The Housing Bubble

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The Missoulian reports from Montana. “The Missoula Symphony Orchestra is not in the business of selling houses. But that hasn’t shielded the local orchestra from feeling the effects of a slowdown in the Missoula housing market and the broader economic downturn that is sweeping the nation. Late last summer, the MSO learned that two of its major sponsors - one of them a local real estate company, which John Driscoll, executive director of the orchestra, declined to name - would not be supporting the orchestra with cash donations this year. Driscoll’s sentiment is echoed at other local arts organizations and businesses around the area. Though none says it is panicking, most have begun to see signs of a slowdown in charitable giving. And all are worried that they’ve only seen the tip of the iceberg.”

“‘Fundraising has been a struggle,’ said Tom Bensen, director of the Missoula Cultural Council. ‘There are a lot of longtime funders who are either taking a break this year or are contributing less than in the past, and it’s been hard to get new donors. If you don’t have an established relationship with a potential donor, nobody’s in a state of mind to add more donations and advertising to their budget.’”

“Ram Murphy, operator of Murphy-Jubb Fine Art, hasn’t seen any real signs of a slowdown in sales at his downtown fine art gallery. In fact, he wonders how much the national economic crisis has really hit home in Missoula. ‘Right now, we seem to be doing fine,’ said Murphy. ‘Who knows,’ he added, “by March we may all be on our knees. But not yet.’”

The Hungry Horse News from Montana. “Plum Creek Timber Co. announced last week it would cut 68 jobs from its plywood plants and has also informed its four logging contractors that there’s no work for them. The lumber markets are the worst in almost three decades, notes Shawn Church, editor of a publication that tracks lumber markets for the wood products industry.”

“Church said that some lumber prices are actually lower, even if they’re not adjusted for inflation, than they were in the recession of the early 1980s. ‘The industry as a whole is dealing with a historical downturn,’ he said.”

The Capital Press from Oregon. “Tree seedling nurseries have been hard hit financially on two fronts. The housing market free-fall has sunk lumber and timber prices, reducing logging operations and thus cutting demand for seedlings for reforestation. At the same time, large numbers of Christmas trees have been reaching maturity and tree prices have fallen in recent years, reducing that industry’s demand for seedlings as well.”

“‘We’ve seen a tremendous downturn in orders,’ said Tom Jackman, CEO of IFA Nurseries, which produces seedlings for forestry in numerous locations in Oregon and Washingon.”

“A downturn of this magnitude is probably unprecedented in the industry, Jackman said. ‘Before, we were saying, ‘At least it’s not as bad as the early 1980s,’ he said. ‘Now, the consensus is that it’s much worse than the early 1980s.’”

“According to the Random Lengths information service, the composite price for framing lumber fell to $234 per thousand board feet - a 50 percent drop from the most recent peak in August 2004 and the lowest price in at least the past decade. Tom Jackman of IFA Nurseries said that market conditions have gotten so bad that customers would rather abandon their contracts and lose cash security deposits than buy pre-ordered trees.”

“‘People aren’t harvesting, they’re not logging,’ he said. ‘People are just leaving them with us.’”

The Lake Oswego Review from Oregon. “Struggling homebuilders are looking for a lifeline from local governments, asking for flexibility on rules and fees to help them get back to building. Joe Keizur, interim vice president of government affairs for the Home Builders Association, said builders are essentially calling in favors from governments after being generally cooperative with fee increases while building was lucrative. ‘Right now we need some reciprocity,’ said Keizur.”

“The Oregon Employment Department noted 11,000 construction jobs were lost in the development sector between September 2007 and September 2008. Many small-scale home builders and contractors aren’t counted in those figures, or in the current unemployment rate of 7.3 percent, because they are self-employed. ‘It’s probably as bad a building environment than it’s been since the ’80s and given that, we need jurisdictions to help us out,’ Keizur said.”

“In other communities, larger problems loom. In Happy Valley, Bethany, Sherwood and Wilsonville along with other areas of both Clackamas and Washington counties, stalled construction projects and vacant subdivision plats blight the communities.”

“In Tualatin, Mayor Lou Ogden plans a meeting with the Home Builders Association where he is likely to grant extensions for approvals and permits in that town. Ogden said he was open to talks about any action Tualatin could take to get building back on track there. ‘We’re interested in looking at ways to not pull the rug out from under these builders as they try to wait out the storm,’ he said. ‘We’ll talk about whatever their issues are. We’re all in this together.’”

The Oregonian. “Shoppers throughout the Portland area swarmed the malls as they hunted for gifts and deals. Debbie Jackson and Annie Montgomery always shop together the day after Thanksgiving. Jackson’s just doing less of it this year. Her husband’s heating and air conditioning business has seen things slow down because of the housing downturn.”

“Montgomery, though, plows ahead with her shopping. She’s a real estate broker from Bend, where the housing market is in tatters, but Montgomery remains upbeat. ‘It’s going to turn around,’ she said. ‘People just need to get some confidence in the market.’”

“Ryan Strasshofer is the Bend-based representative of a Eugene company that is Oregon’s leading buyer of homes at foreclosure auctions. It’s his job to sift through the ever-growing number of homes entering the foreclosure process to see which ones his company might buy and rapidly resell. ‘To summarize our business model, we sell them cheap because we buy them cheaper,’ said John Helmick, Strasshofer’s boss.”

“Defaults seem to come from every economic caste, but there are common causes: divorce, layoffs, luxury purchases and too much leveraging of falling equity, said Strasshofer, who operates as a private contractor. ‘It’s amazing how many homes I drive by and see a new boat or motor home in their driveway, and they’re in foreclosure,’ he said.”

“According to company statistics, of 111 homes put up for auction in Deschutes County in October, five sold. The rest reverted to the lenders holding the liens. ‘What’s happening is that the banks have not dropped the price low enough to get interest from buyers,’ Helmick said.”

The Newport News Times from Oregon. “For many, the holiday season means extra spending - on gifts, travel, accommodating guests, etc. And for those who may not have any savings stored away, the weeks prior to the holidays are an ideal time of year to earn a little extra cash with a seasonal part-time job to help out with extra expenses. But this year is different. With the economy in turmoil and the future looking bleak, many Lincoln County businesses have scaled down or outright eliminated their hiring of extra help for the final months of the year.”

“The number of seasonal or temporary job postings by local businesses are at an historic low, said Sandy Mies-Grantham, business representative for Newport’s Worksource Oregon. She said that retail industry employers are those that typically hire the most seasonal or temporary help. ‘I’ve never seen numbers this low,’ she said. ‘It’s just not happening.’”

