The Housing Bubble

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It’s Friday desk clearing time for this blogger. “Builders are putting up new homes in 33 different communities in the Boulder Valley, said Veronica Precella, chief executive of the Boulder Area Realtor Association. Anthem Highlands homes ranging from 1,900 square feet to 3,200 square are expected to sell for $300,000 to $550,000, said Robyn Asbury, director of sales at Richmond American. The Candelas neighborhood going up in Arvada will feature 4,800-square-foot homes in the $600,000 to $800,000 range, Asbury said. Calmante homes are expected to sell in the ‘low 500s’. Overlook town homes are expected to sell for the ‘high 300s to the low 400s,’ said aul Gortzig, director of sales. ‘We want to price (Calmante and Overlook) in line with what the market is asking for,’ Gortzig said.”

“‘Our homebuyers are finding slim inventories,’ Precella said. ‘Now we’re going to add 20,000 houses to the market.’”

“The supply of homes for sale in the San Fernando Valley increased 21.3 percent from a year earlier in October, but the bump in inventory did little to move the market, the Southland Regional Association of Realtors said. Last month, sales of previously owned houses fell 18 percent to 521 properties, from 635 a year earlier. Sales rose 3.4 percent from 504 in September. The median house price increased 22.4 percent, to $465,000 from $380,000 a year ago, and fell 10.6 percent from $520,000 in October.”

“‘Buyers must accept that deep discount prices are gone, and sellers who ask too high a price will see diminished activity and possibly no multiple offers,’ said Jim Link, the association’s CEO.”

“Across Portland, hundreds of homes—one expert says it could be as many as 1,000—sit vacant in foreclosure limbo. In many cases, the absentee lender doesn’t maintain them, the city isn’t monitoring them, and squatters are moving in. It’s a strange problem to plague a city where vacancy rates are at all-time lows and home prices are soaring. ‘We identified early on that this was going to be the fallout from a massive foreclosure crisis,’ says Angela Martin, executive director of Economic Fairness Oregon. ‘The city wouldn’t have to police it if the owners were taking responsibility. But that hasn’t happened.’”

“Real estate agents say the big cash investors who took over the Las Vegas housing market last year are now leaving. ‘They made their money and right now they’re dumping their product right now, and that is why there is more inventory available,’ Omar Lopez with Cosmopolitan Real Estate said. ‘Now with the inventory going higher, we’re going to see builders offering great incentives.’”

“Julia Lau, a leading Vancouver real estate agent, told me this year that 80 per cent of buyers were mainlanders. Compared to Hong Kong, roiled by talk of locusts and Chinese hot money, there’s been little backlash or even discussion about this phenomenon in Vancouver. Dr David Ley, a geographer at the University of British Columbia, said Chinese migration was ‘undoubtedly’ a driving force at the top end of the market in premier districts. Ley said he was surprised there had been no ‘political pushback’ against the effect that various Canadian immigration schemes had had on Vancouver’s property market.”

“For instance, under the popular investor-class scheme, visas are granted to foreign millionaires prepared to loan C$800,000 to a provincial Canadian government interest-free for five years. Such schemes have attracted 36,892 rich immigrants to British Columbia over the past eight years, of whom 66 per cent were mainland Chinese. With Hongkongers and Taiwanese included, the proportion from China rose to 81 per cent. Nearly all of these millionaire households have settled in Metro Vancouver. The investor visa scheme is so popular that the government last year froze new applications to deal with a backlog.”

“Chinese interest in Australian residential property is booming, with chief executive of McGrath Estate Agents John McGrath describing it as the biggest surge from an offshore market in his 30 years in real estate. ‘In some suburbs 90 per cent of new product will sell to Chinese buyers,’ he said.”

“The most infamous example of absentee owners is the £1.2 billion One Hyde Park development, which was dubbed ‘London’s Mary Celeste’ after it emerged only three of its 85 apartments were used as full-time homes. Shadow housing spokesman Emma Reynolds said too many homes were becoming money-making schemes for rich foreigners who have no intention of living in London. ‘Ideally we would like to stop altogether people using London homes as piggy banks for the world’s wealthy,’ she said. ‘There is a housing crisis in London yet there are about 50,000 empty homes.’”

“While politicians glibly talk about housing the people of New Zealand in new, cheap and cheerful residences that won’t tear bank accounts to shreds, the key thing that’s easy to overlook is the attitude of the construction industry itself. Therefore the latest Ministry of Business, Innovation and Employment (MBIE) report on the construction sector provides some thought-provoking reading.”

