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Articles

Excerpts & Comments

July 27, 2007 - No Housing Turnaround for Two Years?, By Maya Roney, BusinessWeek

First, it was the second half of 2007. Then it was 2008. Now analysts are saying the national housing market may not rebound until 2009

... "People just don't feel the bottom is here yet," says McPherron, who is predicting a rebound in mid-2008. "It's just a really bad market."

PD COMMENT: It's amazing how the problems are considered external, with no one responsible. To me, the real story is that overly-easy money fed the mania up, cutting so many people from home-ownership or putting them in loans beyond their means, and tearing apart families and communities, as people left for places they could afford. Now the easy money is being cut off, and prices are falling closer to what they would've been without the mania. One article said that the industry is being pinched by falling prices and stricter loans, but in fact those are the same thing, if you understand the mechanism of what brought the prices up. This culture rides manias and crashes and some win at the expense of others. Only by understanding these mechanisms can we protect ourselves - and our communities. The people who manipulated the game to get their fees for those subprime loans still have their vacation homes and fancy cars, even if they were out of integrity with their customers, harmful to the community, and manipulating the market. No wonder so many of those doing real work feel resentful of the system. To me the solution is to increase the integrity of the marketplace, and the ability of people to protect themselves from harm.

July 24 - Foreclosures surge in Sonoma County, By Press Democrat staff

County homeowners are falling behind on their mortgage payments, a sign that financial stresses are continuing to build in the region's real estate market, according to a report issued today.

Mortgage defaults, the first step in the foreclosure process, are the highest in Sonoma County since at least 1992, according to DataQuick Information Systems, a La Jolla firm that tracks real estate trends.

>> PD COMMENT: Unfortunately, manias lead to crashes, but many suffer along the way. Was it really doing people a favor to "get them into a home" with loans they couldn't afford?

July 24 - Default notices hit highest level for quarter in 10 years, By Alex Veiga, Associated Press

Mortgage defaults in California soared on an annual basis in the second quarter to the highest level in 10 years, the result of weak home sales and sagging home prices, a real estate research firm said Tuesday.

July 19 - Overstocked in condos, By Michael Coit, Press Democrat

Sales for multiunit dwellings slump alongside new homes as prospective buyers opt to rent

Greg Levy's hopes for selling condominiums he converted from apartments have been dashed by Sonoma County's housing downturn, forcing him to rent out the units with a turnaround still not in sight.

"We just don't have the demand. We're not going to deal with this market anymore," he said.

Condo sales are slumping alongside houses in the county as the market's decline nears the two-year mark. The typical condo sold for $375,000 in June -- a 4 percent drop from the peak of $390,000 in October 2005.

Buyers who backed out of the housing market as prices spiraled to record highs are reluctant to jump back in as prices continue to fall. Yet values haven't dropped enough to make homes much more affordable.

Condos can be an alternative because they are usually cheaper than houses. But finding loans has become harder, particularly for buyers looking for their first home. With foreclosures rising, lenders have tightened qualifying standards, including requiring higher credit scores and down payments.

"If you can't buy, then you go live in an apartment," said Greg Paquin, president of The Gregory Group, a Folsom business that tracks new home construction in California.

A tightening rental market is an indicator that buyers are staying on the sidelines. Sonoma County's apartment vacancy rate is dipping and rents are rising.

"Properties are staying full. A lot of people are still choosing to rent because the affordability gap is so wide. Also, a lot of people the last six months or so have held off from making purchases because prices have been falling," said Jason Smith, an analyst with NorCal Commercial, a North Bay investment real estate brokerage.

Declining sales mean condos stay on the market longer, pushing up the supply. There was a six-month inventory at the end of June based on the current sales pace, up from 5½ months a year ago.

In a buyer's market, sellers must price properties to move or face having to lower the price later.

July 19 - Housing slump hits county's tax collections, By Bleys W. Rose, Press Democrat

Hundreds of homeowners seeking reassessments in hope of lower property tax bills

As the real estate boom withers, slumping home prices are causing a slowdown in property tax collections in Sonoma County and prompting more homeowners to seek lower bills through reassessments.

Although the value of taxable land grew to a record $67 billion in 2006, the annual increase of 7.9 percent was the smallest in nearly a decade.

Home prices tracked by Coldwell Banker for The Press Democrat have fallen for 12 consecutive months in year-over-year comparisons, the longest decline since the newspaper began monitoring home sales in 1990.

