During the state’s real estate boom earlier this decade, prices for single-family homes increased 80 percent. Now new home sales and prices have dropped significantly, and a mortgage crisis is burgeoning. What does it mean for you?

Q. How’s the state’s market currently?

A. The market took a dive starting last summer, and the number of sales fell dramatically in some months - often 20 percent, or more - compared with the same month a year earlier. Right now, the housing market is very slow. A year ago, almost one-third of the mortgages that were being written were for people who had poor credit ratings or could not fully document their income or employment. The loans available to those people have completely dried up. It’s no surprise sales are off by 20 percent, because so many people who previously qualified for mortgages no longer qualify.

Q. In 2007, the state’s median house price fell just 1.5 percent, to $330,000 - is it really that bad?

A. The prices haven’t fallen nearly as much as they did in the three years’ decline in the ’90s. Our single-family median prices in Massachusetts fell 10.2 percent for three years from 1990 through 1992. In the past two years, 2006 and 2007, Massachusetts saw a total decline of 2.8 percent.

Q.What do you expect for foreclosures this year?

A. The number of foreclosure deeds filed in 2007 was 7,653. The number of petitions, the first stage of the process, was 29,607 - a record. I expect both numbers to continue to climb. And the number of people entering the foreclosure process increased dramatically in the second half of last year.

Q. Are foreclosures an isolated problem in some communities or is their impact spreading?

A. If about 7,000 homes went through foreclosure auction last year, the lender bought them and now is trying to sell them. If 29,000 properties entered the foreclosure process, all of those people are trying to refinance, borrow from their parents, or do something. But a lot of them are going on the market. Distressed properties are dictating the whole market in many communities.

Q. Is this the state’s worst housing decline since the early 1990s recession?

A. The decline in the number of sales may already be worse than what we had in the ’90s. In the 1990s, we had just two years when the number of sales declined. We are in the fourth year of declining sales in the current slump. The decline in our median price doesn’t look as bad as it did in the ’90s, but the downturn stands a chance of being more prolonged. If 2008 is another year of declining price, this would be the third year.

Q. How long did it take to climb out of the ’90s slump?

A. It was a very slow recovery. After prices stopped falling in 1993, it took six years for the Massachusetts median price to exceed its level before the slump started. People say, ‘When is the recovery going to start?’ I say maybe next year, but after the recovery starts it might take five years.

Q. What do you predict for the spring market?

A. Slow.

Q. Is the credit crunch on Wall Street making it harder for everyone to get a loan?

A. Yes. It’s due to tightening loan standards and less liquidity. Lenders don’t want to take risks anymore. Most people can’t buy a house without a mortgage loan, so there are going to be fewer houses sold. The number of single-family home sales was down about 10 percent for all of 2007, though the pace accelerated at the end of the year. It wouldn’t surprise me if this year it’s double that.

Q. Could government have prevented this crisis?

A. In hindsight, the government made a lot of mistakes. Perhaps the Federal Reserve fueled ‘irrational exuberance’ in real estate prices by keeping interest rates low. The easy money, low interest rates with low documentation requirements, and 100 percent financing just made it too tempting for people to jump in. People assumed prices were going to keep rising and refinancing was going to solve any problem they had of meeting their mortgage payments. It’s like playing Monopoly with fake money.

In the United States, the housing market is still locked in a slump that began a year ago. In Connecticut, it’s more of a slowdown than a crash - and it may be pulling out of that downward curve.

Lisa Kidder, director of government relations for the Connecticut Home Builders Association, says the Connecticut housing market is showing signs of recovery.

“We’re still down overall,” she said. “But we’re seeing things aren’t as bad here as they are in the rest of the country. And within the state, there are goods pockets of activity.”

Likewise, Realtors said they think Connecticut mortgage activity will straighten out this summer, after being overheated for several years, then hitting the wall in 2006.

“Put a good price on it, and you should be able to sell your house,” said Karen Consalvo, Realtor with McCaffrey Realty Professionals of Brookfield.

“There was a hiss in the balloon, not a bursting,” said Betty Hensel, of Davis & Hoyt/Hensel Realtors in Brookfield.

“There’s still a good market for sellers who are realistic about it.”

