CA Sac qts!

http://www.davisenterprise.com/articles/2007/06/29/news/188new2.txt


Davis homeowners have been largely spared from the rising numbers of foreclosures this year. But it's a whole different story on the other side of the Yolo Causeway, in West Sacramento.

There were 13 Davis homes in some phase of foreclosure during the first four months of 2007, and only three had been repossessed by the lender, according to statistics compiled by RealtyTrac, an Irvine company that monitors foreclosure activity.

But between January and April, a notice of default - the first step in the foreclosure process - was issued for 69 West Sacramento homes. Such a notice is issued when a homeowner falls behind on mortgage payments.

Another 33 West Sacramento homes got auction notices, meaning the lender was prepared to take back the home and sell it at auction. And 28 West Sacramento homes were repossessed by the lender.

Those numbers are still rising, week by week, as cooling home prices, rising mortgage interest rates and competition from home builders take their toll.

In other words, there are a lot of stressed-out sellers.

“Right now, we have 273 houses for sale in West Sacramento,” said Lean Hertel, a Realtor and field trainer with Lyon Real Estate's office in West Sacramento. “Of those 273 homes, 102 are being advertised as ‘short sales.' And 34 are already owned by the bank.”

Hertel explained that “a short sale is an abbreviation for a short payoff sale. It means we're selling the home for less money than it takes to pay the loans off. It's something we do to try to stop the bleeding and minimize the damage, for both the borrower and the lender.”

She added that actually going into foreclosure is “a very, very bad scenario.”

What happened?


Two years ago, there were hardly any foreclosures in West Sacramento. What happened? Herb Cross, vice president of Lyon Real Estate and manager of the company's Davis office, says there's a reason foreclosures are so common in West Sacramento, and relatively rare in Davis.

“Foreclosures seem to be predominant in areas of new construction, where builders have encouraged buyers to come in with no down payment, and they have qualified them (for a mortgage) on marginal income,” Cross said. There haven't been many new homes for sale in Davis in the last few years.

But hundreds of home buyers took the plunge and bought new homes in West Sacramento around the time of the housing market's peak in 2005. Those tend to be the homeowners who are having trouble today.

“A lot of those people are now finding that the terms and conditions of their loan are changing,” Cross said. “A lot of them were adjustable rate mortgages,” with interest rates that are resetting to a higher percentage, causing monthly payments to increase.

“And because the interest rates have gone up, these people have a very hard time refinancing,” Cross said. “And because they got 100 percent financing when they purchased the home, when prices were higher, they find they can no longer obtain 100 percent financing to replace their existing loans - because the price of their property has declined.”

Problems elsewhere

Woodland has seen a rise in foreclosures as well. During the first four months of 2007, a notice of default was issued for 38 Woodland homes. Auction notices were issued for another 19 homes and 25 homes were repossessed.

Some areas in Sacramento have been hit much harder. In the 95823 ZIP code in south Sacramento, there were 213 homes that got a notice of default, 98 that got an auction notice and 107 that were repossessed during the first four months of 2007.

Observers see the same trend up and down the state - but it's more pronounced in the Sacramento area, where communities like West Sacramento, Elk Grove and Natomas added thousands of new homes over the past five years, and lenders were making all kinds of new-fangled loans to get buyers into those houses.

Most of the loans that went into foreclosure in California during the first quarter of 2007 originated between April 2005 and May 2006.

“Today's foreclosure activity reflects a peak in the number of home loans made back in the summer of 2005,” said Marshall Prentice, president of DataQuick, a La Jolla-based real estate data firm. “The loans being made back then were riskier because of the subprime activity, as well as higher appreciation rates” as home prices escalated at 10 to 20 percent a year.

Now that the housing market has cooled, lenders are being more careful - which can spell trouble for a homeowner who bought at the peak and now wants to get out, at a time when prices are going down.

“It's easier to make a loan when the security for that loan is going up in value, than when values are flat,” said Prentice of DataQuick.

DataQuick calculated that on California mortgages that are in trouble, homeowners were a median five months behind on their payments when the lender started the default process. The borrowers owned a median $10,784 past due on a median $331,200 mortgage.

In a jam, quickly

Leah Hertel said she's seen plenty of cases like that in West Sacramento. “Usually, by the time we get them, they've already missed a couple of payments.”

She added that for new-ish homeowners who don't have much equity, the prospect of a foreclosure can materialize quickly.

“There are an awful lot of people paying interest-only mortgage payments, and now the interest rate on their loan is going up, and the value of their home is going down. Then, one thing goes wrong” - a job loss, or a divorce - “and suddenly, they're behind. It can happen real fast off a bump in the road,” she explained.

Homeowners who find themselves in this kind of jam, and risk losing the home that had been their dream, typically don't want to talk much about it, Hertel said.

“They're ashamed. Very often, they feel like it's only happening to them,” she said.

“It's hard on the clients, and it's hard on Realtors, too,” Hertel said. “We didn't get into real estate to sell homes for people who don't want to sell their homes.

“The developers are hurting, too,” Hertel said, and some builders are offering $100,000 in upgrades at no charge, if you use their financing. But that can make things even tougher for the individual homeowner trying to move on.

“You're competing with the developer” for the buyer's attention, Hertel said. “And the developer has 15 homes to sell, while you've got one.”

Hertel added that there are relatively few Realtors working in West Sacramento who weathered the previous market downturn, back in the early 1990s. And many banks are less than fully prepared for the foreclosure surge as well, Hertel said.

“The banks have so many of these short-sale contracts to negotiate and process, we're struggling to get them through,” Hertel said.

Sacramento hit hard

Overall, the Sacramento area has the seventh-highest rate of foreclosures in the nation, according to the Inman Blog, which recently compiled a list of markets with high levels of foreclosure activity. The Vallejo-Fairfield area in Solano County was the sixth-busiest in the nation, and four of the top five foreclosure markets in the nation were either in California, or next to the state: Riverside-San Bernardino at No. 5, Las Vegas at No. 4, Modesto at No. 3, Merced at No. 2 and Stockton at No. 1 (with one in 88 households experiencing a foreclosure filing).

Hertel believes the tough times will pass.

“It's a correction,” she said. “In West Sac, we're close to the job centers, like downtown and midtown Sacramento. We're going to do OK here, over time.”

And for buyers, it's a favorable market, Hertel added.

“Two years ago, I was telling buyers, ‘Here are three houses, pick one, and we'll do the best that we can do for you.' Now, it's ‘Which one of these 20 homes do you like, and what would you like to pay for it?' ” Hertel said.

“Interest rates are a little higher than they were 18 months to two years ago, but you can still get a loan at below 7 percent. I bought my first house at 11.9 percent, and that was considered a good deal at the time. There haven't been many times when it's been this good to be a buyer.”

CA 3 articles

Union



A year ago when the real estate market still bubbled, Kate Woolley, a single mother of three young children, could not afford a house of her own.

But with prices in Nevada County continuing to fall in a nationwide market decline and motivated sellers offering better-than-ever deals, Woolley will move into her own townhouse next week.

"This would have been impossible a year ago. This is huge for me," Woolley said Wednesday.

Buyers like Woolley shine on the bright side of news that others might view as bleak.

In May, the median price for a house or condominium sold in Nevada County dropped slightly more than 5 percent to $460,000, down from $484,500 in May 2006, according to figures released by DataQuick Information Systems in San Diego and posted on the Web at www.dqnews.com.

Placer and Sacramento counties also showed year-over-year declines, while El Dorado County rose less than half a percent, DataQuick reported.

Across California, the pace of sales continued to slow to levels not seen in a dozen years. The median price, however, rose 2.5 percent to $484,000, though markets showed wild swings from county to county, according to DataQuick figures collected from county recorder's offices.

In the nine Bay Area counties, the median price for May rose 3.4 percent from the median a year earlier to $660,00. In Southern California counties, the year-over-year median for May rose 4.9 percent to $505,000, DataQuick reported.

In Nevada County, an older, three-bedroom house that once would have fetched more than $400,000 now sells for well under that bar. With more than three times the number of houses on the market than a year ago (see The Union's interview with Nevada County Board of Realtors President Chauncey Poston), frustrated sellers are reaching out to buyers like Woolley with new incentives.

Some sellers are paying closing costs and offering to buy down interest rates to sell houses that have been on the market for a year or more. Those who fear foreclosure are slashing their prices.

That's good news for buyers who can grab the opportunity a downturn offers.

Yet most middle-class buyers still face several hurdles to home ownership, one local Realtor cautioned.



No more treading water

A divorce and bad credit made it difficult for Woolley to get into a home during the hot market, she said.

"I haven't really been able to keep our heads above water," said Woolley, who works seven days a week as a real estate agent for Keller Williams in Grass Valley.

But in the cooler market now, Woolley will move her family into a new IronHorse townhouse with the help of no down payment and a lease option to buy the house.

Some sellers of high-end properties have dropped prices by as much as $300,000 after watching them stagnate on the market for more than a year, said Marilyn Seolas of RE/MAX Advantage.

Chuck and Jill Ragan, both in their early 30s, searched for two years and walked through an estimated 100 county houses before finding the right one in Grass Valley to call home, they said.

That patience and diligence paid off, Chuck Ragan said.

"It kind of worked in our favor that we had such bad luck at first. We found ourselves in a buyer's market," Ragan said.

Still a way to go

Potential buyers still face monthly payments on prices twice as high as a few years back. Police officers, nurses and teachers who live in the county continue to have trouble purchasing a home, Seolas said.

More barriers could lie ahead.

"Prices are coming down, but interest rates are creeping up," Seolas added.