“‘Twice as much income for the same amount of work’. In fact one said ‘I never accept any commission for a house under a million dollars.’ Then there is the ‘chief executive of a building firm’ who said that their main driver was providing return for shareholders ‘and we don’t build low cost, affordable homes because they are unprofitable.’ Then there’s another architect: ‘Why would a builder who does three houses a year build a couple of low cost houses? Spend equal amount of time at it…There could be a profit, a modest profit. But it’s too modest and too risky.’”

“Mumbai’s residential property market is in ‘dire circumstances,’ says Knight Frank. The unsold stock of homes in Mumbai has reached 130,000 units and developers have been delaying new launches to focus on selling the existing inventory. To that end, developers have been reducing prices by up to 25 per cent, particularly in the premium segment, it says. ‘Widely believed to be in the midst of an asset price bubble, the cash-strapped Indian real estate landscape today is rife with escalating unsold inventory levels,’ the report said.”

“Norway is moving closer to easing mortgage lending standards as the nation’s deflating property market prompts concern among lawmakers that existing regulations are too tight. Real estate prices, which have doubled over the past decade and touched a record high this year, are now dropping faster than the central bank had predicted. ‘It’s a rather hard landing,’ said Erik Bruce, senior economist at Nordea.”

“Last week, Janet Yellen was asked at her confirmation hearing if the Fed’s unprecedented run of accommodative monetary policies might be leading to a bubble in asset prices. Yellen would do well to acknowledge that the Fed’s current policies may not be working as well as they should. In the immediate aftermath of the financial crisis, quantitative easing made sense as an emergency measure. The emergency is over now, but the practice continues. The most obvious beneficiaries of the Fed’s policies are those who own stocks and other assets: among them, the one per cent of Americans who received ninety-five per cent of the income gains between 2009 and 2012. Despite Yellen’s opinion, there are signs that an asset bubble may indeed be forming: rising home prices, stocks, and subprime car loans among them.”

“Thomas Hoenig, the former head of the Kansas City Fed, who had long voted against interest-rate cuts, explained the current challenge succinctly in the film ‘Money For Nothing: Inside the Federal Reserve’: ‘The United States has consumed more than it’s produced, systematically, for at least a decade. What country, in history, ask yourself, can do that indefinitely, forever?’”

A Turkey Day report from Forbes. “According to the American Farm Bureau, the price of a Thanksgiving dinner for 10 is actually 44 cents less than last year. Affordable food prices represent good news for American consumers as we start the holiday season. Adding to the good news for home owners, housing prices are up about 6% across the country. Many Americans will feel a little bit wealthier this holiday season as their biggest asset has appreciated and costs – for Turkey at least – stay low.”

“Ironically, falling prices are exactly what central bankers around the world are trying to avoid. The immediate focus is on keeping rates low to stimulate the economy, increase growth and reduce unemployment.”

“Using prices for chicken as a stand-in for turkey, I compared prices for cities around the country. There is clearly a huge difference in the prices that families will pay for their Thanksgiving dinner across the country. These changes show differences in cost of living between cities. Many of the cities that have had high annual home price appreciation also had high prices for chicken. Prospective homebuyers in these areas may feel the opposite side of the wealth effect, as both housing and food are increasing rapidly at the same time.”

New York Magazine. “Your family’s conversation at Thanksgiving dinner will probably begin with fairly innocent topics, and move on to slightly more serious ones. But the overwhelming odds are that, sometime between the second helping of turkey and the pumpkin pie, someone at your Thanksgiving table will bring it up: the economy. Lucky for you, when your Uncle Chad (and it’s always Uncle Chad) starts talking about the stock market, the deficit, or Ben Bernanke’s money-printing machine, these handy talking points will help.”

“The subject: Quantitative easing (”QE”). The one-minute summary: Since the financial crisis, the Federal Reserve (the money-think place in Washington) has been boosting the economy by buying a lot of stuff from banks. That program is called quantitative easing. It’s been pushing stock markets to all-time highs, and it’s made a lot of people on Wall Street very rich. It’s probably going to end soon.”

“What Uncle Chad will say: ‘The markets are addicted to easy money, and Ben Bernanke just keeps printing, printing, printing. We’re going to get massive inflation and the dollar will become worthless. You’ll see, it’ll be the Weimar Republic all over again.’ Is he wrong? Yes. There has been no significant inflation since the end of the financial crisis, despite the dire warnings of Bernanke haters. And while QE hasn’t worked perfectly, it’s helped keep unemployment from rising to Depression-era levels.”