Kidder said she’s buoyed by statistics for new home construction in April. They show 743 home builder permits issued in the state that month, compared to 484 in March.

More importantly, she said, more building permits were issued this April than in April 2006, when the number was 691 permits, indicating more housing starts.

“I know you can’t tell anything from one month,” she said. “But let’s see how things go this summer.”

Others don’t share Kidder’s optimism… or her good numbers.

In Danbury, Sean Hearty, director of the city’s Permit Center, said housing starts are down “substantially” in the face of rising home loan costs.

Hearty said there are two places in the city - The Reserve and Timber Oaks - where a burst of new housing units skews the numbers.

“But overall, it’s going down,” he said of new home construction in the city.

That’s because the housing boom of a few years ago put a lot of new houses and condominiums on the market as Connecticut home prices surged. Until they are sold, home builders are holding back on digging new foundations.

Kidder said that may be because during the last housing boom, in the late 1980s, many home builders overextended themselves only to get burned after the market cooled.

“This time, they learned their lesson,” she said.

Linda Hannah, president of the Ridgefield Board of Realtors and a Realtor with Century 21 Landmark Properties in Ridgefield, said agents are still dealing with a big inventory of homes on the market.

“We have 317 homes on the market - 24 of those have a bid accepted on them,” she said. “Normally, that number is 200 to 225.”

“There’s an oversupply,” said Realtor Matt Rose, of Century 21 Lombardi in Danbury.

But Hannah also said in the first quarter of 2006, 54 single-family homes were sold in Ridgefield. In the first quarter of 2007, that number was up to 67.

This may be because home mortgage loan applicants are unwilling or unable to pay, and sellers are no longer trying to get 2005 prices.

Hannah said in 2006 an average price for a single-family home in Ridgefield was about $934,000. In 2007, that price has dropped to about $855,000.

Hensel also said sellers - who a few years ago could market homes without having to worry about dust or crabgrass - have learned they have to prettify the place.

“You have to put on your best face,” she said.

“The house has to look perfect. There can’t be any clutter. The lawn has to be mowed, there have to be flowers on the front step. A couple of years ago, that didn’t matter.”

But Hannah said because mortgage interest rates are still relatively low by historical standards, buyers are starting to show up.

“I’m seeing good signs,” she said. “I’m hearing phones ring in the office.”

It’s not easy being Colorado’s housing market these days. The record number of foreclosures in the state, particularly in the Denver area, has given it a bad rap. And some say that foreclosure flap has even affected the sale of luxury homes in the hills above Denver and Boulder.

But Colorado’s housing market is more than just foreclosures. Yes, home sales for the generally middle class in Colorado are awash in such foreclosure problems right now, enough so in fact that the state Legislature is looking at ways to help, but other housing markets in the state are doing just fine.

Both the Denver Post and the Aspen Times report that home sales in Pitkin County, home of Aspen and Snowmass, were up 19 percent in 2006 to a total of $2.69 billion. The average price for a single-family home in Aspen hit $5.44 million in 2006, up more than $1 million from 2005. Buyers are generally wealthy and from out-of-state, and space for building is limited, say officials.

Also in Pitkin County, officials report that so-called “worker housing” or affordable housing sales hit $21.6 million in 2006, the highest it’s been in at least five years. Granted, it’s just a mere fraction of the “regular” housing market in Pitkin County, but this housing market is much different.

Worker or affordable housing is generally subsidized by state, federal or other funding sources, and doesn’t operate in the same kind of market. Prices are capped, appreciation is limited and the number of units for sale is based on how many openings there are in the system. Buyers have to apply and qualify, and units generally aren’t available as second homes or investment properties.

As written in the Aspen Times: “Four three-bedroom, two-bath units [at the Little Ajax housing project were] priced at $199,000, each attracted 40 prospective buyers who competed in lottery for a chance to buy one of the condos. Another nine three-bedroom, two-bathroom condos in the complex, priced at $293,000, each attracted 29 lottery
participants.”

Such a system helps those with limited incomes purchase a place of their own, but getting into one isn’t easy, given the limited supply and the numerous qualifications. But the lure of owning has pushed many people to sign mortgages that aren’t as friendly. And that’s where the foreclosure problem begins.

