China. This would lead to a hollowing out of Japanese domestic industry and create unemployment. Japan is facing an extraordinary economic crisis.’”

“Japan has the highest national debt among major economies, owing almost twice as much as the economy makes in an entire year. Couple that with the funds needed to rebuild after the devastation unleashed by the earthquake and tsunami earlier this year, and it seems Japan is fighting a battle it may not be able to win.”

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It’s Friday desk clearing time for this blogger. “Economist Peter Morici has taken a look at the housing crisis and doesn’t see much hope. He does see one way out, however. ‘If the Fed could get the investors who buy Fannie and Freddie bonds to accept interest rates of minus 3 percent, then young folks could be offered mortgages with appropriately negative interest rates. To accomplish that feat, the Fed would have to buy all those bonds itself-that’s right the Fed would finance all federally guaranteed mortgages and write off 3 percent a year.’”

“Morici is getting at something here, while setting up a preposterous option for Ben Bernanke. The real problem of the cheap money that the Fed has been unleashing by cutting interest rates to nearly zero, promising to keep them there, and then trying to drive rates even lower by doing two rounds of ‘quantitative easing’ plus ‘Operation Twist’ is…that cheap money isn’t good enough! Right now we need…free money!’”

“The Federal Housing Finance Agency announced plans Monday to revamp the three-year-old Home Affordable Refinance Program [HARP] to allow more underwater borrowers to refinance. Anthony Sanders, a finance professor at George Mason University, said a ‘fundamental disconnect’ exists between HARP’s goal of lowering monthly mortgage payments and the larger economic issues facing many Americans.”

“‘There’s no evidence that lowering a mortgage payment a few hundred dollars a month prevents defaults,’ he said. ‘Giving $200 a month to people who already have a job doesn’t really make any sense.’”

“Rep. Dennis Cardoza blasted Obama for ‘failure to understand and effectively address the current housing foreclosure crisis.’ Obama’s new plan is a step in the right direction but doesn’t go far enough, Cardoza says. His idea is to make refinancing available to many more homeowners at very low rates and for terms up to 40 years. If that plan were to be enacted, the government may as well just buy the homes and lease them back.”

“He would allow homeowners with government-backed loans to refinance no matter how little their homes are worth. There is no relief for homeowners who have lost their jobs and can’t make their payments or who are already in foreclosure. And many homeowners no doubt will choose to walk away from their debt instead of refinancing it.”

“Another issue is how the market will feel about providing more money for a home than it’s worth. Banks will go along because the refinancing includes a waiver by Fannie Mae and Freddie Mac that the government-backed agencies will agree not to seek refunds from lenders who made irresponsible loans.”

“Mesa Mayor Scott Smith hosted President Barack Obama in 2009 when the president launched his first foreclosure relief plan. When the housing crisis first hit his city, Smith said about 8 percent of the housing stock in Mesa was empty — about 12,000 homes. While fewer for-sale and foreclosure signs dot the landscape now, he those numbers have held steady for about four years now.”

“A former builder, Smith says most of his friends from that business have been out of work for three years. Most have lost their homes and spent all their savings. Now they are just scraping by. Are they even talking about presidential politics? ‘Not really. Maybe some are,’ Smith said. ‘But they’ve lost so much hope in what Washington can do. They are so turned off by the posturing, the bickering, the partisanship, that it’s not even worth talking about.’”

“Many boomers are saying they’ll keep working during retirement: a total of 73 percent in the new poll, compared with 67 percent in March. That’s more than in any other generation. Sherry Wise, a 53-year-old agricultural economist in Lorton, Va., a suburb of Washington, said she is worried she will have to work well into her 60s and beyond in order to continue paying her mortgage, keep up an investment property in New Mexico and look after her two daughters.”

“‘The one thing I know is that you can’t count on anything anymore. This economy has gotten so screwed up,’ Wise said.”

“About 6 in 10 baby boomers say their workplace retirement plans, personal investments or real estate lost value during the economic downturn. Of this group, 53 percent say they’ll have to delay retirement because their nest eggs shrank. Financial experts say those losses, including home prices that have dropped by a third nationwide over the past four years, have left boomers anxious about moving and selling their homes.”

“‘There’s a mistrust of the real estate market that we didn’t have before,’ said Barbara Corcoran, a New York-based real estate consultant. ‘There’s a concern about whether people will get money out of their house. They envision the home as a problem, not an asset, and this unshakable belief in homes as a tool for retirement has been shaken to the core.’”