“Say this to end the argument: ‘You know, Uncle Chad, you’re right. The dollar is being totally debased by all this reckless money printing. Hey, how’s your gold fund doing these days?’”

“The subject: Wall Street greed. The one-minute summary: Wall Street banks break the law sometimes, and are generally greedy. What Uncle Chad will say: ‘If Eric Holder and his cronies actually did their job, all these crooks would be in jail.’”

“Is he wrong? Not totally. There was a lot of bad behavior on Wall Street this year. (As in every other year.) But this has been a historic year in terms of punishing Wall Street misdeeds. Eric Holder wrung a $13 billion settlement out of JPMorgan Chase for mortgage fraud – the largest corporate settlement in history. Hedge funds are pleading guilty to insider trading. And while it’s true that no major bank executives went to jail over the financial crisis, the new chair of the SEC, Mary Jo White, is taking a tougher approach to busting financial crimes than her predecessors.”

“Say this to end the argument: ‘Unfortunately for Eric Holder, it’s not against the law to be stupid.’”

The Housing Bubble Blog on November 26, 2008. From the comments, “Comment by 2banana 2008-11-26. ‘I am buying with three small kids (so flame away). However, it is either cash or credit card that will be paid in full when the January bill comes in. I can not understand people who go into debt for Christmas and take 5-6 months to pay it off (and I do know people like that).’

“Also - something we all do as a family is ‘buy’ gifts from the Samaritans Purse (like a well or medical supplies for a village). It is very interesting what the kids ‘buy’ with their own money. Sometimes it is very surprising (like they use all their money they saved for other things for this). Maybe that is the best present of all.”

“Comment by Olympiagal, 2008-11-26.

‘I can not understand people who go into debt for Christmas and take 5-6 months to pay it off (and I do know people like that).’”

“I know people like that, too. Crazy, innit? But HERE’S even a worser and crazier thing: a few years ago I worked with a girl who was getting a divorce after 3 years of marriage and, get this, part of the terms they were arguing over was who had to keep paying off the bills for their…wedding. Huh? Huh?
Wow.”

“Comment by Olympiagal, 2008-11-26. ‘Tell us about your newborn, Muggy. Is it cute? Are you training it to be a good future HBBer? Can it say ‘Mama, dadda, loan-to-value ratio’, and stuff like that?’”

“Comment by Olympiagal, 2008-11-26. ‘I come from a giant clan of exuberant Christmas-lovers. And I do mean ‘giant’; I’m from Mormon Land, also known as Utarr, and they take that advice from Sweet Baby Jeebus to ‘multiply and replenish the earth’ seriously. Lessee, I’ve got 67 cousins on my dad’s side. I forget how many on my mom’s side. I don’t pay attention to that side anyhow, as them’s boring. They all still have all their fingers, no scars, and few jail-house and/or homemade tattoos, for instance. And, for some reason, most of them have grown up to be dentists. Odd. I think that’s odd. Don’t you guys think that’s odd?’”

“‘I mean, that’s a lot of dentists. I bothered to show up to one of their reunions and everyone was peering inside each other’s heads.
Outta there!”

“My point is: we love Christmas! Christmas! Christmas! *sits up straight and emits a mighty whoop from the festive Olylungs*”

“And yes, that would be first cousins. And ’bout near every single one of us has got mighty lungs, a translucent hide, a fondness for misbehaving and for trees, and a desire to see what happens if you poke something, anything, who cares what it is, with a stick. These would appear to be what Mendel termed ‘dominant traits’.”

“Hahahaha! That seems funny to me, for some reason.”

“Ahhhh, family… I can’t wait to see them all. And to argue with them all. Maybe I’ll argue alphabetically this year. I suspicion I missed a few arguments last year, in the hurly-burly.”

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The Union Tribune reports from California. “With the number of service veterans who choose to call San Diego home, their use of financing from the U.S. Department of Veterans Affairs play a huge role in the local housing market. Many veterans can take advantage of financing from Veterans Affairs to obtain their dream home in San Diego. Michael Deery, mortgage specialist with Citywide Financial Corp., noted that VA loans are the only program that allows 100 percent financing in any area. He also shared that many lenders may have easier qualifying and credit guidelines for veterans.”

“‘Most VA lenders only need a 620 credit score to offer 100 percent VA financing,’ said Deery. ‘We can also give a VA buyer a 3 percent lender credit to cover all their closing costs.’”