“‘The easiest place for any business to save money is by limiting its workforce costs by cutting back as much as possible on hiring, especially during the holiday season,’ Rob Abbott, work force analyst for the Oregon Department of Employment, wrote in a statewide September report.”

“He continued, ‘If the holiday hiring pattern of previous years holds true, look to see fewer holiday-related jobs this year than we have enjoyed in recent years, with the December peak in holiday-related retail trade possibly dropping to 2005 levels. We are wrestling with the uncertainty of an election year, high energy prices, a housing downturn, and a credit crunch in the banking sector of our economy. With all of these things coming to bear on our economy, the outlook is less than stellar for holiday employment in Oregon. Many stockings won’t be brimming with the plenty of recent years.’”

The Seattle Times from Washington. “Real-estate agent Jonette McGrew is willing to do what it takes to make a property competitive in the market. Sometimes, that means weeding flower beds, washing windows and painting interior walls. McGrew recently began offering free staging services for her clients. ‘In this market it is a must, no question,’ she said.”

“‘The days of just taking the listing and putting it into the [Multiple Listing Service] and letting the MLS sell the property are gone,’ said Brigitte Pascutoi, managing broker at John L. Scott Real Estate’s Bellevue North office.”

“Bill MacDonald, (a) 20-year real-estate veteran recently broke out the toolbox to add double-crown molding to kitchen cabinets, replace light fixtures and install oil-rubbed bronze hardware in a client’s home in Woodinville. MacDonald picked up the listing in July, after it had been on the market a year. He worked with the owners to modernize it with new carpet, paint, landscaping and other changes. He also got them to drop the price $70,000 to $839,000. Now, he’s scheduled multiple Sunday afternoon open houses at the property to entice potential buyers through the door.”

“‘It’s vacant. It’s staged. It’s absolutely perfect inside,’ MacDonald said. ‘And yet it’s impossible to get somebody in to look at it.’”

“For some real-estate professionals, the change in the market is a reminder of why they got into the business in the first place. ‘I didn’t really like the frenzied market,’ said Dennis Brown, president-elect of the Seattle King County Association of Realtors. ‘People had the conception that Realtors were foaming at the mouth. We were so busy. But our business is all about relationships, and when the market is that busy, you don’t have time to build long-lasting relationships.’”

“Seattle architecture firm Weber Thompson had 82 employees when it moved into its new headquarters building in South Lake Union this spring. Now? 54.”

“Seattle-area architects are feeling the chill as the local and global economies cool. The development pipeline on which they depend is drying up. Several firms have laid off employees because there simply is less work. The Architectural Billings Index, a national measure of industry health devised by the American Institute of Architects, declined more steeply in October than in any previous month in its 13-year history.”

“Part of the problem is many larger projects with plans and permits in hand are stalled, often because developers can’t get financing. Weber Thompson’s Web site, for instance, shows eight high-rise projects the firm has designed in downtown Seattle. Two are built. One is almost finished. The other five are on hold.”

“‘When you look at financing and equity requirements, the landscape has changed completely,’ said Mark Woerman, a principal with Seattle firm CollinsWoerman. ‘People just truly don’t know what to do.’”

The Spokane Journal of Business from Washington. “Including transactions involving new and older dwellings, single-family home sales in the first 10 months of the year in Spokane County totaled 4,359 units, down 28 percent from 6,042 sales in the year-earlier period. Meanwhile, the median price here for home sales closed in October was $177,000, down 4.3 percent from $185,000 in the year-earlier month, says Rob Higgins, executive vice president of the Spokane Association of Realtors. ‘We’re having a modest reduction in prices,’ Higgins says.”

“It’s more common for the number of homes on the market to decline around the holidays, when fewer sellers choose to list their homes, says Ken Lewis, the broker at Prudential Spokane Real Estate, which has offices in Spokane and Spokane Valley. He believes, however, that the reduction in inventory between the end of August and Oct. 31 is more than just a normal seasonal adjustment, and says he’s encouraged by that.”

“‘Maybe we will get inventory down to a manageable level,’ he says. ‘The market here isn’t terrible, it’s just that buyers have a lot of choices.’”

The Columbian from Washington. “Higher-end retailers are showing signs of a struggle this year, said Mike Merrill, co-owner of Pro Golf, a shop that offers golf equipment, clothing and custom golf services. ‘In the Portland-Vancouver area, eight independently owned golfing stores have recently gone out of business,’ he said.”

“Merrill blamed the uncertain economy for a 20 percent drop in his store’s sales in recent months.’Golfers are going to buy from you anyway because it’s their passion,’ Merrill said, although he blamed his store’s slipping sales, in part, on Clark County’s plummeting home-building industry. ‘Our bigger customers have been the Realtors and home builders. Now we can’t count on them,’ Merrill said.”

“Local home sales that were down by 33 percent through October have also affected furniture stores, said Keith Koplan, owner of Koplan’s Home Furnishings in downtown Vancouver. ‘Our sales are down significantly,” said Koplan.”

“Koplan predicted big-ticket sales would continue to slide into 2009, primarily because cash-strapped homeowners can no longer secure the home equity loans that helped finance those purchases. Slowing home sales and declining values limited the ability to obtain loans, which homeowners routinely borrowed against.’

“‘The ATM known as your house has shut down,’ Koplan said.”

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Readers discussed the economic fallout from the housing bubble. “My wife and I decided to speed the bust along by not participating in the consumer aspect of Christmas this year. Beyond a couple bottles of wine for our folks, we’re instead making a donation to our two favorite non-profits. My parents are definitely going ‘lite,’ or so they say. But I think it’ll take a couple more Christmas years before we see the real pain–all those rich people ARMs are just starting to reset, so they probably still have access to credit. 2009 or 2010 for total bust.”

A reply. “I have been fed up with the consumerism related to Christmas for years. In our family we mainly just give gifts to kids anyways, so aside from having a nice dinner we don’t spend all that much. But I get the sense that lots of people are doing the same thing. The housing bubble led to a credit and debt bubble, and this in turn led to a retail bubble. One by one they pop, and as each one goes, it sows the seeds for the popping of the next one.”

One had this. “As a lifelong miser who years ago told others (except my brother’s children) that there would be no gifts from me and there should not be any vice versa, i enjoy this year’s xmas spectacle of shut down the wallets. The american sheeple have needed this bat in the face for a very long time, and they are still sitting on the curb wondering why their face hurts so much.”

And one had this quote. “I had three pieces of limestone on my desk, but I was terrified to find that they required to be dusted daily, when the furniture of my mind was all undusted still, and threw them out the window in disgust. - Henry David Thoreau.”

