The Housing Bubble

Reuters reports on California. “Home sales in the San Francisco Bay area rose nearly 39 percent in October from a year earlier and the median home price posted a record fall, a report on Thursday said. The median price paid for all homes in the region fell to $375,000 in October, down 40.6 percent from a year earlier, as the median price fell for an 11th consecutive month on a year-over-year basis. The median price was down 6.3 percent from September, MDA DataQuick said.”

“In October, 44.8 percent of all existing homes sold in the San Francisco Bay area had been foreclosed on at some point in the prior 12 months, up from 41.9 percent in the prior month and 8.2 percent a year ago, according to MDA DataQuick.”

“‘The dramatic, near free-fall in the Bay Area’s median sale price in recent months stems mainly from the shift toward more sales occurring in lower-cost inland markets. At the same time, the role of foreclosures continued to grow across the region, adding more downward pressure to the median,’ John Walsh, MDA DataQuick president, said in a statement.”

The Mercury News. “More Santa Clara County homes changed hands last month than during ultra-slow October 2007, but median prices fell sharply compared to last year. Previously foreclosed properties accounted for more than one-third of sales in the county. The median price of the houses sold last month was $515,250, down 34 percent from a year earlier, according to MDA DataQuick.”

“In San Mateo County, the median price of resale houses fell 26 percent last month, to $642,500,. In Alameda County, resale house prices dropped 39 percent, to $380,000. Contra Costa County’s median house price plunged 49 percent, to $275,000.”

The Marin Independent Journal. “Marin’s median price for all homes was $599,750, down 31.5 percent from the $857,000 median a year ago. The median price of a single-family home in Marin last month was $850,000, down 13 percent from $978,000 last year, MDA DataQuick of San Diego reported Thursday.”

“The San Francisco 49ers, San Jose Earthquakes and Oakland A’s, all of which hope to open new homes worth a combined $1.5 billion by 2012, insist they are forging ahead. But the economy is raising tough questions about where all that money will come from, and when. Lew Wolff, the multimillionaire developer who owns both the Quakes and the A’s, has told the Mercury News he’s no longer planning to immediately fund his projects — in San Jose and Fremont, respectively — with proceeds from planned residential developments.”

“Wolff has asked the city’s permission to allow residential construction on the site; he would then sell it to housing developers and use the profits to build the stadium. Now Wolff finds himself waiting for the housing market to rebound. ‘If this was a typical recession, then I don’t think it would be a big factor,’ Fremont Mayor Bob Wasserman said of the economy. ‘But we’re talking about something different.’ If the residential piece of the project lags, he fears, the stadium itself could be delayed.”

Palo Alto Online. “Developer John McNellis’ decade-long quest to replace the boarded-up Alma Plaza shopping center with a grocery store, 37 homes, a commercial building with 14 below-market-rate apartments and a ‘community room’ may stretch into a second decade.”

“‘Financing a mixed-use project is historically difficult,’ McNellis said. ‘We’ll be seeking to finance these projects separately. There are lenders who will consider low-income housing and there are other lenders who will consider commercial.’”

The Merced Sun Star. “At one of the city’s abandoned … er … I mean … temporarily vacated home developments, the builder has left a half-built wall that seems to attract spray paint cans like the Raiders attract tailgaters. I’ve received many calls about the graffiti problem in this area, but it wasn’t until I saw it with my own eyes Saturday that I realized how bad it had gotten.”

“The would-be home of Highland Park, which has halted development, is apparently the home of a nest of taggers that have littered the massive wall with their ‘art.’ The city is already in negotiations with Pacific Pride of Modesto, the company in control of the property. City of Merced spokesman Mike Conway says the city wants the company to fix the problem and prevent it in the future.”

“‘We want them to include landscaping and water so that you have something growing on it,’ said Conway. ‘No fresh canvas for all of those vandals to attack.’”

The Bakersfield Californian. “An Oregon man finally got a look at his elderly mother’s northeast Bakersfield house Wednesday, a day or two after people who had been living there without his consent vacated the property. A refrigerator was gone. Graffiti was spray painted throughout the garage and scribbled on a bedroom wall in permanent marker. A rear window was smashed, and holes marred several walls. Air duct vents had been removed. The carpet was stained in every room.”

“And a few furniture pieces that don’t belong to Harold Pretorius’ mother were scattered about, including, oddly, a pool table in the driveway. ‘They only left me a couple of balls and no cues, so I can’t even play while I wait for the police,’ Pretorius said wryly.”

“Pretorius recently moved his 89-year-old mother to a nursing home near him and was overseeing the sale of her house. In September, Pretorius called police and told them squatters had broken in and threatened a pending sale.”

“When police went to the home last month to investigate, they found Michael Ayala living there with a girlfriend, a roommate and the roommate’s 8-year-old son. Pretorius had his attorney serve Ayala and his friends with an ejection notice two weeks ago, and then cut off water and electrical power, which had been in his mother’s name. Pretorius then put a fraud alert on the accounts, preventing anyone but him from turning on service.”

“Next, Pretorius reported Ayala to the city’s Division of Code Enforcement for residing in a home without power or water. ‘That is a violation because without electricity we worry about people lighting candles and burning down the place, and no water becomes a health and sanitation issue because you can’t flush toilets,’ said chief code enforcement officer Randy Fidler.”

“Ayala and his roommates did not leave after a 48-hour warning was posted on the house last week, so an inspector red-tagged it, notifying occupants that anyone found residing there would be cited with a misdemeanor safety violation until utilities were restored.”

“Pretorius said he feels violated and powerless. His buyer has walked away, and now he has to spend thousands of dollars on repairs. ‘I can’t believe they called this a civil matter,’ he said. ‘If stealing a house from an 89-year-old woman isn’t a crime, I don’t know what is.’”

“Will Lehman Brothers get to foreclose on McAllister Ranch? A federal bankruptcy judge in Santa Ana is slated to decide the thorny question Thursday afternoon. A foreclosure would wipe out claims of junior creditors and unpaid construction companies owed hundreds of millions.”

“There’s a new big-name player in the ongoing involuntary bankruptcy case: Lennar Homes. The homebuilder’s California division put down about $22.6 million of deposits in 2006 for purchase agreements regarding McAllister Ranch, but the deals never closed. Lennar now believes its deposit money may have been transferred to Lehman’s commercial paper unit, a recent court filing shows.”

“SunCal Cos., the Irvine developer that partnered with Lehman on numerous projects including McAllister, recently filed five more involuntary bankruptcy petitions for Lehman-related projects. Twenty Lehman-SunCal developments are now in bankruptcy court.”

“The latest filings affect high-rise condos in Century City, the Delta Coves waterfront development on Bethel Island, Avalon Palm Springs near Palm Springs, Oak Knoll in Oakland and the early-stage Del Amo project in Torrance. SunCal also filed three voluntary bankruptcy petitions Wednesday.”

The Tribune. “A top state banking official Wednesday reiterated what others have said about the nation’s economy — that the next 18 months to two years will require considerable belt-tightening, ‘and it’s going to hurt.’”

“And as the recovery occurs, the stock market will have to ‘come back to reality’ and housing prices will have to return to a level that’s compatible with what people earn, said Jim Lokey, president of community banking for Rabobank, N.A., who’s also chairman of the California Bankers Association.”

“Lokey also said he wouldn’t shy away from investing in real estate. ‘If you plan on living in it a while, I wouldn’t be afraid to buy a house today or get a mortgage today,’ he said.”

“Lokey also used the forum to offer his personal explanation for how and why the nation’s economy fell on hard times. He pointed out two culprits in the financial collapse: banks generating home equity loans, which homeowners tapped into to make major purchases; and exotic mortgage products that allowed people to buy more house than they could afford. In this ‘consumer-driven’ economy, people were encouraged to spend far more than they earned, he said.’

“‘Those loans were something I didn’t believe banks should do,’ he said. ‘Home equity was your security; you just didn’t tap into that.’”

“But the final straw, he said, was subprime lending that enabled financial institutions to take the risk and make loans to people with less-than-stellar credit. The subprime loans were packaged as mortgage-backed securities and sold to investors hoping for higher returns.”

“‘Everyone knew that real estate goes up 25 percent a year,’ Lokey said, pointing to the fallacy of that statement. As the economy slowed, some homeowners stopped paying their mortgages and banks worldwide stopped lending to each other. And ‘the people at the highest levels of government panicked,’ he said.”

The Orange County Register. “There’s a sense of urgency in Yadira Gomez’s voice as she outlines the crises facing the families she helps at the Share Our Selves, a social service agency in Costa Mesa. Two to three families a day walk into the nonprofit’s crowded waiting room facing essentially identical situations: The interests rates on their home loans have skyrocketed, their mortgage bill has doubled or tripled, and their home is slipping into foreclosure.”

“Across the county this fall, nonprofits and government agencies have been overwhelmed by this new population of clients. Mortgage brokers, real estate agents, construction CEOs: these are the types of clients that SOS doctors, nurse practitioners and volunteers are helping, says Karen Harrington, director of development. Often, the clients are in shock over their situation. ”

“‘There are a lot more conversations in exam rooms of ‘I’d never think that I would be here.’ It’s not what you typically expect to see,’ said Harrington.”

The Press Enterprise. “The notice on the door of Robin Elder’s upscale consignment store — a picture of a turkey and the phrase ‘I’m stuffed’ — is a sign of the times. Good times for resale. ”

“A bad economy equals a boost in business for consignment shops, say owners, who report a marked increase in customers looking for bargains. They’re also seeing a jump in the number of people wanting to exchange their old clothes for cash. ‘More people are bringing things in to sell. I have so much,’ said Elder, owner of My Girlfriend’s Closet in Temecula. Thus the sign on her door.”

“More people are willing to take an instant payout — basically ‘garage sale’ prices — for their Coach bags and True Religion jeans, she said.”

“The trend is not limited to the Inland area, said Adele Meyer, executive director of the National Association of Retail and Thrift Shops. A recent survey of the trade group’s 1,000 members showed that 66 percent of stores saw sales climb between January and August, compared with the same period a year before. Sales were up an average of 35 percent.”