“For many, losing a home is the definition of hitting bottom. But some former homeowners are finding themselves in an even tighter spot than they thought possible. They’ve lost their homes and wrecked their credit ratings. Now lenders are pursuing them for the debt that remains. former homeowners can think they’ve moved on, only to find that the debt is still there. The National Consumer Law Center, a nonprofit consumer advocacy group, confirms that deficiency judgments appear to be going up across the country, but how that plays out depends on state law. Geoff Walsh, a staff attorney with the organization, says approximately 40 states, including Idaho, allow lenders to sue former homeowners for the amount of the mortgage that remains after a foreclosure.”

“‘They’ve definitely been under the impression that they walked away from a situation, or it’s over,’ says Walsh, ‘and then this deficiency claim in court just comes back and hits them.’”

“Nothing appears out of the ordinary in the Heather Croft condominium complex in Egg Harbor Township. But beneath the surface, there are problems. A letter sent out to homeowners several weeks ago lists the names of neighbors who have fallen behind on their maintenance fees, leaving the homeowners association with more than half a million dollars in uncollected funds, the letter stated. More than 30 percent of owners of the complex’s 385 units were in arrears.”

“As a last resort, the association can place a lien on the property and start foreclosure proceedings. But banks also are foreclosing on some units when the owners fall behind on their mortgages, which makes the financial institution responsible for paying maintenance fees. Banks sometimes are reluctant to foreclose and add more units to their already burgeoning inventory of distressed properties.”

“When a bank forecloses on a New Jersey unit, it must pay six months of back fees dating from the time it takes possession, said Jane Herbert, director of collection services for the Wentworth-affiliated Community Collection Services. But many banks are waiting until they actually sell the unit before giving the homeowners association its share. A delay in the foreclosure process just adds to the problem, said Michael Mendillo, president of Wentworth Property Management. ‘If you decide not to pay (your mortgage), you could be in there for three years before they actually pull the plug on you,’ he said.”

“Heather Croft employs a collection attorney who uses various methods to extract money from delinquent homeowners, including garnishing their wages and bank accounts, property manager Monica Sacchetti said. A policy of towing the vehicles of nonpayers ‘works beautifully,’ she said.”

“The expectation is to find glamour and over-the-top glitz at this condominium linked to business magnate Donald Trump. So it comes as a surprise to walk into the lobby of Trump Hollywood to find it oozing understated elegance and sophistication. Four years ago, Harry Polsky, a Florida resident with Toronto connections, watched the gleaming curved tower go up, but suites at that time ranged from US$1.3-million to US$7-million, so he thought ownership at Trump Hollywood was an impossible dream. ‘It was the crème de la crème, but I knew we couldn’t afford it, so I didn’t even look,’ Mr. Polsky says.”

‘Then in January, Mr. Polsky heard that BH3, the new owners of Trump Hollywood who took over in 2010 after lenders foreclosed on the previous owners, had discounted prices. ‘I was ecstatic,’ says Mr. Polsky, who was the first person to buy a suite from the new owners.”

“Mr. Polsky, who lived in downtown Toronto in the late 1990s, paid US$748,000 for his 2,100-square-foot residence on the 11th floor.’We keep pinching ourselves - we can’t believe we have been able to buy here,’ says Mr. Polsky, a broad smile on his face.”

“Although the water level at Lake Conroe is nearing seven feet below the mean sea level measurement of 201 feet, the area around the lake remains a hotbed of housing activity. News of the strong sales left one Lake Conroe realtor feeling ’shocked’ ‘I get calls from people asking, ‘Where’s the water?’ says Trey Mills, a 10-year sales veteran at Lake Conroe. ‘It (the lake) is going to come back – one day.’”

“Judi Foster, a realtor with Coldwell Banker, credits there lake area’s other amenities, including quality schools, for the sales. ‘There’s a quality of life available here,’ she said. ‘Granted, you don’t expect this when there’s a drought, but we’ve got some astute buyers.’”

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A report from StateImpact Idaho. “After several weeks of reporting on the Idaho housing market, it’s impossible not to notice just how many of the people who have lost their homes in the downturn are real estate agents and builders, or do other kinds of work related to housing. In the midst of the boom, Carmel Crock, a realtor who lives in Boise, made financial decisions that counted on the housing market’s continued strength. She refinanced her home in the expectation that her income would keep rising, allowing her to manage a higher monthly payment.”

“Crock says when her income fell and she found herself in the middle of a financial mess, she wasn’t on her own. Many people she knew professionally were also having to figure out how to negotiate short sales. ‘Unfortunately, I had realtor friends, long-time acquaintances, builders who were going through the same thing,’ she says. ‘None of us were doing this alone.’”