From Marketplace. “Tess Vigeland: This week many of us were busy stuffing a turkey or pounding mashed potatoes into a pulp, but not everyone was lucky enough to be feasting. I met Elaine, a 41-year-old mother of two from Altadena, California, at the Foothill Unity Center. She was there with her six-month-old. Elaine: ‘We really just don’t know what’s going to happen, but we’ve been in foreclosure 77 days now, so…’”

“Elaine worked as a loan processor. Her husband was a mortgage broker. She says they cleared somewhere north of $100,000 a year and had no trouble supporting themselves and their two small children — until the housing market crashed. And now?”

“They defaulted on their home loan in January and quickly burned through about $20,000 dollars in savings, so now most expenses are going on credit cards. Her husband is pounding the pavement for a new job while she stays home with the newborn. Elaine: ‘We haven’t had a real estate transaction since December, so we had to take all of our E-Trade accounts, close them out. You know, we had to juggle from paying electricity, gas. It’s a humbling experience to go from making all this money and everything looks great and then all of a sudden just looking out and wondering where and when we’ll have money to buy food.’”

The Birmjngham Business Journal. “The tightened credit market and current housing slump in the Birmingham-Hoover metro area have forced several local mortgage brokers to shutter their businesses. Adam Pullen said since some of the more exotic loan products, such as the 80/20 loans and 100 percent financing, have dried up in the markets, brokers have been left out in the cold.”

“‘What’s happened is brokers have had to rely on lenders. Most of them are banks that have clutched down on lending,’ Pullen said. ‘The industry is shutting down brokers.’”

“The markets will remain crippled without non-conventional loans to offer consumers, Pullen said. ‘Let’s face it – most people need 100 percent financing to buy a home,’ he said.”

The Las Vegas Sun. “Casino and gaming executives from domestic and international companies weighed in on the current economic crisis at this morning’s Global Gaming Conference in Las Vegas. Harrah’s CEO Gary Loveman told attendees the tightening credit market is a much more important challenge in casino growth than the short-term drop in consumer spending. The Harrah’s CEO said casino developers ’spend capital like drunken sailors,’ building lavish facilities while seeing little return on their investment during the downturn.”

The Enterprise Record. “Longtime Chico manufacturer Bruce Norlie knows about painful cutbacks. His company, Norfield Industries, manufactures the equipment to make prehung doors, a staple of the housing industry. Each layoff was hurtful to Norlie, member of a longtime Chico family that values its employees and appreciates their productivity. Lucky for him, his other enterprises, including equipment supplies like saw blades, are still positive.”

“‘When the housing industry was going wild, our business was very strong. We’ve had a substantial number of customers go out of business, predominantly in the U.S., some in Canada,’ he said.”

“Over the years that Norlie has been in the industry, he’s seen other downturns. ‘It’s never been this bad though,’ he noted.”

The Union Tribune. “Matt Sauer, a young, single mortgage broker, planned to get rich quick after graduating from college. By age 28, he owned properties in Pacific Beach, Las Vegas and Florida. Today, the houses are underwater, and Sauer’s dreams of quitting his job to become a Christian missionary are on hold because of his financial obligations.”

“‘Like the Bible says: ‘The borrower is the servant to the lender,’ Sauer said. ‘I am enslaved.’”

The Valley Chronicle. “Though the economic future is uncertain for San Jacinto no less than other local California governments, measures are available to save $380,000 this budget year, City Manager Barry McClellan told the City Council last week and greater savings can be achieved if it becomes necessary. McClellan said he began working on reducing spending - all travel on the city dime must be approved by him personally - in August and department heads have come up with additional ways to save money should the need arrive.”

“It probably will. ‘The days of living fat have come to an end,’ said Mayor Jim Ayres.”

The News Leader. “The odds of landing a part-time job at department store operator Bealls Outlet Stores Inc. this holiday season are slimmer than getting into Harvard: It’s one out of every 45. The chances aren’t any better at 7-Eleven. One California store received more than 100 applicants in a week and a half for jobs that pay $8.50 per hour — and the retailer doesn’t even usually hire holiday workers.”

“‘I thought it was going to be pretty easy, but I am not the only one looking for a job. There are thousands of us going for the same thing,’ said Kimberly Caparo of Chesterfield, Mich., who has applied for part-time jobs at Toys ‘R’ Us Inc., Home Depot Inc. and Lowe’s Cos. Inc. in recent weeks since she and her husband were laid off.”

“In one respect, however, Springfield job applicants appear to fit a nationwide trend — rather than the usual pool of teens or stay-at-home moms looking for extra holiday spending money, those vying for jobs have much deeper résumés. As far back as September, Bealls Outlet Stores — which operates most of its 450 stores in Florida — was being flooded with up to 40 to 50 applicants a week, said Conrad Szymanski, president of the Bradenton, Fla.-based chain. A year ago, they saw one or two applicants a week per store.”

“‘What we are seeing is a profound increase,’ particularly in Florida, California, and Arizona, where the real estate market has been hit hard, said Szymanski.”

“David Ortega, a training store manager at the 7-Eleven in Citrus Heights, Calif., that got more than 100 applications, noted that many applicants have management experience — including those who owned construction businesses. The store in a suburb of Sacramento, which has been hard hit by the housing slump, usually saw candidates who came straight out of high school, he said. One recent applicant — a former manager in cosmetics at Macy’s — even wrote him a thank-you note for discussing the $8.50 per hour job.”

“‘You expect to see that for a higher-level position, like an executive,’ he said.”

“John Morris, who expects to be laid off from his Springfield marketing job at the end of the year, has applied for jobs all over the country.Morris, 41, said the impression he gets is that, although there is a lot of competition, there are a lot of jobs available, as well. ‘The thing that is probably killing the market right now is everyone is waiting for Jan. 1 for the new financial year to start before making any decision.’”

“He’s still optimistic he’ll find another marketing position but recently has been considering taking a job shuttling railroad workers to and from job sites. ‘The stigma there is how do I tell my family I didn’t really need a college degree?’ Morris said.”

“‘Right now I’m still hoping to get a job that is more continuing up the professional ladder,’ he said. ‘But if December comes around and there’s nothing there, then I will swallow my pride and get a commercial driver’s license and lower my expectations — and honestly, probably be happier. There’s not a lot of stress with driving a bus. It gets the bills paid and right now that’s the more important thing.’”

