What Many Thought Impossible Has Happened


The Seattle PI reports from Washington. “Seattle-area house values continued their record-setting slide in March. Values in the area in March were down 4.4 percent from March 2007, according to the Standard & Poor’s S&P/Case-Shiller Home Price Indices, whose Seattle numbers go back to January 1990. It was the third consecutive annual decrease for the area and the second straight record decline for the Seattle index, which goes back to the start of 1990.”

“Prices have declined month to month for eight straight months now. King County’s median house price was $448,500 in April, down 3.5 percent from April 2007 and 6.8 percent from the record high of $477,345 in August, according to the Northwest MLS.”

The New York Times on Washington. “Sales and prices are still robust in Seattle and affluent suburbs like Bellevue because they are more desirable and closer to big employers.”

“‘We are still getting multiple offers on properties there,’ Phil Rodocker, a Seattle-based real estate agent, said about the downtown area and Bellevue. But ‘as you move south, every 10 miles south you go, you see more and more short sales and repossessed houses.’”

“Builders are having trouble selling units in some newer condominium buildings. Mr. Rodocker got an e-mail message from one developer last week who a few months ago had quickly sold 251 units in a project under construction. Now, investors who had signed contracts to buy 40 of those units had reneged.”

“The units in the Belltown section of Seattle are now being resold for as little as $225,950 for a one-bedroom apartment with one bathroom, prices that Mr. Rodocker said were so low as to be ‘ridiculous.’ Last fall, one-bedroom condos in the neighborhood were selling for $260,000 to $290,000, he said.”

“About 35 miles south, outside Tacoma, Irené Foster-Worthy and her husband have received no offers on their three-bedroom, two-bath ranch home since they put it on the market a month ago.”

“‘Only about four people have come to see it, which makes it difficult to sell,’ she said.”

“One of Mr. Rodocker’s clients, Dennis Humphrey, lives south of Seattle in Tukwila and has been looking to buy a home with three or four bedrooms and one or two bathrooms. Parents of 10-year-old twin boys, Mr. Humphrey and his wife live in a rental home and want a bigger place.”

“Mr. Humphrey has made offers on two homes, but the sellers have refused to negotiate. He is willing to spend up to $300,000 and has enough money to put 20 percent down, but Mr. Humphrey said he was worried prices were going to fall farther and could wipe out any money he puts into a home.”

“‘I am not afraid of the monthly mortgage payment, and I am not afraid of taxes, but I am afraid of losing the value I am putting in,’ he said. ‘I believe the right deal will come along, and I am in no rush,’ He added.”

The Daily Interlake from Montana. “Montana Department of Revenue were in Kalispell on Monday, gathering information on real estate market trends for a statewide property reappraisal.”

“Department Director Dan Bucks and several staffers heard from about two dozen local bankers, appraisers and Realtors as part of an unusual effort to bring the state’s property valuations in line with volatile market trends.”

“Bucks said the effort is aimed at determining whether national housing market turmoil is affecting Montana when the state is nearing the end of a six-year reappraisal cycle.”

“‘The Department of Revenue has never done this before,’ Bucks said, explaining a five-point plan for producing reappraisals that accurately reflect current market conditions.”

“The Flathead Valley real estate experts at Monday’s meeting confirmed that local market conditions have indeed been dynamic in recent months. The group came to a consensus that the market has been in a decline, particularly for high-end housing properties.”

“Realtors reported instances of homes selling for prices below their original listing prices. One Realtor cited the example of a house selling for $265,000 in 2007. But this year, two houses with the same floor plans, in the same subdivision, sold for $250,000 and $251,000.”

“Veteran appraiser Jim Kelley reported that the Flathead Valley’s residential sales volume is down 27 percent this year compared to the first five months of last year.”

“‘The basic message is we’re seeing a decline in the real estate market,’ said Rep. Jon Sonju, who sits on the Legislature’s interim revenue committee.”

The Vancouver Sun from Canada. “For decades, generations even, rural Saskatchewan has been emptying out. Most towns had scads of homes for sale with very few buyers. Bargain basement prices prevailed.”

“The past couple years what many thought impossible has happened. In a lot of small and large towns, you can hardly find a house to buy and if you do, the price has increased dramatically. Older houses that no one wanted a few years ago are being gobbled up and renovated. Even houses in old farmyards are in demand.”

“I’m most familiar with communities on the western side of the province, but colleague Lorne McClinton says the same thing is happening in his region in south eastern Saskatchewan. He says two years ago, his community of Yellow Grass was slowly dying.”

“One year ago, McClinton says you could buy a 50-foot lot for $50 and a 100-foot lot for $100. No one wanted them. Now the town has bumped the price to $5,000 for a 50-foot lot and $10,000 for a 100-foot lot. Most have sold and the town office gets several calls a day.”

“Two or three years ago, for a two-bedroom home with single-car garage built in the mid-70s, you would be lucky to get $40,000, says McClinton. Now, he estimates it’s worth at least $125,000.”

“‘It is quite different to feel a sense of real optimism and growth,’ says McClinton. ‘Friends and I were discussing how different the conversations are now than they were just a year or so ago. Last year we were wondering if the school would close. This year we are building new subdivisions. People are quite excited.’”

“Perhaps even more promising, says McClinton, is that people from outside the community have come in to purchase the store and a bunch of commercial property along the highway. Their feeling is that with the incredible amount of drilling and development of the Bakken oil field east of Weyburn that the town is going to have a boom not seen since the region was initially settled 100 plus years ago.”

The Leader Post from Canada. “The average price of a home in Saskatoon was more than $306,000 in April, an increase an RBC economist says is not a sustainable trend in the province.”

“In March, the average home price reached $289,440 and jumped to $306,268 in April, 39 per cent higher than April 2007, the Saskatoon Region Association of Realtors reported Tuesday.”

“The number of homes sold this year is on par with last year, at 1,480, but in the month of April the number of sales dropped 12 per cent to 418 from 476 at the same time in 2007.”

“The decrease is a reflection of a larger inventory of homes, said SRAR executive officer Harry Janzen, who isn’t surprised by another price increase. ‘Because demand dictates price, we knew that we would have an increase, we just didn’t know to what degree,’ he said.”

“This is the first time the average selling price of a home in the city has topped $300,000, a price nearly double that of the April 2006 average of $155,000.”

“Amy Goldbloom, an economist with RBC Economics, believes such increases can’t be sustained because provincial wage growth lags behind the pace of home price increases.”

“During the next year, Goldbloom expects market activity in Saskatchewan to mimic what’s now happening in Alberta. Overvaluation in that market has made it impossible for potential homeowners to buy, leading to more moderate price gains.”

“‘We think more moderation is ahead for Saskatchewan, similar to what is going on in Calgary and Edmonton,’ she said. ‘We’re not looking for any sort of U.S. style correction, but we are looking for those markets that have heated up the quickest to have the most downside in terms of slower prices ahead.’”

“‘We just think housing markets have overshot their true value and they’re going to find a happier cruising speed to maintain that,’ she said.”

“Janzen, however, feels the current market in Saskatoon and the rest of the province is sustainable given a consistent influx of workers and steady wage increases. ‘The buying frenzy, as I refer to it, that we had last spring is a lot more balanced this spring, and that signals that the market is still very, very strong,’ he said.”

“Home prices in Saskatoon, he added, remain some of the most affordable in the country when compared to bigger cities such as Edmonton, where in April the average home sold for $386,000, and Calgary, where the average home sold last month for $474,000.”

“‘We’re really just coming into our own as it pertains to the exploitation of our resource base, every industry is growing,’ he said. ‘We recently had a meeting of our real estate boards from around the province … and activity is happening in literally every area of the province.’”

The News Miner from Alaska. “The Greater Fairbanks Board of Realtors reported Tuesday that one-quarter fewer homes sold around Fairbanks during the first three months of 2008 than the same stretch last year.”

“Real estate agents this winter said Fairbanks was cooling off from an overheated market but has largely missed a housing slump seen around the United States.”

“‘We currently have a 10-month supply of homes on the market,’ said Amy Krier, president of the Realtors board in Fairbanks. ‘(That’s) actually pretty balanced.’”

“James Wiedle, an analyst with the Alaska Housing Finance Corp., said rising home utility costs have likely thrown a wrench into the affordability of Fairbanks’ housing market, particularly for homeowners who live on a tight budget.”

“‘When you consider that a lot of people are kind of on the cusp with home mortgage payments, it could push them into a situation where they can’t afford to make their payment,’ Wiedle said.”

“The average of 154 homes reported sold around Fairbanks from January through March went for $218,407, according to the board. That was a 2 percent drop from last year’s first quarter average sale price but above the average of $204,334 for the first part of 2006.”

“The figure of 154 homes sold fell short of matching a surge seen in the first quarter of last year, when 206 homes were reported sold. The average reported selling price for one-bedroom homes rose by more than one-fifth from the first quarter of last year, while the average prices for two- and three-bedroom homes fell.”

“Tuesday’s numbers for Fairbanks show there are more homes on the market right now than in recent years - a 74 percent increase in inventory from early 2006 - and Krier said sellers are less likely to find multiple potential buyers ‘fighting’ for a home when it hits the marketplace.”

Raising The Titanic


The Journal Gazette reports from Indiana. “The message to the City Council last week was crystal clear: The downtown Harrison Square condominiums will be built. But while developers can promise to construct the building, there is no guarantee people will buy condominiums, live in them and make downtown Fort Wayne the place to be.”