“For veterans buying in San Diego, the VA offers 100 percent financing on homes up to $500,000. VA loans of more than $500,000 are available but require a downpayment. Deery noted that it’s a good idea for a veteran to submit a personal letter with his or her purchase offer to tell the seller why they want to buy the property. ‘Some sellers will take great pleasure in having the opportunity to help our veteran families,’ said Deery.”

The Modesto Bee. “Even with the tougher lending requirements, there have been plenty of eager buyers in Stanislaus. ‘This past spring and summer was the craziest real estate market I’ve ever seen,’ said Bob Brazeal, who has been selling homes for 33 years. ‘Real estate values in our Valley dropped too low. As values firmed and started to rise, the investors came out of the woodwork. Local and Bay Area all-cash investors bought 50 and 100 homes at a time.’”

“Brazeal said fairly priced Stanislaus properties were getting a dozen or more purchase offers within a week of being listed for sale. ‘Now the market is catching its breath,’ Brazeal said. ‘We still have a lack of inventory, but it’s nowhere near as bad as it was.’”

The Sacramento Bee. “The tail end of the housing bust brought a frenzy of real estate investors to the Sacramento region, including multi-billion-dollar hedge funds. Now that the dust has settled, investors own about 80,000, or roughly one in four, detached, single-family homes in Sacramento County, according to a Bee review of parcel data from the county assessor’s office.”

“Investors have effectively taken over the real estate market in several economically depressed neighborhoods. In south and central Oak Park for instance, investors own about 55 percent of single-family, detached homes.”

From NBC News. “At a brand new housing development in Irvine, Calif., some of America’s largest home builders are back at work after a crippling housing crash. Lennar, Pulte, K Hovnanian, Ryland to name a few. It’s a rebirth for U.S. construction, while the customers are largely Chinese. ‘They see the market here still has room for appreciation,’ said Irvine-area real estate agent Kinney Yong. ‘What’s driving them over here is that they have this cash, and they want to park it somewhere or invest somewhere.’”

“Brian Yang, speaking from his home in China, said he purchased a home in Irvine this year, but he will wait five years, until his daughter turns 10, before moving his family to the U.S. He has several reasons for taking the leap. ‘Education in America is very good and world class, so the first one is for education, and I think the second one is for the property appreciation,’ explained Yang.”

“Yang and many of his colleagues, are also concerned about China’s political instability, inflation, even pollution. They are paying all-cash for real estate in California, using it as a safe-haven for their wealth. Yang was reluctant to talk about the money, but he admitted, ‘I feel the same way to some extent.’”

“The homes range from the mid-$700,000s to well over $1 million. Cash is king, and there is a seemingly limitless amount. ‘The price doesn’t matter, $800,000, 1 million, 1.5. If they like it they will purchase it,’ said Helen Zhang of Tarbell Realtors.”

As our CNBC camera crew interviewed Zhang, another group of potential buyers roaming the neighborhood models raised their brochures to hide their faces when they saw the camera. While no one would say specifically why certain families were shying away from the media, some alluded to the fact that many of the buyers don’t want any questions about where the cash is coming from.”

From Tom Dispatch. “Since the buying frenzy began, no company has picked up more houses than the Blackstone Group, the largest private equity firm in the world. In neighborhoods across the country, many residents didn’t have to know what Blackstone was to realize that things were going seriously wrong.”

“Last year, Mark Alston, a real estate broker in Los Angeles, began noticing something strange happening. Home prices were rising. And they were rising fast — up 20% between October 2012 and the same month this year. In a normal market, rising home prices would mean increased demand from homebuyers. But here was the unnerving thing: the homeownership rate was dropping, the first sign for Alston that the market was somehow out of whack.”

“The second sign was the buyers themselves. ‘I went two years without selling to a black family, and that wasn’t for lack of trying,’ says Alston, whose business is concentrated in inner-city neighborhoods where the majority of residents are African American and Hispanic. Instead, all his buyers — every last one of them — were besuited businessmen. And weirder yet, they were all paying in cash.”

“It’s also paved the way for the company to purchase a lot of homes very quickly, shocking local markets and driving prices up in a way that pushes even more families out of the game. ‘You can’t compete with a company that’s betting on speculative future value when they’re playing with cash,’ says Alston. ‘It’s almost like they planned this.’”

The San Francisco Chronicle. “In April 2012, I wrote a column about taking my eight-months-pregnant sister on Muni and the rudeness she encountered. Just one well-mannered rider out of dozens offered to give up his seat. Now, my sister is having an even more quintessential San Francisco experience: leaving.”