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Readers discussed the holidays and the housing bubble. “Three months ago everyone in my extended family up north was talking about coming down to LA for some warmth and sunshine, disneyland, and broadway show. About two weeks ago their plans all fell apart and now we’ll only have local family at our dinner. Only one brother was willing to admit his cancellation was due to financial duress, but I know that my mother has lost big bucks in her stock accounts and my older brother has said his practice barely cashflows.”

“I predict light traffic at the airports and on the freeways over the holiday season and that warm tourist destinations worldwide will go unvisited by those north of the 40th parallel.”

Another said, “My wife and I were just discussing the downturn and how in the last 12 months months we’ve purchased: a new laptop, a used car, all kinds of baby stuff, furniture, took a cruise.”

“We’re very, very frugal, and this was an aberrant year, so we’re thinking that this is way worse than we imagined. We didn’t buy a house though!”

A reply. “Well, with no home purchase closing costs and that big commission due a mortgage broker you certainly had the dough in your pocket for all the other stuff. And just think about all your friends with mortgage notes who are gonna get their yearly notices for payment of higher property tax escrows for the coming year due to the collapse of commercial assessments.”

“Ho! Ho! Ho! Merry XMAS!”

One had this, “I had two get towed off Interstate 26 going into Columbia because of a car issue. (car is 8 years old). The tow truck driver strikes up a conversation that he was retired for two years but went back to work part time. He indicated he had lost $150,000 in the stock market and was very disappointed. I wanted to cheer him up so I said, ‘Well at least you did not get into real estate.’ He replied that he had bought a condo in Daytona a few years ago.”

“It will be a difficult holiday season for conversation.”

To which one posted, “I’ve been saying ‘Well, as long as you didn’t buy or HELOC real estate in the past five years, you’ll probably be fine.’”

“Trouble is, EVERY person I know (besides myself) has bought or HELOCed in the past five years. Seriously. Maybe I need to meet new people.”

The North County Times. “Barratt American, a large, private builder based in Carlsbad, might soon be forced to file for Chapter 11 bankruptcy protection because of a loss in funding from its lender, said Michael Pattinson, president of the company. So far, 11 Barratt American projects around the region have fallen into foreclosure.”

“Pattinson said much of the fault lies with banks unwilling to lend money despite capital infusions from the federal government. ‘Until the banks do their jobs, the economy is going to deteriorate and everybody is going to have a miserable Christmas,’ he said.”

The Record Searchlight. “Calls to the National Foundation for Credit Counseling’s Locator Line have been setting records with each passing week. What’s more, consumers taking the NFCC’s Mortgage Realty CheckSM, are up 33 percent for the year. ‘Unfortunately, we have people who are beginning their 2008 shopping season who are still paying for 2007,’ said NFCC spokeswoman Gail Cunningham. ‘The minute you make that purchase, the interest starts accruing.’”

The News Herald. “Gov. Charlie Crist has kicked off the holiday season with a proposed gift to distressed homeowners: placing a moratorium on foreclosures through the first of the year. The governor called it an act of ‘compassion.’ But it could just as easily be seen as a vacation from economic reality.”

“If a lender believes an owner can make payments on the property after the first of the year then he is more likely to hold off on foreclosure anyway.”

“That mostly leaves the worst cases, the owners who simply can’t make payments in six weeks or six months. Freezing their foreclosures gives them a break they don’t deserve and prevents the lender from being able to recoup his investment. Also, it threatens to create a logjam of foreclosed homes that will be released all at once when the freeze is lifted, flooding the market at a time when it can’t handle more excess housing inventory.”

The Miami New Times. “Two months ago, Cassy (not her real name) was homeless, out in the rain with her four kids. Now she has a three-bedroom, two-bathroom, sky-blue house on a tree-lined street in Miami’s Buena Vista neighborhood. She takes warm showers, cooks vegan dinners, and watches the news on a small, fuzzy TV screen. The only catch: The house isn’t hers. Cassy is a squatter and, at any moment, could be arrested for trespassing, even burglary.”

“Not everybody in Miami-Dade County is crying over this year’s 40,342 foreclosed properties. Cassy is part of a small, well-executed movement by activists at Take Back the Land to relocate homeless families into empty houses and abandoned government-owned buildings.”

“‘We could virtually empty the streets and shelters simply by filling the vacant houses,’ director Max Rameau says. ‘Homes should go to people, not kept empty so banks can cash in.’”

The East Valley Tribune. “For Darrell Logan, 2008 has been the most difficult year of his life. An unyielding series of financial setbacks have culminated in the Queen Creek homeowner, along with his wife, Donnique, and their four children, falling behind on their mortgage and hoping that their lender, Washington Mutual, will give them a break and not rush them into foreclosure.”

“Things were going well for the Logans when they moved from Compton, Calif., in July 2007 and purchased their Queen Creek home in October 2007. They also owned a home in Compton and chose to rent it after they left. ‘(The tenants) were doing OK with the payments in the second half of 2007, but, starting in January, they just weren’t making payments consistently and then they stopped paying,’ Darrell Logan said. ‘So we basically had to use our savings to make up for the payment. Even when they were making payments, we still had to pay $500 extra to make up what they weren’t paying in rent, so that put us in a bind.’”

“Donnique Logan then lost her job with the school district while pregnant with their fourth child. ‘At the same time, we’re paying lawyers to evict these people out of our house … and they just got out of the house on Nov. 12, but the house then foreclosed on Nov. 12. So it just hasn’t been a good year at all,’ Darrell Logan said.”

“All across the East Valley, distressed homeowners are on the verge of losing their homes, and there are already roughly 40,000 foreclosed homes in Maricopa County.”

The Gazette. “Colorado Springs homeowner and artist T. Benton Brooks isn’t in foreclosure — yet. He’s missed two mortgage payments, but is determined to avoid losing the west-side rancher he’s owned for 18 years. At a time when record numbers of people have fallen into foreclosure in the Colorado Springs area, Brooks believes he’s exactly the type of troubled homeowner that lawmakers, housing advocacy groups and consumer counseling agencies want to help. But after nearly six weeks of phone calls and faxes, Brooks has more questions than answers.”

“Brooks, a California native who moved to the Springs in 1978, admits he’s made poor choices. As a car salesman years ago, he took out cash advances on credit cards during lean months — effectively borrowing money at hefty interest rates. Multiple refinancings to fund home improvements early on, and to pay off credit cards in later years, left him owing $260,000 on a home he estimates is worth $180,000. He filed for bankruptcy in 2007.”

“Afterward, he was allowed to stay in his house as long as he made his combined $2,115 a month in first and second mortgage payments. In past years as a cars salesman, he never sold fewer than 12 cars a month; now, he’s struggling to sell seven or eight. He missed $1,425 payments in August and September on his first mortgage, and a $690 payment on his second mortgage in November.”