“As of last week, only five of The Harrison’s 62 condominiums had been bought. Bill Martin, of Martin Goldstine Knapke, said the condominium project represents a new product in the Fort Wayne market, and sometimes people are hesitant to change.”

“‘You can’t force them to sign a contract,’ he told the council.”

“Bob Coffee, president of the Fort Wayne Association of Realtors, said in an interview that revitalizing downtown is critical to the health of the community. Persuading people to live downtown in Fort Wayne can be a challenge, he said. ‘I’m just not sure that people in Fort Wayne are quite ready for it yet,’ he said.”

“Mike Connolly has lived at Midtowne for the past three years, but he put down a $1,000 deposit for a condominium at The Harrison with thoughts of upgrading. Connolly said the $260,000 price tag was too much for a second-story unit overlooking the ballpark.”

“‘I don’t think the value is there for what they are asking,’ he said. ‘I think it’s a great project, desperately needed for Fort Wayne. I’m not sure it’s priced right.’”

“Connolly isn’t alone. At least a dozen people have asked to have their $1,000 deposit returned.”

The Register Mail from Illinois. “The Capital Area Association of Realtors reported the 1,841 homes on the market as of this week is a record high for this time of the year.”

“Local developer Gerry Hughes said he believes the uncertain economy has been a factor in the relatively slow traffic since he and his brother, Steve, put two downtown condos on the market in early March.”

“‘People just aren’t sure what’s going to happen. To be honest, if I was looking to buy right now, I might just sit back and wait, unless you have a rock-solid job that’s not affected by the economy,’ Hughes said.”

“Hughes said the brothers cut the initial asking price of $248,000 for the larger condo and $230,000 for the smaller to $220,000 for each. But he said that was based on the going price for downtown condos, not the economy.”

“‘We’ll play it by ear, but we’re not going to have a fire sale. We might have just started out a little high,’ Hughes said.”

“Association president Phil Chiles said he has tried to keep the 2008 numbers in perspective. ‘We keep looking at this and comparing it to the best year on record (2007),’ Chiles said. ‘We’re back where we were in 2004 and 2003. It’s not terrible. It’s just slow.’”

From Medill Reports in Illinois. “New, single-family home sales lingered near low levels not seen since 1991, according to a report Tuesday by the U. S. Census Bureau and the Department of Housing and Urban Development. The report showed April new-home sales in the Midwest were down 39.7 percent from a year ago.”

“Adolfo Laurenti, senior economist at Mesirow Financial in Chicago, said the spring and summer are prime periods for sales activity, and even with seasonal adjustments, spring hasn’t fared well so far.”

“‘These numbers are a little bit of a disappointment,’ Laurenti said. ‘They are as bad as they were in the early 1990s when we had a recession.’”

“Laurenti said he thinks the large inventory of homes for sale combined with hesitation from potential buyers have kept the real estate market from swinging back up.”

“‘The best we can hope for at this point is for these numbers to stabilize,’ he said. ‘If they could start moving sideways instead of going down, that would be a huge improvement. But I don’t think we are there yet.’”

“The Illinois Association of Realtors reported Friday that total April home sales in the state were down 27.2 percent from the year-ago period. The median price dipped 6.3 percent to $187,500 from $200,000 in April 2007.”

The Detroit News from Michigan. “The Westin Book Cadillac Detroit not only brings some old-fashioned style back to downtown when it opens, but many buyers of the hotel’s upscale condos say they’ll bring the city jobs, too.”

“At least half of the 55 buyers of the housing units at The Book own small- to midsize businesses and many are looking to set up shop or expand their business presence in Detroit, said Jon Grabowski, president of the company handling the sale of the Book Cadillac condominiums.”

“Wes Wyatt, CEO of Cintron Beverage Group in Philadelphia who bought one of The Book’s $1 million-plus penthouses, says he too thinks the Book was too good to pass up. Compared with Philadelphia real estate prices, Wyatt called the seven-figure price tag for his three-story penthouse ‘a bargain.’”

“‘I’m just a big fan of the city,’ added Wyatt, who has described Detroit’s downtown revival as ‘raising the Titanic.’”

“Another penthouse buyer, Bob Bartlett, doesn’t intend to move the insurance cost-containment firm he co-founded, from Farmington Hills to Detroit. ‘But so many people now want us to have meetings at The Book, I can see us benefiting the city,’ Bartlett said.”

“Bartlett lives in Birmingham, and when he mentioned that he was moving to Detroit, ‘A few people told me I was crazy,’ he said. ‘But as more details come out about The Book, some people now think I’m brilliant.’”

The Kalamazoo Gazette from Michigan. “Sales of residential property in the greater Kalamazoo area fell in April, the fourth straight month this year.”

“But the decline was at a far slower rate than in previous months this year, possibly signaling that the housing market has stabilized and may be poised for a rebound, said Matthew Maire, CEO of the Greater Kalamazoo Association of Realtors.”

“‘We’re happy to see that inventory has stabilized and that we may be on the way back up,’ Maire said.”

“The total value of homes sales through the first four months this year also was off, falling 18 percent compared to the same period last year. But in April, the value of those sales declined by 12.8 percent compared to April 2007. In previous months this year, the declines were between 19 percent to 22 percent.”

“Buying activity may be up, but the high number of foreclosure homes on the market tends to depress prices. Through May 1 this year, 337 homes in Kalamazoo County were repossessed by mortgage lenders, up 14 percent from the same period last year.”

“Year to date, the average residential sale price fell to $137,778, down from $149,746 in the same period last year. And year to date, the median sale price dropped to $112,750, down from $125,000 at the same point in 2007.”

The Journal Sentinel from Wisconsin. “Daly’s Pen Shop is one of a handful of high-end retailers still doing business at what is now called the Shops of Grand Avenue.”

“‘It’s because I’m the only fine-writing store in the state of Wisconsin,’ said owner Brad Bodart, who bought Daly’s in 2001. ‘Customers who want to buy something need to come downtown.’”

“But it could be better, and Bodart isn’t happy about the lack of progress from current owner Ashkenazy Acquisitions Corp. of New York, in filling the growing number of empty spaces in the center.”

“It’s a tough time to try to find tenants for an ailing center, with many national retailers closing stores or slowing expansion plans. To make matters worse, the mall is about to lose a major tenant when Linens ‘n Things closes soon.”

“Linens’ exit will create a 30,000-square-foot vacancy and will leave the Plankinton Arcade section of the mall more than half empty. Another store, The Dress Barn, at center court on the second level, closed this month.”

“Even though Milwaukee has added a lot of downtown housing, the number of people working downtown isn’t large, and downtown workers are the basis for downtown retail, said John Melaniphy, a Chicago retail real estate consultant.”

“‘We do extremely well if there are tourists in town,’ said Richard Keppler, owner of Brew City Beer Gear. But there aren’t enough tourists or other customers in the mall often enough these days, said Keppler. ‘It’s very tough,’ he said. ‘We’re at a point where something has to be done.’”

“‘The downtown mall is right smack in the middle of what’s going on,’ Keppler said. ‘Why can’t it get a resurgence? It should get a resurgence.’”

“Rocky Marcoux, city development commissioner, acknowledges that the Grand Avenue’s current tenant mix has few stores that serve the new residents of the upscale condos and apartments being developed in and near downtown.”

“‘They are working very hard to bring in some different retail presence in Grand Avenue,’ Marcoux said. ‘Ashkenazy is not in business to lose money.’”

The Gazette Extra from Wisconsin. “The Janesville real estate market is down, but local homebuilders and real estate agents say it’s nowhere near the free-fall of the national housing market. In Janesville, they say, new home construction was down 12.6 percent last year compared with a 24.8 percent drop on the national level.”

“Sales of existing homes in Janesville dropped 5.5 percent, but the average price of the homes sold rose 2.4 percent to the highest level ever.”

“‘This is not a crash-and-burn market,’ said Dan Kruse, president of the Rock-Green Realtors Association. ‘This is a market that continues to move along steadily, and the sales and prices reflect that.’”

“Realtors sold 927 single-family homes in Janesville last year, a number lower than the previous four years.”

“This year, real estate agents are off to a slower start. Through May 8, they sold 240 homes in Janesville at an average sales price of $128,729. Through the same date last year, they’d sold 321 at an average price of $141,884.”

“‘It’s not a bad time to buy or sell, but we are in a correcting market,’ said Jerry Morse of The Morse Co. in Janesville. ‘With all the national news, move-up buyers are kind of cautious right now. With the foreclosure situation, there are also people out there just looking for bargains.’”

“‘But in most cases, owners aren’t going to sacrifice price. I can show them what the market is doing, but they say that if they can’t get their price, they’ll wait it out,’ he said.”

“‘Last year’s numbers were down, but they weren’t that far off from what we saw in 2000 and 2001,’ said Tom Wellnitz, president of the South Central Wisconsin Builders Association.”

“‘There have certainly been changes in the economy, and a lot of it has to do with how people feel,’ he said. ‘They read the local newspaper and see AP (Associated Press) stories about the housing crisis. But they only read the headline and don’t read any further to see that the problem is in Missouri or Timbuktu.’”

“Wellnitz said the local homebuilding market has been hit hardest in the middle market, where new houses cost around $250,000. Wellnitz expects the inventory of new homes will tighten as fewer builders put up ’spec’ homes, which are homes built without a contract from a buyer.”

“‘With the middle-market problems, I won’t be doing any $250,000 spec homes,’ Wellnitz said. ‘I may do two $150,000 homes instead. The local market had a tough year, but home values continue to increase. When home values start decreasing, that’s a bad sign.’”