“No, it’s not because of that disappointing Muni experiment. It’s because my nephew, James, is getting too big for the closet his crib is wedged into in their one-bedroom Lower Pacific Heights apartment. Because rents and housing prices are increasingly out of reach unless your paycheck is signed by Twitter or Google.”

“And because in San Rafael, she and her husband are in escrow on a four-bedroom house with a nice backyard, a wrap-around deck with views of Mount Tamalpais and the guarantee that James will enter kindergarten at a top-notch, nearby public school. And they’re getting all this for the price of $376 per square foot.”

“In San Francisco, the closest match to that price is in the Bayview, where homes are selling for $361 per square foot, according to Patrick Carlisle at Paragon Real Estate Group. Homes in more traditionally desirable neighborhoods for families might as well be on the moon for my sister, a fifth-grade public-school teacher in Marin, and her husband, an accountant. The Marina? $1,074 per square foot. Noe Valley? $955. Cole Valley? $937.”

“My sister lives on California Street, barely in District 2 and a stone’s throw from District 5. The supervisors of those districts - Mark Farrell and London Breed - grew up in the city and intend to stay. But they lament that so many of their childhood friends have left.”

“Breed grew up in public housing in the Western Addition, where children were plentiful. Just two of those childhood friends remain in the city. The 39-year-old said she wants to have children, but can barely afford living here on her own - even on a supervisor’s salary of about $107,000 a year. ‘I miss what real diversity is,’ said Breed, who is African American, a group that has seen huge numbers of families leave. ‘Real diversity is families. Real diversity is kids outside playing and hanging out. Real diversity is poor people, rich people, middle-class people. Everyone feels the difference in San Francisco now.’”

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A report from Michigan Live. “Another real estate report, another big jump for metro Detroit home selling prices. The October RE/MAX National Housing Report says that of the 52 largest metro areas surveyed, Detroit had the largest rise in median selling prices with an increase of 45 percent. ‘What we’re seeing now are predictable seasonal cycles, which is just another sign that the housing recovery is bringing us back to a more normal market,’ Margaret Kelly, RE/MAX CEO, says in the latest report. ‘Home sales are expected to slow down during the holidays and winter months before returning to the next growth cycle in the spring.’”

The Grand Rapids Business Journal in Michigan. “The latest Grand Rapids Association of Realtors data showed the average West Michigan home sold for $155,648 in September, a dramatic 12 percent increase from the previous September. The number of transactions also was up in September, by almost 14 percent from the same month last year.”

“‘If you list something today and you price it right, it’s going to go. I can give you story after story after story. One that I heard yesterday is somebody put a (for sale) sign in the yard and somebody pulled up in their car and said, ‘I want to see it now’ and then wrote an offer,’ said Julie Rietberg, GRAR CEO. ‘It’s like the market we had way back. We haven’t seen this kind of market for years. I’m going to say it’s almost too much too fast.’”

The Chicago Tribune in Illinois. “Dana and Jim Metz recently moved into a new house after looking for three years. They were motivated by low mortgage rates, finding the right property in their price range and discovering that they had to make a fast decision. During their lengthy search, they found that there is a severe lack of inventory, and a buyer’s market had turned into a seller’s market. As a result, they had to make a quick decision because of competition from other buyers.”

“‘Five days after we first saw Lexington Place, seven of the nine homes had been sold,’ Dana said. Under pressure, they immediately decided to buy a 3,600-square-foot plan with five bedrooms — one of them for their baby daughter.”

From Chicago Mag in Illinois. “Q: Dennis, I was hoping you could offer some advice on the sale of our condo. It is a 2Bd/2Ba that my wife and I purchased in October ’06 for $410,000. We are trying to make the move to the suburbs but are having a hard time finding a buyer. We have lowered our ask from $420,000 (aggressive) down to $350,000, which is where the last two sales in our sister building [next door] were. My question is: do you have any tips on marketing or anything else for high-end ground units?”

“A: Aside from the fall slowdown in the market, there are a few other things that might be working against you, Justin. But you didn’t ask what’s wrong; you asked how to market the property. My first suggestion is always price, because a good price will always bring in potential buyers. So first, I would determine how much farther you can cut it. The neighboring units sold when the market was a little frothier; you might need to get a little lower than they were. Not a ton, just a smidge. Buyers might then bid it back up.”