“‘I know I’m a culprit,’ said Brooks, who added that his financial troubles are of his own making. ‘But I’m also a victim.’”

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The Press Telegram reports from California. “Delfa Robles, 68, a Long Beach resident and a member of the Association of Community Organizations for Reform Now, is facing foreclosure of the home where she and her family have lived for 13 years. ‘She tried to start a restaurant business a couple of years back, and due to financial difficulties, she lost the business and got behind on her house payments,’ she said through ACORN organizer David Mazariegos. ‘The only choice she has is to sell the house or file for bankruptcy, which she doesn’t want to do.’”

“The Robleses were given a variable mortgage rate from their lender, Wachovia, which has given the Robles family time to catch up on their payments.”

“‘They gave her a year to pay, but she has to pay the back mortgage and the monthly payments as they come, and they have raised her mortgage by $800,’ Mazariegos said. ‘She has a whole year to figure it out, and we will put a little bit of pressure on Wachovia to help her out. We made them ‘Turkey of the Year,’ for not working with the people.’”

The San Gabriel Valley Tribune. “California home sales climbed 117 percent in October as buyers took advantage of properties selling for nearly 40 percent less than the year before, according to an industry report released Tuesday. Some of the steeper declines include Altadena (-39.6 percent) and Baldwin Park (-37.7 percent). Bucking the trend, Alhambra saw its home values increase 13.4 percent to $482,000 in October, compared to last year.”

‘Thomas Berge Sr., whose Berge Co. Realtors and Appraisers has been in Alhambra since 1954, didn’t put too much weight in the Alhambra numbers. In reality, ‘the market in Alhambra has deteriorated dramatically,’ he said.”

The Voice of San Diego. “September home prices in San Diego County fell by 26.3 percent from the same month a year earlier, according to the most recent Standard & Poor’s/Case-Shiller index released Tuesday. That was a 34.4 percent drop from the market’s peak in November 2005. Prices are still about 64 percent higher than they were at the start of the decade. The index reports housing data with a two-month lag.”

“Real estate agent Camille Bruno in Bonita sells bank-owned homes in the South Bay, and named two sales where homes that previously sold for $1.3 million and $1.5 million sold in recent months in the $700,000 range. ‘They’re like 50 percent off, basically,’ she said. ‘Those same houses haven’t come down in North County as far as they have here yet.’”

“But Ed Mracek, real estate agent with Willis Allen in La Jolla, said the long-held supposition that the coastal neighborhood would stay untouched by housing trouble is going away and the La Jolla ZIP code is starting to see large price reductions, he said. He mentioned an oceanfront house that the sellers had listed for more than $25 million before recently lowering their asking price to $18.8 million. They paid $17 million for it, he said.”

“‘Sellers need to be realistic — the world kind of changed after the stock market crash,’ he said.”

The Union Tribune. “Some distressed sellers are offering great deals. Peter Toner, a broker with Prudential, said a 1,500-square-foot house in North County purchased for $498,000 four years ago is now listed at $289,000 as a short sale. Toner said the weakening economy is beginning to take a toll on neighborhoods that until now have been relatively unscathed by the foreclosure crisis, particularly along the coast.”

“‘I think it is spreading a bit,’ he said. “It just has taken longer. The people on the coast weren’t quite so involved in the dodgy loans.’”

The Recordnet. “Housing production in California last month was the lowest on record, down 45 percent from October 2007, according to the California Building Industry Association. The group wants some help for the industry - and thus, the economy - via a government stimulus. Joe Anfuso, CEO of Stockton-based Florsheim Homes, said he anticipates that the federal government will approve some type of tax credit for home buyers as a way to stimulate the economy.”

“‘The one thing I like is knowing that housing is at the forefront of the political landscaping,’ Anfuso said. ‘That’s the key.’”

“Tuesday’s announcement of another $800 billion bailout that’s designed to unfreeze the nation’s market for consumer debt has drawn mixed reviews from Southland business leaders, economists and political figures. Mike Spence is president of the California Republican Assembly, the state’s oldest and largest Republican volunteer organization.”

“‘The government is deciding who wins and who loses,’ Spence said. ‘Lobbyists are spending millions to make sure their industry gets a piece of the pie - that’s not how you recover economically.’”

“Larry Harris, a professor of finance and business economics at USC’s Marshall School of Business, agreed that the rescue plans thus far have been all over the map. ‘They’ve done so many different things … how can you not agree with some part of it?’ he asked, jokingly.”

“Still, Harris acknowledged that some kind of action has been sorely needed. ‘All attempts by the government to address the market problem are welcome as long as they don’t make the problem worse,’ he said. ‘We’re operating in an uncertain environment and it’s inevitable that mistakes were made and mistakes would be made if they didn’t act. We just have to trust in people who are wiser than us to decide on our behalf.’”

The Burbank Leader. “State lawmakers continued deliberations Tuesday on competing plans that could freeze foreclosure proceedings for up to 120 days. Richard Pittman, housing services coordinator at a nonprofit housing counseling agency, said the proposals could have negative consequences by simply extending the foreclosure process for homeowners who failed to do enough to stay in their homes.”

“‘In some cases it will buy them time for folks who may be out of work to get them started, and that’s great,’ he said. ‘But people are not necessarily looking at the big picture, and neither is the lender.’”

“According to a report, 1,337 homes in Burbank and 1,614 in Glendale are in various states of foreclosure. More than 309,000 homes in California are close to or are already in the process of being foreclosed upon.”

“‘We need to have some flexibility and relief to people who are facing imminent foreclosure,’ said Assemblyman Paul Krekorian, a Democrat whose district includes Burbank and Glendale. ‘What I’m going to be concerned about is encouraging lenders who have programs in place without discouraging additional credit from coming onto the market.’”

The Hi-Desert Star. “Two more banks with local branches, Pomona First Federal and Downey Savings, became the latest names on the list of failed institutions late Friday. PFF was the oldest bank in Southern California, founded in Pomona in 1892. After weathering over a century of financial disasters and staying out of the recent subprime mortgage debacle, analysts claim it was the last batch of unpaid millions in construction loans that drove shares down from a high of $40 two years ago to 36 cents last Friday. PFF had 38 branch offices in the counties of San Bernardino, Riverside, Orange and Los Angeles.”

“Bill Powers, Indian Wells-based president of Pacific Western, feels the pain for his struggling neighborhood institutions, but in a tough-love kind of way. ‘None of this is unexpected in our greed economy,’ Powers observed. ‘Greed takes a toll on everyone’s common sense.’”