June's median resale price was $605,000.

For most of this decade, home prices climbed at a remarkable clip, doubling the assessed value of land in Sonoma County since 1999. Since then, annual increases in land value of 7 percent to 13 percent have been common.

But with sagging home resale prices and with fewer homes staying on the market longer, an increase in taxable land value this year will be in the range of 3.5 percent to 5 percent, County Administrator Bob Deis said.

"That will take us back to the mid-'90s," said Supervisor Tim Smith, noting a real estate slump back then produced minuscule increases in taxable land value.

More than 15,000 property owners had their property reassessed downward during Sonoma County's six-year real estate slump that came to an end in 1997.

Last year, about 300 homeowners requested reassessments, a number that county Assessor Bill Rousseau said he expects to rise this year.

The Assessor's Office has initiated its own reviews in some neighborhoods of Santa Rosa, Petaluma and Rohnert Park as comparable sales prices turn up in property transactions, he said.

"We are finding it is pretty spotty, and it is not widespread," Rousseau said. "We expect to be real busy when tax bills go out in the fall."

Unlike most other Bay Area counties, Sonoma County is primarily residential, which means declines in home prices affect property tax collections. That ultimately means schools, county services and fire departments would get less money if the taxable land value actually dips below the previous year.

PD COMMENT: This article also includes information for landowners about getting property reassessed.

June 26 - Bust? What housing bust?, By Les Christie, CNNMoney.com staff writer

In the middle of a nationwide housing slump, a few markets have held their ground - and then some.

In Seattle, for example, the median home sale price was $380,200 during the first three months of 2007, according to the latest stats from the National Association of Realtors (NAR). That's a 12.3 percent year-over-year increase.

Ten other metro areas among the 156 markets covered by NAR also recorded double-digit, year-over-year price increases.

So what have they get that other markets don't?

The main ingredient is a set of positive fundamentals, including strong job and population growth, which then fuel demand for houses.

...Other factors also got the double-digit markets percolating. In nearly all of the areas, prices never overheated, remaining relatively low through the boom years. It's easier to show outsized growth when you're starting from a low base.

June 22 - Bank of America Report Sees Worse Mortgage Defaults, By Sebastian Boyd and Will Edwards, Bloomberg

Losses in the U.S. mortgage market may be the ``tip of the iceberg'' as borrowers fail to keep up with rising payments on billions worth of adjustable-rate loans in coming months, Bank of America Corp. analysts said.

Homeowners with about $515 billion on adjustable-rate home loans will pay more this year, and another $680 billion worth of mortgages will reset next year, analysts led by Robert Lacoursiere wrote in a research note today. More than 70 percent of the total was granted to subprime borrowers, people with the riskiest credit records, they said.

Surging defaults on subprime loans have pushed at least 60 mortgage companies to close or sell operations and forced Bear Stearns Cos. to offer a $3.2 billion bailout for one of two money-losing hedge funds. New foreclosures set a record in the first quarter, with subprime borrowers leading the way, the Mortgage Bankers Association reported.

``The large volume of subprime ARMs scheduled to reset at higher rates in '07 and '08 will pressure already stretched borrowers,'' forcing more loans into foreclosure, the Bank of America analysts wrote from New York. A collapse of the Bear Stearns funds ``could be the tipping point of a broader fallout from subprime mortgage credit deterioration,'' they said.

June 14 - Sonoma County housing slump continues, By Michael Coit, Press Democrat

PD COMMENT: Drug-induced highs can be fun - until you crash. So too with housing prices that skyrocketed past most of our ability to pay, fueled by speculation and reckless lending practices that gave short-term profits to the lenders at the expense of the lendees. Our communities have also been harmed, as people moved away from family and friends just so they could afford a place to live.

Sonoma County's slumping housing market showed little sign of improving in May as sales and prices continued to fall below last year's levels, when the downturn took hold.

May's median resale price was $575,000, down 4.6 percent from the same month a year ago. Prices have fallen for 11 consecutive months, the longest decline since The Press Democrat began tracking home sales in 1990. The previous record was set in 1992 and 1993, when prices fell for nine months during the region's last housing downswing.

Sales were down 15.1 percent from a year ago. Although May's sales were up from April, the increase was expected because the home buying season typically heats up heading into summer.

The county's housing market also continues to fare poorly in comparison with the rest of the Bay Area.

Sales of new and existing homes and condominiums fell across the Bay Area in May, DataQuick Information Systems reported Thursday.