“More than 85 percent of stores said the number of new customers has increased, and 75 percent have seen new people bringing in merchandise to sell, Meyer said.”

“Mary Irey, owner of New 2 You in Grand Terrace, (has) noticed an uptick in new shoppers looking for big-ticket items such as appliances, furniture and cookware. Irey gets some of her merchandise from auctions of moving and storage units that are abandoned, and she figures some of it has to do with the rash of foreclosures.”

“Rhonda Sher, of Murrieta, is a consignment aficionado, seeking out ‘upscale and bling,’ like the one-of-a-kind, hand-painted Saks jacket she scored for $49, worth hundreds at retail. Some of her favorite detours are Sparkle Plenty Resale Boutique in Oceanside and the annual white elephant sale at the Oakland Museum of California. ‘In this market, it’s just a fabulous way to shop,’ she said.”

“Sher also frequents Ronni’s Resale in Sun City, where a $1,000 St. John knit can be had for $160. Clothes are marked down regularly until they make their way out the door after 60 days, owner Ronni Kantra-Peters said. ‘If it’s been in a lady’s closet for more than a year, we’re not interested’ in buying, she said.”

The Desert Sun. “Coachella Valley home sales during the third quarter of 2008 jumped 51.5 percent compared to 2007, driven predominately by buyers nabbing foreclosures and other distressed properties. Average prices are down as banks try to clear out the rising number of foreclosures and other sellers try to compete with the deals offered on distressed properties.”

“‘It’s creating new market-level prices and competition,’said Patrick Veling, president of Brea-based Real Data Strategies. ‘Traditional sellers can agree to meet or beat (bank prices) or simply wait it out.’”

“The bulk of homes sold are going for less than $500,000, a price point that traditionally has been described as the entry-level market. In 2007, homes priced under $500,000 made up 68 percent of all local sales. In the third quarter of 2008, they accounted for nearly 85 percent.”

“In many cities where sales are up, the total volume of sales — the value of all the sold homes’ prices — is on par or even less than years where they saw fewer sales. Take the 92240 ZIP code of Desert Hot Springs. In third quarter 2006, 176 entry-level homes were sold equating to nearly $50.1 million in sales. Compare that to third quarter 2008, when 220 homes were sold — a 25 percent increase — but average prices have dropped about $150,000. Total sales equated to $29.5 million.”

“Experts say not all those are traditional entry-level homes. Some are move-up or upscale homes that have seen dramatic price reductions in order to draw buyers. ‘You’re seeing condos with a ‘1′ in front of it instead of a ‘2,’ Palm Springs Regional Association of Realtors executive officer Sam Schenkl said. ‘You’re getting a second chance at a home that may have been priced out of your reach.’”

“Kevin Stern has witnessed the market shift firsthand. The Rancho Mirage-based Windermere agent does a lot of business in Cathedral City. ‘Some of these homes that are selling in the 200 or $300,0000 range were selling for 4, 5, $600,000,’ said Stern, who wrote three offers this weekend including one for a foreclosure that had nine offers. ‘They’re priced extremely competitively and aggressively. It’s all a matter of pricing and products.’”

The Sun Sentinel reports from Florida. “A typical used home in Broward and Palm Beach counties now sells for less than $295,000, a price not seen here since spring 2004, according to the most recent data from the Florida Association of Realtors. Distressed properties fetch far less than that. Many existing condominium units, meanwhile, are going for under $140,000, nearly 40 percent less than two years ago. Age-restricted communities are seeing growing interest in one-bedroom condos selling for less than $50,000, real estate agents say.”

“Rebecca DiLenge’s only concern was in not buying. She and two roommates were renting an apartment in Pembroke Pines for $1,700 a month. But with home prices falling, DiLenge figured she could buy a home for as much as she was paying in rent. She was drawn to a two-bedroom condo in Weston listed for $165,000. She got it for $129,000.”

“‘Ideally, I wanted to wait a little longer before I decided to buy a home,’ said DiLenge, 25, a personal vacation planner for Carnival Cruise Lines. ‘But with prices so low now, it would have been foolish.’”

“Frank Ginder and his wife Susan Bleda, paid $170,000 for a one-bedroom Midtown condo originally priced at $279,900. Ginder and Bleda, who rent out their home in Wellington, planned to get a mortgage for the condo, but their California lender, IndyMac, failed this summer. Faced with the prospect of losing the Midtown deal or paying cash, Ginder and Bleda chose the latter.”

“‘To me, this couldn’t be a better time to buy real estate, if you believe in an area and the product and the builder,’ Ginder said. ‘Real estate has always been a good long-term investment.’”

The Herald Tribune. “When it comes to financial collapse, Sarasota real estate investor R. Craig Adams has few peers. Adams, who specialized in building waterfront mega-mansions during the boom, has defaulted on nine loans totaling $11.9 million since May. His former wife, Holly Adams, who divorced Adams in 2007, filed for Chapter 7 federal bankruptcy protection in January, listing $22.4 million in debts and only $3.9 million in assets.”

“Holly Adams said the bankruptcy was needed because her name appeared on most of the loans that her husband secured during his long real estate investment career. But that does not mean she knew a lot about her husband’s transactions. ‘I was a stay-at-home mom,’ Holly Adams said. ‘He said, ‘Sign here, sign here,’ and I signed.’”

“In (a) deal that involved sales to and from associates, long-time Adams business associate, Charles Scott Abel, bought a condominium unit on Siesta Key for $380,000 in June 2001 and financed the deal with $380,000 in loans from Bank of America. Abel sold the condo to Adams in April 2002 for $425,000 and Adams received $390,000 in loans from Impac Funding and AmSouth Bank.”

“Adams refinanced his initial loan in 2005 with $588,750 in loans from Opteum Financial Services and BB&T Bank, ultimately selling the condo to his sister’s brother-in-law, David Andrew Strickland, in June 2006 for $694,000. Strickland’s wife, Julie, said the deal was the worst investment decision she and her husband have ever made.”

“‘Craig is a hell of a salesman,’ Julie Strickland said. ‘The way he presented it, it was the greatest condo deal of all time. It was oceanfront property we could buy and pay for by renting it out. But this property has been our downfall. Our credit is ruined.’”

“Washington Mutual seized the condo in April after winning a $552,841 foreclosure judgment.”

“‘Craig’s biggest mistake was that he started doing big $5 million spec houses,’ said Richard Dear, a Siesta Key real estate investor who bought several properties from Adams over the years. ‘That’s when he ran into trouble.’”

“A curious thing happened in early September. After a long time in the darkness, the Southwest Florida real estate market finally began to show signs of life. But the housing crisis triggered a financial crisis, a credit meltdown and an overall economic tailspin that transformed the playing field in a matter of days and weeks.”

“For the Sarasota-Bradenton real estate market, the optimism evaporated. ‘We had people in here looking to buy. There had been a lot of activity. But as soon as the economy tanked, it was like somebody turned the water off,’ said Sherwin Taradash, a Michael Saunders & Co. agent based in Lakewood Ranch.”

“‘Trend lines and rules of thumb do well under normal circumstances, but now we have so many complex variables at work in the marketplace,’ said Jack McCabe, a Fort Lauderdale-based real estate analyst who correctly predicted the housing downturn before it began. ‘No one really knows where this thing is going.’”

The Beacon Online. “Volusia County’s unemployment rate is higher than national and state averages, and home-loan defaults are rising locally. Economic Development Director Rick Michael briefed the County Council on the local economy, noting Volusia has just over 258,000 people employed or able to work, and about 18,000 of them do not have jobs.”

“Perhaps to no one’s surprise, home construction has fallen to about half of the almost $145 million value for the July-September period of 2007. The slowdown in home building is related to the steep increase in foreclosures. The Clerk of the Court’s Office shows there were 4,195 foreclosures in Volusia County in 2007, and the number of homes repossessed in the first nine months of 2008 totals 5,679. ”

“Of those 5,679, only 739 have been sold, leaving a glut of houses on the market and driving the prices of many of them lower. ‘It’s a serious concern to us. It represents about 8 percent of our housing stock,’ Michael said.”

“County Manager James Dinneen recalled stories from Ohio and other Northern states, describing ‘people freezing to death in the streets of cities.’ ‘We’re getting to the point where, if all else fails, you turn to the county,’ he said. ‘How do we avoid the train wreck we know is coming?’”

‘Alluding to the barrage of gloomy economic news, Dinneen added he needs the council’s help to prepare a contingency plan in case ‘the bottom falls out.’”

The Palm Beach Post. “An analysis of the nation’s market for new homes from Metrostudy: ‘There are hundreds of housing markets, and each is on a different trajectory,’ said Brad Hunter, Metrostudy’s chief economist and national director of consulting. ‘Some markets never experienced a price boom, and are therefore having a less severe bust, but they are all suffering badly.’”

“Hunter’s comments came as the Commerce Department reported that construction of new homes and apartments fell 4.5 percent in October, the fourth straight monthly decline. Construction sank to an annual rate of 791,000 units from an upwardly revised September rate of 828,000 units. The results were the lowest on government records dating back to January 1959. Previously, the slowest pace had been in January 1991.”

“‘Naples/Fort Myers starts in subdivisions are off 92 percent from the peak, as of the end of the third quarter of 2008. Phoenix new-home construction is off 75 percent from the peak, while Atlanta is off 84 percent,’ Hunter said.”

“Austin (off 49 percent) and Raleigh (off 57 percent) never had a price bubble, and it is remarkable that they are down as far as they are, Hunter said. ‘Finished, vacant inventories are actually coming down, but they remain too high in most markets,’ he said. ‘The markets that have the most serious problems are Central Florida, with 8.9 months of finished, vacant home inventory, South Florida, with 8.3 months, Atlanta, with 8.1 months, and Coastal Los Angeles and Naples/Ft. Myers, each with 8 months.’”

“These readings are all far in excess of the ‘equilibrium’ level of 1.5 to 2.5 months that is typical in a normal market, Hunter said.”

“A Delray Beach man on trial for mortgage fraud used his position as a real estate closing agent to help others land more than $5 million in fraudulent loans, a federal prosecutor told jurors Monday in Fort Lauderdale federal court.”