“Powers attributed his bank’s financial soundness to ‘adhering to the basics of banking.’ ‘We didn’t do Freddie Mac or Fannie Mae,’ he said. ‘You don’t loan money to people who can’t pay it back.’”

“Still, Powers thinks ‘no one will go unscathed. This is a centipede economy,’ he said. ‘How many shoes have dropped so far? I don’t even know how many shoes the centipede has.’”

The Desert Sun. “For Debbie Lewis of Terra Lago, the $48.5 million Neighborhood Stabilization Program the Riverside County supervisors approved Tuesday can’t arrive soon enough. Lewis bought her $500,000-plus home in the country club setting of Indio when housing prices were at their high.”

“Now, as homes tumble into foreclosure and her home equity disappears before her very eyes, Lewis is part of a growing army of Coachella Valley residents seeking a return to stable, well-stocked neighborhoods.”

“One day last week, alone, notices of default were listed on properties in the Coachella Valley with mortgage defaults totaling $18.1 million. The next day, the troubled paper count on yet another round of properties heading toward the auction block stood at $3.1 million.”

“‘We lobbied heavily for the funding,’ said Fred Bell, executive director of the Desert Chapter of the Building Industry Association. ‘The primary goal is to make sure the maximum amount of money that can be allocated reaches the end-user.’”

The Daily Herald. “Many working people can’t get the credit they need, said Richard Pittman, a counselor with (a) nonprofit which offers personal credit counseling in Los Angeles. ‘We’re crossing our fingers that this will work,’ Pittman said. ‘If we don’t get the market moving again, the biggest industry is going to be soup lines.’”

“The small businesses that rely on loans to stay open need to see more liquidity in the credit markets, said Scott Hauge, president of Small Business California. ‘There have been situations where a guy went to have his credit line increased but instead they cut it in half,’ he said. ‘I’ve also heard about people who don’t even know their lines or credit cards have been cut until they try to use it. It’s a mess.’”

The Enterprise Record. “Builders, planners and real estate agents have seen a significant decline in the local housing market, with new construction taking the biggest hit. ‘The new home housing market is about as slow as we’ve seen in a long time,’ said Chris Giampaoli of Epick Homes.”

“Jason Bougie of the Butte Community Builders Association said the builders who are struggling are the ones that are sitting on unsold built homes. Locally that hasn’t happened much, but it was a big factor in the Sacramento area where corporate builders built hundreds of homes, he said.”

“Debbie Brodie, president of the Chico Association of Realtors, said plenty of loans are available for normal-priced homes, but she’s seen people have problems getting loans if they’re seeking a higher amount, have poor credit, or are trying to finance commercial loans or ‘anything outside the box.’ She said first-time buyers are able to get loans as long as they have good credit scores.”

“Bougie agreed. ‘All the while, it is the best time to buy a house. If I had money I’d buy a few of them.’”

Inside Bay Area. “Washington Mutual’s departure from Pleasanton could do more than eliminate 1,200 jobs and erode the local economy and office market: The exit could leave the failed thrift’s landlord in the lurch without rental payments. ‘We have the right to exit from those leases,’ said Gary Kishner, a Washington Mutual spokesman, said of the Pleasanton rental agreements. “Chase will not be making those lease payments.’”

“LBA Realty Fund, WaMu’s landlord at the Pleasanton office complex, would have to get in line with WaMu’s other creditors if LBA wishes to enter a claim to recoup at least some of its lost revenues from the unpaid lease.”

“The LBA group paid an estimated $66.5 million in June for the 217,000-square-foot complex. LBA used a previously established $150 million line of credit to finance the acquisition, according to Alameda County property records. That loan, obtained from Bank of America, would need to be paid to keep the Pleasanton buildings out of default, the county records show. The mortgage also is being used to finance other buildings in California, including a property in Fremont.”

“‘”LBA is a pretty deep-pocketed owner that is successful and has hit some home runs,’ said William Nork, a senior vice president who manages the Emeryville office of Cornish & Carey Commercial. ‘But who would have thought this would have happened? When LBA bought the building, WaMu was a real quality tenant.’”

About this time of the year in 2005, we discussed the possibility of a housing bubble related holiday bust. A bit premature, but what about 2008? And what of the various local housing markets in light of the unprecedented economic events that are unfolding? Anecdotal insights from your holiday gatherings are appreciated. I’ll forward these threads through the weekend.

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

A report from the Associated Press. “Existing home sales in the Northeast dropped more than 9 percent in October from last year, while the median sales price in the region sank 5 percent to $277,000, the National Association of Realtors said Monday. Michael Lynch, regional economist at Global Insight, said the largest economy in New England, Massachusetts, is starting to show cracks after seeming ‘resilient’ for the past several months. Job losses are mounting, which could be a harbinger for the rest of the region. ‘It’s the place to watch right now,’ Lynch said.”

“Already, the New York City suburban housing market is teetering, said real estate agent Sandra Lippman of Prudential Centennial Realty in Westchester County, north of the Big Apple. Lippman said sales are ‘creeping’ while inventory has increased over last year. Sales in Suffolk, Nassau and Westchester counties, which surround New York City, dropped more than 11 percent, while prices fell almost 10 percent to $400,000, according to the AP-Re/Max report.”

“‘I had a few buyers who work for the investment banks or brokerage houses. Some of them have just disappeared,’ Lippman said.”

“Downtown Providence is still reeling from too many condos and rampant lending to riskier borrowers during the boom. About one in four sales are bank-owned properties or short sales, in which the lender agrees to accept a sales price below the balance owed on the mortgage, said real estate agent Julie Longtin, in East Greenwich, R.I.”

“The median price of a Providence home tumbled more than 12 percent in October, from a year ago, the largest decline of the Northeast metro areas. The supply of unsold homes decreased by 6 percent from October of last year. Still, Longtin said, ‘We’re on the cusp of stabilization if nothing else goes dramatically wrong.’”

“Steve Testa put his split-level ranch house in Cranston, a Providence suburb, on the market in January for $339,000. With very few nibbles, he slashed the price to $302,500 in the summer. Finally, to nab one buyer who kept coming back, he reduced the price even more. The final selling price for the three-bedroom house: $297,500.”

“‘If we didn’t negotiate with this potential buyer,’ he said, ‘there was a very distinct possibility we would be in the house through the holidays and into the springtime.’”

The Press & Sun Bulletin from New York. “In Broome County, there were 173 foreclosures between July and September, up from just 18 two years ago. More than 50,000 homeowners in New York face foreclosure this year, particularly in the Mid-Hudson Valley and western New York.”