The Economics Of Housing In California No Longer Work


The North County Times reports from California. “San Diego County home prices took yet another beating in March, reaching the largest rate of decline yet, according to a report released Tuesday. Home prices in March were 20.5 percent below the same month a year earlier, the first time county home prices were more than 20 percent below price a year before, according to Standard & Poor’s Case-Shiller Home Price Index.”

“‘Almost all of the realized loss in the last year has occured in the last six months through March,’ said Maureen Maitland, VP of index and analysis for Standard & Poor’s. ‘So, no, we haven’t seen deceleration. If anything, we’ve seen an acceleration in price declines.’”

“Prices are 25.9 percent below a November 2005 peak.”

“San Diego County’s year-over-year decline puts it in the ‘Sun Belt’ club, a group of six cities that saw the largest appreciation during the housing boom and are now seeing the biggest drops, Maitland said.”

“The lower end saw a larger run-up during the housing boom, reaching a peak of almost triple 2000 levels, according to the report. Now, lower-end homes are less than double what they were in 2000.”

“Despite the heavy price drops over the last six months, the typical San Diego County home is priced 84 percent higher than in 2000 and currently at early 2004 levels, according to the data.”

The Voice of San Diego. “Here’s the tier breakdown: Lowest tier (Homes priced lower than $392,045): Prices fell 28.9 percent year-over-year and 33.9 percent from this tier’s peak in June 2006.”

“Middle tier (Homes priced between $392,045 and $588,222): Prices fell 21.5 percent compared to March 2007 and 27.8 percent from this tier’s peak in November 2005.”

“Highest tier (Over $588,222): Prices fell 13.3 percent year-over-year and 18 percent from this tier’s peak in June 2006. The index measures price changes on the same houses over the years. It doesn’t track condos or new homes.”

The Union Tribune. “The housing slump is downsizing San Diego County’s home-building industry, as many of the large firms that helped create suburban communities scale back or close local operations. Some of those that leave probably won’t return.”

“‘Centex, KB Home, K. Hovnanian, William Lyon, Richmond American, Pulte - all have closed local offices, and pretty much every other builder has reduced staff,’ said real estate analyst Peter Dennehy. ‘They don’t need the same number of staff as when the market was rockin’ and rollin.’”

“‘The industry is experiencing a paradigm shift,’ said Tryon, CEO of the Building Industry Association of San Diego County. ‘It really means we are seeing a shift to a smaller market with less greenfield (open land) development, an environment where large-scale development is difficult to achieve. That means a different kind of product in many cases.’”

“‘Banks have taken flight and left our industry,’ said Michael D. Pattinson, president of Carlsbad-based Barratt American. ‘The economics of housing in San Diego and California no longer work. The houses now that are selling are the foreclosures that have been taken back. We are selling assets to survive and doing what we can to keep our businesses going.’”

“Tony Pauker, former regional president of the Orange County-based Olson Co., lost his job when the firm closed its office here in January. ‘We went from a peak of 55 employees down to 20 and then to zero,’ Pauker said.”

“He recalls seeing a decline in traffic at new-home communities during summer 2004. By the end of 2005, some local builders were shedding staff. ‘The downsizing started as a trickle and became a flood,’ Pauker said.”

The LA Daily News. “Foreclosures have already pushed record numbers of homeowners into apartments, leaving a trail of brown lawns, overgrown hedges and cracked paint in suburbs from Palmdale to Pacoima.”

“Now, homeowners associations are feeling the pain of the bursting housing bubble, dealing with a huge spike in delinquent monthly fee payments.”

“And as operating budgets fall into deficit, associations across the nation are trimming fewer lawns and cutting more spending. ‘It’s the most serious challenge the boards have faced in a decade,’ said Glennon Gray, owner of Santa Clarita-based Euclid Management, which oversees 250 homeowners associations throughout Southern California.”

“Russ Hoffman, CEO of Santa Clarita-based Valencia Management Group…manages 32 homeowner associations in Southern California, including Valencia Summit, Bridgeport and Creekside in Santa Clarita.”

“It’s the newer developments built in the last six to seven years that are taking the hardest hit, Hoffman said. ‘It’s a tough situation for a certain group of people,’ he said. ‘It is all based on the timing when the loans were taken out.’”

“All this financial turmoil means that associations won’t be able to put money into reserves for pricey projects such as redoing roofs and streets. Eventually that would likely mean increased monthly fees, special assessments or reduced services.”

“‘If it continues, it will have a dramatic effect on assessments,’ Euclid Management’s Gray said. ‘We have to adjust for our losses. We are used to everybody paying.’”

From The Sun. “Stumped by depressing sales numbers, the Inland Empire’s market for new homes is forcing certain builders to fast-track inventory straight to the auction block. Some are even doing it over the Internet to cut costs.”

“Developer Mark Gardner made the choice to send 25 of his never-lived-in homes to a virtual auction block. ‘We overbuilt for the current market conditions,’ said Gardner, who owns Redlands-based Gardner Construction.”

“Over the past decade, Gardner’s company has developed more than 600 homes across San Bernardino and Riverside counties. The last auction the company held was a ‘live auction’ in the mid-1990s, and he’s predicting he’ll have to hold more auctions in the future.”

“‘You’re going to find that builders will be looking at all avenues to get rid of their product,’ he said about the current real-estate market. ‘It’s trying to get the perception out to buyers that, ‘Hey, these are great deals.’”

“‘Our average builder auction has 30 to 40 homes, while a lender auction is 100, 200, or more,’ said Rhett Winchell, president of Beverly Hills-based Kennedy Wilson Auction & Sales Group. ‘You won’t see 80 homes at a builder auction. Offering 80 of the same thing at one time isn’t good.’”

The Press Enterprise. “Rialto has 778 bank-owned properties and another 970 in the pre-foreclosure stage. City leaders say that’s a recipe for suburban blight, and they hope to stem the tide.”

“Rialto is the latest Inland city to go after lenders and financial institutions as a tactic to force someone to be responsible for the upkeep of abandoned houses after distressed homeowners have packed up and moved away.”

“‘We probably started seeing a big spike in foreclosures starting about the third quarter of 2007,’ John Dutrey, the city’s housing program manager, said. ‘In Rialto, we had about 480 foreclosures in 2007. In 2008, the way things are going, we’re going to have over 1,000 foreclosures.’”

“The problem is pervasive, he said. ‘It’s happening in areas where new homes are being built. It’s happening in the older neighborhoods,’ Dutrey said. ‘It’s happening in the high-cost neighborhoods. It’s happening in the low-cost neighborhoods.’”

“In a written report to the City Council last month, Dutrey said 25 percent of Rialto’s vacant homes are poorly maintained.”

“‘The presence of vacant buildings … can lead to neighborhood decline, create attractive nuisances, contribute to lower property values and discourage buyers from purchasing properties adjacent to abandoned buildings,’ Dutrey said in his report. ‘Many of the homes are owned by lenders who fail to adequately maintain and secure these vacant buildings.’”

“‘Usually the foreclosure process takes about four of five months, from the time the notice is filed to the time the foreclosure sale takes place,’ Dutrey said.”

“Homeowners often move out before the sale.”

“‘The problem is: Who’s responsible for the house during this interim period?’ Dutrey said. ‘The homeowner is gone. You can’t find that person.’”

The Bakersfield Californian. “These days Louie Gregorio hears home hunters repeating the same question. ‘All of them go, ‘You’re going to show me foreclosures, right?’ said Gregorio, a broker and co-owner of Bakersfield Premier Realty.”

“Bank-owned and ’short sale’ properties account for roughly 50 percent of homes for sale on the Bakersfield MLS, according to the Bakersfield Association of Realtors.”

“Agent Victor Vazquez (estimated) foreclosures need cosmetic work about 75 percent of the time.”

“‘The bank hasn’t lived in the property,’ agent Jon Vaughn said. ‘So they’re not going to tell you, ‘Oh, we’ve got this problem with the air conditioner,’ because they don’t know there’s a problem with the air conditioner.’ A home inspection is critical, he said.”

“With foreclosures - where a previous owner was either unable or unwilling to make mortgage payments - minor fixes were sometimes deferred and allowed to morph into major problems, home inspector Butch Boynton said.”

“He’s discovered leaky plumbing that gave rise to mold. In a neighborhood with homes selling in the $400,000 range, Boynton came across a backyard concrete job that had sealed over the mechanism meant to drain moisture from stucco walls.”

“‘We’re seeing a lot of oddball things,’ Boynton said.”

“Some banks will respond to offers within two days, while others drag their feet, said agent Susan Ferguson.”

“A slow response might not be so bad today. In this market, no one should feel rushed, Vaughn said. ‘Stick the offers out there,’ Vaughn said. ‘Stick to your guns.’”

“Southwest Bakersfield’s new high school wasn’t supposed to go up in the middle of nowhere. But dead and delayed development means Independence High School towers over a knee-high skyline of mostly row crops and empty lots instead of suburban tracts that surround it on paper.”

“Like the Kern High School District’s other new site opening this summer - Mira Monte High School in southeast Bakersfield - Independence was created as the city’s housing market roared in 2004 and 2005.”

“Both schools…show Kern’s dramatic real estate boom and bust is affecting more than homeowners, sellers and buyers. Large public projects that require years of planning are also nudged by unpredictable ripples of the fallout.”

“When the district asked voters to approve a $219 million bond measure in November 2004, they pointed to maps with tens of thousands of new homes choking planners’ desks in city and county offices.”

“Overcrowded schools would be swamped with an unprecedented enrollment surge, figures at the time showed.”