“‘Most of my developer clients have felt a really big hit from the downfall of the real estate market,’ says Terri Pickens, an attorney in private practice in Boise. ‘And as a consequence most of them have lost their personal private residences in addition to their subdivisions, or commercial developments.’”

“As she understands it, not only have people whose work is connected to real estate suffered a direct hit in the downturn. They also may have been more likely to be drawn in by the excitement of the boom. ‘They were more likely to purchase a home that they couldn’t purchase in a down market,’ she says.”

“Andy Enrico, Vice Chair of the Idaho Real Estate Commission, says he watched people get caught in that downturn, too. ‘Builders got in trouble, and real estate agents who wanted to aggressively buy and invest got in trouble, because they thought the market would never quit,’ he said. ‘When you get so busy, you think sometimes, ‘Maybe it won’t end.’”

The Idaho Reporter. “Even though the Tamarack Resort in Valley County is on life support, the Idaho Land Board has an ongoing right to build residential structures on a number of acres near the Osprey Golf Course. The state could, if it wanted, even act as a landlord for homes or condos. Former state lawmaker Bob Forrey, who monitors Land Board policies and transactions, said the state should completely avoid getting into the business of building homes because it doesn’t have the right to do so.”

“Tamarack’s story is one of great expectations with little fulfillment of dreams. The resort opened with limited availability in 2003 and expanded operations in the years following.”

“The former Republican lawmaker also contended that the Idaho Constitution prohibits making investments in which the return is not guaranteed. He says residential properties at Tamarack would not bring in guaranteed money. ‘The risk is just out of bounds,’ he said of the possibility of the state building homes at Tamarack. ‘I think it’s totally wrong. It doesn’t sound like good government to me.’”

The Oregonian. “The nation’s home prices showed signs of good news in August, and this time Portland joined in the party — but without offering too much to celebrate. Prices are still below a August year ago — 7.6 percent lower in Portland and 3.8 percent lower for the 20-city composite — though the year-over-year declines are smaller than those reported in earlier months this year, a sign of market stability.”

“Tim Duy, an economist at the University of Oregon, said the fact that annual price declines are decelerating is encouraging. The lingering problem, Conerly said, is a large inventory of houses amid a dwindling pool of potential buyers. ‘We’re still in a situation of excess supply,’ said Conerly, adding he included houses that aren’t listed for sale. ‘We simply have more housing units than we have households, and its going to be some time before we work that off.’”

From KGW News in Oregon. “President Obama’s revamped ‘Home Affordable Refinance Program’ may help underwater homeowners in Oregon and around the country. Of the 9,100 homes for sale in the Portland Metro area alone, 2,000 are currently short sales and 500 are bank owned – or previous foreclosures.”

“Steve Schwab, a principal broker at Keller Williams Realty, said that it still won’t be soon enough for many homeowners. ‘I believe a lot of people if they could get out of their house all together they would,’ he told KGW.”

The Seattle Times in Washington. “The owner of downtown Seattle’s well-known and well-loved — but mostly empty — Smith Tower has defaulted on the loan it took out when it bought the landmark in 2006. In 2007, less than a year after it bought the Smith Tower, Walton Street Capital received the city’s approval to convert the entire building to condos. When the downtown condo market began to cool later in 2007, Walton Street scaled back its condo-conversion plans to just the top 12 stories.”

“When the Seattle-based Samis Foundation sold it to Walton Street five years ago it was 100 percent leased, according to William Justen, Samis’ former managing director of real estate. Walton Street missed opportunities to sign or resign office tenants while it was pursuing its condo-conversion plan, said William Justen, Samis’ former managing director of real estate.. Meanwhile, the office market collapsed.”

“‘There’s nothing wrong with the building,’ Justen said. ‘Walton Street just had a business plan that did not work.’”

My Northwest on Washington. “A 71-year-old former foster mother on fixed income has averted losing her home thanks to a grassroots campaign. Dixie Mitchell, who lives in Seattle’s Central District area, had received a foreclosure notice, and her home of four decades was due on the auction block. But a grassroots group called Washington CAN! (Community Action Network) took up her cause.”

“The bank adjusted Mitchell’s previous payment of $2,568 a month, to $1,700, which she says will be a stretch, with a monthly income of $2,300, but she’s pleased for that adjustment and is still in negotiations with the bank. ‘I’m happy that I’m going to stay here,’ said Mitchell in an appearance on 97.3 KIRO FM’s Ross and Burbank Show.”

KOMO News on Washington. “A group of protestors successfully disrupted the weekly real estate auction held in King County. The weekly foreclosure auction at the King County administration building started at 10 a.m. as usual, but then protestors began shouting during the bidding process. The grassroots group ‘Our Washington’ is demanding a moratorium on all foreclosures. ‘We’re protesting the auction,’ said Marliza Melzer. ‘We don’t want the people to be able to buy our homes.’”