“Howard Gaines smoothed the way for a Coral Springs con man to use straw buyers and forged documents to purchase dozens of Broward County properties, prosecutor Jeffrey Kay said in opening statements. That man, Anthony Dehaney, pleaded guilty last month to mortgage fraud charges and is expected to testify for the government at Gaines’ trial.”

“Federal authorities have touted the case as part of a crackdown on mortgage fraud. Since September 2007, federal prosecutors have charged more than 110 individuals in cases involving nearly $200 million in loans, according to the U.S. Attorney’s Office.”

The News Press. “The median price of an existing Lee County single-family home sold with the help of a Realtor was $147,800, down 39 percent from $243,800 in the third quarter of 2007. Sales increased 73 percent from 1,273 to 2,198 in the same period. At the peak of the real estate boom in the county, the median single-family home sold for $322,300, more than twice what it is now.”

“The trend of higher sales volume continued in October, said Steve Koffman, a real estate broker in Cape Coral. For example, off-water homes in Cape Coral sold for a median price of $105,000, down 5 percent from September, he said. Meanwhile, the number of off-water Cape homes sold was 337 in October, the highest monthly rate since 2004 except for September’s 349.”

“Some investors are buying up homes to rent them but many buyers are ‘people who can afford a house at $85,000 who couldn’t before,’ Koffman said.”

“People with good credit usually have no trouble getting financing but risk-sensitive bankers are turning down those with credit problems, he said. ‘If you’ve got questionable credit, you’re not going to get a loan, you’re just not.’”

The Orlando Sentinel. “Beleaguered developer Kevin Azzouz has sold his lavish lakefront mansion in Windermere for $8.25 million, according to a warranty deed recorded last week in Orange County. Azzouz bought the 22,000-square-foot, three-story home for $5.1 million in 1997, when he was riding high as a former dot-com millionaire looking to be a big-time land developer in west Orange County. The Orange County property appraiser estimates the cost of the building new would be $10.6 million.”

“Azzouz, who had ambitious plans to breathe new life into the MetroWest mixed-use development in west Orlando, is now scrambling to salvage what he can of the project, which has been slowed by the slump in condominium sales and the sour economy. Azzouz faces lawsuits, liens and foreclosures totaling more than $70 million connected to his half-built Veranda Park project in MetroWest. He did not return calls seeking comment.”

The Miami New Times. “When times get tough, the wealthy serve pigs-in-a-blanket at cocktail parties. Actually, those little bite-size wieners were the only hint of scaling back at a recent hoity-toity elbow-rubbing event at the Mar-a-Lago estate in Palm Beach. ”

“Members of the Hialeah-based Developers and Builders Alliance recently gathered at the estate to discuss fantasy architecture and how to get richer. Under enormous crystal chandeliers, they talked beachfront property in Costa Rica, shopping malls in Cairo, and, of course, how it’s just the right time to invest in South Florida.”

“‘All you have to do is observe the lifestyle we have here,’ Brickell-based developer Evangeline Gouletas gushed. ‘International buyers have been to the great cities of the world. You can’t buy land like this anywhere else.’”

“Gouletas has heard the economy is sagging. She chortled while recounting the tale of a housekeeper who bought a $5 million unit and then asked for her deposit back. If only Gouletas had a zillion dollars to bargain-shop in this ’soft’ real estate market!”

“Real estate consultant Michael Cannon, also of Miami, pooh-poohed all of those headlines about the weak housing market. ‘I’m guessing that only 25 percent of foreclosure filings actually end up in foreclosure sales.’”

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The LA Times reports from California. “The median sales price for homes in the region fell to $300,000 in October, a level not seen since 2003 and a 41% drop from the peak price set in the spring and summer of 2007, according to MDA DataQuick. Los Angeles County’s median home sales price was $355,000, down 29% from a year ago. Just a year ago, several market analysts interviewed by The Times predicted that Southern California home prices would drop 15% to 25% from their peak.”

“It took only until July for the median price to fall 25% below its 2007 peak of $505,000, and it has kept falling since. Those earlier forecasts proved off because ‘it was hard for people to get their arms around just how bad lending standards had gotten,’ said Thomas Davidoff, a UC Berkeley economist.”

“In October 2007, 16% of the homes sold in Southern California had been foreclosed, compared with 51% last month. The ripple effect from that put even more homeowners underwater — owing more on their homes than they were worth — and led to more foreclosures.”

“Now, ‘we’re probably seeing an over-correction’ in the most depressed inland areas, Davidoff said. In communities overrun by foreclosures, ‘you couldn’t build a house for less than what [existing homes] are selling for,’ he said.”

The Union Tribune. “San Diego’s prices have come down so much – off 37.5 percent from the peak in November 2005 – that the area ranks as only the 31st least affordable out of 222 markets surveyed. That’s the best showing since the builders began tracking affordability in 1991. Just four years ago, San Diego ranked as the least-affordable market nationally. MDA DataQuick reported yesterday that…prices dipped to a median $323,500, a number not seen in six years. Foreclosures made up nearly half of all resales, their highest proportion so far.”

“The National Association of Home Builders’ Housing Opportunity Index is based on how many homes of all types sold that are affordable to households earning the median income and at prevailing interest rates for both fixed-rate and adjustable-rate mortgages. While nearly 39 percent of San Diego homes sold were affordable in the third quarter, the New York City area was deemed the least affordable with only 10.6 percent of homes sold at a median $500,000 and within reach of the median-income household earning $63,000.”

“Four of the least-affordable markets were in California: San Luis Obispo, 13.4 percent; San Francisco, 16.6 percent; Los Angeles, 20.7 percent; and Napa, 23.2 percent.”

The Press Enterprise. “The median home price in Riverside County fell to $230,000 in October, a drop of $7,500 from September and a decline of 35.4 percent in the past 12 months. In San Bernardino County, the median price declined to $200,000 from $205,000 the previous month, but fell 39.4 percent from October 2007.”

“DataQuick analyst Andrew LePage said about 68 percent of Riverside County sales and 65 percent of San Bernardino County sales in October were foreclosure-related. Both counties were well above the 51 percent figure for Southern California as a whole.”

“Steve Johnson, a director in the Riverside office of MetroStudy, said bargain hunters and investors are currently drawn primarily to resale homes in older neighborhoods, sometimes being sold in the foreclosure process at up to 50 percent off their original list prices.”

“San Bernardino County plans to use $22.8 million in federal funds to help the local housing market get through the foreclosure crisis. About 42,000 homes in the county are now in foreclosure, said Mitch Slagerman, director of community development and housing for the county.”

The Ventura County Star. “Ventura County’s median sales price was $375,000, down 2.6 percent from $385,000 in September, but off 29.9 percent from $535,000 a year ago. Kay Wilson-Bolton, broker in Santa Paula…estimated that about 60 percent of the housing inventory countywide involves short sales or bank repossessions. ‘Those are the homes being offered at the most affordable prices,’ she said. ‘Now we’ve got mortgage payments bumping up against rent payments.’”

“People want homes and they can’t pass up a bargain, said Dennis Torres, executive director of real estate operations at Pepperdine University’s Graziadio School of Business and Management. ‘Yes, more and more people are being laid off, and those people can’t afford to buy a house,’ Torres said. ‘But the majority of people are working.’”

The Modesto Bee. “Great news: Home prices have fallen! At least that’s great news for people buying homes. New statistics show home affordability has soared in the Northern San Joaquin Valley. ‘About 90 percent of the loans we do in our office are for first-time home buyers,’ said Kim Arivett, owner of Residential Pacific Mortgage and president of the Mortgage Lenders Association of Stanislaus County.”

“‘The buyers are just absolutely thrilled to get their house keys,’ Arivett said. ‘It’s heartwarming for our staff because we know they really can afford these homes.’”

“But many workers in the region have lost jobs this year, and unemployment is rising. ‘Income numbers often lag,’ cautioned Dr. Stephen Endsley, a Modesto real estate investor. ‘It may look like we have housing affordability, but do we really consider unemployment? First-time buyers have to have confidence before they go out and buy, but many of them have questions about (the stability of) their employment.’”

“Endsley said nearly 11 percent of Stanislaus’ workers are officially out of work, and he estimated an additional 4 percent are underemployed and another 4 percent have become discouraged and dropped out of the job market. But home prices have fallen so low, Endsley said, that ’speculative investors have come heavily back into the market.’”

The Press Democrat. “Falling home prices stoked Sonoma County’s hot housing market. Two out of three of the 512 homes sold in October were either bank-owned houses or properties unloaded by sellers who could no longer afford their mortgages. The drop in home values has sent the median price tumbling 42 percent from its record high in 2005, according to The Press Democrat monthly real estate report.”

“Agent Deke DeKay has a Healdsburg listing for $370,000 that is $205,000 below the price the owner paid two years ago. The owner must sell because monthly payments on his adjustable-rate loan are set to go higher and he will take less than he owes to avoid foreclosure. ‘Some of the buyer expectations are kind of unreasonable. People are just thinking the sellers will sell for anything,’ DeKay said. ‘This is severe.’”

The Sacramento Bee. “Gasoline prices have fallen $1 in a month and more than $2 since the all-time high in June. But motorists aren’t dancing. The effect of cheaper gas is being overwhelmed by the housing crash and the financial crisis. So-called ‘equity extractions’ in California – the dollars generated by home equity loans, refinancing or outright sales – have fallen by $41 billion this year, according to MDA DataQuick.”

“Not surprisingly, Californians aren’t suddenly reopening their wallets. ‘We’re doing the same things that we did when gas was almost $5,’ said Marty Walter of Orangevale during a stop at a Union 76 station in Roseville on Monday. ‘We’re getting into the pattern of saving – let’s not do anything unless we have to.’”

The San Francisco Chronicle. “Jing Hua Wu, the engineer who police say fatally shot three executives at a Santa Clara startup company last week just hours after being fired, spent the last few years amassing a large portfolio of investment properties. Records show that Wu and his wife went on a property-buying spree starting in 2004. From June to October 2005, they bought two rental homes and five vacant lots for $526,000 in Hot Springs Village.”