Interest rates are hovering at 6.5 percent to 7 percent and are expected to rise, she said. When Seolas entered real estate 26 years ago, rates were as high as 18 percent - but homes cost far less.

Without a foot in the door or someone such as a parent to help out with a down payment, many struggle to get into the housing market while trying to keep up with the high cost of living, Seolas said.

"Somewhere in here, we have to hit a happy medium," she said.

ooo

To contact Staff Writer Laura Brown, e-mail laurab@ theunion.com or call 477-4231.

Median real estate prices in Nevada County
May 07 May 06 % change
Nevada County $460,000 $484,500 -5.06
Grass Valley $410,000 $405,000 1.23
Nevada City $450,000 $487,250 -7.64
Penn Valley $405,000 $412,000 -1.7
Truckee $617,750 $600,000 2.96
— Source: DataQuick Information Systems

Union



Chauncey Poston, president of the Nevada County Association of Realtors and Grass Valley City Councilman, talked with The Union this week about the real estate market downturn and its impact on the local economy. Here are some excerpts from the interview:

What have been the effects of the downturn in the local real estate market?

From a municipality standpoint, we have over 600 approved of- and yet-to-be-built-homes in Grass Valley, and that is largely due to the downturn in the market. You have developers who have permission to build the homes, but they're not pulling the permits to start because of the conditions out there. On a larger scale, the economy here in Nevada County and Grass Valley is very dependent on building. So, when the building stops, no one is buying furniture and no one is buying new plants. All the businesses really take a hit.

How long do you expect the real estate downturn to last?

I have no idea. ... When I attended a California Association of Realtors meeting in Sacramento three weeks ago, they seem to say we're going to have another downturn of 7 percent, but the values up here shouldn't be all that bad. The values that will plummet will be in places like the Central Valley, where there's a lot of brand-new construction. ... We don't really have that up here. ... I think we're going to be fine up here, in terms of not having massive foreclosures like in heavily urban areas.

Are there any bright spots in the real estate market?

If you are a buyer and you have money and staying power, now is the time for you to make a good investment.

What are some of the good deals to be had in western Nevada County?

They're all over. It just depends on where you want to live. We have such a varied selection up here. ... Alta Sierra and Lake Wildwood, those are some of the easier places to purchase because there are so many available.

Do you sense any issues as far as the quality of the local housing stock?

If you talk about quality, there are some absolutely drop-dead gorgeous, very expensive homes on the market right now. In the town of Grass Valley, there are a lot of older, smaller homes that are really wonderful opportunities for the first-time home buyer.

Compare the number of homes being sold locally to the homes on the market.

A couple years ago, homes didn't stay on the market very long at all. We had the whole phenomenon of competing prices, where people would actually bid, but this is not occurring now. I think I heard a figure that there are more than 1,500 listings on the market right now. I can remember when there were only 400. Yes, the supply is way up.


Signal


Sales of single-family homes in the Santa Clarita Valley are down sharply from a year ago, according to statistics released Wednesday, yet the median price of homes continues to rise in most sections of the valley.

Sales in the SCV are down 21 percent this year compared to last year, according to real estate agent Pam Ingram of Re/Max. A similar drop has occurred statewide, with sales down 25 percent in May from the same period last year, officials with the California Association of Realtors said.

But the median price for a single-family home in May was $615,000 in the SCV, up from the January price of $531,000 and up 3.4 percent over April's prices, according to a report from the Southern Regional Association of Realtors.

The association reports inventory in the Santa Clarita Valley remains high, with 2,240 active listings in the month of May.

A total of 179 single-family homes closed escrow during May, 23.5 percent down from a year ago.

The apparent violation of the law of supply and demand has created a recent increase in business for Debbie Penny, Realtor and broker/owner of Legacy Real Estate Group in Santa Clarita.

However, she says, "I don't trust it'll last. I don't see this as being long-term."

Nationally, home sales surged 12.5 percent in April, but analysts say they believe it was a one-time occurrence due to weather and other factors. In every other month this year, sales have fallen nationally, and so have home prices. The median price of a new home sold in April was down 0.9 percent from a year ago, and sales slid throughout the nation except in the Midwest.

Home prices are expected to fall in most of the nation throughout the coming months. But in parts of California, the picture is different.

The median price of a single-family detached home in May was $591,180 statewide, up 4.8 percent from a year ago.

Reports of a massive housing slump have brought out the bargain hunters in the Santa Clarita Valley, but it's not necessarily a buyer's market, said Penny.

"Buyers have a little more in (their) favor than there was two years ago," she said. "(But) the buyers aren't going to get everything they want, and the seller's not going to get everything they want. There's give and take on both sides."

But the bargain hunters are out there for those anxious to sell, said Ingram.

"Right now, the buyers are looking for deals," she said. "They're looking for the best house for the least amount of money, and unfortunately, the sellers are having to reduce their prices to be in the market."

California Association of Realtors President Colleen Badagliacco said the decline in home sales doesn't necessarily translate to affordable housing.

"With prices holding steady or showing marginal declines in many parts of the state, affordability will continue to be a problem even with mortgage rates that remain near historic lows," Badagliacco said in a statement.

Many unknown factors plague the current market, Ingram said, ranging from people simply testing the waters to a potential foreclosure market.

Forecasting the future of housing prices is impossible, Penny said wryly, adding that "I don't have the crystal ball."

The Associated Press contributed to this report
Copyright:The Signal

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CA auction

http://www.news10.net/display_story.aspx?storyid=29527

Hundreds of potential homebuyers crowded an exhibition hall at Cal Expo Saturday morning, many hoping to snap up a foreclosed home.

At a fast, nearly frenzied pace, 242 homes in the Sacramento region were all auctioned off to the highest bidder in about three hours.

Many homes valued at nearly $500,000 opened to bidders at just $250,000. But it didn't take long for the hot homebuyer competition to quickly drive many of those prices up.

"I haven't heard of that many steals here," said Andy Adams, who drove to the auction from South Lake Tahoe.

But there were some bargains to be found. Pat and Satya Chaterjee won their bidding war for a Roseville home, paying about $15,000 under market value.

But despite their good fortune, the auction's circumstances made it tough for the Chaterjees to celebrate.

"It's sad to see new houses with owners thrown out. The fault goes to greedy mortgage lenders offering no interest loans," said Satya Chaterjee.

The Sacramento region has some of the highest home foreclosure rates in the nation. Nearly 3,400 homes were foreclosed upon in the first quarter of 2007.

The auction was the first of three held by the Real Estate Disposition Corporation scheduled for this weekend. An auction of Bay Area properties will be held at the San Mateo County Event Center in San Mateo Sunday, followed by bidding for Modesto and Fresno properties Monday at the Modesto Centre Plaza in Modesto.


http://www.sacbee.com/101/story/238605.html

Repossessed homes trigger hot bidding
By Jim Wasserman - Bee Staff Writer
Published 12:00 am PDT Sunday, June 24, 2007

Bill Weldon liked the empty house so much he watered its landscaping for two days before it was to be auctioned to the highest bidder.

Saturday, that was him.

Among a crowd of 1,200 people attending a colorful, fast-paced auction of 107 foreclosed homes, Weldon, a retired Antioch High School teacher, outbid a competitor and won the house in Galt for $300,000. He leapt past his intentions of spending $275,000, but it was the house he really wanted.

"It's a very nice house with vaulted ceilings," he said. "I figure instead of saving $100,000, I saved $75,000. It's still a good deal." He will move soon from his house in Rancho Cordova.

Weldon signed his escrow papers about 1:15 p.m. Saturday, then quickly returned to the boisterous adrenaline-loaded spectacle where an Irvine foreclosure liquidator sold the bank-repossessed homes.

Tuxedo-clad runners worked the large crowd and attractive young women staffers heartily applauded opening bids as homes, condominiums and mountain cabins from eight area counties went on the auction block. Loud, rapid auctioneer babble, rock music and free coffee fueled the intensity as bidding began shortly after 10 a.m. Many of the houses, witness to previous owners' misfortunes and inability to make mortgage payments, sold at the rate of one per minute.

Eyeing the crowd, which quickly surpassed 1,000 after doors opened at 8 a.m., Mike Shack, vice president of Real Estate Disposition Corp., pronounced himself "very pleased." The firm and its affiliates had 150 staffers on the scene and spent "hundreds of thousands of dollars" promoting a three-day auction of 242 Northern California bank-repossessed houses. Auctions are scheduled today in San Mateo and Monday in Modesto.

Saturday's auction, where winning bids ranged from $105,000 for a dwelling in Sacramento to $810,000 for a house in El Dorado Hills, showed a housing market in distress as foreclosure activity mounts.

Banks and mortgage lenders last month repossessed 969 homes in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties, according to Fair Oaks-based Foreclosures.com. But the numbers, while rising, are well under 1 percent of total area households, the Web site reported.

Still, other peoples' troubles have surely opened doors for investors who flocked to Cal Expo.

Inside a cavernous room with 850 folding chairs and with hundreds of people standing along the walls, Gail Roe of San Jose got a 755-square-foot house in Sacramento for $115,000. Friend Barbie Correnti, holding a dog named Peanut, whooped and hugged Roe. Minutes earlier Roe had lost another house after stopping at $355,000. The blind former Kaiser Permanente nurse practitioner lives on income from her investment properties.

Bob Somal and his real estate broker father, Narinder Somal, bought two houses, paying $240,000 for one in Stockton and $400,000 for another in Elk Grove.

"We were going to go to $350,000," said Bob Somal. "We decided to go to $380,000. And our winning bid was $400,000."