“Property taxes will account for 39 percent of the City of Binghamton’s expected revenue next year. And while the Greater Binghamton area has been bucking national trends with its climbing housing values, Mayor Matthew T. Ryan is concerned. ‘We’ve already got our fiscal crisis,’ Ryan said, ‘and obviously we’re not looking forward to something that adds to it.’”

From New York Magazine. “Is there anyone in town—owner, renter, or especially buyer or seller—who isn’t watching the New York real-estate market right now? New York collected seven of the best real-estate minds we know for an afternoon roundtable.”

“Do they think we’re at bottom? Do you? “Noah Rosenblatt, Halstead Property vice-president: ‘I don’t expect to do a deal in the next three or four months. It’s not that I don’t want to. But my clients know what’s going on. If I said, ‘Buy now, you’re going to miss it,’ I’m going to insult their intelligence.’”

“Dottie Herman, CEO of Prudential Douglas Elliman: ‘I have to disagree. If you’re going to live there and raise a family, and you try to wait for that perfect time, you might miss something you like. [But] if you expect to become rich in a day or two, forget it.’”

“New York Comptroller Thomas DiNapoli said Monday that the financial crisis gripping Wall Street and the world economy could cost the state and New York City 225,000 private-sector jobs over the next two years. The securities industry in New York has already lost more than 16,000 jobs and could shed a total of 38,000 jobs by next October. In the first half of this year, New York Stock Exchange member firms alone lost nearly $21 billion, DiNapoli said.”

“‘These numbers are translating into job losses,’ he said. Before the current crisis, the securities industry accounted for 5 percent of New York City’s employment but nearly 25 percent of the wages.”

The Boston Herald from Massachusetts. “Eviction filings in state housing court hit a new high in the last fiscal year as the faltering economy and a worsening foreclosure crisis pushed more than 20,000 Bay Staters to the brink of homelessness. In particular, housing advocates are worried about the growing number of tenants in multi-family units who pay their monthly rent, but still receive eviction notices from banks who have foreclosed on their landlord’s property.”

“In March, Barclay’s Capital Real Estate Inc. foreclosed on the two-family home where Rob Chiampa had been renting an apartment for $700 monthly since 2003, according to Suffolk County land records and an interview. Chiampa and his neighbors were in Boston Housing Court last week because of eviction notices that had been mailed to their homes under the name ‘John Doe.’ He didn’t know why the landlord fell behind.”

“‘Lord knows,’ Chiampa said. ‘She certainly wasn’t paying the mortgage.’”

My Central New Jersey. “Foreclosure filings on New Jersey properties hit 8,473 in October 2008. That’s a 75 percent increase over filings for October 2007 (4,844). ‘”I’ve been doing this job for almost 30 years and it’s as bad as it ever was,’ said Middlesex County Sheriff Joe Spicuzzo. ‘We were averaging, several years ago, maybe two or three sheriff sales a month. Now, we’re scheduling about 50 a month on average.’”

“In all, home foreclosures in New Jersey are now on pace to hit 50,000 this year. The situation is exacerbated by rising joblessness with employment in the state falling in eight of the 10 months of 2008. The Associated Press reported that unemployment in New Jersey climbed to its highest level in five years in October.”

“‘When I first became the sheriff, I would grant anybody all the time they needed to settle with the bank,’ said Spicuzzo who said a judge then called him in and explained that, by law, sheriffs are obligated to sell foreclosed homes on scheduled dates or risk becoming personally responsible for the debt.”

“‘I’ll schedule sheriff’s sales for this next coming Tuesday, and I can’t stand selling a person’s house two days before Thanksgiving, and two days before Christmas,’ said Spicuzzo. ‘But you know, that’s my job, and I feel really bad about doing it.”’

The Star Ledger from New Jersey. “Turns out there may be an upside to the prolonged downturn in home prices. With home prices down 25 percent in New Jersey from peak levels in 2006, some homeowners may be entitled to a reduction in property taxes come 2009.”

“‘We had 4,200 appeals, last year, which was up from the prior year and I’m bracing for even more this year,’ said Lawrence Vituscka, the tax administrator at the Ocean County Board of Taxation. ‘Every day people are seeing home sale prices falling in their areas and foreclosures, so they feel over assessed. The economy is bad. We’re seeing more layoffs and people are starting to look at every dollar very closely.’”

“One big stumbling block in this sluggish housing market, however, is the shortage of recent sales data. ‘It is very difficult to prove the value of real estate in New Jersey right now, because in this market, you may not be able to find a lot of comparable home sales,’ he said.”

“Another strike against homeowners: estate sales, foreclosures, short sale are not considered ‘arm’s length transactions,’ in New Jersey and therefore you are not allowed to present those types of transactions as comparable sales data during your appeal. ‘Make sure you present only valid sales — properties on the open market that have been sold in a competitive fashion and not under duress,’ Vitsucka said. ‘Foreclosures are considered under duress.’”

“Still, Timothy Duggan, a tax attorney in Lawrenceville, says in these unprecedented times, with home foreclosures and home price declines in record territory, it certainly wouldn’t hurt to include foreclosures along with your regular comparable sales data to really drive your point home, he said. ‘We are anticipating a lot of appeals this coming year,’ he said. ‘I don’t know how many will be successful, but I think in 2009, more people will be winning.’”

Public Opinion News from Pennsylvania. “The national housing downturn has touched Franklin County. Home foreclosures are up. The number of properties listed for sheriff’s sale has doubled. The median sale price of a house declined 3 percent. Sales are flagging.”

“‘I think people forgot a home was a home and turned it into a money vehicle,’ said Tina Long, Realtor/owner of Exit Preferred Realty, Chambersburg. ‘It’s still a home. There’s money out there to buy a home. I don’t remember seeing the public as afraid as they are now.’”

“‘It’s not a good time to buy if you’re going to live in a house for one year,’ Long said. ‘If you’re going to live in it for five years, and make a house a home, it’s a great time to buy.’”

“With national media attention focused on foreclosures, Exit Preferred Realty has scheduled a local foreclosure bus tour for Jan. 11. ‘The idea is to get investors looking at houses so the houses aren’t sitting in inventory,’ Long said. ‘Banks are working with people. It’s an excellent time to buy. It’s just a way of getting some interest.’”

The Cape Gazette from Delaware. “The Sussex County housing market took a sharp hit this fall as a perfect storm of problems developed both here and nationwide: an oversupply of homes, a credit crisis and a decrease in consumer confidence. Still, a local builder says the gloomy outlook will pass - and possibly sooner rather than later.”