From Chicago Business. “Chicago had 33,902 vacant homes at midyear, up 22 percent from the end of 2010, according to DePaul University’s Institute for Housing Studies. In some census tracts in South Side neighborhoods such as Englewood and Back of the Yards, 1 in 6 homes is vacant. Vacancies in suburban Cook County have jumped 79 percent since the end of 2010, to 21,479 homes at midyear. In one census tract in Harvey, the vacancy rate is 17 percent, while it topped 16 percent in a tract that includes parts of Chicago Heights, Steger, Ford Heights and Sauk Village.”

“More than 17 percent, or 12,856, of all Chicago-area homes in the foreclosure process are ‘zombies,’ properties that have been vacated but have yet to be repossessed by lenders, according to RealtyTrac. Compounding the problem, it takes an average of 828 days—more than two years—for a home to go through foreclosure in Illinois, the fourth-longest among all 50 states.”

“A turn down its side streets in Washington Park, Englewood, West Englewood and Back of the Yards reveals the impact of decades of poverty and neglect, compounded by the housing crash. Blocks with a half-dozen board-ups or more are common. Sitting in between many are vacant lots, often overgrown and strewn with garbage. ‘Look at that poor person trying to sell that house. I mean, are you kidding me?’ says Cook County Commissioner Bridget Gainer, pointing out a small frame house listed for $29,900.”

The Columbus Dispatch. in Ohio. “After roaring back from the dead, the housing market appears to be quieting down. Home sales declined in central Ohio and throughout the nation in October. Experts attribute the low inventory level of the past year to several things, including homeowners nervous about moving up after the housing crisis or being unable to sell because they owe more than their home is worth.”

“One expert says that rising prices contributed more to the sales decline than did a low inventory. ‘Prices have reached a point where buying a house isn’t the great deal it was 18 month ago, so fewer people are buying,’ said Richard Green, director of the Lusk Center for Real Estate at the University of Southern California.”

From WOSU in Ohio. “The Central Ohio real estate market has seen its ups and downs over the past 10 years. Prices peaked seven years ago, then plummeted when the housing bubble burst. Now sales and prices are on the rise – raising fears of another bubble. One area of concern: foreclosed properties still left over from the recession. Bank repossessions in the Columbus metro area have nearly doubled this year. Those properties soon will be for sale.”

“RealtyTrac’s VP Daren Blomquist worries about a potential bubble caused by outside investors who may overpay for the foreclosed properties. ‘It could be creating a sort of a bubble. It’s not the same sort of bubble that we saw in the last housing boom and bust where that bubble was facilitated by loose lending…This is a totally different phenomenon in many ways,’ Blomquist said. ‘But it could be pushing prices up to higher than they really should be.’”

From KCRG on Iowa. “Mayoral challenger Greg Hughes is losing his house to foreclosure and a sheriff’s sale. The light blue-colored, two-story where Hughes has lived since boyhood, will be sold to satisfy debts at a Linn County Sheriff’s sale on Dec. 10. Hughes called the move to let his house go a ’strategic’ one designed, in part, so he does not have to pay two people back to whom he owes money, he said. As for the possibility of a bank losing money on his house or his debts, Hughes said, ‘We don’t feel sorry for the banks. Look at the bailouts they got. … They have insurance for this kind of stuff.’”

“Hughes said he’s likely to rent an apartment after the December sheriff’s sale of his house, which he said he’s lived in for 47 of his 56 years. Hughes said he’s ‘not ashamed’ of the foreclosure of his house now and of his bankruptcy a year ago. ‘I just did what I had to do,’ he said. ‘… Just like anybody else.’”

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The Boston Globe reports on Massachusetts. “If you really want that house, grab a pen and start pouring your heart out to the seller. And, above all, don’t forget to gush. Shed that New England reserve and let it all tumble out about how you will cherish the seller’s house long after they have moved on to that retirement community in Arizona. Apparently, your closing argument should paint an idyllic vision of you and your family sitting by the fire in the seller’s house, forever grateful to the generous, wise, and bountiful sellers who gave you the keys to this paradise.”

“OK, I am only half serious here. Still gushing seems to be a prerequisite if you want to write one of these letters, at least based on the advice being doled out on the many real estate websites out there. Nearly 30 percent of all winning bids by Boston-area buyers included a ‘cover letter’ or personal appeal to the seller, according to Redfin’s latest report on bidding wars in various metro markets across the country.”

“That’s down somewhat from the height of the spring market, when 41 percent of all winning buyers penned personal appeals.”