“Scott, the district’s assistant business superintendent, said the current bust is much like one that hit Kern after a previous boom. ‘It looks an awful lot like what happened in ‘93-’94 in this community,’ Scott said, when a dramatic slowdown hit after a growth spurt.”

The LA Times. “Although Malibu Colony may have been where everybody knew his name, ‘Cheers’ star Ted Danson is moving on, having sold his Cape Cod-style house for an undisclosed price, according to area real estate agents. It most recently had been listed at $16.75 million. It was originally listed at $18.5 million.”

“So much for celebrity cachet. Even Hollywood types with homes for sale are feeling the market’s slowdown and lowering their asking prices.”

“Real-estate-savvy Frankie Muniz, the Emmy-nominated star of the hit TV series ‘Malcolm in the Middle,’ has relisted his five-bedroom, four-bathroom Hollywood Hills home for $3,695,000, down from $3,875,000 last fall. Muniz purchased it in January 2006 for about $3.5 million.”

“Angela Bassett and her husband reduced the asking price on their Hancock Park mansion from $5,999,000 to $4.6 million.”

“Norm Waitt Jr., co-founder of Gateway computers, is selling his Montecito mansion in a sealed-bid auction. The house, his ex-wife’s pet project, had been listed for more than a year.”

“He even dropped the price from $24.8 million to an eventual $19.7 million, based on his agent’s advice that ‘below $20 million’ would attract a buyer. It didn’t.”

“A Beverly Hills house that actress Sharon Stone bought for just under $11 million in April 2006 and then promptly relisted at $12.5 million — to no takers — is now back on the market at $10 million.”

“Stone never moved in, and the 1991 gated estate, with seven bedrooms and eight bathrooms, was completely refurbished in 2004. The actress lives in another mansion not far from this one. So why’d she buy this house? Impulse, pure and simple, said the listing agent back in 2006.”

“And now, not unlike that Lycra minidress you bought because it just looked so dang adorable on the Size 2 mannequin, she probably wishes there were a more liberal return policy when it comes to Beverly Hills mansions.”

They Were Living In The Moment In Florida


The Bradenton Herald reports from Florida. “Christine Walker, some might say, should have known better. As a mortgage branch manager and then an account executive for wholesale mortgages for Bank of America, Walker had intimate knowledge of the mortgage process. But in 2005, when homes sales were so hot in Florida there were often bidding wars, Walker and her husband, John, thought they knew a good investment bet when they saw one.”

“When a friend backed out of a contract for a new four-bedroom, three-bath home to be built in Twin Rivers in Parrish, the Walkers decided to take it over. ‘It seemed like it was no risk at that time,’ she said. ‘I was trying to get ahead by putting my money in a sure thing.’”

“The Walkers, who had near perfect credit, even put 10 percent down on the $435,000 home. But they still ended up with a 8.45 percent subprime interest rate.”

“‘But I wasn’t worried because I knew we were going to turn around and sell it when it was finished,’ Walker said. They also owned their residence in Twin Rivers and another home out-of-state.”

“But when the home was finished in July 2006, the housing market had started to fall and home sales were stagnant. They put the home on the market and priced it in the low $500,000s, which was ‘on the low side in the neighborhood,’ she said.

“The couple still thought they had a chance to make some money on their investment. ‘It wasn’t so shockingly clear that it was going to be a total disaster,’ she said. ‘But then, every month things got worse and worse.’”

‘In November, they rented the home for $1,650, still leaving them to make up the difference in their $3,000-plus monthly mortgage payment. It was a rent-to-own situation, Walker said, but when the renter moved out in July 2007, the couple knew they were in a losing battle.”

“‘We looked at each other and said, ‘we can’t do this any more,’ she said. ‘We had spent every piece of money cash flow to not lose our credit.’”

“In October 2007, Walker lost her job when Bank of America did away with the commercial division she was working in. The couple lost all three houses through foreclosure and filed for bankruptcy. Today, they and their three children rent a house in their old neighborhood.”

“She gets tired of seeing everyone pointing the finger at the next guy and not taking responsibility for their actions ‘I take total responsibility for what happened,’ she said. ‘It was a risk. But I’ve moved on. It was much more stressful thinking about losing everything than accepting and moving on.’”

“And she won’t be buying real estate as an investment anytime soon. ‘Investing in real estate is for the rich,’ Walker said.”

“Real estate agent Joseph Kandel made lots of money buying and reselling residential properties in Southwest and Central Florida before and during the 2004-06 housing boom. During one 18-month period, he said, he made $440,000 flipping five properties.”

“He used those proceeds to qualify for subprime, adjustable-rate loans to buy more houses. Then the sizzling local housing market fizzled, much to his surprise. ‘I know nothing lasts forever, but I didn’t see it coming,’ he said. ‘All I knew was I was making cash and making it big.’”

“His income, which had been in six figures, dropped to $17,000 last year - far less than his mortgage payments, which totaled $19,600 a month.”

“He managed to sell one property in Orlando for more than what he owed, but lost a Sarasota condominium to foreclosure earlier this month. He’s facing the same prospect on three Manatee County properties he still owns - the house and a condominium in Lakewood Ranch, and a house in University Park.”

“Kandel’s now hoping to sell them through short sales. But none have sold so far, and Kandel blames lenders instead of himself.”

“‘They lost $12,500 because of their stupidity,’ Kandel said. ‘That’s the problem with lenders right now: They don’t have an exit strategy.’”

“Kandel expects to lose his remaining properties to foreclosure later this year but said he is losing little sleep over it. ‘Why? My credit’s shot already,’ he said.”

“Despite the damage, he still plans to get back into investing in real estate.”

“Subprime lenders targeted Manatee County blacks, Hispanics and minority neighborhoods during the housing boom. Mario Garcia, a Mexican national…was making $12.50 an hour at a Bradenton lumber company when he bought a Ruskin mobile home for $279,000 in 2005.”

“Washington Mutual’s subprime arm, Long Beach Mortgage, gave him two loans, one for 80 percent of the purchase price and the other for 20 percent. To qualify Garcia for the loans, the mortgage broker listed his annual income at $60,000.”

“Garcia said when he asked about the figures at closing, he was told not to worry. ‘I said, ‘I can’t read it,’ he said through an interpreter. ‘And they said everything was fine.’”

“It was a costly mistake. With the loans’ high interest rates - 10.269 and 11.538 percent, respectively - he would have paid more than $1 million through the 30-year life of the loans.”

“He lasted just five months. With his income nowhere near the $2,350 monthly mortgage, he exhausted his savings before moving out.”

“Mike Rahn, production manager with CNL Bank in Sarasota, blames Wall Street and the way rating agencies.”

“‘If Wall Street and the bond-rating companies had not rated this subprime paper as triple A-type bonds, no one would have bought it, so there would have never been a market for it,’ Rahn says. ‘I lay a lot of this blame at the foot of Standard & Poor’s, Fitch and Moody’s. These ratings agencies should have never been allowed to rate this kind of paper. But again, they’re in bed with the investment banks.’”

“More than 4,000 foreclosure suits have been filed in Manatee County since January 2007, according to court records. That has left the county saddled with thousands of vacant homes - many neglected in the absence of their former owners.”

“Soaring foreclosures, coupled with the real estate downturn, means even ordinary homeowners trying to sell their properties are taking a hit.”

“‘Even though it’s not a foreclosure sale, it’s a distressed market,’ said said Bill Kersey, director of appraisal services for Manatee County. ‘If you want to sell it, you’re going to get a lot less for it than you did two years ago. And what this does is drive all the values in the neighborhood down. I have neighborhoods that are down as much as 30 percent, 32 percent.’”

“Gemma Henderson owns two homes in Covered Bridge Estates in Ellenton - one she lives in, the other she rents out. Her community ranks No. 4 in terms of foreclosure suits in Manatee County, with 31 actions filed during 2007. Nearly half of those - 13 homes - have already been foreclosed on.”

“Some investors looking to avoid foreclosure have turned to leasing their properties, and many of the same maintenance issues plague the rental homes. ‘People are desperate to have people come in and rent the houses they are trying to sell,’ Henderson said. ‘It’s put a big damper on where we are.’”

“‘Even the contractors have crashed so they can’t even finish what they started,’ Henderson said. ‘I think everybody is fighting to sell their home and it’s driving down everyone’s property values. They knew this day would come, but they were living in the moment like any other business would have.’”

The Herald Tribune. “Jeffrey J. Lauro was another of those energetic builder-developer deal makers who appeared to have the knack for making millions during Southwest Florida’s real estate boom. But when the real estate market soured, Lauro not only defaulted on millions of dollars in loans to banks and investors, but he has been charged by the Charlotte County Sheriff’s Office with stealing nearly $200,000 through a construction loan scheme.”

“‘He came to me to buy building lots,’ said Tom Welchman, a Port Charlotte real estate agent. ‘I loaned him $280,000. He bought and sold the lots within 40 days and never paid me back.’”

“‘He owes me about $3 million from putting together projects for him in Deep Creek and Burnt Store Lakes,’ said John Kingston, a Charlotte county mortgage broker and landowner. ‘He never paid and now the land is tied up in bankruptcy.’”

“Messages left for Lauro at a family residence in California and with his criminal attorney, Jason Goldman, were not returned.”

“‘I’m sure there are hundreds of real estate investors, as well as other local professionals dependent on the real estate market, that have had their livelihoods and personal finances turned upside down by the horrible turn of events due to volatile local real estate values,’ Goldman said.”