“Schell Bros. President Chris Schell said sales are ugly right now, but that people should realize when it gets this bad, it’s good. Schell said his company and other national builders in Delaware reached their peak home sales in 2004 and 2005. A classic speculative bubble formed, he said, resulting in a huge surplus of new and existing homes despite a high demand in the area.”

“‘Back then, a lot of people got involved in real estate and everyone was making money,’ said Schell. But the problems implanted in the speculative boom came to an end, led by a mortgage crisis, and ultimately resulted in a huge drop in consumer confidence, he said.”

The Herald Mail from Maryland. “Don’t break out the champagne yet, but for those with a house to sell, there is good news: Washington County’s real estate market increased last month for the first time in nearly three years. The number of people buying homes rose slightly, boosting the market 2.4 percent.”

“That alone is reason to cheer, said Joan McLernon, president-elect of the Pen-Mar Regional Association of Realtors. ‘Any news is good news, and I will take it for all it’s worth,’ McLernon said. ‘And if the buying public has woken up and seen what wonderful buying opportunities there are out there, that’s wonderful.’”

“In Washington County, the real estate market peaked in 2005 with a mind-numbing 45 percent gain, according to MRIS data. In that one year, buyers grabbed up a total of 2,254 houses here for a total of $578 million, a record high. During the heady days of 2005, there was an average of 607 homes for sale in Washington County. On average, sales were taking 50 days.”

“This past month, by comparison, there were 1,292 homes on the market. And, on average, sales were taking 184 days. Such figures are a lesson in the effects of supply and demand, McLernon said. When the supply is high and demand low, prices fall. That’s why Realtors have been trying to reduce the supply by urging clients ‘who don’t have to sell’ to pull their houses off the market, McLernon said.”

“‘If you don’t need to sell or, more importantly, if your house is not priced appropriately, you are hurting more than helping,’ McLernon said. ‘Some sellers are in denial of what the market is’ and won’t accept lower prices, she said.”

“MRIS figures show the average price of homes sold here last month was 13 percent lower than the average asking price. In 2005, the average selling price was 2.8 percent lower than the average asking price. Properties that don’t have 2008 prices are ‘just going to sit there, but the inventory is going to stay up,’ McLernon said. ‘So it’s hurting all the other people who need to sell, who maybe their job has moved or they really need to reduce their mortgage and downsize.’”

“McLernon listed a log home with acreage a few days ago. Almost immediately, she said she began receiving ‘a huge number of inquiries from people who are considering second homes.’ The response was so unexpected, she said she began asking callers why they were interested.”

“‘A lot of them are saying, ‘The money in my 401(k) is going down. … They’re saying, ‘If I buy a second home soon, not only do I get the enjoyment of a second home, but the property will appreciate and more likely than not, will end up being a better gain for me in the long run,’ McLernon said.”

“In the same way, she said, October’s uptick in sales indicates ‘the buying public is finally starting to listen to us, that there are tremendous buying opportunities out there, and interest rates are at historic lows.’”

“Sales are important now, regardless of the product, McLernon said. ‘We, as a public, we need to invest in our country. We need to buy cars. Everyone can’t be paralyzed,’ she said. ‘People are afraid. But to spur our economy to keep us strong, as a buying public, we need to buy when it is appropriate.’”

From WVEC. “In the hard-hit real estate sector, Virginia in October saw a tenfold increase in the number of home foreclosures since 2004. People who held onto their homes have seen their equity wither the past two years. One telling measure from the Washington, D.C., market is that the percentage of people who forfeited deposits they had put down on contract to buy a house increased from 4 percent in 2005 to spike at 66 percent in August, largely a measure of buyers who could not secure financing, according to a George Mason University analysis.”

“In dismaying detail, legislative budget writers got their fullest look Tuesday at a darkening fiscal crisis that will soon force them to cut government priorities once held harmless. ‘You are at the juncture where all the low-hanging fruit is gone,’ members of the House Appropriations Committee learned from the chief of the committee staff, Robert Vaughn.”

“The credit crisis has brought an end to discretionary shopping and consumers are avoiding frills, explaining why upscale retailers are suffering and discount chains such as Wal-Mart that cater to basic needs remain profitable, said legislative fiscal analyst Ann Oman. ‘Americans don’t stop spending when they run out of money. They stop spending when they run out of credit. That’s what appears to be happening,’ she said.”

The Washington Independent. “With graffiti-scarred walls, an overgrown lawn strewn with crushed cardboard boxes and empty cans and a rusted swing set next door, it’s fair to say that the foreclosed townhouse, part of a complex called Irongate in suburban Prince William County, Va., doesn’t have a lot going for it. It’s hard to tell if things look any better on the inside, since someone broke the lockbox and stole the key.”

“The unit sold in 2005 for $285,000, but these days it’s going for $50,000 — and it’s still been sitting on the market for more than six months, with no takers in sight. Places hit hard by the foreclosure crisis, like Prince William County, are dealing with hundreds, and sometimes thousands, of abandoned and deteriorating properties like the Irongate townhouse.”

“Despite a commute that can take an hour or more, Prince William boomed during the last decade, as buyers flocked to brand-new, spacious homes on wooded lots, or to affordable middle-class rowhouses. It soon became one of the country’s fastest growing areas, emblematic of the expansion of the exurbs around the country. Housing values skyrocketed.”

“The housing bust was just as dramatic. Foreclosures rose from 246 in 2006 to 2,800 in 2007, and the county expects more than 7,000 this year, said finance director Christopher Martino. It’s the highest number of any jurisdiction in Virginia.”

“Some 5.5 percent of the county’s housing was in some stage of foreclosure last spring, according to the George Mason University Center for Regional Analysis. Home values have also taken a tumble, down 30 percent this year for single family homes and 40 percent for townhouses. With the economy weakening, and many loan resets expected next year on interest-only mortgages, more foreclosures could be coming down the pike, Martino said.”

“Sales of foreclosed houses are soaring in the meantime — but prices aren’t going up. Average sale prices dropped by $90,000 between January and October, said local realtor Keith Elliott Jr.”

“In a subdivison of more upscale houses, in nearby Gainesville, a spacious three-bedroom home looks nearly untouched by damage except for some stained carpeting. But the orange stickers noting that it’s been winterized are dated from December 2007, meaning the home has been vacant for nearly a year, despite its sales price of $270,900, well below its assessed value of $327,100.”

“Elliott said he’s not surprised. ‘There’s just a huge volume of houses like this all throughout Prince William County,’ he said.”