The Journal News in New York. “Dan Rivlin said when he and his wife saw a totally renovated move-in-ready house in New Rochelle they knew they had to act quickly. To get the house and move from a rental apartment in New York City, their offer included a handwritten note to the owner saying this house was where they wanted to begin their family. The couple recently closed on the updated 4-bedroom home. ‘I did get nervous that we would lose this one and then we wouldn’t find the right house,’ he said.”

From Bloomberg. “Toll Bros. has room to raise prices on its houses as the real estate market extends its recovery, CEO Douglas Yearley Jr. said. Buyers are purchasing properties ’sight unseen’ in New York and demand is strong on the coasts, in Texas and in suburban Detroit, Yearley said. ‘We have plenty of room’ to raise prices, Yearley said. ‘I think 2014 is going to be a great year.’”

CBS New York. “A startling trend is happening in some of our area’s most ritzy communities — a foreclosure wave is affecting an income bracket that may surprise you. A Rockland couple asked that their identity remain concealed. They are now in the middle a foreclosure battle with their bank. When the husband lost his job, the couple got behind on payments. Even with his new job, they now owe $780,000 on their home, which is worth just $500,000.”

“‘You just feel like you’re this horrible person, that you have this dark, deep secret and you want to be able to talk to somebody about it. But you feel that you would get shunned upon,’ the wife told CBS 2’s Janelle Burrell. ‘It’s kind of like an embarrassment. How did it get here? How did I end up in this situation? What did we do to deserve this?’ the husband added.”

“Their attorney, Linda Tirelli, said she has been so inundated with foreclosures; they are now the only cases she handles. ‘The flood gates are starting to open,’ she said. ‘More and more people are underemployed and simply not making the same salaries they were making before,’ Tirelli said.”

“Real estate experts say even in upscale communities like Scarsdale, on average 1 in every 7 homes is in foreclosure.”

Aljazeera America on New Jersey. “Paulette McQueen, 60, and her mother Lavinia Curry, 86, have lived in this narrow, two-story house on Garwood Place since 2003. ‘My mother always dreamed of having a home,’ said McQueen. But since 2010 their home has been a source of consternation as much as pride. ‘We were one month behind, and I took [two payments] to Wells Fargo the next month,’ McQueen said. ‘They told me they wouldn’t accept it. Ever since then, they’re harassing my mother. They want me to sell her house.’

“At a press conference on Saturday, Irvington Mayor Wayne Smith announced the township’s plan to ‘take’ and revalue foreclosed homes at market rates for the public’s benefit, using the legal doctrine of ‘eminent domain.’ Should the plan move forward, Irvington could become the first municipality to seize and re-mortgage foreclosed properties. ‘When you hear (‘eminent domain’), you usually think of people being talked out of their homes (for corporate development), but what we’re trying to do is recast it so that people can stay in their homes,’ Smith said.”

“From credit cards to home loans, banks have targeted low-income people of color for toxic products, according to the non-profit group New Jersey Communities United. In Irvington, whose population is 85 percent African American, consumer issues resonate in racial-justice terms.”

“‘They know we’re poor, and they’re taking advantage of us,’ said McQueen. ‘The neighborhood we live in, nobody gives a damn because it’s black, Spanish, Haitian and Jamaican. They put us in situations where, at the time, it’s presentable, but when we go to talk to them, they aren’t willing to help.’”

The Providence Journal in Rhode Island. “After nearly five years of trying to avoid foreclosure and get a mortgage loan modification, Paul Patnaude is ready to let go. Patnaude is living alone at the Cape Cod-style house he bought in 2004. Until June, it was also the home of his wife and their three children, ages 10, 8 and 3. Patnaude and his wife, who are getting divorced, recently settled their foreclosure-challenge case with Bank of America. Theirs is one of the 1,123 cases that have been handled in the U.S. District Court in Providence, as part of Judge John J. McConnell Jr.’s foreclosure mediation docket.”

“For $10,000, which they will split evenly, the Patnaudes will give their house to the bank, and their debt of about $300,000 will be erased.”

“In 2004 the Patnaudes paid $400,000 for their house, putting down $90,000, and paying $13,000 in closing costs. Patnaude said the down payment money came from the sale of his house in Lincoln, which he bought when he was single. In 2004, Patnaude’s 17-year-old home-improvement company was doing well, and the monthly house payments of about $2,200 seemed manageable for the two-income family. By 2008, however, the faltering economy had hurt Patnaude’s business so much that he was having trouble paying the mortgage.”