The St Petersburg Times. “Millions of dollars in debt and sued by dozens of disgruntled customers, the developers of the Clearwater Cay Club are liquidating some of their property to try to stay afloat.”

“During the real estate boom, Cay Club partners Dave Clark and Dave Schwarz made millions selling condo-hotel units. In Clearwater, the pair promised to convert apartment buildings into luxury condominiums on Old Tampa Bay. Investors from across the country sued, saying Cay Club violated securities laws by luring them into contracts with promises of quick appreciation and easy rental income.”

“Instead, many units are worth only half of what buyers paid for them. Cay Club also reneged on promises to rebate part of the purchase price through a ‘lease back’ program that put units in a rental pool.”

“At the auction, 10 of the condos and 10 of the boat slips will go to the highest bidder without a reserve price.”

The Orlando Sentinel. “Mitchell Harlee recently became a first-time homeowner in Orange County, fulfilling a lifelong dream despite some past bill-payment problems. ‘I had credit issues,’ he said.”

“A single father raising two daughters, Harlee improved his credit score by working closely with an east Orlando real-estate agent, Michele Guzman, who specializes in first-time buyers. Harlee attended Guzman’s free seminars and followed her advice for about a year — and finally was able to buy a spacious, four-bedroom, two-bath home in Pine Hills for $150,000.”

“He got a 30-year, fixed-rate mortgage with an interest rate of 5.9 percent. Better still, ‘I didn’t have to put a penny down,” he said, because he qualified for an Orange County down-payment-assistance program that Guzman told him about. ‘I couldn’t have done it without the help,’ Harlee said.”

“Single-family home construction in the Orlando area has stopped its downward spiral, according to a first-quarter survey by Charles Wayne Consulting Inc. of Maitland.”

“But the reason for that, said Jim Lewis, president of the real-estate research and consulting company, is because ‘they can’t go much lower.’”

“Only 916 new homes were started in subdivisions in the Orange, Seminole, Osceola, Lake and northeast Polk area during the three months that ended March 31.”

“Lewis found that only about 20 subdivisions out of the 376 ‘active’ subdivisions in the region accounted for more than 200 of the housing starts. That means, he said, that most of the subdivisions in Central Florida ‘weren’t [active] at all,’ with builders sitting on a combined 24,500 vacant lots.”

“And those are only the lots that are ‘fully developed and immediately buildable,’ Lewis said — his inventory count doesn’t include the thousands of other, unimproved lots in future development plans.”

The Palm Beach Post. “With no signs of a real-estate rebound in sight, a slew of buyers are trying to get out of their luxury condo contracts at Boca Raton-based Altman Development Corp.’s waterfront project in Stuart.”

“They’re taking the approach du jour when it comes to backing out of condo contracts around Florida: claiming Altman subsidiary Harborage Cottages-Stuart LLLP violated the Interstate Land Sales Full Disclosure Act.”

“The act, a 40-year-old law designed to protect land buyers or renters against fraud, requires, among other things, that developers of subdivisions of 100 or more nonexempt lots provide each buyer with a detailed property report.”

“The Harborage buyers say their contracts are null because they never received such a report.”

“In one of the lawsuits, filed May 15, Palm City residents R. Scott and Patricia Stone also claim the quality of construction on their $430,000 Harborage condo was not as good as the developer promised.”

“But Altman denies construction was sub-par and claims it is exempt from providing the property reports. The buyers are just trying to wriggle out of the contracts because real estate values have dropped, said Tony DiTocco, financial and legal consultant to Altman.”

“‘It’s all economic,’ he said. ‘It’s all a function of the marketplace.’”

What Something’s Worth And What Someone Will Pay


Some housing bubble news from Wall Street and Washington. Reuters, “Prices of single-family homes plunged a record 14.1 percent in the first quarter from a year earlier, marking a pace five times faster than the last housing recession, the Standard & Poor’s/Case Shiller composite index of 20 metropolitan areas (showed). Housing markets that grew the most during the housing boom, such as Las Vegas, Nevada and Miami, Florida, are leading the decline, S&P said.”

“S&P said its composite index of 10 metropolitan areas declined 2.4 percent in March, for a record 15.3 percent year-over-year drop.”

“U.S. sales of newly constructed single-family homes rose 3.3 percent in April to a 526,000 annual rate but they were down 42 percent from a year ago, which was the largest year-over-year drop in nearly 27 years, Commerce Department data on Tuesday showed.”

The Boston Globe. “The median price of a single-family home in Massachusetts was $305,000 last month, down 12 percent from $346,750 in April 2007, said the Warren Group. That drop was the steepest decline since the Warren Group began recording prices in 1987, the firm said.”

“The number of single-family homes sold in the state during April declined 12 percent to 3,215, from 3,654 a year ago, the Warren Group said.”

“‘In the early 1990s - during the last big housing slump - prices fell in 42 of 48 months,’ CEO Timothy Warren Jr. said in a statement. ‘Since March 2006, when prices first started to fall in this current slump, there have been price declines in 20 of the 26 months. But the early ’90s price declines weren’t as dramatic as the drops we’re seeing now.’”

The Associated Press. “Federally regulated savings and loans set aside a record $7.6 billion to cover losses on problem loans in the first quarter as they felt the brunt of the housing market’s downturn…the Office of Thrift Supervision said Tuesday.”

“Thrifts set aside $5.5 billion for loan losses in the previous quarter and $1.2 billion in the first quarter of 2007.”

“The agency regulates major lenders, including Washington Mutual Inc., Sovereign Bancorp Inc. and Countrywide Bank, owned by Countrywide Financial Corp.”

“The amount set aside for problem loans soared in the first quarter to more than 2 percent of average assets, about six times from 0.33 percent a year earlier. Charge-offs, or loans written off as not being repaid, rose to 0.93 percent of average assets from 0.28 percent a year earlier.”

“Troubled assets, loans that are 90 or more days past due, continued to soar, rising to $31.1 billion in the first quarter, up from $11.9 billion in the same quarter last year. As a percentage of total assets, troubled assets rose to the highest level since the early 1990s.”

The Buffalo News. “M&T Bank Corp. said it expects to lose more money on its investment in a Florida-based commercial mortgage lender, and is closely monitoring the value of its securities portfolio to see if paper losses of more than $100 million turn real.”

“In its quarterly filing with the Securities and Exchange Commission, the Buffalo-based banking company said it ‘anticipates operating losses’ at Bayview Lending Group LLC in the second quarter, as the Miami-based lender terminates leases and pays severance.”

“Also in the filing, M&T disclosed that it had recorded $194 million in ‘net unrealized losses’ in the first quarter on its investment securities.”

“In the fourth quarter, M&T recorded a $127 million hit to earnings after reducing the value of three mortgage-backed investments by 96 percent, down to just $4.4 million. At that time, the bank had concluded that the damage to those investments’ value was likely to be permanent, prompting it to take the charge.”

“In contrast, as of March 31, executives still believed M&T would receive all the principal and interest payments from the other mortgage investments, and were not ready to declare the losses permament.”

“‘The ability to reasonably determine the fair value of certain assets in times like these is, at best, severely limited, because those that previously made markets in these assets are nowhere to be found,’ said spokesman Chet Bridger.”

From USA Today. “A modest housing tract, set amid pecan trees here in suburban Phoenix, faces big problems: About 40% of its homeowners aren’t paying their association fees. It’s a scenario being repeated across the country.”

“‘We’re looking at a very deep hole,’ says Kent Miller, president of the Los Arbolitos Homeowners Association in Avondale, Arizona. ‘I don’t know how we’re going to get out of it. We’ve put liens on all the (delinquent) properties, but it doesn’t do any good.’”

“‘It’s happening all over,’ says Frank Rathbun, a spokesman for the Virginia-based Community Associations Institute. ‘It’s a national problem.’”

“In Phoenix, Shawn Stone, a lawyer for homeowner associations and property managers, says the problem is most acute at new developments. Some homeowner boards, Stone says, have been able to collect assessments from only half their members. ‘It’s not going to be too long before we’ll see situations where associations are going bankrupt.’”

“In Florida, homeowner groups surveyed by the Community Association Leadership Lobby complained that even some banks are failing to pay association fees after foreclosing on homes.”

“‘The whole issue of foreclosures is dire and getting worse,’ says David Muller, a Sarasota lawyer who co-directed the survey. ‘It’s causing the rest of the owners, who aren’t delinquent, to pay even more money.’”

“The ’snowball effect’ began, Muller says, as buyers, many of them speculative investors, started snapping up homes using subprime loans. As housing values plunged and mortgage bills ballooned, some buyers owed more on their mortgages than the homes were worth. So they stopped paying community association fees, then walked away.”

“‘At one place in Florida we had seven (foreclosed) homes on one street,’ says Steven Brumfield, VP of operations at Wentworth Property Management, which serves 950 community associations in more than a dozen states. ‘The association could not even afford to cut the grass, there were so many of them. They ended up with a street full of homes that looked horrible and wouldn’t sell.’”

“Eric Glazer, a property management lawyer in Florida, says he’s had to deal with some banks that failed to pay association dues after taking over properties through foreclosure. ‘Just this morning, we found ourselves in court, and we got a default judgment against a bank,’ he said last week. ‘Words can’t describe how bad the problem is here.’”

“Karen Conlon, president of the California Association of Community Managers, estimates that her state’s delinquency rate soared 1,000% over the past year. Fees at her condo association were raised 18.5% to account for a shortfall.

“‘We’re seeing cutbacks,’ she says. ‘Instead of having flowers planted six times a year, it may be just two or three times.’”