But that was $20,000 less than the 2,460-square-foot house brought the first time it was sold Saturday. Several times during the day, houses returned to the auction block when buyers had financial issues. The Somals plan to resell both houses.

Investor Heman Lee of Sacramento bid $350,000 for an 1,844-square-foot house in Elk Grove and plans to rent it. He called it a "good price. I looked at the house. It's real clean. It doesn't look like a lot needs to be done."

Buyers paid an additional 5 percent of their sales prices to REDC. The firm also charged lenders an unspecified commission and promotion costs. Buyers were required to show up with a $5,000 cashier's check and had to pay at least 5 percent down on the purchase. The event lender, Irvine-based Impac Lending Group, offered four types of loans: 30-year fixed, interest-only, five-year fixed and stated income.

Most buyers proclaimed themselves pleased with their savings, which ranged from about 5 percent to perhaps 30 percent below previous asking prices. But some overpaid, said watchful real estate agents. Seeing one Stockton house sell for $460,000, veteran Stockton agent J. Richard Sabbatini shook his head and said the house was not worth that much.

Some came to watch for practice, assuming there will be more auctions and better prices later this year or next. Others said they decided not to bid after seeing heavy traffic at open houses and such a large crowd.

"I just figured it was going to be prices higher than I'd like to pay," said Mesut Koch of Rocklin. Watching the frenzy, Koch said: "I don't think I would do well here. I'm not coming back."

He said it looked easy for people to lose themselves and go $10,000 too far.

Others were simply disappointed. Jennifer and Michael Johnson of Esparto, had hopes for two houses in Marysville and Olivehurst. They waited through 3 1/2 hours of bids with two young children, only to see prices quickly jump beyond them.

For Weldon, it was his second time buying at a foreclosure auction. During California's last real estate downturn in the 1990s, he successfully bid $162,000 for a Pittsburg waterfront town house. Today, he said, it's worth $600,000.

Go to: Sacbee / Back to story

NYT CDOs

http://www.nytimes.com/2007/06/21/business/21bonds.html?_r=1&hp=&pagewanted=all&oref=slogin


The high-stakes game of brinksmanship began early yesterday on Wall Street, and continued throughout the day. Bankers traded telephone calls, frenetically negotiating the fate of two hedge funds.

All wanted to avoid a fire sale in the troubled mortgage-securities market, but at the same time, not get stuck with an exploding liability that could result in steep losses. The day ended with deals that appeared to have forestalled a meltdown. But questions remained about how successful they were and whether they had merely delayed the inevitable.

As the morning unfolded, lenders to two hedge funds at a unit of Bear Stearns, the investment bank, tried to ascertain what they could expect if they auctioned off mortgage securities with a face value of up to $2 billion. The solicitations were hastily withdrawn when investors reacted with little enthusiasm. But by the end of the day, some of the less-risky securities did change hands.

At the same time, several lenders, including JP Morgan Chase, Goldman Sachs and Bank of America, reached deals with Bear Stearns that forestalled a need to sell securities in the open market. It appeared that some lenders pulled back over concerns about the effect that a large liquidation would have on bond prices and investor confidence. While the securities involved represent a fraction of the market, a liquidation could have forced a bigger sell-off while setting a lower price.

One lender, Merrill Lynch & Company, moved ahead with plans to auction $850 million in collateral it had seized from the Bear funds, according to people briefed on the matter. And Deutsche Bank was said to be shopping $600 million in assets.

Concern over the Bear funds, along with a drop in energy stocks and uptick in yields, helped drive down stocks yesterday. The Standard & Poor’s 500-stock index fell 20.86 points, to 1,512.84 , and the Dow Jones industrial average fell 146 points, to 13,489.42.

In the last week, escalating problems at the Bear Stearns High Grade Structured Credit Strategies Enhanced Leveraged Fund and a related fund have jarred investors into confronting systemic risks in the once booming market for bonds that are backed by mortgages to homeowners with weak, or subprime, credit. Last year, more than $483 billion of such bonds were issued, up 5 percent from 2005.

The deal that JP Morgan Chase reached with Bear Stearns Asset Management allowed it to sell $400 million collateral back to the hedge funds for cash, according to people briefed on the matter. It was not clear what price the two banks agreed to.

Goldman Sachs and Bank of America reached similar deals, though details remained unclear. Also unclear is what price the assets will eventually fetch for the Bear funds and what types of losses investors, who have been unable to redeem their investments since May, will face.

The securities causing the greatest concern within the Bear Stearns funds are known as collateralized debt obligations, or C.D.O.’s. Run by portfolio managers, these complex instrument are akin to mutual funds in that they buy stakes in a variety of bonds backed by mortgages.

They often invest in the riskiest portion of the bonds, usually with a hundreds of millions or billions in borrowed money. Some simply buy stakes in other C.D.O.’s. About $316 billion in C.D.O.’s specializing in mortgages were issued last year, up from $178 billion in 2005.

The leveraged fund at Bear Stearns, which is 10 months old, made a particularly big bet on these C.D.O.’s. But that strategy soured as more homeowners fell behind on loan payments and foreclosures surged. In many regions, home prices are falling and the number of properties for sale are growing.

Traders and industry executives who saw lists of C.D.O.’s on offer from the Bear Stearns funds say that even as the manager of the funds, Ralph Cioffi, bought some protection against a deteriorating housing market, on balance his investments seem to be based on a belief that the subprime market would not crumble, or at least not soon.

“This is some of the more aggressive stuff that has been issued in the last couple of years and is not indicative of what most people have been invested in,” said a portfolio manager who did not want to speak for attribution because his firm may make bids on some of the assets.

He said it would take time — perhaps several days — for potential buyers to drill down into some of the more complex securities in order to value them before any bids could be prepared. From 33 to 45 percent of the $2 billion in C.D.O.’s on offer by the funds early yesterday were investments in other C.D.O.’s, according to officials who have seen the bid lists.

One worry about the possible unwinding of the Bear funds is that it will cascade into larger liquidations by other investors who hold similar securities at far higher prices. Accounting rules require investment banks to mark the value of the investments to the price of similar assets trading in the market. Many mortgage-related securities, and C.D.O.’s in particular, do not trade frequently, making them hard to value.

“I think people are nervous and trying to figure out what the best course of action is here,” said Jeffrey Gundlach, chief investment officer at the TCW Group, an investment management company with $85 billion in mortgage- and asset-backed securities. “Do you want to be the first one out and perhaps cause the lows to be hit in the market, or do you want to wait and see how this all plays out?”

In fact, rather than aggressively selling the assets it has seized, Merrill is quietly showing it to a small group of potential buyers, according to a person briefed on the process.

Such an approach helps to keep the pricing of the securities under wraps, allowing Wall Street firms to avoid marking down their own stakes. Keeping the sales price quiet also means that the firms may not have to add collateral immediately to shore up their portfolios.

At the end of the day, Merrill sold only a small portion of the $850 million in assets it had seized from the Bear funds as collateral. Traders said what did sell was the less risky, well-collateralized securities and that those sold near or at par in many cases. It is unclear whether Merrill intends to hold onto the remaining securities or whether it will try to sell them again down the road.

Yet another emerging worry is that the big investment banks that until now have generously lent billions of dollars on good terms to traders and portfolio managers are pulling back or demanding stricter terms.

One industry executive, who asked not to be named because of the delicacy of the subject, said the banks involved in the Bear funds could collectively lose $1 billion on their lendings to the Bear funds. While the amount is not itself significant given the size of these banks, it suggests the potential for bigger losses down the road.

“We have heard that lenders have already reduced the amount that they are willing to lend against C.D.O.’s,” said Timothy Rowe, a portfolio manager at Smith Breeden Associates.

Still, analysts note that credit remains easy by historical standards and the market seems to be weathering the current storm well.

“Yes, there was too much leverage in the market. Yes, there was too much appetite for risk and yes, that risk was underpriced,” said Mark Adelson, a senior analyst at Nomura Securities in New York. “But there has not been a lick of spillover of this situation in the corporate bond market or stock markets so I don’t think people need to start hoarding food, water and ammunition because the end is coming.”

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NV Ely Times

Ely Times


Development of the master-planned Coyote Springs community 50 miles from Las Vegas is coming along on schedule, with the first production model village set to open in less than a year, an executive for the primary home builder said.
Click here for the Ely Times


There have been no delays or scaling back of plans for the 43,000-acre bedroom community, said Klif Andrews, division president of Pardee Homes.

"Not at all. I don't know where that comes from," Andrews said in response to reports that Coyote Springs has become a victim of the slowing housing market.

Pardee entered an agreement with Coyote Springs developer Harvey Whittemore in 2004 to build about 7,000 homes on the first 2,000 acres. The homes were originally scheduled to be finished this spring. The community has been approved for 159,000 homes.

"That's really a function of our delays with the general improvement district and delays associated with the water treatment and sewer facility," Whittemore said. "It doesn't have anything to do with the market at all."

Despite the glut of homes on the market for sale, Andrews said, he's confident Pardee will deliver its first housing units at Coyote Springs by the end of 2008.

"Everyone you survey will tell you no matter what the inventory looks like today, 2008 will be a good year for having lots," he said.

About 70 custom home lots along the Jack Nicklaus signature golf course have been graded and will be available for sale when the course is ready for play in September, he said. Prices have yet to be determined.

"It's a very expensive (golf) course. That's the draw," Andrews said. "The custom lots ... I don't worry about that for a minute."