However, prices rose in the nine-county region for the fourth consecutive month. The median price climbed to $660,000 in May, up 3.4 percent from a year ago. The trend is largely the result of sales falling less in higher-priced markets, namely Marin, the San Francisco peninsula and the South Bay, compared with the lower-cost East Bay and North Bay counties.

June 12 - Housing slump expected to last through 2007 - By James R. Hagerty, Jonathan Karp, and Mark Whitehouse, Wall St. Journal

Economists are giving up on the idea that the U.S. housing slump will be quick and relatively painless.

Instead, more are concluding, the downturn that began nearly two years ago will last at least through the end of 2007, remaining a major drag on the U.S. economy. The culprits: A glut of homes for sale and growing caution among lenders who now regret being so free with their mortgages during the boom.

...In Sonoma County, home prices are expected to continue sliding until next spring, then begin to rise slowly in the second half of 2008, according to a May 31 forecast by Moody's Economy.com, which tracks the local economy. Home prices have dropped 8 percent since their peak in summer 2005, and will fall an additional 6 percent before the market stabilizes in the summer of 2008, according to the forecast.

...The rise in interest rates is only adding to the gloom. The average rate for 30-year fixed-rate mortgages stood at about 6.65 percent Friday, up from 6.35 percent in early May, according to HSH Associates, a financial publishing firm in Pompton Plains, N.J.

...The market started to cool in mid-2005 after a buying frenzy that drove up the average U.S. home price nearly 60 percent in the first half of the decade and more than doubled prices in many areas near the East and West coasts.

...David Resler, chief economist at Nomura Securities International Inc. in New York, says he is surprised by the degree to which speculation caused builders to overestimate demand, leaving a glut of houses and condominiums.

...Home values can also influence consumer spending, as people use cash-out mortgage refinancings and home equity loans to pull money out of their houses. At the peak of the housing boom in the third quarter of 2005, people were taking cash out of their homes at an annual rate of $709 billion, according to Michael Feroli, an economist at J.P. Morgan Chase & Co in New York. As of the first quarter of 2007, that number had fallen to $178 billion.

May 29 - U.S. home prices fall for first time in 15 years, By Rex Nutting, MarketWatch

U.S. home prices fell 1.4% in the first quarter compared with a year earlier, the first year-over-year decline since 1991, according to the S&P/Case-Shiller home price index released Tuesday. A year ago, home prices were rising at an 11.5% pace. The 10-city price index fell 1.9% year-on-year through March, while the 20-city index dropped 1.4%. Thirteen of 20 cities have seen falling prices in the past year, led by Detroit and San Diego. Home prices rose 10% in Seattle. The national decline "is reaffirmation of the pullback in the U.S. residential real estate market," said Robert Shiller, chief economist for MacroMarkets LLC, and co-inventor of the index.

May 26 - Neighborhood Swayed by 'Liar's Loans', By Adam Geller, AP National Writer

AP Impact: Drawn Into Real Estate Frenzy, a Neighborhood Finds Home Loans Too Good to Be True

PD COMMENT: This is just one (perhaps more extreme) example of the industry-wide salesmanship of "getting people into a home" that got people into homes they couldn't afford and thus deep financial trouble. This distorted the market and greatly inflated housing prices beyond most of our reach - while the marketeers profited and moved on. To me, the real current housing story isn't about subprime loans but about the tale they told everyone while they sold them - that they were doing the buyers a favor to throw out fiscal responsibility - when in fact they were doing themselves a favor by increasing their own income. This dynamic has had such a harmful impact on people's lives and on communities, as high prices force people to break their family and social bonds and move away, increasing everyone's feeling of isolation and no continuity. For so many reasons, in so many cases, it's so vital that we look behind today's soothing stories to see the real dynamics underneath - so that we, individually and collectively, can act with true wisdom.

...Mortgage fraud is most visible in the spectacular cases that draw prosecutorial muscle, involving fake buyers, property flipping, vast amounts of money. But that overlooks smaller-scale foul play now costing many subprime borrowers their homes, experts say.

Often it's not considered fraud. It's pushing the envelope. It's a dollop of distortion topped with a measure of creative exaggeration. It's doing whatever it takes.

"There's a huge amount of broker fraud out there," says Kerstin Arusha of the Fair Housing Law Project in San Jose, Cal., which represents low-income homeowners stuck in such loans. "When you look at the applications of many of these borrowers, I see it reported that they make $10,000 or $12,000 a month, sometimes $20,000 a month. They always have $100,000 in personal assets ... You can see that these things are created by the broker."