Democrats and Republicans in the Colorado Legislature are looking at bills to address the problem, and many are focusing on the culture of lending: Who is appraising homes and who is offering what kind of mortgages?

The articles say nothing of foreclosure or other botched financial obligations associated with the worker housing projects. So maybe another avenue for lawmakers is to find ways to add more worker housing projects, to lessen the demand for the mortgages that got so many people into trouble in the first place.

It may not be the news homeowners, contractors and real estate agents want to hear, but economists continue to predict further declines in home prices will prevail throughout 2007.

In November, Washington County reported the first decline in average home prices in Northwest Arkansas after 11 months of price increases despite oversupply and sagging sales.

“The market must continue to work through the oversupply that has been building for the past two years. We simply can’t absorb all the product available and soon to come through the pipeline overnight,” said Kathy Deck, director for the Center for Business and Economic Development at the University of Arkansas.

The inventory surplus reported in the last Skyline Report rose by 22 percent from the year before to almost 3,000 homes completed and unoccupied.

Deck predicts the oversupply will put additional downward pressure on prices with single digit declines lasting through 2007 and into 2008.

Moody’s Economy.com, a private research firm, projected that the median home sales price will drop this year by 3.6 percent — the first decline for an entire year in U.S. home prices since the Great Depression.

In Northwest Arkansas, Moody’s analyst Acharya Yubraj predicts a price decline of roughly 2 percent on fewer sales in 2007 as compared to 2006 based on data collected by the National Association of Realtors and the Office of Federal Housing Enterprise Oversight.

David Wyss, chief economist with Standard & Poor’s, forecasts a 3 percent decline in the nation’s housing prices from the fourth quarter of 2006 to the same period in 2007.

“Nationally, the big bang in sales is over and don’t expect it to recover until late this year or early next year and prices are not done falling — they will contract more,” Wyss said.

He explains there are three basic phases in a housing downturn and each local and regional market is experiencing various stages of the three-year downturn.

Phase I is “Denial.” During this first year prices keep going up despite falling sales, Wyss said.

“People just refuse to sell at lower prices and that usually lasts about a year,” he added.

Phase II is “Anger.” In this phase, oversupplies build, people can’t sell and prices come down while building slows. This can cause further economic fallout when people stop or slow the building rate, Wyss said.

Phase III is “Acceptance.” Wyss said this occurs when the unsold inventory is cleared out.

On a positive note, another factor affecting how fast a local market recovers includes employment.

“When jobs are being created, the unsold inventory will be absorbed faster,” Wyss said.

Larry Kelly, a vice president for the Arkansas Realtor’s Association, sees the Northwest Arkansas area recovering by the spring.

“I think we are addressing the oversupply by less building and while prices may flatten out in the coming months, I think in the spring we will see a different market,” Kelly said.

For those who are in still in the market to purchase a home, Wyss said don’t wait too long.

While prices are likely to slide a little lower, he predicts higher long-term interest rates will be a reality toward the end of the year.

The future of metropolitan Phoenix’s housing market comes down to investors. Again.

These speculative home buyers hyperinflated prices in 2005 by at least 25 percent with their purchasing sprees, new research shows. And what they do this year will determine whether the Valley’s housing market sags, keeps climbing or stabilizes.

Forecasts call for everything from a 10 percent increase in Valley home prices to a 10 to 15 percent drop.

“In a normal housing market without the froth that investors brought, Valley home prices wouldn’t have climbed nearly as high,” said Jay Butler, director of the Arizona Real Estate Center at Arizona State University Polytechnic. His research indicates that the median price for an existing home would have likely hit a high of $205,000 last year, rather than the $263,000 it peaked at in September.

Population and job growth have been the key indicators of metro Phoenix’s economic growth in the past, but this year, what home investors do will be another important trend. Because housing is the Valley’s biggest industry, the area’s economic growth will slow if housing does.

“Phoenix is going to burn off some investors during the first half of this year,” said John Burns, a national real estate consultant. “We will see how many investors can’t hang on and need to sell. As long as a bunch don’t start dumping, the market will be all right.”