Pardee Community Development Director Jim Rizzi said his biggest accomplishment in the past few weeks has been getting the building permit for the 32,000-square-foot community center at Coyote Springs. It's part of a $20 million lake amenity center that includes an outdoor amphitheater.

An "accelerated schedule" calls for the main entry at U.S. Highway 93 and State Route 168 to be completed in October or December, development of water wells by February and all of the infrastructure, including dry utilities, to be in place by March, Rizzi said.

Some 20,000 acres have been set aside for residential development in Coyote Springs. About 30 percent of the land lies in Clark County and 70 percent is in Lincoln County. The Clark County portion is being developed first and will take about 10 years, Andrews said.

Lincoln County Sheriff Kerry Lee, who meets with the developer at least once a month, said he'd heard the Clark County side wasn't going to be as big as originally planned. He said developers had lightened up the density and increased open space.

"We heard it was going to be coming in two years, then we heard it would be five years and then 10 years," Lee said. "My feeling is that Toquop (Lincoln Highlands by Olympia Group) comes before Coyote Springs."

Coyote Springs would be served by the sheriff's substation in Alamo, about 35 miles away, Lee said. He has about 10 officers to cover 11,000 square miles of Lincoln County. Initial home development at Coyote Springs would fund two or three more officers, he said.

Coyote Springs is divided by the Pahranagat Wash wetlands and will have 12,000 acres of nature preserves, trail systems, parks and open space.

The master plan calls for six golf courses and a major golf training facility, vacation golf villas, multifamily housing and commercial and retail development.

"It looks like one of those things that's too big not to happen," said Larry Murphy, president of

Las Vegas-based SalesTraq. "It's on a scale of CityCenter. When you've got that many dollars and that many players, they've got too much in it not to go through with it."

Construction of the water treatment plant is nearly complete and work is about to start on the wastewater and sewer plant. Estimated construction cost for both plants is $35 million, Andrews said.

Pardee has spent tens of millions of dollars on infrastructure, including 21,000 feet of sewer line and 10,500 feet of water line. Nearly 2 million cubic yards of dirt have been moved.

Coyote Springs will draw its initial power from existing lines along U.S. Highway 93. The developer is working with the Lincoln County Power District to provide power for the entire community.

Whittemore's Coyote Springs Investment company bought the land for $15 million in 1996. The previous owner, Aerojet, a California-based defense contractor, had obtained it in a 1988 federal land swap for use as a rocket-testing facility.

"Coyote Springs is creating a new destination in the Las Vegas sphere of influence," housing consultant Tim Sullivan said. "With the golf orientation -- a dying breed in the west because of the lack of land -- multiple home types and village core, they're establishing a new destination."

Sullivan said Coyote Springs could complement Lake Las Vegas as master-planned resorts that enhance lifestyle options for the active adult and second home buyer.

Andrews said Coyote Springs is for "trailblazers and stargazers who want to be connected to the land, their neighbors and their livelihood in a sustainable setting away from congested cities."

Pardee is building in 22 communities around the valley, from $260,000 homes in the Sunrise Mountain area to high-end golf course homes at Lake Las Vegas.

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Fl auction

TC Palm


Even though the housing bubble had burst months before construction began, Janos Gyory was optimistic the new homes his company was building would sell for nearly $300,000 each.

Most of them didn't.

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This Saturday the remaining 14 finished homes will be auctioned, with bidding starting at $190,000.

"We were always optimistic that it is a good product," said Gyory, president of NGG Point. "But we are still paying interest to the bank and need to move it somehow."

National Auction Co. auctioneer George Richards expects the homes to sell between $195,000 and $200,000, roughly two-thirds of the original asking price.

That price is in line with current market conditions, said Sheri Wetzel, president of the Realtors Association of St. Lucie County.

"That seems to be the really hot price right now," Wetzel said. "Generally, anything priced under $200,000 will move and it will move pretty quick."

The slowdowns of sales and median prices aren't the only reasons why the homes didn't sell.

Richards pointed to the on-going road construction along U.S. 1 near the intersection for dissuading potential buyers.

"With the construction, selling them conventionally didn't attract enough traffic to get them sold," Richards said.

Hoyt C. Murphy Inc. Realtors' Port St. Lucie, which marketed the homes, will assist Richards in the auction.

The homes range in size from 2,400 square feet to 2,700 square feet and were built by Port St. Lucie-based Town & Country Home Builders. The five models were designed by Gyory, who is also an architect who led the design team for a Four Seasons resort in Caracas, Venezuela.

Gyory's company purchased the nine-acre parcel for $230,000 in 2003 and construction began in early 2006, months after the start of the national downturn in the housing market.

"Everything was already designed and permitted," Gyory said. "We thought there was still people who might be interested."

Gyory is still optimistic about the new home market of St. Lucie County. He is in the early stages of developing a 44-unit subdivision called Orange Gardens at Edwards and McNeil roads in Fort Pierce.

"We believe the market will turn around by the time we are building there," Gyory said.

LAS PALMAS AUCTION

When: Saturday

Registration: Begins at 9 a.m.

Bidders must register with the auctioneer, and present photo identification and a cashiers check for $2,500 at registration.

Arrangements have been made with National City Bank for financing.

s Treasure Coast Newspapers. Site Us

CA 2 articles

Ventura County Star

Property owners who think their tax assessments should be reduced amid falling real estate prices should wait before hiring a company to help them win a reduction, Ventura County Assessor Dan Goodwin said Friday.

That's because their homes may be among 8,622 whose assessed value has been cut under a program that Goodwin's staff launched this year in response to the real estate downturn.

The reductions which will save affected homeowners an average of $500 each on their next property tax bills are scheduled to be mailed in mid-July.

Homeowners should wait until then, Goodwin said, before responding to mailed sales pitches from at least two companies saying that, for a fee, they can help get assessments reduced.

Property taxes are computed based on what the Assessor's Office says a property is worth. Goodwin said his office's program is a proactive attempt to react to the market slowdown and be fair.

The reductions will lop off about $400 million in valuation from the county's assessment roll, which is to be announced in early July, Goodwin said. Since 1998, total assessments have increased nearly 100 percent, from $47.9 billion in 1998 to $95.8 billion last year. Goodwin noted that the value of many homes has increased much more than 100 percent over that period.

"What this is really about is the good government thing of giving people a fair tax bill, not one that is excessive," Goodwin said. "The other big issue is I didn't want to wait for thousands of people to have to call me and say, Didn't you notice? The market went down.'"

12,000 letters sent

Robert Jones, managing director of Escondido-based Property Tax Appeal Services LLC, which pitched its program recently in letters sent to 12,000 homeowners in Ventura, Los Angeles, Orange, San Diego, San Bernardino and Riverside counties, said he has already won assessment reductions for some of his customers, ranging from 6 percent to 18 percent.

His company, which charges a $100 retainer and 25 percent of any savings it obtains for a taxpayer, uses a statewide real estate records database and many of the same comparable sales criteria appraisers use to determine a home's value.

"Our point is to prove that the value has in fact fallen from when that person bought the house," Jones said. "The assessor's job is to prove that it hasn't lost value since it was bought."

The Assessor's Office tracks the value of some 300,000 properties in Ventura County, including about 150,000 condominium and single-family-home residences. The others are mobile homes, farms, commercial-industrial properties, boats, airplanes and business inventories and equipment.

In a typical year, Goodwin said, his staff reassesses about 30,000 properties, primarily those that have changed hands or undergone construction, ranging from room additions and remodeling projects to new buildings.

Price peak, then slide

This year, the office looked at about 18,000 additional residences, mostly those that changed hands from July 2005 to the end of last year, the period when prices peaked and then began sliding.

"Those properties generally fall into the range of ones that might have an assessment posted that would be over their market value," said Goodwin. "We broke that down by areas of the county because some areas were stronger than others because of scarcity and other issues. Typically, condos were disproportionately high in terms of properties that had declined in value."

The median price for new and existing homes and condominiums during that 18-month window started at $579,000, peaked at $634,000 and ended at $593,000, according to DataQuick Information Systems. The La Jolla-based marketing firm reported this week that the median for May was $590,000, a 1.6 percent decline from the same month last year.

Commercial and industrial properties were not studied because their values mostly have not declined, Goodwin said. Neither were residences purchased for below-market prices in subsidized housing programs.

His staff did full appraisals on 15,225 properties, including about 5,200 condominiums, 10,450 subdivision homes and 2,400 custom homes, Goodwin said. The values are as of Jan. 1, under law the assessment date for all properties for the 2007-08 year.

Other assessment options

Goodwin said appraisers also considered reducing assessments for all properties by a percentage equalling the overall decline in real estate prices, but that would have resulted in over-assessing some properties and under-assessing others.

Other counties are handling the problem that way, he said.

Goodwin said he has seen mailed pitches urging property owners to pay for help to get lower assessments from two companies, but he could only identify Property Tax Appeal Services. He emphasized that the mailers are not illegal.

Voters approved a law in 1979 allowing a property owner to file a form asking for a one-year lower assessment rather than filing a formal appeal. Homeowners who want to appeal for a lower assessment have until November.

Property Tax Appeal Services sometimes cannot come up with evidence that a reduction is needed, said Jones, the managing director.

"Some places don't even go down in value," he said. "If you own a home on a bluff in La Jolla, it hasn't gone down in value. They always seem to go up there."

His company will seek reductions only for properties purchased at the peak of the real estate boom. While most homes purchased earlier have probably lost some value, Jones said, they are almost certainly still worth more then when they were acquired.


Orange County


The woes of the national housing market continue to impact Irvine-based Standard Pacific Corp., whose stock hit a nearly four-year low this month.