Of course, most real estate agents and mortgage brokers are honest.

But there have been too many in the last few years "who stretch the truth ... that make deals happen that really shouldn't happen," says Jim Croft, founder of the Mortgage Asset Research Institute.

"And they always have the fallback that they're not dishonest," he says. "They're just helping Jill and Joe Six-pack get into the home -- and realize the American dream."

...It was the real estate agents who "were pushing people into homes they shouldn't have been," Noyes says. Borrowers, too, bear responsibility, she says.

...If they deserve blame, she and other buyers say, it's for being too willing to believe and too naive to ask questions.

PD COMMENT: In this case, also for just signing the forms without understanding them - including blank forms!

April 11 - Suze Orman Money Matters : Protecting Yourself from the Wrong Mortgage

Talk about being late to the game.

After the past few months of mortgage delinquency rates and home foreclosures creeping ominously upward, a lot of government attention is suddenly being focused on the "shocking" fact that many borrowers ended up with nontraditional mortgages they had little chance of affording once the alluring introductory periods expired.

From recent congressional hearings to the passage of new federal guidelines on mortgage qualification rules, Washington is playing catch-up in addressing aggressive lending practices that have led consumers into an unaffordable debt spiral.

Do-It-Yourself Protection

I suppose we should chalk it all up to "better late than never," but I'm not so sure that government intervention is the real solution. Besides, who knows if and when any meaningful legislation will be put into place to help borrowers avoid mortgage deals they can't really afford.

Instead, the real solution is for borrowers to step up to the plate and assume full responsibility for understanding what they're agreeing to when they sign their mortgage documents.

Given that we're now heading into the home-buying season, here's what I recommend that every homebuyer -- and anyone contemplating a mortgage refinance -- should consider before signing on the dotted line:

PD NOTE: Tips are detailed in the article.

Jan. 25 - Existing Home Sales Plummet in 2006, AP

Sales of existing homes fell in December, closing out a year in which demand for homes slumped by the largest amount in 17 years.

The sales figure underscored the sharp contraction that is going on in the once high-flying housing market, which before last year had set sales records for five straight years.

Even with the sharp drop in sales last year, the median price of an existing home sold in 2006 managed to rise a slight 1.1 percent. But that was far below the double-digit gains during the boom years. The median home price had risen by 12.4 percent in 2005.

After a five-year boom, housing slowed significantly last year, which has caused ripple effects throughout the economy with rising job layoffs in construction and other housing-related industries.

...He said that speculators had now left the market and that should leave sales at a more sustainable level.

"With fingers and toes crossed, it appears that we have hit bottom in the existing home market," he said.

PD COMMENT: Some of us still look at housing prices and wonder how most people can afford them. Looking at home loan defaults, I'm not sure the speculative puff has fully left this market.

Jan. 25, 2007 - "County home loan default notices soar: Fourth-quarter doubling of foreclosure threats sign of weak real estate market," By Michael Coit, Press Democrat

Foreclosure activity soared in Sonoma County at the end of 2006, the latest indicator of stress in the real estate market as more homeowners in financial trouble face losing their houses.... Statewide, the housing downturn has sent sales plummeting with prices falling in some areas and leveling in others. Sonoma County home sales dropped 25 percent in 2006, while the price of a typical home fell 1.7 percent to $585,000. While the correction was expected, it has been steeper and faster than anticipated....

The type of loan and amount of equity in a home are critical. Interest-only loans and mortgages with minimum payment options proliferated in Sonoma County as buyers looked for ways to reduce monthly payments to purchase homes as prices soared. But those loans can put buyers in riskier financial positions, especially if they purchased homes with little or no down payment, relying on the market to build home values rather than paying down a loan.

PD COMMENT: The passive voice in this conversation is so amazing. It was obvious to many of us a few years ago, when the conversation was focused on "getting someone into a home," that they weren't making sure someone could actually stay in that home. I also feel that using these risky loans inflated the market, allowing prices to keep going up beyond what the vast majority of people could really afford. While people are responsible for their choices, it frustrates me that the advisors who were in their self- interest "helping" people "get into a home" are not being held accountable now for their bad advice. They too often didn't tell people the serious risks with interest-only loans, loans that would rise with interest rates, etc., even though they were known. Now those people risk losing their home, bankruptcy, and other financial hardships as a result. A hard lesson for some about fiscal sanity and "Buyer Beware."