The Washington Post. “For a while, the two-story house with the burgundy shutters in Manassas appeared to be growing wheat in the yard. In one especially thick stand of the suburban savannah was visible a hollowed-out den, where a large mammal was apparently bedding down for the night.”

“Carl Berry lives two doors down from the house, which he said was abandoned about six weeks ago by a family that used to keep the property tidy. Now there’s a real estate agent’s lockbox on the door, rain-sopped newspapers in the driveway and, until repeated complaints brought it down, uncut grass so unruly it was attracting other occupants.”

“‘I’d never seen a rat in this neighborhood until now, and I’ve lived here since 1988,’ he said. He and his wife have seen snakes in the reedy thicket, too.”

“No county in the region has been hit harder by the foreclosure wave than Prince William, where there are nearly 7,000 empty houses, said neighborhood services coordinator Michelle Casciato. Given recent census estimates, that means about one in 20 houses in the county are unoccupied.”

“And new residents aren’t filling up the empty houses fast enough. Although home sales in the county increased 14 percent from January through April compared with the same period last year, foreclosures in the county have gone up 211 percent in that time.”

“There were 645 foreclosures last month in Prince William, Manassas and Manassas Park, court records show.”

“‘We’re hopeful that the real estate community and banking community will do what they can with the property entrusted in their care,’ Casciato said. ‘For the ones where that is not the case, we’re calling on the community to help us locate those.’”

“These days, Manassas resident Jennifer Hansbrough sees the overgrown lawns in her neighborhood as a depressing economic barometer. It’s bad enough that she is seeing more ticks and mosquitoes this year, but the long grass also signifies the $100,000 drop she has seen in her home’s value.”

“‘It reminds me the economy is crappy,’ she said.”

National Mortgage News. “INNOCENT VICTIMS OF A BAD MARKET: (Edited, in part, by me) ‘What am I to do? Last week I had a contract on my house for $316,500 with a qualified buyer. The appraisal came in $36,500 less than the agreed upon sales price. So the sale fell through. I live in Lake County, Ill., just north of Chicago.’”

“‘There are a few homes in my neighborhood for sale but no foreclosures that I know of. Because of all the hype of doom and gloom buyers are sometimes making low offers and some sellers are grabbing on like it’s a lifesaver. A little over six months ago my neighbor took $287K for their home. It was the first offer after only three months on the market.’”

“‘I have the same floor plan but theirs required painting of the interior and new carpet and it didn’t have the upgrades that mine has. That was the main comp that was used even though they also showed others in the same neighborhood over $300K. Is my only alternative to come down to the $280K appraised value, hope for a cash buyer, or not sell?’”

“‘My buyer didn’t have cash to pay the difference. They were getting a 97% FHA loan. The value of something is the price an educated willing buyer is willing to pay. The lenders are going to drive the prices down even further because of a few scared or desperate sellers. I can only imagine what foreclosures do to a neighborhood when the lenders agree to fire sales to investors.’ — Debbie.”

“In last week’s column I mentioned what some former mortgage executives are doing to make a living. Jack Martin, a former wholesale official, writes, ‘I have a very large database of past and present broker clients. About 80% to 90% of my past customers have closed shop. That is, the majority of offices I have called on in Orange County are no longer in business.’”

“‘What I think has happened is they haven’t really gone out of business, but are now working out of their houses (low overhead)…I know of one LO who is selling Toyotas and making a living again. I tried selling Infiniti’s but got really bored due to little or no customer traffic. The recession has affected car purchases.’”

The Morning Call. “There is no doubt that the rules have changed for buying and selling a house in this market. Most importantly, sellers need to price their houses aggressively to compete with comparable homes. And buyers need to make sure their financial ‘house’ is in order.”

“For almost 30 years, Realtor Joyce Carlos has been hanging up signs, holding open houses and selling real estate. The hard truth for sellers is that what they think their house is worth has no meaning to buyers. ‘The buyer looks at it from a different perspective – its current market value,’ Carlos warned.”

“‘You have to look at [the house] as someone else is looking at it,’ agreed Joyce Epstein of Joyce Epstein Realty in Manchester. ‘It’s not the place where you brought up your children. It’s a home for someone else. It’s a commodity.’”

“A sore spot for longtime homeowners is dealing with what they may consider insulting low-ball offers. Epstein recalled one prospective buyer who offered $98,000 below the listing price. ‘That’s the worst one I’ve got,’ she said.”

“But even low-ball offers can be a starting point in this market.”

“‘I had people come in at $70,000 below and we were able to negotiate it up and have a meeting of the minds at $29,000 below,’ she said.”

“To avoid excessively low offers, Epstein advises her clients to price their houses realistically. ‘There’s a big difference between what something’s worth and what someone will pay,’ she said. ‘The truth of the matter is the buyer is not going to pay you what you were going to get in 2004.’”

“News reports about the tough shape of the California and Florida real estate markets don’t apply to Connecticut, said Realtor Elizabeth Banco, in Simsbury. ‘But homebuyers can’t help but be affected by what they hear on the news or read all time. It starts to sink in subconsciously.’”

“Yet it’s true that today’s market is slower, with many buyers taking their time, Realtors said.”

“‘People are thinking prices will drop so they will get better deals,’ Banco said. ‘But if that happens, maybe interest rates go up and it will be a wash. Who knows what will happen? Most of us try to discourage that way of thinking.’”

The Losing Side Of The Game Of Hot Potato


The Post Independent reports from Colorado. “Garfield County Public Trustee Bob Slade isn’t concerned with the increase in foreclosures the county has seen in the first quarter of 2008, but it’s still a little early in the year. ‘Our numbers are up significantly over last year,’ Slade said. ‘But I’ve not had any go to sale yet.’”

“Slade said there are different statutes in foreclosures as of Jan. 1, giving the borrower more time between when the foreclosure is filed and when it proceeds to final sale. This change gives homeowners more time to get their situation in order, Slade said.”

“‘I’ve had several withdrawn already and have had none go to sale,’ Slade said. ‘So far everything I’ve had for May has been continued to future dates.’”

“With the foreclosures on the rise, home sales have plummeted over the first quarter, down 32 percent in total property transactions countywide. March alone saw a 49 percent decrease in property transactions over March 2007.”

The Standard Blade from Colorado. “A foreclosure report released last week by the Colorado Department of Local Affairs had bad news for the state in general and Adams County in particular. The report says new foreclosure filings in Colorado between January and March were 23 percent higher than in the first quarter of 2007.”

“Adams County had the dubious distinction of having the highest rate among all the counties. In total, 1,704 households were in foreclosure in Adams County in the first quarter of 2008, a 17 percent jump over the same period last year.”

“Local real estate brokers say they have seen the effects of the high foreclosure rates first hand. ‘I’ve been doing this for 16 years,’ said Deanne Kouba Day of Day and Co., Inc. ‘This is the weirdest market that I’ve ever seen. I’ve never seen the prices go this low, I’ve never seen auctions like this, I’ve never seen banks go so low.’”

“Day said the market is excellent for buyers, because banks are scrambling to get rid of an overabundance of properties. Local broker Brian Margolis, who sells properties on behalf of large national banks, agreed.”

“Margolis said home values are down about 5 percent this year in Brighton, and he predicts a double-digit decrease by the end of the year.”

“‘Business is really good right now, but it’s a shame it’s all bank-owned properties,’ Margolis said. ‘It is going to be very difficult for normal sellers to sell their homes.’”

The Daily Planet from Colorado. “An early-season slowdown in the local real-estate market is starting to ripple through Telluride’s finances and the town’s earnings from its all-important real-estate transfer tax. Revenues from the town’s 3 percent tax on property sales are lower now than they’ve been since 2005.”

“Property sales across the county are down some 32 percent for the first four months of the year. The decline follows a record-busting 2007 and years of nearly uninterrupted growth in the local real-estate market.”

“‘I’m hoping that it’s only an aberration and that it’s not a long-term thing,’ said council member Thom Carnevale. ‘But we can’t know for sure.’”

“The town officially expects to earn $4.7 million in transfer taxes this year, she said, after taking in $4.9 million last year. Last year’s haul was actually 6 percent below Telluride’s 2006 earnings of $5.3 million in RETT money, which represented an all-time high.”

“As Telluride built out over the 1990s and watched home prices rocket and property bounce from owner to owner, the transfer tax turned into a mint for town government, more than quadrupling over the past 15 years. In 1991, Telluride took in $952,000 in transfer taxes. In 2007, it grossed $972,000 in a single month.”

The East Valley Tribune from Arizona. “With home sales still in a slump, Valley builders and real estate agents are working to mend strained relationships between the two sides and boost business for everyone.”

“During the boom - when sales were nearly effortless - some builders slashed commissions to agents who brought in clients. Others offered flat fees that were a fraction of a standard commission amount.”

“Some agents felt, ‘You pushed us away when you didn’t need us, and now you do need us,’ said Diane Byrne, VP of marketing for Cachet Homes.”

“With so many abandoned homes, people think the best deal is always the foreclosure home, but that’s not necessarily true, said agent Alicia Conley.”

“Builders may be offering new homes in the same area for only a few thousand dollars more, said associate broker Dawn Matesi. Buyers also know what they’re getting instead of having to accept a foreclosure home ‘as is,’ Matesi said.”

“‘It’s brand new. It’s got the warranty,’ she said. ‘It’s really a no-brainer.’”

“With a massive oversupply of homes in today’s market, it’s crucial for builders and agents to work together, said Karl Tunberg, co-owner of Chandler-based Sanctuary Builder.”