Adding insult to injury, a drop in 2006 revenue amid the housing slump got Standard Pacific booted from this year’s Fortune 500.

A year ago, Standard Pacific marked its first inclusion in the Fortune 500, coming in at No. 493. That followed a tripling of revenue during the prior five years.

This year, Standard Pacific—the country’s 11th largest homebuilder—missed the cut for the prestigious list, coming in at No. 533 on the broader Fortune 1000.

The company’s decline has been dramatic, if not unexpected. Standard Pacific has spent much of the year getting rid of land, cutting building costs, offering incentives to buyers and dealing with slow sales in key markets such as California, Texas and Florida.

In the first quarter, the company took charges of $130 million to reflect land values that aren’t what they used to be, with $52 million of the charges related to holdings in California.

Standard Pacific’s stock—like that of most of its homebuilding peers—is reflecting the company’s slimmed-down operations.

Shares last week were off nearly 40% since February and down 60% from the industry’s heyday in mid-2005. The company had a market value of about $1.3 billion last week.

The housing slowdown and Standard Pacific’s stock slide have some analysts questioning whether a private equity firm could emerge as a buyer.

While the company’s “aware that there is interest,” Chief Executive Stephen Scarborough said late last week that it hasn’t been in any talks.

“We like the path we’re on,” he said.

If a turnaround is expected in the near future, Standard Pacific’s figures aren’t showing it. Last week, the company reported worse than expected orders for new homes in April and May.

Orders Down

New home orders, where buyers enter a pact to buy a home before it’s finished, were down 16% from the year-ago period, due in large part to slumping business in Florida and Arizona.

In California, where the company started selling at a number of developments, orders were up more than 13% in April and May.

Despite “seeing some energy” in California, overall home orders in April and May were off nearly 20% from the company’s business plan, executives said.

Along with regions of Texas, Arizona and Florida, the company blames underperforming areas such as the Inland Empire for the difference between projections and reality.

“The degree to which the (Inland Empire) market is correcting is greater than we expected,” Scarborough said last week at a New York investor conference.

There’s also fallout from the subprime mortgage collapse, Scarborough said.

“Certainly the impact of the subprime tightening has impacted some of our more affordable markets,” including Tampa, Fla., Phoenix and San Antonio, Texas, he said.

There are some positive signs.

The company’s cancellation rate from buyers backing out of orders was 28% in April and May, down from 35% a year earlier.

In California, the cancellation rate was 29%, down from 42%.

The number of prospective buyers at projects across the country also is strong, up nearly 20% from a year earlier.

“Buyers are out there looking for a house,” Scarborough said. “They like what (they’re) seeing, but haven’t gotten comfortable with the pricing they’re seeing. We need to work harder to convert that traffic.”

The company is offering increased fees to brokers as one way to boost sales.

Standard Pacific has about 57,000 home lots for current and future projects. That’s down from about 74,000 at the end of 2005.

“We’ve walked away from several thousand lots over the last year or so,” said Andrew Parnes, the company’s chief financial officer.

The company’s employee count is down 15% from a year earlier. Like other builders, it’s asked subcontractors to lower prices to bring down construction costs.

In some cases, Standard Pacific has “de-spec’ed” its homes, cutting pricey features to make houses more affordable.

It also plans to build fewer houses on speculation at its developments. The typical Standard Pacific community has three homes built but not sold. The company would like to get that average down to two.

Standard Pacific counts operations in six of the top seven growing markets in the country, and in 16 of the top 25 markets.

“We’ve got a sound footprint” to grow, Scarborough said.

He cited the Chicago and Washington, D.C., regions as two new markets that might be of

CA modesto bee

Modesto Bee


Property values seem to be on everyone's mind. That was especially true Wednesday for the more than 500 people who attended the Valley Real Estate and Economics Conference in Modesto.

The hot topic was the depressed real estate market, and speakers offered conflicting views about how long it will last.

Some predictions were dire.

Stephen Endsley, the longtime real estate investor who organized the conference, gave the most gloomy forecast: Housing prices will continue to fall 5 percent to 10 percent per year for the next five years.

"It took us five years to get into this housing bubble, and it probably will take us five years to get out," said Endsley, a retired cardiologist.

That prediction was too harsh, according to Mike Zagaris, president of PMZ Real Estate in Modesto. Zagaris said the market may spend "another couple years drifting along" at current values, which makes this a good time to buy.

"You have to buck the psychology of the masses to take advantage of the real opportunity," Zagaris advised.

Those who study crowd psychology, he said, conclude that "the vast majority of people are buying when they should be selling and selling when they should be buying."

Few people are buying anything these days.

In Stanislaus County, only 3,700 homes are expected to sell in 2007, which is about half as many as sold in 2004 or 2005, according to Craig Lewis, pres-ident of Prudential California Realty.

Lewis said median home prices have fallen from $414,000 in 2005 to $359,000 now, and it takes nearly three months to sell the typical home.

"First-time home buyers have the ability to buy now, but … they're sitting back and waiting because they think the price will go down more," Lewis said. He doesn't agree. "I certainly feel we're at the bottom of the market."

So does James Brenda, president of JKB Homes, which has developments in Turlock, Denair, Hughson, Oakdale and Riverbank.

"A lot of price corrections already have taken place," Brenda said. He predicted home prices will be flat until next spring. "After that, it's going to be a long steady climb."

Fees drive prices higher

Among the things pushing up home prices are high government building fees, said Bill Zoslocki, a Modesto contractor and president of the Building Industry Association of Central California.

Example: Zoslocki said Patterson forces developers to pay more than $96,000 in fees per home, plus extra costs if it is built inside a community facilities district.

He said fees per home are $57,659 in Modesto and $53,741 in Oakdale, and both cities charge more for homes in community facilities districts.

"The fees are growing," Zoslocki complained. "If you want affordable housing to be built, this will have to change."

Besides dealing with a slowing market and increasing government demands, builders at the conference said they must cope with the region's shifting demographics.

Scott Salazar Myers, president of Renova Communities and Del Valle Homes, said about 70 percent of buyers are Latino at his southwest Modesto development, Rancho Encantado. Homes there start at $229,000 for 1,100 square feet.

Myers said Latinos are more than a niche market; soon they will be the majority. In the San Joaquin Valley, Myers said, Latinos make up about 40 percent of the population, but they are expected to expand to 51 percent by 2020 and 60 percent by 2040.

"Hispanics are largely a group of people who came here to work hard, but they come here with significantly less education," Myers warned. That means most don't earn as much as better-educated Americans, so they can't afford to buy expensive homes. "For those of you who bought a $500,000 house in Ceres … you have to be realistic about who your buyers are going to be (when you eventually sell)."

Hard to attract industries

The valley's demographics may be hurting the region's chances to lure new businesses and jobs.

Patrick Gavaghan, president of the corporation that developed Keystone Business Park in Patterson, said attracting industries to Stanislaus County "is a tough sell" because its residents aren't well-educated.

Gavaghan said his business park isn't able to attract many large employers — such as a Target distribution center that could have employed 450 full-time and 1,200 part-time workers — because the work force doesn't have enough formal education.

"Patterson and Stanislaus County have got to graduate more high school students," Gavaghan said. He expressed frustration because during the past two years he has not been able to convince any new big employers to move into his park.

Modesto's Beard Industrial District has a different problem recruiting businesses, according to Joe Mackil, its chief executive officer.

"We're turning away good companies with lots of jobs because we can't meet the water and sewer needs," Mackil said. He blamed Modesto politicians, who he said were unwilling for many years to raise water and sewer rates to finance new facilities. "Now we don't have the capacity."

OR 2 articles

http://www.bendbulletin.com/apps/pbcs.dll/article?AID=/20070613/BIZ0102/706130350/1011&nav_category=

Last year, the houses that Sun Creek Homes built in its little subdivision on Parkview Court in east Bend flew off the market nearly as fast as they went up.

Not this year, though.

The 14th and last home, finished in the spring, still stands unsold, Meridian Realty owner Natalka Hamilton said Tuesday.

Despite its granite countertops and double-screened fireplaces. Despite a 13.25 percent price reduction. And despite the builder's offer to pay thousands of dollars in closing costs.

Why?

Investors who could have easily afforded its $338,000 price tag have long since fled the market, leaving mostly first-time buyers to pick up homes in the region's lower-end $250,000 to $350,000 price range, Hamilton said.

And, with the rug pulled out from under the market's once plentiful supply of no-money-down, no-documentation loans, fewer first-timers can afford to buy, even if they wanted to.

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"You actually have to have 5 percent (down) of your own money right now," Hamilton said. "And there aren't a lot of people who have that kind of money sitting in their bank accounts."

"I could take anybody and get them qualified for a loan a year ago," she said. "Now I have to tell them they need to save money. Which is a good thing for the market in the long term, but in the short term, our market is definitely in a correction."

May typically marks the beginning of the region's summer selling surge, but not this year.

Sales of single-family homes on less than an acre in Bend slumped to 121 in May, the weakest May sales figure in five years and the weakest month of the year so far, according to the Central Oregon Multiple Listing Service.

In Redmond, the month's sales plunged to 38, according to the MLS, 61 percent off of the still hot-market sales of May 2006, and also the weakest May in the last five years.

Compared with May sales of 2004 through 2006, May 2007 sales also were off in Crook and Jefferson counties, where sales are dominated by the typically less-expensive Prineville and Madras markets, and in less-expensive La Pine. Only sales in Sisters held about even with patterns of the past five years.