Articles	Excerpts & Comments
July 27, 2007 - No Housing Turnaround for Two Years?, By Maya Roney, BusinessWeek	First, it was the second half of 2007. Then it was 2008. Now analysts are saying the national housing market may not rebound until 2009 ... "People just don't feel the bottom is here yet," says McPherron, who is predicting a rebound in mid-2008. "It's just a really bad market." PD COMMENT: It's amazing how the problems are considered external, with no one responsible. To me, the real story is that overly-easy money fed the mania up, cutting so many people from home-ownership or putting them in loans beyond their means, and tearing apart families and communities, as people left for places they could afford. Now the easy money is being cut off, and prices are falling closer to what they would've been without the mania. One article said that the industry is being pinched by falling prices and stricter loans, but in fact those are the same thing, if you understand the mechanism of what brought the prices up. This culture rides manias and crashes and some win at the expense of others. Only by understanding these mechanisms can we protect ourselves - and our communities. The people who manipulated the game to get their fees for those subprime loans still have their vacation homes and fancy cars, even if they were out of integrity with their customers, harmful to the community, and manipulating the market. No wonder so many of those doing real work feel resentful of the system. To me the solution is to increase the integrity of the marketplace, and the ability of people to protect themselves from harm.
July 24 - Foreclosures surge in Sonoma County, By Press Democrat staff	County homeowners are falling behind on their mortgage payments, a sign that financial stresses are continuing to build in the region's real estate market, according to a report issued today. Mortgage defaults, the first step in the foreclosure process, are the highest in Sonoma County since at least 1992, according to DataQuick Information Systems, a La Jolla firm that tracks real estate trends. >> PD COMMENT: Unfortunately, manias lead to crashes, but many suffer along the way. Was it really doing people a favor to "get them into a home" with loans they couldn't afford?
July 24 - Default notices hit highest level for quarter in 10 years, By Alex Veiga, Associated Press	Mortgage defaults in California soared on an annual basis in the second quarter to the highest level in 10 years, the result of weak home sales and sagging home prices, a real estate research firm said Tuesday.
July 19 - Overstocked in condos, By Michael Coit, Press Democrat	Sales for multiunit dwellings slump alongside new homes as prospective buyers opt to rent Greg Levy's hopes for selling condominiums he converted from apartments have been dashed by Sonoma County's housing downturn, forcing him to rent out the units with a turnaround still not in sight. "We just don't have the demand. We're not going to deal with this market anymore," he said. Condo sales are slumping alongside houses in the county as the market's decline nears the two-year mark. The typical condo sold for $375,000 in June -- a 4 percent drop from the peak of $390,000 in October 2005. Buyers who backed out of the housing market as prices spiraled to record highs are reluctant to jump back in as prices continue to fall. Yet values haven't dropped enough to make homes much more affordable. Condos can be an alternative because they are usually cheaper than houses. But finding loans has become harder, particularly for buyers looking for their first home. With foreclosures rising, lenders have tightened qualifying standards, including requiring higher credit scores and down payments. "If you can't buy, then you go live in an apartment," said Greg Paquin, president of The Gregory Group, a Folsom business that tracks new home construction in California. A tightening rental market is an indicator that buyers are staying on the sidelines. Sonoma County's apartment vacancy rate is dipping and rents are rising. "Properties are staying full. A lot of people are still choosing to rent because the affordability gap is so wide. Also, a lot of people the last six months or so have held off from making purchases because prices have been falling," said Jason Smith, an analyst with NorCal Commercial, a North Bay investment real estate brokerage. Declining sales mean condos stay on the market longer, pushing up the supply. There was a six-month inventory at the end of June based on the current sales pace, up from 5½ months a year ago. In a buyer's market, sellers must price properties to move or face having to lower the price later.