“Although he made no payments on the house for more than two years, Patnaude said he began paying $760 a month after Sherman began to administer the federal court’s foreclosure mediation program. Sherman instituted monthly ‘use and occupancy’ payments, based in part on the home’s current market value. In August 2011, McConnell issued a stay preventing foreclosures and evictions in pending foreclosure cases. The use and occupancy collections were halted in September, following an appeals court ruling that effectively required McConnell to remove that stay.”

“Today, Patnaude is working for a local painting company, and he is preparing to move out of the house. The latest statement he received from Bank of America said that $2,414.77 was due on Nov. 1 and that he was $103,131.84 behind in payments, and $30,735.36 behind in escrow payments. The loan balance was $302,407.93. The loan was a conventional, 30-year mortgage with an interest rate of 5.65 percent. But Patnaude will soon be rid of all that debt, along with the house.”

“Patnaude said he’ll probably stay with a relative for a while before starting over in a new place of his own. ‘I fought the fight …, ‘ he said, but ‘I’m letting it go. Too much has happened.’”

Post off-topic ideas, links, and Craigslist finds here.

A poster suggested this for the weekend topic. “What constitutes a ‘healthy’ housing market seems to differ wildly depending on whose lens you see the world through. Examples:

Broker: Healthy = lots of sales
Individual without liquidity: Healthy = low mortgage standards
Individual with liquidity: Healthy = low prices
Banker: Healthy = few mortgage defaults
Builder: Healthy = strong demand for new homes

What is a ‘healthy’ housing market?”

Go Local Worchester. “Central Massachusetts has recently seen greater stability and improvement in the housing market — and now home values are beginning to rise after remaining stagnant over the past few years. The region has not seen two consecutive periods of positive indexing since the last two quarters of 2006. The index saw record lows in 2008, during a time of worldwide economic decline, but a slow and steady climb upwards has finally net positive results.”

“‘You definitely see it moving in the right direction,’ said Michael Barbara of Real Living Barbara Associates in Worcester. ‘Central Massachusetts has seen an increase in transaction volume, and a slight stabilization of home prices.’”

“‘This year we’ve seen Baby Boomers on the move, and they are doing what we call ‘right-sizing’,’ said Erika Hall of Keller Williams Realty in Worcester, ‘who are looking to move out of a large family home now that they have two or three empty bedrooms and are paying to heat a much larger house than they need.’”

“With a number of ‘boomerang children’ of Generation Y moving back in with their parents after college, a greater number of larger homes will be on the market in the coming year. ‘A new construction trend we’ve seen this year is multi-generational homes with in-law suites,’ said Hall, ‘We are not sure who will be absorbing these homes already on the market.’”

Culture Map Houston. “Houston’s existing home sales broke more records in October, as the city’s strong economy and low mortgage rates extended a phenomenal run for real estate. Houston realty veteran Martha Turner said one of her Memorial-area listings, a townhome priced at $995,000, drew offers from 11 bidders. ‘It’s never been like this before,’ says Turner. ‘There’s not a part of the city that’s not doing well.’”

“Lower inventory drives up home prices and creates bidding wars between buyers. Buyers must be nimble and be prepared to offer all-cash or be prepared to close quickly. Sellers are dictating the terms in this market. Prices are going up.”

The San Francisco Bay Guardian. “San Francisco’s Housing Element, a study of housing needs mandated by state law to ensure that cities are addressing their affordable housing obligations, called for the city to build 31,193 housing units from 2007-2014. Partially as a result of the 2008 financial meltdown, San Francisco fell far short of that goal, with just 11,130 units getting permitted, most of those market-rate units.”

“But that was enough to meet 60.6 percent of the projected need for serving those earning 120 percent of area median income and above, whereas the city entitled just 360 units for moderate income San Franciscans — 5.3 percent of the projected need — and 3,313 units for low-income (80 percent of AMI and below), or 27.3 percent of the need.”

“So it isn’t that San Francisco is facing a ‘housing crisis,’ as Housing Action Coalition and others often proclaim, it’s that the city is facing an affordable housing crisis driven by not building enough below-market-rate housing and allowing real estate speculators to cannibalize the city’s rent-controlled housing.”

“The trend in what’s being built in San Francisco and what those units are going for only increases the pressure on tenants in rent-controlled apartments, who are now being displaced at rates not seen since the last dot-com bubble, both through evictions and buy-outs. Contrary to the supply-and-demand arguments made by pro-development cheerleaders, there’s no evidence that the housing supply now being built is doing anything to help most San Franciscans.”

“‘Trickle down theory is going to f*ck San Francisco, it’s not going to help it,’ said Peter Cohen, a housing activist who also works for the San Francisco Council of Community Housing Organizations.”