Inventories of unsold homes continued to rise, reaching 1,500 in Bend by June 4, a nearly 22 percent increase since April 2, according to tracking data compiled by Bratton Appraisal Group's Mike Caba. That means that about 11 months' worth of housing inventory is on the market now, assuming that the average monthly sales volumes of the last six months hold steady.

Mixed messages

On the surface, prices don't appear to have dropped in response.

Median sales prices in Bend nudged up a bit in May, reaching $351,900 for the year, according to davidfoster.biz, a Web site maintained by RE/MAX Equity Group broker David Foster.

Across the region, average list prices bumped upward as well, The Hasson Company Realtors principal broker Bill Berger said, leaving him to wonder where the market is really heading.

"We've just got so darned many pieces of conflicting information here, I just don't know what to make of it," Berger said. "I honestly wish I had a better handle on it."

"I think it's just kind of that transitional period where we are trying to find a balance. I don't know."

Among the possibilities: Sales have remained relatively strong in the upper price levels, Hamilton said, with sales still going smoothly for people moving here from outside the region with money they've taken out of another home. On the lower end, though, the slowdown is more pronounced.

A broader look at the region's sales numbers tends to bear that out.

In Bend, sales of homes worth $400,000 or less last month were down 65 percent from May 2006, according to the MLS. Sales in the $400,000 to $750,000 range were down 39.7 percent, while sales in the $750,000 to $1 million range slid 22 percent.

Eleven homes worth more than $1 million closed sales in May in the Bend-Tumalo-Alfalfa area, according to the MLS, accounting for nearly 10 percent of the month's sales - apparently a coincidence, since seven of them had been on the market for 11 months or more. One to three monthly million-dollar sales has been the norm for that market for the past six months, Berger said.

Redmond's generally lower-priced market showed even more weakness compared with May of last year, with sales in the $250,000 to $400,000 range off 71 percent and sales of $250,000 or less off 33.3 percent. Nothing sold for more than $522,000 in Redmond in May.

Builders

Contractors continued to rein in the pace of new building in May, without stopping altogether.

Only 169 building permits were issued throughout the region in May, according to Cascade Central Business Consultants President Don Patton. That's about on a par with the first five months of this year but 52 percent less than the torrid pace of May 2006 when the market was still booming.

Last spring, contractors were straining to build enough houses for a crush of investors and speculators, along with normal home buyers, WoodHill Homes President George Hale noted. This year, 75 percent of the three to four buyers a month who are picking up homes in his lowest priced subdivision, WoodHill Park off Empire Avenue, are first-time buyers, and Hale has trimmed his projection of home starts this year from 80 or 90 to about 60 while he waits to see where the market goes through the summer.

Houses are still selling and contractors are still making money, said Brian Bergler, vice president for communications at Pahlisch Homes, the region's largest volume home builder over the last few years. But the pain of the slowdown is easier for some to handle than others.

Dennis Pahlisch, who founded the company in the early 1980s when 18 percent mortgage interest rates were devastating the industry, steered a relatively cautious path through the boom years of 2005 and 2006, taking care to avoid straining the company's credit lines with overconfident land buys and building schedules, Bergler said.

Partly because of that, Pahlisch's sales numbers aren't showing many dramatic shifts. It has averaged sales of about 14.5 homes per month through the first five months of this year in its various subdivisions, Bergler said. The company still plans to start about 200 homes this year, he said. It sold 149 homes in 2005 and 218 in 2006.

Slowdown coming?

So far, the real estate and construction slowdown seems to be fairly well contained to those industries, even in a growing city where housing and housing-related sectors play a greater role than most.

The Bend Chamber of Commerce's roster stands at 1,567 members this month, Chamber Vice President Jeff Nielson said, up about 70 members in the past 18 months. In sectors that aren't tied directly tied to real estate, "I'm not picking up any kind of a despair or panic or anything like that," Nielsen said.

Inside the industry, the strains are more apparent.

Subcontractors are easier to find in nearly all trades this spring than they were last, Hale said, and their prices are either down or have at least stopped rising.

"It really hits everybody," Hale said. "Mortgage brokers, Realtors, title companies, anybody who has any kind of piece in the real estate industry is really feeling the slowdown."

Mortgage brokers, in particular, have been whipsawed by fallout from the sudden decay of the subprime lending industry, said Rockland Dunn, last year's president of the Central Oregon chapter of the Oregon Association of Mortgage Professionals and the broker of record for Summit Mortgage's Bend office.

Partly due to a nationwide rise in foreclosures, and partly due to the general slump in home prices, most lenders have tightened their lending standards considerably, Dunn said, insisting on more money down and better documentation of income and assets from borrowers, along with more critical appraisals of the homes they are buying.

That will result in a more stable and predictable housing market going forward, Dunn said. But the loss of loan volume to the investors and marginal first-time buyers who thrived for awhile on no-money-down, no documentation loans is painful for the mortgage industry in the short run.

Several offices around town, including Dunn's own, have laid off brokers, Dunn said. The rest are waiting to see where things stabilize.

"We rode the wave, and now it's going to get back to a normal buyers' market, rather than the artificial one we had created," Dunn said.

At least some of the "normal" buyers are apparently still coming, albeit more slowly than in past years, for reasons that sound familiar.

Sam Jauchius, Tum-A-Lum Lumber's new manager in Redmond, moved here a few weeks ago from Sacramento. After a successful career in the building supplies market in California, Jauchius said he and his wife, a registered nurse, were attracted by the prospect of settling down to a Central Oregon lifestyle.

He's living in his RV now while his wife tries to sell their old house - which could take awhile. But, even in Sacramento's slumping market, Jauchius figures he'll make enough to easily afford a Bend house and everything that goes with it.

"This is the only place I've found where I really want to live," Jauchius said. "It's beautiful. So I'm here for the duration."

David Fisher can be reached at 617-7862 or at dfisher@bendbulletin.com.
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http://www.ktvz.com/Global/story.asp?S=6653595


You have to go all the way back to 2000 for a May in which fewer Bend homes sold than last month, the surest sign yet that the High Desert is anything but immune from the nation's real-estate cooldown - and there are new signs prices finally are dropping, to reflect that chill.

Cite (or blame) whatever factors you want, from a fairly cool end of spring to those soaring (now retreating) gas prices. But the numbers from the Central Oregon Multiple are dramatically clear, showing the slowest month of the year, at a time of year when home sales normally start to pick up.

There were 120 homes sold in Bend (without large acreage) last month, 70 on the Westside and 50 on the Eastside, said Rob Eggers, a Realtor with Duke Warner Realty. That compares to 146 sales in April and 156 in March, and is even slower than the typically frigid winter months - 128 homes sold in Bend in February and 133 in January, he said.

Bend's May home sales figure is the lowest since 2000, when 101 homes sold that month, fairly equally split between west and east. The 2007 number is comparable to the 125 homes sold in May of 2001, a figure that steadily climbed to the super-hot figures of 2005 (256 May home sales) and 2006 (down a bit, to 242).

But prices to this point have held surprisingly firm for such a chill, leaving many in the home business (building, selling or buying) scratching their heads.

"One of the most baffling stats from May is that the median sale price for the Westside actually went up roughly 15 percent" from a year ago, Eggers said. "Another head-scratcher is that, year to date, our median sale price for all sales ... is up roughly 6 percent over last year."

"So sales volume is way down, but prices on the properties that have sold are holding," Eggers said - quickly adding, "For the moment."

"Weather can play some part, but I don't think its had anything to do with the market this year as we've had a very mild winter and near record setting temperatures in May," Eggers told KTVZ.COM.

"Gas prices, increase in interest rates, and the general consensus of the economy play the biggest role" in the decline, he said. "People are hesitant to buy right now because if they wait a month or two, prices may come down even further. Exactly the opposite of 2005 and 2006, (when) sellers were hesitant to put their home on the market because if they waited a month or so longer to list, they could earn more equity."

"There's definitely some conflicting data in the MLS right now concerning pricing," Eggers said, but he agreed with observers who said "May prices may have been skewed by 11 $1 million-plus homes closing where on average we have about one to three close per month."

"Regardless of what the numbers say, prices are dropping," the Realtor said. "According to our 24-hour market watch on the MLS, yesterday (Tuesday) there were roughly 65 new listings, 25 sale pending, 30 closings and 127 price reductions. Those reductions will ultimately lead to lower prices throughout our market."