July 19 - Housing slump hits county's tax collections, By Bleys W. Rose, Press Democrat	Hundreds of homeowners seeking reassessments in hope of lower property tax bills As the real estate boom withers, slumping home prices are causing a slowdown in property tax collections in Sonoma County and prompting more homeowners to seek lower bills through reassessments. Although the value of taxable land grew to a record $67 billion in 2006, the annual increase of 7.9 percent was the smallest in nearly a decade. Home prices tracked by Coldwell Banker for The Press Democrat have fallen for 12 consecutive months in year-over-year comparisons, the longest decline since the newspaper began monitoring home sales in 1990. June's median resale price was $605,000. For most of this decade, home prices climbed at a remarkable clip, doubling the assessed value of land in Sonoma County since 1999. Since then, annual increases in land value of 7 percent to 13 percent have been common. But with sagging home resale prices and with fewer homes staying on the market longer, an increase in taxable land value this year will be in the range of 3.5 percent to 5 percent, County Administrator Bob Deis said. "That will take us back to the mid-'90s," said Supervisor Tim Smith, noting a real estate slump back then produced minuscule increases in taxable land value. More than 15,000 property owners had their property reassessed downward during Sonoma County's six-year real estate slump that came to an end in 1997. Last year, about 300 homeowners requested reassessments, a number that county Assessor Bill Rousseau said he expects to rise this year. The Assessor's Office has initiated its own reviews in some neighborhoods of Santa Rosa, Petaluma and Rohnert Park as comparable sales prices turn up in property transactions, he said. "We are finding it is pretty spotty, and it is not widespread," Rousseau said. "We expect to be real busy when tax bills go out in the fall." Unlike most other Bay Area counties, Sonoma County is primarily residential, which means declines in home prices affect property tax collections. That ultimately means schools, county services and fire departments would get less money if the taxable land value actually dips below the previous year. PD COMMENT: This article also includes information for landowners about getting property reassessed.
June 26 - Bust? What housing bust?, By Les Christie, CNNMoney.com staff writer	In the middle of a nationwide housing slump, a few markets have held their ground - and then some. In Seattle, for example, the median home sale price was $380,200 during the first three months of 2007, according to the latest stats from the National Association of Realtors (NAR). That's a 12.3 percent year-over-year increase. Ten other metro areas among the 156 markets covered by NAR also recorded double-digit, year-over-year price increases. So what have they get that other markets don't? The main ingredient is a set of positive fundamentals, including strong job and population growth, which then fuel demand for houses. ...Other factors also got the double-digit markets percolating. In nearly all of the areas, prices never overheated, remaining relatively low through the boom years. It's easier to show outsized growth when you're starting from a low base.
June 22 - Bank of America Report Sees Worse Mortgage Defaults, By Sebastian Boyd and Will Edwards, Bloomberg	Losses in the U.S. mortgage market may be the ``tip of the iceberg'' as borrowers fail to keep up with rising payments on billions worth of adjustable-rate loans in coming months, Bank of America Corp. analysts said. Homeowners with about $515 billion on adjustable-rate home loans will pay more this year, and another $680 billion worth of mortgages will reset next year, analysts led by Robert Lacoursiere wrote in a research note today. More than 70 percent of the total was granted to subprime borrowers, people with the riskiest credit records, they said. Surging defaults on subprime loans have pushed at least 60 mortgage companies to close or sell operations and forced Bear Stearns Cos. to offer a $3.2 billion bailout for one of two money-losing hedge funds. New foreclosures set a record in the first quarter, with subprime borrowers leading the way, the Mortgage Bankers Association reported. ``The large volume of subprime ARMs scheduled to reset at higher rates in '07 and '08 will pressure already stretched borrowers,'' forcing more loans into foreclosure, the Bank of America analysts wrote from New York. A collapse of the Bear Stearns funds ``could be the tipping point of a broader fallout from subprime mortgage credit deterioration,'' they said.
June 14 - Sonoma County housing slump continues, By Michael Coit, Press Democrat	PD COMMENT: Drug-induced highs can be fun - until you crash. So too with housing prices that skyrocketed past most of our ability to pay, fueled by speculation and reckless lending practices that gave short-term profits to the lenders at the expense of the lendees. Our communities have also been harmed, as people moved away from family and friends just so they could afford a place to live. Sonoma County's slumping housing market showed little sign of improving in May as sales and prices continued to fall below last year's levels, when the downturn took hold. May's median resale price was $575,000, down 4.6 percent from the same month a year ago. Prices have fallen for 11 consecutive months, the longest decline since The Press Democrat began tracking home sales in 1990. The previous record was set in 1992 and 1993, when prices fell for nine months during the region's last housing downswing. Sales were down 15.1 percent from a year ago. Although May's sales were up from April, the increase was expected because the home buying season typically heats up heading into summer. The county's housing market also continues to fare poorly in comparison with the rest of the Bay Area. Sales of new and existing homes and condominiums fell across the Bay Area in May, DataQuick Information Systems reported Thursday. However, prices rose in the nine-county region for the fourth consecutive month. The median price climbed to $660,000 in May, up 3.4 percent from a year ago. The trend is largely the result of sales falling less in higher-priced markets, namely Marin, the San Francisco peninsula and the South Bay, compared with the lower-cost East Bay and North Bay counties.