“Real estate broker Darin Silva says he can’t help the person who missed payments, but he says he can help their neighbors, fixing up empty, rundown homes to increase property values. ‘The people who have lived in these houses, sometimes for two years without paying their mortgage I think it’s about time to start re-contributing to the economy.’”

The Yakima Herald in Washington. “Bob and Mary Vandegraaf had been looking at The Lofts, but never put in an offer because they felt the prices were too high. But the Granger couple felt they got a good deal Saturday with their winning bid for a nearly 1,800-square-foot, two-bedroom unit during a fast-paced auction of the unsold downtown Yakima condos.”

“Seattle developer Gary Bodenstab and local developer Joe Morrier spent more than $10 million to renovate the former Bon Marche store into condos, a project that was to usher in high-end urban living, which many say is a key component to downtown revitalization. “But more than two years after the project was completed, more than half of the 22 units were still vacant.

“About 50 people showed up for the auction, which was reportedly lower than organizers anticipated. Still, 10 of the 15 vacant condos were successfully auctioned off. Five units were not put up for live auction. Starting prices for the units ranged from $85,000 to $195,000, well below the $318,000 to $618,000 developers asked for when the The Lofts opened in January 2009.”

“The Vandegraafs said they got into a bidding war for their first choice with another prospective buyer who was participating by proxy from Juneau, Alaska. But ultimately they won. The couple did not reveal the price of their winning bid, as all bids are still subject to approval by The Lofts developers. ‘It was a bit higher than we wanted, but it was pretty much in the range,’ Mary Vandegraaf said.”

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The Hartford Courant reports from Connecticut. “More tenants in Connecticut are stretching to meet their monthly rent payments as the drop in the state’s median household income hit renters particularly hard, according to a new report. The prolonged period of high unemployment in Connecticut has increased demand for apartments as more residents opt to rent rather than buy, even though home prices have slid. ‘While income fell, Connecticut’s ‘housing wage’ — the wage needed to afford the rent for a typical two-bedroom apartment — was the sixth highest in the nation,’ according to the ‘HousingCT2011.’ ‘The state’s housing wage of $23.37 an hour equates to nearly $49,000 annually, an average wage level that nearly half the state’s occupations fail to reach.’”

From StateImpact. “Periodically, StateImpact New Hampshire likes to check in with the Boston Fed. We stumbled onto this deceptively dry-titled little gem of a report by Robert Clifford: ‘State Foreclosure Prevention Efforts in New England: Mediation and Assistance.’ Of all six New England states, Clifford found that Connecticut has been the most successful at preventing foreclosure. Connecticut now funds two major financial assistance programs with millions of dollars from state coffers. By the end of January this year, 9,472 homeowners had completed mediation. About 79 percent of them somehow ‘avoided foreclosure.’”

“Kennedy Lidonde, who lives in Woodstock, started working with Neighborhood Assistance Corp. of America, or NACA, a nonprofit housing advocacy group, even before he came to the XL Center. Unlike many borrowers seeking help, Lidonde wasn’t behind on his mortgage payments. But he was in danger of missing a payment after he lost his job as a supervisor at a college in Worcester, Mass., and was forced to take a lower-paying job as a car salesman. His wife works as a clerk at the same college where he once did, but it wasn’t enough to make ends meet.”

“‘I thought, ‘How am I going to keep coming up with $2,400 for the mortgage,’ on top of credit card, food and utility bills, Lidonde said. ‘It all started piling up.’”

“Bank of America offered to drop Lidonde’s mortgage rate from 5.89 percent to 3 percent, cutting his monthly payment to $1,600 on his four-bedroom, Cape Cod-style house near a lake. The payment comprises principal, interest, plus escrow for taxes and homeowners insurance. While the monthly payment is lower, the term of the mortgage will stretch from 30 to 40 years, Lidonde said. It’s going to take a little longer, Lidonde said. ‘It’s going to be like starting over, but it’s a relief.’”

Westport Now in Connecticut. “The latest Case-Shiller report is out and shows that U.S. home prices are up 0.2 percent in August, making it the fifth consecutive month of gains for the real estate market. Our region is in the New York MSA , and with an index level of 169.19, it is the third highest in the nation, behind Washington D.C. and Los Angeles, respectively. The index references a starting point of January 2000 which equals 100.”