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IN new home party ends

http://www.indystar.com/apps/pbcs.dll/article?AID=/20070610/LOCAL/706100395/-1/LOCAL17

A downward trend in Indianapolis' home-building market is fueling scores of job cuts and discounts that, in some cases, risk devaluing entire neighborhoods.
The slide also could weed out some of the big tract builders that sell about three of every four new homes in the nine-county, $1 billion market. The builders, which employed more than 22,000 in good times, could become disenchanted with the drop in single-family building permits to 7,500 this year, the fewest since 1991.
"We rode a good wave for a long time," said Ed Hackett, Indianapolis division president of Dallas-based Centex Homes. "It's going to weed out the competition. We'll eliminate some players."
The sales downturn has hurt not only builders, but also the web of contractors and service firms that cater to the huge new-home market. The slowdown also takes money out of the economy as builders cut inventory and expenses. With fewer home buyers, home furnishing retailers and building suppliers also feel the sting.
Home construction "is a stimulus to everything else," from material suppliers to finance companies and utilities, said Patrick Barkey, research economist for the Miller College of Business at Ball State University.
Single-family building permits totaled more than 12,000 in 2005. From January through March of this year, building permits filed for new homes fell 35 percent from a year ago, to 2,359.
New-home sales are down not only in Indianapolis, but nationally. Reasons include a drying up of cheap credit -- blame it on hard times in the industry that makes loans to borrowers whose credit woes disqualify them from market interest rates -- and lagging demand from buyers.
They include a once-thriving investor market that bought vast numbers of new homes, many in the South and Southwest, to rent or resell for profit.
Housing is notoriously cyclical, given to booms and busts. In Indianapolis, the slowdown follows a string of strong years dating to the early 1990s.
The half-dozen or more national tract builders in the market, plus local players, are trying to hang on by cutting overhead and turning to price-cutting and promotions to lure the smaller pool of increasingly picky buyers. Some builders are cutting jobs.
Pulte Homes said last month it is cutting about 16 percent of its work force, or about 1,900 jobs, as part of a restructuring. Pulte is one of the nation's leading homebuilders, with 10 subdivisions in the Indianapolis metro area.
Some builders have even cut their prices below what comparable homes in the same subdivision sold for in the past year. That spells savings to new-home buyers, who are the main beneficiaries of the building slowdown, but it worries others.
Patty Torr, a vice president for F.C. Tucker Realtors, said one builder this spring knocked $100,000 off the price of a Northside home it couldn't peddle.
"That's just crazy," she said. "That devalues the whole neighborhood."
Hackett, of Centex, said some builders are slashing base prices -- as opposed to using promotions such as a free basement or money off on a fireplace -- for the first time in years.
"We've had instances where we had to lower our prices," he said, with cuts ranging from $2,000 to $20,000 per home.
Centex aims to sell 650 homes this year. It sold 725 in 2006.
Los Angeles-based KB Homes is building homes in nine Indianapolis-area communities this spring, compared with 17 last year.
"We tried to be realistic" about the market, said KB's division president, Dave Berman. Even so, KB remains "absolutely committed to Indianapolis," he said.
Two locally based tract builders, Gunstra Builders and Davis Homes, have tried other tactics to combat poor sales.
Gunstra has had luck building in urban niche markets, rather than sticking to subdivisions in suburban farm fields.
Its 77-townhouse Monon and Main project in downtown Carmel sold half of the units a month after opening, at prices ranging from $194,900 to more than $400,000, said sales manager Jim Morgan.
"And we haven't given away so much as a microwave," he said.
Davis is active in 22 subdivisions, about the same as last year, but expects sales to fall to 500 to 525 homes this year, compared with 750 two years ago, said President Brad Davis.
Davis Homes has laid off about 30 percent of its staff during the past two years and has gotten back into "on your lot" construction and custom home building as it seeks buyers, Davis said.
"That will be welcome business right now," he said. "We've all had overhead reductions that are very substantial."
Heating, ventilation and plumbing supplier JTB Contractors of Franklin managed to retain its 40 employees by working less overtime and reducing spending on new equipment, said Vice President Derek Baird.
Even so, "sales being down really hurt," he said.
The home building lag means fewer developers locally want to buy farmland or forested tracts to turn into subdivisions, said Corby Thompson, president of Thompson Land Co. in Fishers.
"Anybody looking to sell land, it's virtually impossible," he said.
For the first time in more than 20 years, he said, he's granting wholesale time extensions to builders to fulfill their lot-buying deals in Thompson subdivisions.
"We're going through a cleansing," he said. "I think it was overdue. Land prices were getting frothy. It was just unstable."
At Stock Building Supply, a national lumber supplier with locations in Franklin, Fishers and New Castle, the slowdown has led to layoffs of 100 of its 400 local employees since last year, said sales manager Gary Foltz.
To make up for lower sales to tract builders, Stock's local managers have started selling to builders of small hotels. The firm also is into the do-it-yourself home market.
The Builders Association of Greater Indianapolis said its membership has actually risen 5 percent in each of the past two years, to 1,350, as more builders and suppliers look to use the association's programs to boost sales and learn ways to cut costs.
Even so, among builders locally, "they're all reducing their inventories, reducing their permit expectations," said Steve Lains, the association's chief executive.
"People tend to forget, because housing is such an emotional purchase, that this is still an industry," Lains said. "It goes through boom and bust cycles."

CA NYT

http://www.nytimes.com/2007/06/10/realestate/10nati.html?_r=2&oref=slogin&pagewanted=all&oref=slogin




Riverside, Calif.

ON a foggy Sunday morning last month, the parking lots around the convention center here were filling fast.

The volume of the traffic downtown was not unusual. What was unusual was that the men directing the traffic were wearing tuxedoes.

The crowd — about 1,200 people looking for deep discounts in real estate — was decidedly less formal, in jeans and Dockers, shorts and sandals. The casual dress code concealed the fact that many were serious buyers carrying millions of dollars collectively into the hall in cash and cashier’s checks.

Some were investors, like Dendy and Rita Villegas of San Diego, who were looking to pick up an inexpensive house to rent out. Some were first-time buyers, like Rodolfo and Veronica Gonzalez of Fontana, who were hoping to save $200,000 or so off the asking price of a family home.

They converged on an event the likes of which Californians have not seen in a decade: a large-scale auction of foreclosed homes.

On this occasion in Riverside, two lenders had put 100 properties on the block. By the end of the day, 93 had sold. Most of those properties were in fast-growing exurban and desert communities in Riverside and San Bernardino Counties east of Los Angeles.

The company that held the auction had been dormant for a decade. But in recent months, when mortgages started going bad and foreclosures multiplied, several lenders contacted the company’s officers and asked if they could get back into the business of auctioning properties.

“We went into hibernation, and we’re back!” said Robert Friedman, the chairman of the Real Estate Disposition Corporation, which is based in Irvine.

The company sold more than 265 properties in San Diego, Los Angeles and Riverside during two weekends in May, and it is planning to hold auctions in Sacramento, Modesto, the Bay Area and Atlanta this summer.

Mr. Friedman described his trade as a “countercyclical business,” and he said that the banks unloading the properties preferred not to be identified.

In some cases, he said, the institutions sold the properties for less money than they were owed.

“It’s not a happy occasion,” he said. “They’d rather take a little loss quickly, rather than waiting and seeing.”

However unhappy the occasion may have been for lenders, the auction company put on a driving, shrieking, high-spirited event. All that was missing was the preacher and the tent.

The men in tuxedoes were not confined to the parking lots. Inside the convention center, they were everywhere, smiling, answering questions and showing the way to the auction hall.

Opposite the hall, a ballroom held 41 loan officers and 25 escrow officers. Before the bidding started, a jubilant soundtrack poured from the speakers. The rotation included “Jumpin’ Jack Flash,” the happiest songs of Earth Wind and Fire, and a modern version of “I’m a Believer.”

During a brief seminar before the auction, Mr. Friedman gave the theme of the day.

“Today’s the day,” he told the crowd, as staff members wheeled in stacks of extra chairs to accommodate hundreds of people standing in the back.

“The time to buy real estate is when the market is soft,” he said. “Today’s the day. Don’t regret not buying at this auction.”

Foreclosures have surged in Southern California in the last year, particularly in outlying areas.

In seven counties, lending institutions foreclosed on 6,007 properties in the first quarter of 2007, up from 721 properties in the first quarter of 2006, according to DataQuick Information Systems, a research company based in San Diego.

In Riverside and San Bernardino Counties, lenders foreclosed on 255 homes in the first quarter of 2006. That number grew to 2,369 in the first quarter of 2007, according to DataQuick.

John Karevoll, an analyst for DataQuick, said the data show “pockets of distress” in outlying areas that experienced a lot of new building.

“The foreclosure numbers are a function of how many loans are made,” Mr. Karevoll said. “If you go to a new area, you have a higher percentage of people who bought in the last five years. You just have a higher percentage of people who get in trouble.”

The normal process for the auction of foreclosures in California can be complicated, and it tends to be a game played by professional investors. After completing legal default proceedings, banks typically auction properties on the steps of county courthouses. Buyers have no opportunity to inspect the properties and must pay in full, in cash. The sellers do not have to guarantee that the title is clear of liens and additional mortgages.

The recent real estate auction in Riverside eliminated many of those problems.

The company presented every property for public inspection for three days, and it guaranteed title insurance as well. In addition, the company arranged for a lender to finance the deals, so that buyers did not have to pay cash for the full price.

Buyers paid the auction company a fee of 5 percent of the sale price for the first house, and 15 percent of the sale price on additional houses.

“It’s a pretty safe way to do this,” said Hasnain Khaku, a Realtor from Anaheim Hills who was outbid on six houses at the auction. “I’ve been telling my clients for two years to sell as fast as they can, or to keep cash on hand for opportunities like these.”

Dendy and Rita Villegas drove two hours from San Diego with their 7-month-old daughter for the chance to bid on a house in Murrieta, about 80 miles southeast of downtown Los Angeles. They are real estate agents, and Mr. Villegas is also a home inspector. He said that the house they wanted looked better than the other bank-owned houses on its street, but that it needed a lot of work.

“It looked like whoever had lived there just got up and left,” he said. The walls were dirty, the floor was damaged and the pool equipment wasn’t working.

When the property came up for bidding, Mr. Villegas was quick to raise his card. He was prepared to go as high as $300,000.

Within seconds, the auctioneer, at blood-boiling pace, ran the price up to $350,000. Ultimately, the four-bedroom, 1,828-square-foot house went for $400,000 to another bidder. The auction catalog said it had been previously valued at $425,000.

Throughout the bidding, the loudspeakers shrieked at rock-concert levels. The young men in tuxedoes — called “ring men” by the auction company — ran up and down the aisles in a sweat, spotting bids, flashing the totals on their fingers.