June 12 - Housing slump expected to last through 2007 - By James R. Hagerty, Jonathan Karp, and Mark Whitehouse, Wall St. Journal	Economists are giving up on the idea that the U.S. housing slump will be quick and relatively painless. Instead, more are concluding, the downturn that began nearly two years ago will last at least through the end of 2007, remaining a major drag on the U.S. economy. The culprits: A glut of homes for sale and growing caution among lenders who now regret being so free with their mortgages during the boom. ...In Sonoma County, home prices are expected to continue sliding until next spring, then begin to rise slowly in the second half of 2008, according to a May 31 forecast by Moody's Economy.com, which tracks the local economy. Home prices have dropped 8 percent since their peak in summer 2005, and will fall an additional 6 percent before the market stabilizes in the summer of 2008, according to the forecast. ...The rise in interest rates is only adding to the gloom. The average rate for 30-year fixed-rate mortgages stood at about 6.65 percent Friday, up from 6.35 percent in early May, according to HSH Associates, a financial publishing firm in Pompton Plains, N.J. ...The market started to cool in mid-2005 after a buying frenzy that drove up the average U.S. home price nearly 60 percent in the first half of the decade and more than doubled prices in many areas near the East and West coasts. ...David Resler, chief economist at Nomura Securities International Inc. in New York, says he is surprised by the degree to which speculation caused builders to overestimate demand, leaving a glut of houses and condominiums. ...Home values can also influence consumer spending, as people use cash-out mortgage refinancings and home equity loans to pull money out of their houses. At the peak of the housing boom in the third quarter of 2005, people were taking cash out of their homes at an annual rate of $709 billion, according to Michael Feroli, an economist at J.P. Morgan Chase & Co in New York. As of the first quarter of 2007, that number had fallen to $178 billion.
May 29 - U.S. home prices fall for first time in 15 years, By Rex Nutting, MarketWatch	U.S. home prices fell 1.4% in the first quarter compared with a year earlier, the first year-over-year decline since 1991, according to the S&P/Case-Shiller home price index released Tuesday. A year ago, home prices were rising at an 11.5% pace. The 10-city price index fell 1.9% year-on-year through March, while the 20-city index dropped 1.4%. Thirteen of 20 cities have seen falling prices in the past year, led by Detroit and San Diego. Home prices rose 10% in Seattle. The national decline "is reaffirmation of the pullback in the U.S. residential real estate market," said Robert Shiller, chief economist for MacroMarkets LLC, and co-inventor of the index.
May 26 - Neighborhood Swayed by 'Liar's Loans', By Adam Geller, AP National Writer	AP Impact: Drawn Into Real Estate Frenzy, a Neighborhood Finds Home Loans Too Good to Be True PD COMMENT: This is just one (perhaps more extreme) example of the industry-wide salesmanship of "getting people into a home" that got people into homes they couldn't afford and thus deep financial trouble. This distorted the market and greatly inflated housing prices beyond most of our reach - while the marketeers profited and moved on. To me, the real current housing story isn't about subprime loans but about the tale they told everyone while they sold them - that they were doing the buyers a favor to throw out fiscal responsibility - when in fact they were doing themselves a favor by increasing their own income. This dynamic has had such a harmful impact on people's lives and on communities, as high prices force people to break their family and social bonds and move away, increasing everyone's feeling of isolation and no continuity. For so many reasons, in so many cases, it's so vital that we look behind today's soothing stories to see the real dynamics underneath - so that we, individually and collectively, can act with true wisdom. ...Mortgage fraud is most visible in the spectacular cases that draw prosecutorial muscle, involving fake buyers, property flipping, vast amounts of money. But that overlooks smaller-scale foul play now costing many subprime borrowers their homes, experts say. Often it's not considered fraud. It's pushing the envelope. It's a dollop of distortion topped with a measure of creative exaggeration. It's doing whatever it takes. "There's a huge amount of broker fraud out there," says Kerstin Arusha of the Fair Housing Law Project in San Jose, Cal., which represents low-income homeowners stuck in such loans. "When you look at the applications of many of these borrowers, I see it reported that they make $10,000 or $12,000 a month, sometimes $20,000 a month. They always have $100,000 in personal assets ... You can see that these things are created by the broker." Of course, most real estate agents and mortgage brokers are honest. But there have been too many in the last few years "who stretch the truth ... that make deals happen that really shouldn't happen," says Jim Croft, founder of the Mortgage Asset Research Institute. "And they always have the fallback that they're not dishonest," he says. "They're just helping Jill and Joe Six-pack get into the home -- and realize the American dream." ...It was the real estate agents who "were pushing people into homes they shouldn't have been," Noyes says. Borrowers, too, bear responsibility, she says. ...If they deserve blame, she and other buyers say, it's for being too willing to believe and too naive to ask questions. PD COMMENT: In this case, also for just signing the forms without understanding them - including blank forms!