“The couple also bought at least five homes and six lots in Washington north of Portland, in the communities of Anderson Island, Vancouver and Ocean Shores. In California, they bought a modest home in Elk Grove and a bare lot near Lake Shastina in Siskiyou County.”

The Pine Tree. “Governor Arnold Schwarzenegger today launched Global Entrepreneurship Week at the first-ever Governor’s Conference on Small Business & Entrepreneurship. ‘The important thing also is that’s why we have a special session now where we deal with the unemployment rate, where we want to stimulate the economy. And where we also want to make sure that we keep people in their homes, because there are too many people that go through foreclosure. And I think that it is terrible to see the mistakes that were made by the lenders and also by the borrowers but that doesn’t help us to look back now at where the mistakes were made. The key thing now is to keep our people in their homes, which will also help our economy.’”

“‘I talked yesterday again to some builders and they are in a disastrous situation because a lot of homes are half-finished, people are not interested in buying it — even though those numbers are coming back right now of more and more people buying homes again because the prices are so low. But we really need to go and do everything we can to keep the people in their homes right now, so I hope that we solve this problem also in our special session.’”

“A proposed four-month foreclosure moratorium that would crank up the heat on lenders to rewrite more of California’s troubled mortgages downshifted to the slow lane Monday. Assemblyman Ted Lieu, D-Torrance, agreed to delay a committee vote on his plan to speed up the pace of loan modifications. Last week, he said he expected the committee and full Assembly to vote on it this week.”

“California Department of Corporations Commissioner Preston DuFauchard said the Schwarzenegger administration deliberately limited its moratorium proposal to 90 days. ‘We felt that over 100 days you’re probably sending a message that it’s OK to stop paying your mortgage, and we want to discourage that,’ he said.”

Dow Jones Newswire. “Historical evidence suggests that even when lenders modify mortgage terms for at-risk borrowers - cutting interest rates, principal or extending the loan’s life - a hefty portion of those borrowers default within a year or two anyway. Besides, in many cases with subprime loans, so many borrowers had so markedly inflated their income status, that even a vastly modified loan still won’t make it affordable for their true earnings.”

“According a 2007 Fitch Ratings report, 35% to 40% of borrowers default on their modified loans within 12-24 months. Research from Moody’s Investors Service and other firms have found similar, albeit bleaker, statistics.”

“Dr. Joseph Mason, a banking professor at Louisiana State University’s business school, cites research suggesting that borrowers substantially inflated their incomes in about 70% of loans. ‘If modifications are given to borrowers that are not well suited for homeownership in the long term,’ Mason writes in his report, ‘the loan modification only serves to delay the inevitable.’”

The Voice of San Diego. “San Diego plans to spend $9.4 million to help homebuyers purchase foreclosed homes, and buy foreclosed homes itself to rent out to low-income families, as part of a federal grant program intended to stabilize neighborhoods ravaged by foreclosure.”

“Those potential 122 houses that would be purchased with the help of grants represent about 2 percent of the 6,111 homes in the county that went through the entire foreclosure process between July 2007 and September 2008, according to the agency’s report.”

“Lynn Hastings, a local real estate broker who sits on the task force, said it seemed unlikely that a buyer’s offer would be accepted contingent on the money coming in from the government. She said the winning offers in neighborhoods where low-priced foreclosures are getting competitive are from buyers paying all cash or making a large down payment.”

“‘I’m not sure how the program matches the marketplace,’ she said.”

The Legal Newsline. “San Diego City Attorney Mike Aguirre will look for new ways to protect homeowners facing foreclosure despite losing a bitter re-election campaign on Nov. 4, he told Legal Newsline. Aguirre thought a populist campaign that reached out to minorities, the working class and faithful Democratic voters would be enough to win. He admitted being surprised by his defeat despite the obvious opposition.”

“‘I was not anticipating getting the s— kicked out of me in the election,’ Aguirre said. ‘I got it from every angle: North, South, East and West. I united people who never worked together before. Unfortunately, I united them against me.’”

“Despite the political setback, Aguirre said the enormity of the housing crisis and the problems within it will continue to motivate him as he returns to private practice. ‘People have no idea of the massiveness of the subprime problem,’ Aguirre said. ‘It became literally the financial highway that everyone rode on to create trillions of dollars.’”

The Santa Cruz Sentinel. “A new Web site created by the State Bar Association to help people facing foreclosure sounded promising. But after seeing what’s available for local residents, I was disappointed. There’s plenty of free information, but good luck finding free legal advice unless you’re over 60 or your family of four makes under $26,500. Which raises the question: How can a household income of $26,500 be enough to buy a home in Santa Cruz County?”

“It’s not as if Santa Cruz County has escaped the wave of foreclosure activity. So far this year, 1,557 default notices have been issued and 780 homes sold at foreclosure sales — double the numbers from a year ago.”

“About a dozen people showed up for a free workshop Friday. One woman related that she and her husband had been unable to pay their mortgage since he lost his construction job. Another man was looking for information relating to foreclosure on a mobile home.”

“An 84-year-old Aptos man was frustrated. ‘Unless I’m in default, no one will talk to me,’ he said. ‘It’s easier for me to buy another house than to stop a foreclosure.’”

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A report from Oregon Public Radio. “In the last several years high-end resort communities have sprung up across the West. But those destination resorts are suffering big time under the housing slump and credit crunch. Vast tracks of land sit idle without buyers. Resort club houses are ‘closing for the winter.’ And several developments are trying to fight off foreclosure. Charlotte McGinness is a Realtor for Zillah Lakes — a second-home development just east of Yakima, Washington. She’s eager to point out all the special features of this lake-side home she’s selling.”

“Still, owners of this resort have 650 homes to sell. So far, they’ve sold about 20. And many of those sales have been to McGinness’ own friends and family.”

“Charlotte McGinness: ‘I’m committed to it. Otherwise my dear mom wouldn’t be buying here if I didn’t think it was a good place to buy. And my sister wouldn’t be buying here if I didn’t think it was a good place to buy. And my boyfriend wouldn’t be buying here if I didn’t think it was a good place to buy.’”

“From Colorado to Oregon chalets stand empty, resort hotels are closing down and large developments are in jeopardy. These resorts were begun in happier times: Well-off Baby Boomers were looking for vacation homes. Getting credit was easy and there was a huge rush in real estate investment. Gregory Kolb is a resort development research analyst based in Colorado. He says the second-home market was oversaturated and now those once numerous buyers have gone away.”

“Gregory Kolb: ‘While there would have been demand two years ago, there isn’t any anymore. Because people who might have bought that stuff don’t qualify can’t get that lending so they can’t buy. And that’s where you see people left with this glut of development.’”

“Pronghorn Resort near Bend, Oregon has also laid-off people, closed its Bend sales office and reduced its winter operations. And Moonlight Basin Ranch in Montana is battling rumors of bankruptcy. Steve Robertson: ‘It’s the worst.’”

“That’s Steve Robertson, the developer of Illahee resort in Walla Walla. The project is now on hold, after millions of dollars were invested. Steve Robertson: ‘You would be silly to move forward in that environment building up additional financial obligations that there are no buyers for because there is no lending capacity at the bank level even if they wanted to buy your house, the banks not going to help them do it.’”

The Oregonian. “Consumers slapped shut their wallets in October, helping drive the unemployment rate to 7.3 percent in Oregon, which lost 14,100 jobs since September — the worst seasonally adjusted monthly decline since February 1981.”

“‘Consumers are going on strike,’ said Michael Parks, publisher of a Seattle-based economic bulletin. ‘It’s no wonder, because their housing prices are going down, their job security is eroding, and by the way, have you opened your 401K statement lately?’”

The Register Guard from Oregon. “Nothing about the past five months has been easy for Thomas Henderson. An assembly line worker at Monaco Coach Corp. in Coburg, the 39-year-old divorced father of three was among the temporary layoffs in June, leaving the family with no steady source of income to pay bills or the mortgage on their five-bedroom home in north Eugene.”

“Henderson held a garage sale, took in a boarder and accepted any job he could get — including one as a caller for a collection agency — one of the few booming businesses these days. ‘Try going home and having calls from people trying to do the same thing to you,’ he said, noting the irony.”

“‘I’m struggling — if the economy doesn’t shape up in the next six months or so, I don’t know if I’m going to be able to keep my house,’ Henderson said.”

From MarketWatch. “Faced with selling his house in a slow economy, George Tran decided to do something creative, while benefiting Habitat for Humanity, Best Friends Animal Shelter, and Citizens for Health at the same time. He is giving away his house in Oregon to the most worthy family via the Internet. Users are asked to pay a $19.95 registration fee to be in the running. Tell him why they should receive the house and have the Internet decide.”

“The story with the highest number of votes will receive the house (or $100,000) as a Christmas present. Proceeds above $300,000 will be donated. This is a first-of-its-kind giveaway as it uses the Internet to select the winner; prior contests are judged by the operator.”

“Tran said, ‘We bought the house in 2005 for $250,000, and had a horrible tenant that trashed the place. As a result, we spent $40,000 to renovate the place. We were told by our agent, Jody Draper, that it may take 11 months, or more, to sell in this market. As Internet marketers, my wife and I thought, why not use social media and see if we can give it away? We also want to make the offer relevant to more people as not everyone wants to move to Oregon, so we decided to award the winner with their choice of the house or $100,000 cash.’”

The Associated Press on Idaho. “It seemed like a no-brainer: build swanky homes around a Jack Nicklaus-designed golf course above scenic Lake Pend Oreille, all in the shadow of the Schweitzer Mountain ski area. But it turned into a nightmare for Sullivan Homes Idaho. The luxury builder recently went out of business after going an entire year without selling a single home despite being the ‘preferred builder’ at The Idaho Club.”

“The economic meltdown is having a special impact in the remote Idaho Panhandle, where construction of vacation and luxury retirement homes amid the lakes and mountains has made this one of the fastest growing regions in the country for the past decade. ‘In the last few weeks, the world’s changed quite a bit,’ said Mike Meldman of Gozzer Ranch, a 395-home development on nearby Lake Coeur d’Alene.”