“A little bit of distance has always existed between real estate agents and builders - a rift that widened during the boom, he said. Some builders gave agents a $1,500 flat fee on $300,000 and $400,000 homes, he said. Usually, that commission would be closer to $15,000, he said.”

“Many people in the industry are struggling and falling on hard times, he said. ‘It’s really easy right now to get down about what you’re doing and not feeling like you’re worthwhile,’ he said.”

“Two years after one big condo tower got the green light in Tempe, the site remains a fenced-off dirt lot. Just down University Drive from that site, a larger cluster of towers has yet to rise more than a year after the city signed off on that ritzy development.”

“The consensus is some of the planned luxury condo towers won’t sell in today’s economy and will have to wait years for demand to rebound.”

“Tempe Mayor Hugh Hallman, who holds an economics degree, expressed exasperation at the idea that some delays could jeopardize the larger vision for a denser, more cosmopolitan community.”

“‘The real story is: My God! - people are still investing hundreds of millions of dollars in Tempe,’ Hallman said.”

“Some city-approved projects won’t ever happen, Hallman acknowledged, but only because some ‘bottom-feeders’ structured unrealistic transactions that unfairly tarnish the reputation of other projects. ‘The silly deals are going to shake out,’ Hallman said.”

“City officials and developers will only privately speculate at what deals they consider silly or realistic.”

“Several forces have collided at once and hurt the condo market, said Randy Levin, the project manager for Hayden Ferry Lakeside. The credit crisis has left some buyers unable to get loans. Others can’t sell their existing homes. And the supply of condos has surged past demand.”

“‘What’s going on now is kind of a cleansing process,’ Levin said. ‘You have to ask yourself, were there really too many condos that were put on the board here? Was that too much all at one time?’”

From Sedona.biz in Arizona. “Scott Cole, the developer for the 158-unit Cole Sedona Preserve condominium project on both sides of Hwy. 89A in Uptown, successfully requested a 24-month extension for his development agreement with the city on May 13.”

“Mr. Cole said one major obstacle is he cannot get loan financing to do the project unless he can pre-sell up to 50 percent of their projects. The local condo market was good when he began the Preserves project more than two years ago, but he is not so excited about today’s market.”

“‘Banks have completely turned their backs on new condo projects so I am not sure an advance sellout of even more than 50 percent will turn bank heads at this point with the general softness in the market,’ said Laurence Ross, an investment sale broker with Bensen & Associates in New York.”

“‘What I have seen over the last few years is a ton of amateurs - fly-by-nights - who are now on the losing side of the game of hot potato; and are scrambling for dollars after paying astronomical numbers on a price per buildable square-foot,’ Mr. Ross said.”

The Tahoe Daily Tribune. “What does the Chapter 11 filing earlier this month by Tropicana Entertainment - the parent company of Horizon Casino Resort and MontBleu Resort Casino & Spa - mean in the future?”

“The unknown is nothing new for South Shore casinos. But the potentially higher stakes these days are reflected in the emergence of Indian gambling in California, the absence of major airline service to Tahoe, the continued growth of Las Vegas casinos as a worldwide destination and a fickleness among gamers themselves.”

“‘Overall, there’s been a tremendous growth in gaming. It just hasn’t been here,’ said Eadington, who has tracked casino gambling at Tahoe for 30 years. ‘Reno hasn’t done as well, either, but not as badly as South Tahoe.’”

“He pointed to Lake Tahoe’s North Shore condominium and timeshare projects planned for Cal-Neva and the Tahoe Biltmore. The idea is to focus less on gaming and more on high-end retail and destination visitors.”

“‘The old model is the hotel feeds the casino,’ Eadington explained. ‘The new model is the casino can’t do that, and so you generate business and condominiums. Right now, it might be a tough sell because of housing and the national markets.’”

“While the South Shore is separated by a state line, the effects of a Horizon closure would put further financial constraints on the city of South Lake Tahoe, said City Councilman Bill Crawford.”

“‘We have to make the adjustment to the reality, and the reality is Tropicana is in serious trouble,’ Crawford said. ‘It looks like within three years, the Horizon will not be a gambling house. The handwriting is on the wall there.’”

“Add to this a real-estate downturn and a convention center redevelopment project - considered among some as an economic silver bullet that has run into financing problems - and South Lake Tahoe could be in for a wild ride, Crawford said.”

“‘My position is we adjust to the reality,’ he said. ‘The reality here is we are in decline.’”

The Review Journal from Nevada. “Lehman Bros., which recently gained control of the financially troubled Vegas Grand luxury condominium project, has hired CB Richard Ellis, a commercial real estate brokerage, in Las Vegas to market the property.”

“‘What this really gives somebody is a clean slate,’ CB First VP Geoffrey West said. ‘It was originally intended as a for-sale condominium project, but that market has all but disintegrated. This gives an opportunity to utilize it as luxury apartments, a nongaming hotel and resort or a time share.’”

“As if waning taxable sales and slumping gaming revenue weren’t enough, you can add Clark County property taxes to the catalog of levies feeling the economic slowdown.”

“The number of delinquent parcels advertised in a public notice in Wednesday’s Review-Journal rose 51.2 percent when compared with the number of lots published in the paper a year ago, Clark County Treasurer Laura Fitzpatrick said Friday.”

“What’s more, 2.3 percent of the county’s properties in Wednesday’s notice were in arrears, compared with 1.4 percent a year earlier.”

“Astoria Homes claimed the single-biggest number of parcels on the list, with taxes due on about 1,300 pieces of property in the county. Astoria President Tom McCormick noted it’s the first time in the local builder’s 13-year history that the company missed the deadline on property-tax payments.

“But it’s what happens in a credit crunch, when banks stop lending construction financing, McCormick said. ‘It’s very embarrassing,’ he said.”

“Astoria, which has eight actively selling neighborhoods in Las Vegas and five more under development, had secured agreements for construction funding from three lenders who have since decided they want out of residential real estate nationwide.”

In Business Las Vegas from Nevada. “In April the 1,794 home sales on the MLS were 30 percent higher than April 2007, the first meaningful month-over-month gain amid the housing slowdown. No one is expecting a boom, but there is a sense of hope in the real estate community that the bottom has been reached and the market is inching back up.”

“‘There have been reports that the bottom has been hit,’ said said Bob Hamrick, CEO of Coldwell Banker Premier Realty. ‘I can’t guarantee this, but we can certainly see it from here. It’s not with great velocity, but we are bouncing off it.’”

“So far, May hasn’t been as good as April, and Hamrick said the market may be at a ’sloppy bottom,’ where there are monthly variations.”

“Properties owned by banks and other lenders continue to account for more than half of the homes being sold every month.”

“High-end buyers aren’t willing to pay $900,000 for a noncustom home that is only selling for that price because of appreciation, said said Mark Stark, CEO of Prudential Americana Group.”

“‘The middle range is the getting hit the hardest,’ Stark said. ‘The homes $400,000 to $900,000 are getting crushed.’”

The Las Vegas Sun. “Everything seems fine out at Lake Las Vegas. Except for the developer who couldn’t pay the mortgage, the four-diamond hotel that just filed for bankruptcy court protection, and home foreclosure rates roughly the same as in the rest of the valley.”

“At the beginning of the year Atalon Group, a firm that specializes in turning around financially troubled companies, acquired Lake Las Vegas after its original developer, Transcontinental Corp., defaulted on a $540 million loan.”

“‘Everybody who was there is out,’ said an investor familiar with recent changes at the community around a man-made lake southeast of Las Vegas. ‘The people who were there from the beginning are just gone.’”

“Plans call for about 9,000 homes near the 320-acre lake. Today, 1,500 houses exist. Clark County recorder documents show that 142 of those residences - roughly one in 10 - have been foreclosed on or have been on the brink of foreclosure since January.”

“More than 400 houses and condos were sold in 2006 during the boom in residential construction. In 2007 that number dropped to 234. This year only 54 have been sold.”

“Donna Gold knows something about the roller-coaster ride that’s Las Vegas real estate. After moving from California to Las Vegas in 2000, Gold thought she had come to the land of milk and honey.”

“A year after moving here, Gold got a license to sell real estate just like she once had California before quitting the business about 1985.”

“Gold bought nine homes and two condominiums in Las Vegas and four homes out of state. She couldn’t believe her timing: When she started buying homes in 2001 and 2002, the median price of existing homes was $136,500. The price rose to $275,000 by 2005, and Gold’s wealth grew to $4.5 million, not counting the six figures she earned a year as a Realtor.”

“She planned to sell a couple of properties and cash out on the appreciation and keep the others as rentals to produce income. She wasn’t buying real estate as a flipper, she says.”

“‘I came here in the golden age and realized this is a perfect time to make money. I felt for the first time that God blessed us,’ Gold says. ‘I was trying to create a future.’”

“But the market changed and with it Gold’s fortunes. She sold one of her Las Vegas homes, but the change in the real estate market made it difficult for her to sell any other properties at the end of 2006 and beginning of 2007.”

“She was able to refinance out of six adjustable rate mortgages, but found herself burdened by two others she was talked into by her mortgage brokers with the mistaken belief she could easily refinance them as she had the others.”

“After being able to make all her mortgage payments in the past through the end of 2007, Gold says she has fallen about $22,000 short each month on mortgage payments and is as much as four months behind on some payments. She lost access to her line of credit even though she is still paying it down. She also has to deal with some of her tenants’ inability to pay rent.”

“The real estate market was hurting her income as a Realtor. Her once six-figure income fell to nothing because of no commissions in 2007. Gold said she worries about prospect of foreclosure, but has no plans to file for bankruptcy. She remains adamant that she will survive these tough times.”