“Current year-to-date figures as per our MLS system, show an average sales price of $1,353,420. There are 332 single family homes actively on the market. Their average list price is $2,123,410, and these homes have been listed for sale an average of 140 days. The median price has risen slightly to $1,346,500. Almost 38 percent of the homes available for sale in town have are listed between $1 million and $1.5 million.”

“The highest asking price for all homes currently on the market is $24,950,000, and the lowest available priced home is $380,000. As reported in an earlier column, our average sale price is down about 3 percent overall. We still have the remainder of the year to catch up on that very minor decline, and ‘break even,’ so to speak, and we have a good opportunity to do that.”

The Boston Globe in Massachusetts. “A startling 78 percent of Massachusetts real estate agents polled by HomeGain ’strongly disapprove’ of the Obama’s performance. Banker & Tradesman column delves into the HomeGain poll numbers. It is by far the highest level of discontent among real estate agents in any major state, including other liberal bastions such as New York, New Jersey and California, according to the survey by the online real estate site.”

“And Obama’s plunging poll numbers among Realtors points to a much bigger problem when it comes to the president’s reelection hopes - a muddled housing strategy that took an already a messed up housing market and made it worse. ‘It’s the lack of any meaningful recovery in the housing market, in spite of expensive Obama signature programs,’ that has disillusioned so many Realtors, notes Louis Cammarosano, a HomeGain spokesman. ‘Generally, it’s the realization that hope and change don’t pay the bills.’”

The Worchester Business Journal in Massachusetts. “A recent change in federal mortgage lending limits could affect Worcester County more than other areas of the United States, according to a study. Homebuyers looking for a single-family home in the county have $100,000 less to work with starting this month if they pursue a Federal Housing Administration mortgage. FHA loans have become more widely used in the wake of the 2008 economic crash that caused some private lenders to exit the market, according to several area real estate professionals and federal data.”

“Perception is important, and Kevin Maher, managing partner at Emerson Realtors in Auburn, said consumers will see declining FHA limits as a sign the market is going down rather than up, which could remove any sense of urgency they have to buy. ‘It’s just one more negative thing you’re going to hear about,’ Maher said. ‘We’re dealing with enough structural issues in the real estate economy today.’”

The Patriot Ledger in Massachusetts. “Price declines could be leveling off after a downward market that’s afflicted many Massachusetts towns for at least five years. Rick Coughlin, a real estate agent in Weymouth, said prices could still decline in some towns by a modest percentage, but he doesn’t expect any more big drops. ‘The worst of the storm is over,’ Coughlin said. ‘The people who are buying their homes today, five years from now, they’re going to look back and say, ‘Thank goodness I did.’”

“Interest rates are at historic lows. However, agents say that many potential buyers aren’t able to take advantage of those rates. Buyers are having a harder time getting qualified for loans after lenders tightened their standards following the 2008 mortgage meltdown. ‘The lenders have so many restrictions and requirements for people to get money,’ said. ‘They’re overcompensating for what happened before.’”

“But Coughlin said the low interest rates are, at least, having a positive effect by simply preventing values from falling further. ‘If interest rates were still around 5 percent, things would be a lot worse than they are,’ he said.”

From City Limits in New York. “How is developer Forest City Ratner fulfilling its ambitious promises of jobs, affordable housing, local/minority contracting, and more at its controversial Atlantic Yards project in Brooklyn? There’s no housing yet, of course.”

“Forest City’s Atlantic Yards web site offers no current information about jobs, but it does present dubious claims like: ‘Atlantic Yards will be an economic engine for Brooklyn, New York City and the State, generating more than $5 billion in new tax revenues over the next 30 years. In addition to tax benefits, the project will also create thousands of new jobs: upwards of 17,000 construction related jobs and up to 8,000 permanent jobs.’”

“In June 2005, New York City Mayor Mike Bloomberg prominently signed the Atlantic Yards CBA as a witness. In a scene captured in the recent documentary Battle for Brooklyn, Bloomberg commented condescendingly, ‘You have Bruce Ratner’s word. That should be enough for you.’”

The New York Observer. “Get those elbows out and ball point pens ready, New Yorkers! One57, the giant condo tower giving new meaning to the term ‘high rise,’ has already begun selling units. Although the building’s developer, Extell, will open an official sales office in the coming weeks, foreign investors have already started sealing deals in the building, The Real Deal reports.”

“Entering the luxury condo’s website, a message appears on the screen: ‘NOT ONLY DO YOU LIVE AT THE CENTER OF THE UNIVERSE… YOU OVERLOOK IT.’”

“The building ain’t cheap, either. According to The Real Deal, one bedrooms on low floors are going for $3,400 per square foot. Two penthouses atop the tower are supposedly priced at $98 million a pop. How many Yuan is that?”

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