“Kathryn Tacke, an analyst for the state Department of Labor, said about 200 real estate agents have recently left the business in the Coeur d’Alene area alone. In the Sun Valley area, the 421-unit Sweetwater Community has been suspended after 49 town homes were built and none were sold.”

“In some ways, the drop in stock prices is good for developers, because it drives investors into looking for harder assets like homes, Meldman said. ‘You are investing in family and able to enjoy it and use it and have a hard asset,’ Meldman said. ‘As long as you don’t have to sell the house, you are not going to lose value and it is not going to disappear on you.’”

From Local News 8 in Idaho. “Eastern Idaho’s housing market is flooded with homes, and buyers aren’t buying as much as they used to even though real estate agents say it’s more of buyer’s market. Sales have declined by about 30 to 40 percent for the months of September and October.”

“Most listing agents across the Snake River valley will put homes up for sale between November 17th to the 23rd. They plan to take a recommended 5 percent off the price of homes. It’s an effort to encourage nervous buyers.”

“If you’ve considered selling in today’s market, you might have run into some obstacles. ‘Sellers are having to do more, whether it’s be a little more aggressive on the price, whether it’s improving the condition to get it sold. You’re seeing more negotiation when the offers do come in,’ says Steven Taggart, a Broker in Idaho Falls.”

“Not all houses on the market are for sale. Stephanie Laird and her husband Ryan are the owners of a rental company in Rexburg. While the economy is hurting nearly every business across the nation, theirs seems to be thriving. Stephanie Laird said, ‘People can’t sell their home, so they turn to rent. People are renting like crazy because they can’t get mortgages.’”

“We’ve seen the signs in nearly every neighborhood, but as the economy continues to struggle, many home owners are looking for a way to hang on to their equity. The owner of Rentmaster in Idaho Falls is seeing an increase in not only his rentals, but the number of empty houses. Rentmaster owner Michael Baird said, ‘Usually there are more apartments, but now there are more empty homes.’”

“While a third of the nation rents, the economy could be pushing a different crowed towards the rental market. ‘We’re talking doctors, lawyers, it’s not just your average renters anymore’ explained Laird. ‘It’s people you would think would have money, and they’re renting.’”

The Daily News from Washington. “Cowlitz County’s housing market nose-dived in October, with homes sales and the median selling price down nearly 20 percent. The county’s median price was $159,500 last month, down from $195,000 in October 2007 and the lowest in three years, the Northwest MLS reported.”

“‘The real estate marketplace doesn’t have buyers in it,’ said Gerry Flaskerud, broker in Longview.”

“At the beginning of the month, Flaskerud’s agency took a bold step to attract buyers by cutting the prices of nearly half of their listed homes by 10 percent. Participation by sellers was strong, Flaskerud said. But buyers, frightened by news of collapsing investment banks, high unemployment and the erratic stock market, mostly stayed on the sidelines, he said.”

“‘It is psychological. It’s not that they don’t have credit or can’t get it. They’re not even thinking about trying to,’ Flaskerud said.”

“Longview developer Charles Blevins had big dreams of creating jobs, homes and profits. When a large bank loan fell through this year for a subdivision he was poised to build at the foot of Mount Solo, Blevins’ dreams died. The ripple effect of losing that loan caused his other business and real estate ventures to implode. He owes money to several local companies. If he can’t work out deals with his creditors, he may have to file for bankruptcy, Blevins said.”

“‘I lost everything,’ he said, citing losses that amount to millions of dollars.”

“‘It all snowballed so fast. I was throwing good money after bad left and right,’ Blevins said. ‘If I would have been smarter, in retrospect, I would have pulled the plug’ at the first sign of the market slowdown, he said.”

“Blevins couldn’t be reached for Sunday’s story. Neither city officials nor his former business partner knew where he was. City Development Director John Brickey said he assumed Blevins was abandoning the project because he hadn’t heard from him since the city approved it in November 2007. Yes, the project is kaput, Blevins confirmed. Blevins, who now lives in Vancouver, saw the article online and came to The Daily News office Thursday to explain what happened.”

“‘People need to know I didn’t just leave town and take the money,’ he said, adding that he wants to apologize to anyone in town who lost money as a result of his failed business ventures.”

“After the city approved the Mount Solo subdivision, Blevins said, he and his brother went to Cowlitz Bank and learned their loan for the development’s infrastructure had been cancelled. ‘After two years of making very high payments, we were obviously in the same boat as every other developer. So we had to put the brakes on everything,’ said Blevins, who had partnered on the deal with his half-brother and his wife. The lender who’d financed the partners’ purchase of the 77 acres at Mount Solo now owns the land, Blevins said.”

“In addition to the Mount Solo Project, Blevins was forced to sell his share of Park Place mall, a retail development he and another business partner built on Oregon Way. He’s lost his two rental homes, plus 10 acres of property on which he’d intended to build a house for himself. He no longer has a cell phone, and his Hummer SUV is for sale. ‘I’m just down to the basics,’ he said.”

“At heart, though, he’s a developer. And when the market improves, he hopes to return with a different approach — one where he’s not overexposed and overextended. This has been a lesson learned, Blevins said. ‘I have a Ph.D. in loss,’ he said.”

“Blevins, who once owned a mortgage company, is working on forming a non-profit organization to help victims of the mortgage crisis to repair their credit. ‘This economy is maybe a blessing in disguise because it makes people realize the power of savings and the power of being frugal,’ he said.”

The Sun Times reports from Illinois. “Home sales in Chicago fell 23 percent and the median price fell 4.5 percent in the third quarter from a year earlier, the Illinois Association of Realtors said Monday. Statewide, sales dropped 21.2 percent and prices fell 8.2 percent. ‘Clearly the housing market is still unsettled,’ said David Hanna, president of the Chicago Association of Realtors in a statement, adding the industry is looking to the new administration for direction in how to resolve ‘the overriding economic issues we face.’”

The Northwest Herald from Illinois. “In May 2004, Cary Bruce, a McHenry native, and his wife bought a small house in Round Lake Beach where they live with four children. They bought the house before Bruce lost his job as a union sheet metal worker. ‘We don’t answer the phone because we get 15 to 20 calls a day, and it’s all bill collectors,’ said Bruce, who notes that there isn’t a lot of work in sheet metal these days because of the housing slump. ‘We’re not quite in foreclosure yet, but we’re very, very, very close.’”

“McHenry County had 1,881 foreclosure case filings in the first 10 months of 2008, 332 more than in all of 2007. That rise comes after 2007 saw 1,549 foreclosures, a rise of 451 over 2006, according to statistics compiled by the McHenry County Circuit Clerk’s Office. McHenry County had 112,384 housing units, according to the 2006 census.”

“Not every foreclosure case filing results in foreclosure. But 90 percent to 95 percent of cases filed usually do, said McHenry County Judge Michael Caldwell, who handled foreclosure cases two days a week until September. In the vast majority of foreclosure cases, the property owners never appear in court to defend themselves, Sullivan said.”

“In March through August McHenry County had 1,065 foreclosure filings. Maybe 5 percent to 10 percent of the filings won’t end in a foreclosed home, Caldwell said. ‘Potentially what that means is 1,000 empty houses are going to hit the real estate market sometime in the next year,’ Caldwell said.”

“Bruce finds some comfort in knowing that he’s not alone. He hopes more banks are forced to renegotiate mortgages, still providing lenders a profit, if a little less than originally anticipated. ‘I’m not happy about it, but it does make me feel better that there’s many millions, millions, millions of people who are in this situation, and we can be heard,’ Bruce said.”

“Bill Carlander said he had to lay himself off work. ‘We’ve all seen this to some degree, but never like this,’ said Carlander, who has run Wauconda-based Carlander Drywall Contractors Inc. for almost 30 years.”

“According to the Illinois Department of Employment Security, construction lost 3,300 workers statewide in the month of September, the second largest loss since February 2007. This year, the section has shed 10,000 workers, the worst among all the industry sectors.”

“The housing slump hasn’t come as a complete shock for Carlander, who said his workload had taken dramatic cuts in the past few years. In 2006, his company worked on about 650 homes. In 2007, it was down to 350. ‘This year, we’ve done 15,’ Carlander said. ‘We only have one on the books to the end of the year.’”

“During the boom times, Jan Leider liked to take five vacations a year. Now, the president of Northwest Mortgage Services takes one. She is selling about half the number of mortgages that she did during the first half of the decade.”

“‘This is the worst I’ve ever seen it,’ said Leider, who has been in the mortgage business for 42 years. ‘Fewer people are applying for loans. They are worried about the economy; they don’t want bigger payments. People are staying put.’”

“Statewide, the number of Realtors is down about 18 percent since its peak. In 2006, the Illinois Association of Realtors had 63,683 members. The association now has 52,072 members, spokeswoman Mary Schaefer said. The housing market correction has created a ’survival of the fittest’ atmosphere within the industry, Coldwell Banker real estate agent Cathy Burley said.”

“The price of the homes that Re/Max Plaza real estate broker Elise Livingston is selling have dropped. Agents no longer can afford to take on obstinate clients or advertise homes that they feel are overpriced. ‘When I meet with a seller, I sit across from them and tell them the truth, which isn’t always easy,’ Livingston said.”

“Livingston said she even has turned away some sellers who couldn’t be realistic about setting a list price. Agents also have had to learn more about foreclosures, short-sales and housing auctions – things they rarely had to worry about in the past.”

“Gone are the days of easy money, stated-income loans, and other exotic lending packages, said Leider. ‘I’ve had to turn away more customers because they can’t afford what they want to buy,’ Leider said.”

“Other customers are being turned down by banks and other lending institutions. They simply fail to qualify for loans, either to buy, sell or refinance, Leider said.”

“Regardless of the gloomy reports, volatile stock market and uncertain future, all of the real estate agents, lenders and brokers contacted for this story agreed on one thing: Now is the time to buy. ‘What are you waiting for? It’s a great time to be a homeowner,’ Livingston said.”