“‘I am going to come through this fine,’ Gold says. ‘I don’t blame anybody. I take responsibility, but I am going to forge on. I am going to dust myself off and keep going forward.’”

A More Affordable Version Of The American Dream


The Worchester Business Journal reports from Massachusetts. “The Falls at Arden Mills, a gated condominium development in Fitchburg, is eventually supposed to have 204 units. So far, though, only one building of the project, with 48 units, is standing, and only 11 of the condos are occupied. ‘It’s slowed down quite a bit, no secrets there,’ said Steve Callahan, president of Global Property Developers Corp. of Bridgewater, which is developing the project.”

“Indeed, Massachusetts condo sales were down 32.6 percent for the first quarter of 2008, according to The Warren Group. With lots of condos in Central Massachusetts sitting empty and more set to be built, Callahan and other developers say there are real costs to the slow market.”

“For some, there’s not much of a silver lining in the current condo market. University Park Lofts in Worcester has received plenty of publicity for selling only eight of its 37 units before going bankrupt. The remaining 29 condos are scheduled to be auctioned off on May 29.”

“Last December, Mark Biller, operations manager at Lifestyle Builders LLC in Holden, gave up on a planned 131-unit condo project in Fitchburg after a fight with the city over improvements to water lines in the area. He said he had already worked on the project for three years at that point, but today he wonders if it wasn’t a good thing that he got out when he did.”

“Biller also…handles three other condo developments in the area, and he said nothing is selling. At the Village at Westminster Place in Holden, he said, Milford-based Fafard Development planned for 125 units, but in the past three years it’s built only 16.”

“‘Unfortunately the market’s not there,’ Biller said. ‘I don’t foresee myself building anywhere.’”

The Morning Call from Pennsylvania. “For nearly a decade, tax-weary people from New Jersey and New York poured into the Lehigh Valley in search of a bigger home on a bigger lot, and developers couldn’t build so-called McMansions fast enough to meet demand.”

“But as a credit crisis sweeps the nation, forcing a record number of homeowners into foreclosure, home building, especially construction of large homes, in the Lehigh Valley has slowed to a crawl.”

“A housing downturn that has made credit more difficult to get, combined with rising energy costs, is pushing the market away from the McMansions built in the Valley the past decade, and toward a more affordable version of the American Dream.”

“‘We’re not looking to eliminate big homes, we just think there should be a balance,’ said Planning Commission Executive Director Michael Kaiser. ‘Most of what we see now is a 3,000-square-foot home with giant rooms and a cathedral ceiling. The typical firefighter, policeman or medical workers can’t afford it.’”

“Last year, the average size of a Valley home declined for the first time since 2001, as the number of new McMansion-style homes fell from a peak of 2,401 in 2005 to 1,088.”

“Bethlehem Township developer Abraham Atiyeh announced two weeks ago that he’s building a downtown Bethlehem development of town homes starting at $129,000, and national builder Pulte Homes has halted its large-home building in the area and last winter began marketing a new home, called ‘The Lehigh,’ with 1,050 square feet and starting price of $139,000.”

“Urban development expert Christopher Leinberger said one of the main reasons people flooded into the Valley to build giant homes is now gone — and it has little to do with the credit collapse.”

“‘That model where people took on a long commute to have a bigger house was predicated on cheap energy, but with $4-a-gallon gas, that market is shut down,’ Leinberger said. ‘This is the perfect time to reshape your efforts in the housing market.’”

“Consider what happened earlier in the decade: Valley population grew by more than 8 percent, largely spurred by the migration of people who work in the New York, New Jersey or Philadelphia areas. So developers, both local and national, began building the kind of giant homes the transplants demanded — the model not-so-affectionately nicknamed the McMansion.”

“The so-called ‘New Jersey invasion’ drove up home prices across the region. At the same time, the demand for those massive homes had developers gobbling up farmland, chewing up more than 4 square miles of open space each year Valleywide.”

“‘McMansion’ is a subjective term with no set definition. Avi Hornstein, part owner of one of the area’s largest builders, Allentown’s Omega Homes, said the term McMansion is more about a cultural trend than a particular size.

“‘The McMansion is an ‘I can have one, too’ product,’ Hornstein said. ‘It’s a production-line version of the mansion. Without the custom touches, it puts a lot of space at a price point that’s within reach of people of middle and upper-middle income.’”

“The average home built this decade in the Lehigh Valley is the McMansion. Of the 16,202 detached homes built since 2000, nearly 40 percent have square footage of more than 2,450.”

“‘Don’t blame us, we’re just building what the current zoning laws allow,’ said Chuck Hamilton, executive officer of the Lehigh Valley Builders Association. ‘If a township requires 1-acre lots, no one wants to put a small house on that. If these planners allow smaller lots, we’ll be happy to build smaller homes, if people want them.’”

“‘In the past 30 years, zoning that was designed to limit development ended up creating the McMansion market,’ Hornstein said. ‘You can’t build a small home on a 1- or 2-acre lot. The costs just don’t add up.’”

The Herald Mail from Maryland. “Geographically, the large duplexes going up behind Hagerstown’s old Pangborn Boulevard neighborhood are on a hillside. Economically, some of their owners are on a cliff.”

“The houses they moved into just a year or two ago are now worth as much as 24 percent less than they paid. ‘We don’t know what to do,’ said Armita Varjavand. Their savings gone, a loan from her mother is the only way they can pay the rising mortgage that the lender refuses to refinance as the property loses value.”

“Michael Davis, who lives a few doors away, is applying for refinancing because his mortgage is set to readjust this fall. ‘Yeah, but I know a lot of these people have tried,’ he said, gesturing up and down the street. ‘That’s why they have the ‘For Sale’ signs out.’”

“Such predicaments are typical among the more than 1,000 families who bought the houses that popped up quickly in Washington County during the market’s recent boom, an official said.”

“‘For a lot of these people who purchased with an adjustable rate, they now have a house of less value, they’re looking to refinance and they now have less equity,’ said Sharon Disque, executive director of a nonprofit organization whose work includes counseling families facing foreclosure.”

“Worse yet, Disque said, ‘a lot of the people that bought in ‘04, ‘05, ‘06 and ‘07 are from areas east of here,’ and they still commute to jobs there.”

“So when gasoline prices began to spike, ‘we had a convergence of a housing boom that went bust, and then, it was compounded by a sustained rise in gas prices,’ she said.”

“Kensington Villas is a 100-lot development on a long, skinny, 20-acre tract bought for $5 million in late 2004 by national home builder K. Hovnanian Homes. Since 2005, K. Hovnanian has been building large two-story duplexes.”

“Ten families moved in in 2005, 30 more in 2006 and 24 more in 2007, records show. Robert and Sharon Lopez were among the first. Lopez said he and his wife were living in ‘the ‘burbs of Washington’ when they decided to move here in 2005.”

“They read a study showing ‘that Hagerstown had the right growth potential, property values were going up,’ recalled Lopez, who began investing in real estate at least eight years ago.”

“In October 2005, they paid $324,650 for the 2,731-square-foot house at 215 Brynwood St. Looking back, Lopez said he can see now it was very much the wrong time for them to buy - as prices were soaring to their peak and just before they began to drop.”

“‘Of the investment properties we have,’ he said, ‘this is probably the worst. We put 20 percent down, and it’s (the loss of value) probably eaten up most of that 20 percent.’”

“According to a Herald-Mail examination of new property tax assessments in the Kensington development, Lopez’s house has lost 19.9 percent of its value already. The house’s worth sunk to just $259,780 in January, when the latest assessments were issued by the Maryland Department of Assessments and Taxation.”

“Fifty-six of the 64 Kensington houses assessed by January were actually worth less than what the owners paid. The combined value of all 64 properties has fallen 11.3 percent. The homeowners paid a total of $18.4 million but, by January, the properties were worth just $16.3 million.”

“Sitting in his Kensington house, Robert Lopez said he has seen the up-down of the economy firsthand. ‘We bought the first unit here and the (sales) girl told me, ‘Almost every time we sell, we raise the price,’ Lopez recalled. ‘But they started trickling down, trickling down. And here we are today. And, who knows where we go from here?’”

“Several houses up the block is the four-bedroom home of Malick and Brenda Thiam. The Thiams wanted something larger than the town house they had in Montgomery County, Md. Washington County offered ‘more home for less money,’ Brenda said.”

“They were happy in November 2006 when they paid $343,283 for the house here. Then came January 2008 and the assessment notice, saying the house is now worth $257,930 - a 24.8 percent drop in just less than a year.”

“Brenda and her husband were incredulous and outraged. ‘We wanted so badly to blame someone for the situation we’re in, but no one put a gun to our head,’ she said.”

“So now, they are resolved to work through the situation, pay down the debt and eventually, perhaps, sell and move elsewhere. But some of their neighbors are worse off. Lenders have foreclosed on at least two houses - including 254 Brynwood St., which is next door.”

“One homeowner still hoping not to have to sell is Varjavand. She and her husband bought their four-bedroom house for $306,413 early in 2006, according to assessment records. Now, the assessed value is $238,450 - 22 percent less.”

“Varjavand said their first real sign of trouble came when the interest rate on their mortgage rose from 8.5 percent to 11.5 percent, which is more than they can afford.”

“When their lender refused to lower the payments, the couple used their savings. Now that that is gone, she said, they’re borrowing from her mother. They don’t know where they can turn next.”

“To cope, ‘we try to use less water and electricity,’ she said. And, ‘less driving.’”