Local Market Observations

What do you see in your local housing market this weekend? Overbuilding? "In Loudoun County, Va., it seems that everywhere you look, construction crews are still building. But more than 440 foreclosures have been filed at the courthouse in Leesburg so far this year. 'Everywhere you go, there are for sale signs and foreclosure signs,' Jack Baumgartner said. 'People got in over their heads with mortgages they can't afford. It makes you sick.'"

Slower sales? "North Texas home sales continued a downward trend in August, with 10 percent fewer houses changing hands than a year earlier. The drop was even steeper in the condominium market, where sales were off 17 percent. 'Some companies seem to be down significantly, while others are down slightly,' said Jim Fite, president of Dallas-based Century 21 Judge Fite Realtors. 'Same with areas' of the city."

Canceled projects? "A Chicago-area home builder will not proceed with expansion plans for a large condominium development in St. Francis that overlooks Lake Michigan. The move ends Kimball Hill's troubled foray into the Milwaukee area."

Housing related layoffs? "With the housing bubble bursting and new homebuilding in decline, Montana's lumber industry is starting to feel the pinch, according to Charles Keegan, a researcher with the University of Montana."

"After a five-year building frenzy fueled by low interest rates and real estate speculation, the downturn in building is expected to last through next year, Keegan said. 'Construction this year and next year will be considerably below long-term averages,' he said."

"According to Keegan, the high rate of construction, which started around 2001, led to a glut in the market and a nosedive for housing prices nationwide."

"Paced by losses in construction and manufacturing, the world's largest economy shed jobs for the first time in four years last month, according to the U.S. Labour Department. 'A drop of this magnitude has never been observed outside recessions,' National Bank Financial economist Stéfane Marion remarked. 'That is unnerving.'"

"Countrywide Financial Corp., the biggest U.S. mortgage company, plans to cut its workforce by 10,000 to 12,000 in the largest round of firings since the industry's contraction began last year."

"CEO Angelo Mozilo said in an interview he has 'no regrets' about adding staff in recent years. 'We adjust to the environment we're in,' he said. 'It was impossible to anticipate the credit crisis we've seen on a worldwide basis.'"

Lending changes? "Citigroup Inc., the largest U.S. bank, curtailed lending to mortgage companies, according to two people with knowledge of the decision. The bank's First Collateral Services unit won't accept new clients for 'warehouse' credit lines, which provide cash to mortgage banks so they can fund home purchases and refinancings, the people said."

A letter to the editor? "In all of the articles regarding the mortgage mess I have yet to see some part of the blame directed to Congress for changing the capital gains provisions of the tax code in 1997, which in part contributed to the current problem."

"Lenders were now free to design loan programs tuned to a 2-to-5 year turnover with a minimum of monthly payments and expecting that the property would be sold at a windfall profit. As a result, housing prices rose, therefore the price of raw land rose for developers, and the spiral began."

"I am a Real Estate broker, have been since 1975. I've been through up markets and down markets for a long time. Consumers of bad loans should bear the action of their greed. All of them knew they were buying homes they really could not afford. And they all thought they could sell the property for much more than they paid for it in a short period of time. They need to accept responsibility for their own actions."