The Naperville Sun from Illinois. “To rent or buy - that is the question. There was a time when the noble thing to do was save your money and buy a piece of the American Dream. Naperville-based real estate agents say there might not be a better time to buy than now. And, they add, if your individual profile is right, buying trumps renting every time.”

“‘First and foremost, Naperville is not the rest of the country,’ said Jim Freier, a broker with Re/Max Action. ‘We have a unique market here and property in DuPage County is selling.’”

“Al Scheiderer, a real estate agent working in Naperville says paying rent means giving away all that money as real cash. ‘If your rent is $2,000, that’s real money that you have to give away,’ he said. ‘There are some fantastic prices out there right now, and if people shop carefully without emotion, they can really get a bargain. Regardless of how the economy has been, it’s still always better to buy, as long as you aren’t looking to turn things over and make a quick re-sale.’”

“Jeff Stainer, a Naperville agent, said history has shown that both the stock market and home values are going to rebound and, if folks don’t buy now, ‘they’re destined to miss out on the bottom of the market.’”

“Courtney Tarpein, 30, recently decided she and her husband were ready to leave their renting days behind. The couple just purchased a home in Brookfield where they had been renting a house. Tarpein is expecting a baby before the end of the year and said the time was right to own instead of continuing to rent. ‘Our lease was up in November, and I’d been putting money away in CDs for savings but not particularly for a house,’ Tarpein said. ‘The problem, as I see it, is there are so many upside down mortgages right now.’”

Medill Reports from Illinois. “When Anthony Smith moved into his four-bedroom house more than six years ago, he noticed that the previous owners’ property taxes seemed high. ‘The previous owners were getting screwed,’ Smith said. ‘When I moved in, I decided I wasn’t going to take it,’ he added. ”

“So the following year, Smith, an unemployed computer programmer, appealed his property taxes. When Smith appealed in 2003, the housing market was stable. Now falling home prices have made appeals all the more desirable, with Mayor Daley calling on homeowners to challenge their property taxes.”

“‘Based on the dire economic situation nationally and locally, we’re willing to consider any evidence’ that might demonstrate lower home values and thus reduce property tax bills, said Scott Guetzow, a spokesman for the Cook County Board of Review.”

The Journal Sentinel from Wisconsin. “The recession and credit crunch, which have killed plans for new condominiums, hotels and other projects, are forcing some Milwaukee-area architectural firms to cut jobs. Kahler Slater, with offices in Milwaukee, Madison, Green Bay and Burlington, N.C., has 145 positions after its recent cuts, said George Meyer, co-executive officer. Kahler Slater was hurt when some of its institutional clients postponed projects, Meyer said.”

“Even large institutional clients are having trouble finding investors willing to buy bonds to generate financing for their projects, Meyer said. Those institutions also have seen the income from their investment portfolios plummet thanks to Wall Street’s meltdown, he said.”

“Eppstein Uhen, which has offices in Milwaukee and Madison, reduced its staff largely because of the decline in the condo market, Uhen said. ‘That work has fallen off the cliff,’ he said.”

The Kalamazoo Gazette from Michigan. “Greg Dedes, a 37-year-old construction manager who lives near Portage Lake in Mendon Township…was annoyed in October when he was notified that his home equity line of credit at Chase Bank had been eliminated. But, he said, he was infuriated when he learned the consumer banking operation of JP Morgan Chase & Co., which was set to receive $25 billion from the U.S. Treasury, had not reduced the lines of credit on his high-interest rate credit cards.”

“‘Our home equity line of credit issued at a rate of 6.5 percent to 7.5 percent interest was canceled while they maintained over $30,000 in available limits on credit cards with interest rates pushing 18 percent to 20 percent,’ Dedes wrote to the Gazette in October. ‘JP Morgan Chase should either reinstate the lower rate products or return the $25 billion that they were issued.’”

“Dedes said that when he built his $210,000 home in St. Joseph County in 2005, he opened a line of credit to take advantage of a mortgage-rate incentive and to create a ’safety net.’ ‘Like most people, you get that home equity line and set it up as a safety net, just in case,’ he said. ‘Fortunately, I haven’t lost my job.’”

“Dedes said it wasn’t right that Chase and others would take billions in taxpayer money and at the same time cancel credit. ‘They say they’re pulling back lines of credit in the best interest of customers,’ he said. ‘It just seems that’s not necessarily in my best interest.’”

“Mary Kay Bean, a spokeswoman for Chase Bank in Michigan said Dedes’ complaint reflects a difference between credit-card and home-equity credit lines. Credit cards, she said carry high interest rates because they’re not backed by assets. Home equity loans require equity, or the home’s market value minus what’s owed on it.”

“As home values have fallen dramatically over the past two years, a lot of equity has disappeared, Bean said. ‘You don’t want people to end up in the position of owing more than what the house is worth,’ she said.”

“The average home price in St. Joseph County has declined 15 percent to 20 percent in the past year, said Rick Mahler, president of the St. Joseph County Association of Realtors. ‘That’s due to the number of foreclosures that are out there that have pulled the whole thing down,’ Mahler said.”

“‘When a home value goes down precipitously, we are permitted to reduce the line (of credit) or cancel the line,’ said Terry Francisco, a spokesman for Bank of America. He said the Bank of America is reviewing loans in areas where there have been rapid declines in home prices, such as Michigan, California, Arizona and Nevada.”

“”In addition to Chase, at least three other large bank holding companies contacted by the Gazette are reviewing home prices and their portfolios of home-equity loans and reducing or canceling lines of credit as necessary, bank officials said. Those are Fifth Third Bancorp, Bank of America Corp. and National City Corp.”

The Columbus Dispatch from Ohio. “The Treasury Department recently…denied National City Corp’s request to be included in the $700 billion rescue plan. Instead, PNC Financial Services Group of Pittsburg received $7.7 billion in federal funds and marching orders to use it to buy struggling National City, which it did for $5.58 billion, or $2.23 a share.”

“In the end, National City was a textbook example of how the subprime-mortgage mess and the accompanying drop in home values brought down seemingly indestructible companies and led the country into recession. National City shareholders lost billions as the company’s stock plummeted from $38 in early 2007 to less than $2 at one point, and many Ohio residents saw their investment and retirement accounts drop dramatically.”

“Howard Klein was one of the stockholders who watched his National City investment become virtually worthless. ‘I got hit pretty good, but I have some friends with even bigger stakes. They’ve really been hurt by this,’ said the northern Ohio resident.”

“The lesson, said Andrew Karolyi, a professor at Ohio State University, is that financial institutions are intrinsically linked to one another and the overall economy. A serious break in the chain — in this case, the decline in housing prices — can lead to ‘a systemwide failure to the real economy, to unemployment, to the gross national product.’”

“The chapter on National City will describe a bank that jumped into the lucrative subprime market with both feet, scooping up companies that originated those risky loans and also offering such loans on its own to its core market in the Midwest and then to customers all over the country. ‘They were one of the most aggressive subprime lenders,’ said Matt McCormick, an analyst with Cincinnati investment adviser Bahl & Gaynor. ‘It was great when the market was great, but they paid the price when it wasn’t.’”

“‘They became one of the most aggressive lenders,’ McCormick said of National City. ‘They dominated the Midwest and then went into other markets.’”

“By 2003, National City was making a profit of $2.6 million a day from its mortgage business. ‘But as they grew, they became more and more dependent on low interest rates and the continued housing boom,’ McCormick said.”

“Julien McCall, chairman of National City from 1979 to 1986, said he saw it all coming and tried to warn National City executives and board members, but to no avail. ‘It’s sad for the people involved,’ he said, ‘especially the stockholders, who absolutely got clobbered.’”

“McCall noticed a change in culture at National City and other financial institutions, to one in which risk became more acceptable in the chase for the ever-increasing profits that stockholders craved. ‘The credit culture changed,’ he said. ‘The worst thing you can do in community banking is make a bad loan.’”

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The Times Standard reports from California. “A new housing affordability index, released this month by the Humboldt Association of Realtors, shows Humboldt housing prices — recently overvalued countywide — have begun to dip. Fortuna showed the largest net increase in affordability, rising 19 percent between August and September of this year, and 26 percent between October 2007 and September 2008. In September, according to HAR data, 30 percent of households in Fortuna were able to purchase a home in Fortuna. That percentage is still significantly less than in April of 1999, however, when 60 percent of Fortuna households could afford a home in the city.”

“According to the index data, in September, the median sold home price in Humboldt County was $291,000. ‘Countywide, it’s not a staggering difference,” said Tom Hiller, president of HAR. ‘Each market is slightly different. We’re starting to see attractive deals throughout the county.’”

“Of course for sellers, the prospect of falling property values may not be as appealing. But Hiller said property values had been inflated to unrealistic highs, and the dip is a natural adjustment in the market. ‘In the short term, there’s been a reduction in equity,’ Hiller said. ‘But if people hang onto those homes, the prices will catch up with them.’”

“Thomas Bruner, an associate professor of economics at Humboldt State University, said he believes HAR’s findings are reasonable, and he expects affordability to continue trending in buyers’ favor through the winter. ‘I think January and February might be some of the best times historically, at least in the last 10 years, to buy,’ Bruner said. ‘If you have the money, this is the time to invest.’”

The Press Democrat. “Help is building to assist homeowners redo mortgages and avoid foreclosure, but questions remain about how far lenders will go as the toll of people losing homes mounts. Joan and Angela Ricci, a mother and daughter who own a Sonoma home, needed 14 months before their lender agreed to lower their monthly mortgage payment.”

“‘Everyday, I thought I was going to lose the house. I was a nervous wreck. Your life changes,’ said Joan Ricci. ‘We’ve been crying a lot.’”

“The problems for Joan Ricci began when she refinanced her home of 43 years in January 2007. Ricci was put into a subprime loan with a high interest rate — not the 30-year mortgage she expected — by an out-of-town mortgage broker who solicited her by phone. Daughter Angela Ricci stepped in, but couldn’t get the original lender, Argent Mortgage, to undo the loan. Citimortgage later purchased the mortgage.”