April 11 - Suze Orman Money Matters : Protecting Yourself from the Wrong Mortgage	Talk about being late to the game. After the past few months of mortgage delinquency rates and home foreclosures creeping ominously upward, a lot of government attention is suddenly being focused on the "shocking" fact that many borrowers ended up with nontraditional mortgages they had little chance of affording once the alluring introductory periods expired. From recent congressional hearings to the passage of new federal guidelines on mortgage qualification rules, Washington is playing catch-up in addressing aggressive lending practices that have led consumers into an unaffordable debt spiral. Do-It-Yourself Protection I suppose we should chalk it all up to "better late than never," but I'm not so sure that government intervention is the real solution. Besides, who knows if and when any meaningful legislation will be put into place to help borrowers avoid mortgage deals they can't really afford. Instead, the real solution is for borrowers to step up to the plate and assume full responsibility for understanding what they're agreeing to when they sign their mortgage documents. Given that we're now heading into the home-buying season, here's what I recommend that every homebuyer -- and anyone contemplating a mortgage refinance -- should consider before signing on the dotted line: PD NOTE: Tips are detailed in the article.
Jan. 25 - Existing Home Sales Plummet in 2006, AP	Sales of existing homes fell in December, closing out a year in which demand for homes slumped by the largest amount in 17 years. The sales figure underscored the sharp contraction that is going on in the once high-flying housing market, which before last year had set sales records for five straight years. Even with the sharp drop in sales last year, the median price of an existing home sold in 2006 managed to rise a slight 1.1 percent. But that was far below the double-digit gains during the boom years. The median home price had risen by 12.4 percent in 2005. After a five-year boom, housing slowed significantly last year, which has caused ripple effects throughout the economy with rising job layoffs in construction and other housing-related industries. ...He said that speculators had now left the market and that should leave sales at a more sustainable level. "With fingers and toes crossed, it appears that we have hit bottom in the existing home market," he said. PD COMMENT: Some of us still look at housing prices and wonder how most people can afford them. Looking at home loan defaults, I'm not sure the speculative puff has fully left this market.
Jan. 25, 2007 - "County home loan default notices soar: Fourth-quarter doubling of foreclosure threats sign of weak real estate market," By Michael Coit, Press Democrat	Foreclosure activity soared in Sonoma County at the end of 2006, the latest indicator of stress in the real estate market as more homeowners in financial trouble face losing their houses.... Statewide, the housing downturn has sent sales plummeting with prices falling in some areas and leveling in others. Sonoma County home sales dropped 25 percent in 2006, while the price of a typical home fell 1.7 percent to $585,000. While the correction was expected, it has been steeper and faster than anticipated.... The type of loan and amount of equity in a home are critical. Interest-only loans and mortgages with minimum payment options proliferated in Sonoma County as buyers looked for ways to reduce monthly payments to purchase homes as prices soared. But those loans can put buyers in riskier financial positions, especially if they purchased homes with little or no down payment, relying on the market to build home values rather than paying down a loan. PD COMMENT: The passive voice in this conversation is so amazing. It was obvious to many of us a few years ago, when the conversation was focused on "getting someone into a home," that they weren't making sure someone could actually stay in that home. I also feel that using these risky loans inflated the market, allowing prices to keep going up beyond what the vast majority of people could really afford. While people are responsible for their choices, it frustrates me that the advisors who were in their self- interest "helping" people "get into a home" are not being held accountable now for their bad advice. They too often didn't tell people the serious risks with interest-only loans, loans that would rise with interest rates, etc., even though they were known. Now those people risk losing their home, bankruptcy, and other financial hardships as a result. A hard lesson for some about fiscal sanity and "Buyer Beware."

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