At pauses in the bidding, the auctioneer would shout encouragement. “What the heck?” he would say. “It’s only money!” At the front table, a chorus of young women clapped and cheered with each surge in the price.

The Gonzalez family of Fontana had hoped to get a good price on a three-bedroom house in Cathedral City near Palm Springs. Nine months pregnant, with two toddlers in tow, Veronica Gonzalez, 24, was prepared to go as high as $250,000 for the house, which had been previously valued at $389,000. She flashed her card to open the bidding at $179,000 and quickly saw the price soar past the family’s limit. The winning bid was for $280,000.

“It wasn’t worth that much,” said her husband, Rodolfo, 25. He said the house had holes in the walls and broken windows. The floor needed refinishing and the backyard needed work.

Of course, not everyone went away disappointed. Judy Sutter, a retiree who recently sold her house in San Diego, submitted the winning bid for a four-bedroom, 2,506-square-foot house in Menifee, not far from Murietta. Her bid, for $325,000, came in nearly $100,000 less than the house’s previous value.

Ms. Sutter was satisfied.

“This is move-in ready,” she said, as one of the young women from the cheering section escorted her to the finance room. “It looks like no one has ever lived in this house. This works for me.”

Even so, the concern among many bidders at the event was that even if the properties sold for 20 or 30 percent less than their value at the peak of the market, the price might still be too high.

Jim and Betty Botley of Chino attended the event with their Realtor, Maurice Merchant. They were looking to spend what Ms. Botley defined as “$300,000, and that’s it.”

The house they wanted went for an auction price of $550,000. The Botleys thought it would have needed $50,000 to $100,000 for renovation. After the repairs, auction fee and closing costs, they couldn’t see how anyone got a deal.

“We learned a lot today,” Mr. Botley said. “You can probably buy them cheaper on the market than buying here.”

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CA modesto bee

http://www.modbee.com/business/story/13651010p-14244449c.html

Modesto Bee


A bleak picture was painted of the region’s housing market at a recent conference for real estate appraisers.

The Appraisal Institute’s Northern California Chapter brought in experts to speak at the all-day event in Modesto last month, and their words weren’t cheery.

Speakers focused on housing trends and the slumping real estate market throughout the Northern San Joaquin Valley.

Statistics released recently by building and real estate associations also show a troubled market:

• Home prices falling: The worst of the housing price slump may not be over.

“This year, we’re going to see prices drop in every market across the country for the first time since the Great Depression,” said Steven Smith, a property appraiser and consultant from San Bernardino.

Smith predicted that home values throughout the country will fall 25 percent to 50 percent below what they were at their peak, which was in 2005 or 2006, depending on the region.

New home prices already have declined dramatically in the Northern San Joaquin Valley.

This March, the median-priced new home in Merced County was $310,990, which was nearly 22 percent below March 2006, according to Hanley Wood Market Intelligence.

In Stanislaus County, new homes sold in March with a median of $430,990, a 4.2 percent drop. In San Joaquin County, they sold with a median of $462,950, a 12.3 percent drop.

“Builders are continuing to lower prices and offer incentives to buyers,” said Joanna Terry, a senior manager for Hanley Wood Market Intelligence, a real estate research firm. In addition, she said, many builders are including upgrades without charging extra.

Used homes also are selling for far less this year compared with last.

In Modesto during the past six months, the median home sales price was about $322,000, compared with about $340,000 during the same period a year ago, according to the Central Valley Association of Realtors.

Modesto’s $18,000 median price drop is modest compared with nearby communities.

Resale home prices are down about $55,000 in Turlock, about $46,000 in Oakdale and Riverbank, $49,000 in Salida, and $113,000 in Ripon.

“We have not hit the bottom yet in prices. There’s just too much inventory,” said Glenn Race, sales man- ager for Prudential California Realty. “It will take time for the next recovery, perhaps four to five years.”

• Slow home sales: It’s taking much longer for homeowners to sell their property compared with last year, according to the Central Valley Association of Realtors.

In Modesto, for instance, only 732 houses had sold this year through mid-May. During the same period in 2006, nearly twice as many -- 1,349 homes -- had sold.

Sales are off even more in many smaller cities, such as Riverbank, where 59 homes sold, compared with 181; and Oakdale, where 76 sold, compared with 152.

New home sales also are very sluggish.

Only 1,382 new homes were sold during the first three months of 2007 in Stanislaus, San Joaquin and Merced counties, according to Hanley Wood.

That’s 26.3 percent fewer than during the same months in 2006. Sales were about twice as high during those months in 2003, 2004 and 2005.

There are 79 active subdivisions with 10 homes or more in Stanislaus County, 70 in Merced County and 96 in San Joaquin County. Combined, those developments had more than 700 completed homes waiting for buyers during the first three months of this year.

“Subdivisions that should have sold out a year ago are still here,” Terry said. She said each subdivision on average is selling only about 1½ homes per month in Stanislaus, one home in Merced and three homes in San Joaquin.

That’s far slower than last year’s sales pace, let alone the rapid sales rate experienced from 2003 to 2005.

Among the best-selling developments in the region this year are: Woodbridge by Del Webb in Man- teca, Legends North by JKB Homes in Turlock and Bing Cherry by Kimball Hill Homes in Ceres.

• Why home buyers commute: “As you drive from the Bay Area to Modesto, home prices drop $6,000 per mile,” said Mike Zagaris, president of PMZ Real Estate. “A 2,000-square-foot home in Santa Clara costs $700,000 more than in Modesto.”

His calculations are based on the price of homes for sale in Santa Clara, Pleasanton, Tracy and Mo- desto.

“That $6,000 per mile difference is an incentive for people to move here,” Zagaris said.

• Investors gone: Many of the homes purchased during the region’s real estate boom years were bought by investors and second-home buyers, but such buyers have disappeared, Race said.

“Due to slower or nonexistent appreciation, less equity to convert to down payments and higher returns on other investments, we have lost approximately 35 percent of the purchasers who made up the 2005 record-setting bull market,” Race said. “These potential purchasers are sitting on the sidelines today waiting for signs of what’s next.”

• Exotic mortgages: Many buyers in recent years agreed to untradi- tional loan terms to finance their purchases.

“These buyers took shortcuts to homeownership with ‘stated income loan.’ Today they’re called ‘liar loans,’ ” Race said. “They took shortcuts with zero down payments, negative amortization loans, interest-only mortgages, sellers covering closing costs and short-term suicide loans where the fixed-loan period is only two or three years with an equally long prepayment penalty.”

Now, interest rates are adjusting upward and property values have dropped, so homeowners can’t refinance their mortgages.

“The ‘toxic’ mortgages taken out in 2004, 2005 and 2006 are resetting, causing problems for many who gambled on continued appreciation,” Race said. “They were playing ‘house poker,’ and many are ‘all in’ right now.”

• Subprime loans in trouble: About 18 percent of mortgages in the Northern San Joaquin Valley are subprime loans, compared with an average of 16 percent in all of California and the United States.

Of Stanislaus County’s subprime borrowers, more than 14 percent were 60 days or more late on their mortgage payments as of March, according to statistics gathered by First American LoanPerformance.

That’s nearly six times higher than the late payment rate from two years ago.

About 5 percent of Stanislaus County’s subprime borrowers were in the process of being foreclosed on in March. LoanPerformance shows that foreclosure rates are more than nine times higher than two years ago.

Subprime loans typically are made to borrowers who have low credit scores or histories of payment problems, so they are considered at higher risk to default. These loans typically have higher interest rates and fees compared with prime loans.

Prime borrowers are in much better shape. In Stanislaus County, only about 1 percent of prime borrowers are behind on their payments and just 0.35 percent are in the process of foreclosure.

• Foreclosure homes for sale: Homeowners at risk of losing their homes to foreclosure often try to sell before it’s too late.

During the first four months of 2007, there were 1,733 homes for sale in the Northern San Joaquin Valley that were in process of foreclosure or already had been taken back by the lender, Race said.

By comparison, only 1,149 such homes were for sale in all of 2006. Race said the huge increase in “distress sale” properties is dramatic- ally impacting the market because they must be sold.

“They are not selling quickly enough to not be a drag on this market and are affecting the market values of all homes in the marketplace,” Race said.

• Loans tougher to get: Rising foreclosure rates on subprime loans are expected to make mortgages harder to get, Race said.

“The National Association of Realtors has predicted the tightening of standards and proposed new restrictions on new loans may cause a decline of approximately 100,000 to 250,000 sales nationwide in 2007-2008. That’s about 3 percent per year,” Race said.

• Building permits decline: The Northern San Joaquin Valley building boom is over. The number of building permits issued has plummeted, according to the Construction Industry Research Board.

Merced County building permits fell 64.6 percent during the first four months of 2007, compared with the first four months of 2006.

Building permits dropped 44.3 percent in Stanislaus County, 34.1 percent in San Joaquin County and 28.2 percent statewide for the same period.

• Realtors quitting: Membership is shrinking in the Central Valley Association of Realtors.

Race said there were more than 3,300 members of the association in February 2006. But that declined to about 2,500 in February 2007 -- a drop of 800, or 24 percent.

“Simply put,” Race said, “there are not enough sales to sustain the large population of agents walking around with licenses.”

• Time to buy: “The best time to buy anything is when nobody else wants it,” Zagaris said. “The window of opportunity is now open for people who want to invest in residential real estate for the long term.”

He said that’s because prices have dropped, interest rates remain relatively low, the economy is stable and there’s a broad selection of houses for sale.

“The fact is: The smart money is buying real estate now,” Zagaris said. But he warned that prices may not recover quickly. “Next year we’re still going to be in this real estate correction.”