“They made the monthly payments, with Joan returning to work at age 70 and Angela taking on side jobs as a respiratory therapist. Family and friends also provided financial help. But by December, they could no longer afford the house payment. ‘We depleted every penny we had,’ Angela Ricci said.”

“The lender didn’t agree to specific terms until this month, lowering the interest rate to get the monthly payment from $4,600 down to $2,900. ‘It means we get to keep our home, which is what we wanted all along. But I have the burden of working everyday of my life to make the payment,’ Angela Ricci said.”

“Sandra and Octavio Lara weren’t as successful working with the lender on their Rohnert Park home. They defaulted on the loan and now their only hope to avoid foreclosure is to sell short, where a buyer pays less than what is owed on a home. The couple had an adjustable rate mortgage with Carrington Mortgage on their Rohnert Park home. The payments had risen from $3,000 to $5,100 when the couple stopped making the mortgage in October. The lender began talks over loan terms the end of December. Carrington Mortgage eventually agreed to lower the payment, but only by $800, leaving the family with a $4,300 monthly payment.”

“‘We asked them to lower the loan amount, if they were willing to finance it for what it was now worth. But they basically want their money,’ she said. ‘We couldn’t afford it anymore.’”

“Reducing loan balances to bring them closer to current home values could be an incentive for homeowners to struggle and make mortgage payments, said Kevin Stein, executive director for a San Francisco-based low income housing advocate. ‘If their debt is more in line with their home’s value, it reduces the number of people supposedly walking away from their homes,’ Stein said.”

The Sacramento Bee. “Sacramento County’s lowest-income neighborhoods continue to take the toughest, most destabilizing punches of the region’s two-year foreclosure crisis, says a new report from the Sacramento Housing and Redevelopment Agency. And it’s getting worse.”

“‘Foreclosures are continuing to increase,’ said Joel Riphagen, SHRA redevelopment analyst. ‘The common denominator of the hardest-hit areas is they are low-income.’”

“Sacramento County has seen banks repossess 14,054 homes the first nine months of this year – 5,643 in July, August and September alone, according to MDA DataQuick. That’s 73.5 percent of the capital region’s total. SHRA, which doesn’t count homes bought at auction, showed 4,670 third-quarter foreclosures.”

“Investors are snapping up homes formerly occupied by owners with intent of renting them. More than one-third of Sacramento home sales in October were priced below $160,000. Three-fourths of county sales were of foreclosed homes repossessed by banks, the Sacramento Association of Realtors reported Friday.”

The Manteca Bulletin. “Closing schools to weather the deepening budget crisis is among 100 ideas being scrutinized by Manteca Unified. The double whammy of declining enrollment due to the foreclosure crisis coupled with the state’s mid-year deficit projection that has ballooned to $28 billion has opened the door to such a move.”

“Serious talk about closing schools is ironic considering Manteca Unified leaders are dedicating the $89 million Lathrop High campus today at 4 p.m.”

The Westside Connect. “With its enrollment continuing to dwindle and the uncertainty of how hard the state budget crisis will hit public education, the Gustine Unified School District has implemented a hiring and spending freeze. Superintendent Gail McWilliams said the district received a double dose of worrisome news recently.”

“The October count by which enrollment is measured for the state showed a decline of 140 students from last October, McWilliams said, a steeper drop than anticipated. ‘We had thought that the decline would be right around 100 students, but our enrollment dropped more than that,’ McWilliams said.”

“She attributes the exodus of students to the collapse of the housing market and tough economic times. ‘Our hope would be that as gas prices and housing prices fall that people start coming in, but we don’t have any indication of that happening at this time,’ the superintendent commented.”

The Voice of San Diego. “The town of Julian, an hour east of San Diego, is a destination for harried city-dwellers who escape on weekends. Named a couple of years ago by Sunset Magazine as one of 10 places in the western states to buy a cabin, the mountain town attracts second home buyers.”

“But three years after the San Diego County housing market reached its price peak, the number of second-home buyers — and buyers in general — has ceased to be buoyed by housing frenzy. Julian’s market closely tracks the county’s housing macro-trends of falling prices, increased foreclosures and weak sales compared to the boom.”

“Twenty-seven homes sold in the first nine months of 2008 in Julian’s 92036 ZIP code. That was half as many as sold in the same period in 2007. The decline in sales is even starker compared to the same nine months in 2005, when 78 homes sold, and 2004, with 89 sales, according to MDA DataQuick.”

“There are about 75 homes and lots on the market in Julian, of about 1,650 total homes in the 92036 ZIP code. Fifteen of those listings are bank-owned. Another 11 are in an earlier stage of foreclosure, according to public records. Many others are short sales. And the rest, if they want to sell, must price their homes close to the distressed property prices to compete.”

“That means homes that were selling in the high $300,000s now sell for about $250,000, said Dennis Frieden, the broker and owner of Julian Realty. One house that was originally listed for about $1 million a couple of years ago has now dropped in price to about $600,000.”

“On a few of the lots where homes burned in 2003, buyers tried their hand at building homes in order to sell them. But by the time they obtained the permits, and built and finished the houses, the market had peaked and fallen. Now there are four or five listed for less than the owners owe on their construction loans.”

“On a drive through Julian’s winding roads with a visitor, Frieden stops to point through the trees at a 3,000 square foot house that fits that description. Its builders bought the lot and built a house that they hoped and expected to sell for $1 million. Now Frieden estimates they could get $550,000.”

“He points out another, a large brown farm-style house that was foreclosed on in this downturn. Its previous owners had mortgages up $600,000 and contacted Frieden to sell it for $700,000. It ultimately went to foreclosure, and the buyer who lives there now paid $489,000.”

“Frieden’s own journey to Julian matches some common reasons for moving there. He ran a real estate agency and employed 65 agents in Mission Hills for a couple of decades before selling his office and moving east.”

“‘Everything was getting redundant,’ Frieden said of his former metropolitan life. ‘I sold the same houses three or four times.’”

The Union Tribune. “Greed and naivete collided on Little Lake Street in the fall of 2004. It produced easy money for speculators and mortgage brokers and short-lived happiness for families who bought houses they couldn’t afford to keep. Few streets in the county have witnessed as dramatic a turnaround as Little Lake.”

“Prices on one block peaked in 2005, a few months after homes hit the market. Since then, 13 of the 23 houses – 57 percent – have fallen into fore-closure. Subprime loans were rampant in the census tract surrounding Little Lake Street. Of the 3,600 loans sold in that tract in the past three years, more than 1,000 were subprime.”

“But the problem wasn’t confined to subprime mortgages. Many home buyers gorged on easy credit. About 12 percent of foreclosed properties likely belonged to investors who walked away from at least two houses in the past three years, the Union-Tribune found.”

“During the overheated market, thousands swarmed the South Bay and took out risky mortgages. ‘All people did it,’ said JesÚs Muñoz, a construction worker who lost his Little Lake Street house in March. ‘They were investing and selling. If other people can do it, why not me?’”

“Many buyers on Little Lake Street, including Terry Louise Washington, said they were bombarded with messages from family, friends and co-workers to invest in property before theprices climbed out of reach. Washington, a community college instructor, heard that message repeatedly at church and even by a speaker at her high school reunion.”

“‘I thought I did the right thing’ in buying the house as an investment, said Washington, who used an inheritance from her grandmother for her $118,000 down payment. ‘People told me it’s the way to make it in life.’”

Philip and Perlita Bautista bought eight houses in the past five years, mostly in southeast San Diego, Otay Mesa and Chula Vista, according to county deeds. Because some had adjustable and negative-amortizing mortgages, it didn’t take long for the couple to fall behind in their payments. ‘The payment is increasing and the bank is squeezing,’ said Philip Bautista, who works as an electrician. ‘It’s pretty horrible. Ten years we worked. All the money we saved, it’s gone.’”

“In addition to his Little Lake house, which was rented out, Bautista said he has lost ‘two or three’ others. He walked away from the Little Lake house when his mortgage payments adjusted upward, and his loans surpassed what the house was worth. In his eyes, he already had paid the bank considerable money — $28,000 down and two years of mortgage payments.”

“‘That’s a lot of money. The bank already has that money,’ Bautista said. ‘Now that the house is only worth $300,000, are you still going to pay?’”

“County records show Bautista refinanced his original mortgage and recovered his down payment 17 months after his purchase.”

“Longtime community members say the South Bay’s housing bust has been a deflating experience, prompting many to work multiple jobs and placing strains on marriages. ‘People are just trying to hang on,’ said Aguirre, the National City community development specialist. ‘It used to be Hummer City. Now it’s Toyota Tercel Town.’”

“Maria Alvarez made decisions to minimize her losses. Alvarez bought her house on Little Lake Street as an investment property with a 20 percent down payment. Six months after buying the house, Alvarez refinanced and took out a $95,000 line-of-credit, according to county records. ‘We put $100,000 down. We didn’t want to lose that,’ said Alvarez, who defaulted on another house in May. ‘A lot of people are losing their down payments. Now they don’t have anything. My husband and I put it into our business. We survived with that money.’”

“Like Alvarez, several people who pulled equity out of their Little Lake properties say they spent it on business expenses or mortgage payments. Only when prodded, and in one case reminded, did they acknowledge using the money to buy a timeshare, new cars and jewelry. The most common response to the question of how the money was spent was: ‘To pay bills.’ Many could not remember what those bills were for.”

“Bankruptcy specialists say…lenders set themselves up for problems by not requiring buyers to prove they could afford the loans, or to provide traditional down payments. That stripped buyers of a tangible incentive to stay in their homes. The stigma of foreclosure and damaged credit are real, but temporary.”

“‘Twenty years ago, individuals were doing everything in their power to save their houses,’ said Radmila Fulton, a bankruptcy attorney. ‘Now they’re more willing to walk away. Why pay now when they can rent for less than their mortgage payment?’”

A report from the Washington Post. “In the casino of the housing market, Tom Walters is holding the wrong cards. He’s a mortgage broker, so business has been slow, and on his own house, payments have risen to about $6,200 — too much to handle. Instead of gambling on a sale, Walters and his wife decided to let others take a chance. So for just $50, people can buy a raffle ticket for his six-bedroom, 4 1/2 -bath, 6,000-square-foot home on a two-acre parcel just outside of Annapolis. Estimated value? One million clams.”

“This is the 10th house raffle attempted this year, according to the Maryland secretary of state’s office. But only one, in Hagerstown, has been successful so far. In the Walterses’ raffle, the winner (to be picked Dec. 31) gets the home, free and clear. No closing costs. No mortgage payments. No broker fees. The Walterses get to walk away.”

“‘It’s kind of bittersweet,’ Walters said. ‘We’ve put so much into this that it’ll be tough moving, but at the same time you have to do what’s right for the family.’”

“The Walters had big plans for the house when they bought it for $425,000 in 2006. It was in foreclosure. Tom Walters had grown up nearby, and he and his wife fell for the log cabin originally built in 1840. Sure, it needed a bit of work. No problem, they thought. By the time they were done, they’d sunk about $750,000 into renovations. That includes the $450,000 construction loan they took out.”

“The Walterses found they couldn’t pull any of the equity out and their payments had grown. ‘That’s when it became necessary to sell,’ Walterses said. ‘Rather than stick it on market and take our chances, we wanted to be proactive.’”

The Wall Street Journal. “Despite all the gloom, some people believe it isn’t too early to pick up bargains. One key, they say, is a deep understanding of the local demand for rental housing.”

“Dinesh and Rima Kumar, who live in Ashburn, Va., last month bought a town house in Sterling, Va., a suburb of Washington, D.C., for $154,000. The same home sold in June 2005 for $375,000 to a buyer who used subprime loans to finance 100% of the price. It went into foreclosure late last year. Mr. Kumar says he has found a renter at $1,500 a month. The Kumars, who paid cash for the home, calculate their monthly expenses — including taxes, insurance, maintenance and fees — at $491 a month.”

“The couple made the plunge partly because Ms. Kumar, a real-estate agent, noticed that homes in the area priced at $250,000 or less were attracting multiple offers. Home sales in the northern Virginia suburbs of Washington totaled 3,360 in September, up 92% from a year earlier, according to the Northern Virginia Association of Realtors. The average price: about $333,000, down 32% from a year earlier.”

“‘This could be the bottom,’ Mr. Kumar says, and even if it isn’t, ‘the down side on a $150,000 property is pretty low.’”

“Moreover, he has been burned in the past by stock-market investments and thinks rental income will far exceed the meager interest rates offered on bank deposits.”

The New York Times. “An exiting army of Republican foot soldiers is faced with the prospect of selling its Washington-area homes in the worst housing bust since the Great Depression. Many Republican-appointed officials in Washington are nested in northern Virginia. And for those who arrived near the height of the housing bubble, particularly those who came after George W. Bush was re-elected in 2004, what a time to buy in northern Virginia it was.’

“Like Miami and Las Vegas, northern Virginia was frantically built up during the housing bubble. Prices of single-family homes and condos skyrocketed. When I first lived in the area a couple of years ago, I remember hearing the curious term ‘Fairfaxed.’ It referred to Fairfax County, Va., an overbuilt Washington suburb. Builders continued to plant residential high-rises around the county and beyond in anticipation that housing prices would climb ever higher.”

“Fast-forward to today. Also like Miami and Las Vegas, northern Virginia’s housing market has cratered. The average housing price in the greater northern Virginia area in September declined 32.11 percent from the previous year, according to the Northern Virginia Association of Realtors.”

The Virginian Pilot. “The number of foreclosure-related notices in Hampton Roads was 1,155 in October, up 25 percent from September and 191 percent from year-ago levels, according to RealtyTrac. The spikes were most dramatic in Hampton, Portsmouth and Suffolk, all of which had an increase in foreclosure activity of more than 400 percent.”

“‘I think we’re just looking at the tip of the iceberg,’ said James Koch, an economist and president emeritus at Old Dominion University. ‘If housing prices continue to deteriorate, and I expect they will, we’re likely to see the foreclosure rate go up substantially.’”

“He predicts that homeowners in increasing numbers will walk away from homes for which they owe more than the property’s value. The new foreclosure data are being released two days after the federal government announced a plan to help more homeowners avoid foreclosure. But the program may be a little too late, said Kevin Harris, a housing counselor and lending consultant for Community Housing Partners in Virginia Beach.”

“‘A lot of people are upside down. It’s pretty bad,’ Harris said. ‘We get a lot of people calling due to loss of income, possibly having been laid off from a job. I definitely think it’s a reflection of the economy.’”

“Things got harder and harder in the past year for small-business owner Beverly Turner. Fewer customers came in each month. Revenue kept falling. She fell behind on her rent. She decided to close the corporate office of Weight Loss Forever, as well as two of the seven stores throughout Virginia Beach and Chesapeake. She thought that would be enough to keep her business afloat.”

“Then two weeks ago she got a letter from her creditor informing her that, as of Nov. 30, it no longer would finance her customers’ weight-loss plans, she said.”

“Tidewater Sports & Collecti bles shut down its locations in Chesapeake and Newport News in August and September, respectively. Its store at Norfolk’s MacArthur Center is scheduled to close today , said Raelee Everett, the chief operating officer. She and her husband started the business in 1999, selling sports and novelty beanies at a flea market in Virginia Beach. Business had been pretty good until the economy turned, she said.”

“The company filed for Chapter 11 bankruptcy reorganization last month. The store’s sales totaled $1.6 million in 2007, according to the tax return included with its bankruptcy filing. But the business still lost $19,673 last year. ‘We grew too fast, took on too much debt and didn’t pay attention to the trends in the economy,’ Everett said. ‘Part of it was poor business management, part of it was the poor economy.”

“The hardest part is letting down her employees, which totaled 27 in July, she said. By the end of December, she plans to close the last store in Virginia Beach. ‘It’s a very bitter end,’ Everett said.”

The Times Dispatch from Virginia. “The U.S. economy is not likely to recover until the housing market stabilizes, according to experts from the Federal Reserve Bank of Richmond. The supply of houses for sale across the nation is too high. Prices nationwide and in Virginia are falling. And the quality of mortgages — even those for people considered good credit risks — has declined.”

“Housing prices in Virginia began to fall in March and depreciation accelerated through June, the latest figures available, said Michael L. Riddle, a senior financial analyst at the Federal Reserve Bank of Richmond. ‘Negative housing prices have been driven by Northern Virginia, areas along the coast and Richmond to a lesser extent,’ Riddle said.”

“‘”It all boils down to a deterioration in underwriting,’ said Riddle…referring to loose credit standards for funding mortgage loans that led to the housing bubble.”

“Troubling new trends are emerging that show the number of borrowers with prime mortgages — traditionally considered among the most stable loans — is rising in Virginia and the nation. ‘We’re starting to see a notable deterioration in bedrock prime-rate loans,’ Riddle said.”

The Free Lance Star from Virginia. “There were 1,067 homes sold in the Fredericksburg area during the third quarter, a 15.7 percent jump from the year-ago period. Median sales prices dropped 19.5 percent; they were $230,000 in September for the Fredericksburg area–which comprises the city and Spotsylvania, Stafford, King George and Caroline counties.”

“The trend of rising sales and falling prices has been most extreme in Prince William County, which has been hit hard by home foreclosures. Third-quarter sales there rose 144.6 percent from the same period in 2007, while median sales prices dropped 42.4 percent.”

“Realtors on the call yesterday said the trend should continue in the fourth quarter and predicted that a leveling off of foreclosures and continued declines in new-home construction should stabilize the market. Christine Todd, CEO of the Northern Virginia Association of Realtors, called 2008 ‘the year of the cleanup,’ as investors and bargain-seekers sweep foreclosures off the market.”

The News & Advance from Virginia. “You wouldn’t expect a $1 million home on Easy Street on Smith Mountain Lake to end up in the same situation as a $20,000 house from inner-city Lynchburg. One was built as a lakeside mini-mansion in 2006. It has 5,200 square feet, granite countertops, cathedral ceilings and geothermal heat. The other was built in 1892 with a wood frame and siding. Its 1,500 square feet are warmed with electric baseboard heaters.”

“Both met the same fate this year. Foreclosure. So did more than 200 other homes in the Lynchburg area. An examination by The News & Advance of land records in Lynchburg and the counties of Amherst, Appomattox, Bedford and Campbell show that more people have lost their homes this year than last year, up 33 percent overall.”

“Many of the mortgages that went to foreclosure this year in the Lynchburg area bore the signs of subprime borrowing. The average interest rate, when listed in land records, was 7.9 percent. Nearly 10 percent of the foreclosed properties had interest rates that started at 10 percent or higher. At least 68 of the properties had mortgages financed with adjustable-rate loans. The top lenders whose local loans ended in foreclosure were big players in the subprime industry: Decision One Mortgage Company, New Century Mortgage and Option One Mortgage Company.”

“Subprime lending was mortgage companies’ bread and butter for a while. But it became their downfall, said Billy Woolridge, a local mortgage originator who worked for American Home for six months before the company went bankrupt last year.”

“‘It wasn’t because of any wrongdoing. We weren’t doing anything that dozens of other companies were not doing,’ he said.”

“Clark Jefferson, (a) counselor for Lynchburg Community Action Group (said) their clients had missed mortgage payments for a variety of reasons. Jefferson said some had lost jobs. Some had taken on extra debt for cars or furniture.”

“Melissa Yuille, senior housing counselor for the nonprofit agency, said she has seen some clients’ payments go from $800 to $1,200 a month after the interest rate changed. ‘And who has an extra $400 lying around?’ Jefferson said.”

“‘I’ve had a surprising amount in the upper-price ranges around (Smith Mountain) lake and the Forest area, some of the nicer homes,’ said Bonnie Hall, a Roanoke-based real estate agent who deals only with foreclosures.”

“One of those was the home on Easy Street in Moneta. With a backyard facing Smith Mountain Lake, the home was appraised by the county at $1.2 million. Cameron Jordan, the real estate agent who now owns that house, said the former owner was the contractor who built the home, then refinanced it in 2006.”

“After the owners d