Investors accounted for at least 25 percent of all Valley home buyers last year, according to property records and real estate agent reports.

But some economists think the figure is even higher. Frank Nothaft, chief economist for mortgage giant Freddie Mac, said investors accounted for 30 to 35 percent of all home sales in metro Phoenix last year. Nationally, the rate was 23 percent. Las Vegas, where investors have started to pull out and cause home prices to dip in some new neighborhoods, had a higher rate than the Valley.

If investors slash home prices to sell, there will be pressure on all Valley home prices. A glut of houses on the market also will cut into demand for new homes, which will affect building and construction jobs.

As home prices have flattened, many investors have tried to find renters instead of buyers for their properties. If people keep moving to the Valley as projected, most investors should be able to find people to lease their homes.

A slowdown in home-price increases isn’t necessarily bad because it keeps metro Phoenix from following California cities such as San Diego and San Francisco, which are losing jobs and residents because of high housing costs.

Most market watchers believe the most-speculative investors have already cashed out of metro Phoenix’s housing market, moving on in search of the next big deal. The number of home buyers acknowledging that they are buying houses as investments fell in December. The percentage of new homes selling to investors dropped from a high of 11 percent last January to 5 percent at the end of the year, according to the Information Market, a Phoenix-based data firm. About 18 percent of all used homes were selling to investors in December, compared with a high of 20 percent in September.

Last spring, at the peak of the investor frenzy in the Valley, home sellers were getting multiple offers, and many were above appraised values. First-time buyers, fearing prices would keep climbing, jumped in and used all types of creative mortgages to afford a home. Homes priced right were selling in days.

Then, late last summer, the frenzy started to subside as investors began to sell. Deals for overpriced homes began to fall through as some investors started looking to other regions for affordable homes with big appreciation potential or they abandoned real estate altogether in favor of the stock market.

Valley home listings have climbed from a low of about 6,000 in February to 30,000 now. Prices dipped in some areas late last year as the number of homes for sale rose. Now, it’s taking at least 10 days longer for houses to sell than it did a year ago.

As investors cash out of the housing market, it could slow even more, according to a forecast this month at the National Association of Home Builders conference in Orlando.

Not all investors are the stereotypical out-of-state buyer purchasing three or four Valley homes with small down payments all at once, often without even seeing them. Many locals tapped equity in their own homes to buy others, often using interest-only or other adjustable-rate mortgages. Other investors bought one home to live in but counted on the property to appreciate quickly so they could sell.

“Speculators bid up home prices beyond economic fundamentals,” said Marshall Vest, an economist and director with the Economic and Business Research Center at the University of Arizona’s Eller College of Management. “Long-term investors don’t bring that type of problem because their purchases aren’t as volatile.”

The housing market in Anchorage remains robust, despite high prices, escalating building costs and steadily increasing interest rates. However. the pace of home building–particularly with single-family houses–is slowing down. Now some people are wondering if the residential market has peaked and if prices will plummet. But perhaps the million-dollar question is: Will the bottom drop out

of Alaska’s housing market. as it did in the 1980s? The consensus among local experts is that the residential housing market is not headed for a drastic downturn. And the boom-bust scenario that played out in the ’80s isn’t likely to happen again. According to state economist Neil Fried, the economic environment is very different now than in the ’80s. And in fact, many of the national housing markets have been hotter than Alaska’s, he said.

“Unlike the rest of the country, we had a giant real estate overhang,” Fried added. “We had a tremendous amount of inventory that was built in the ’80s and was being absorbed in the ’90s.”

Economic Climate of the ’80s

The ’80s was a time of tremendous growth, due to an influx of North Slope oil revenue into the state treasury. The era also spawned what Realtor Niel Thomas described as the “perfect real estate storm.” Three significant factors converged to throw Alaska’s real estate market into chaos. The state was spending massive amounts of money on capital construction projects, including a new library, civic center, sports arena and performing arts center.

At the other end of the spectrum, the Tax Reform Act of 1986 disadvantaged real estate as a form of investment, leading to bank failures nationwide. And faltering world oil prices caused an oil bust in.

The Alabama housing market as a whole, and in Tuscaloosa County, both improved in February compared with the first month of the year, and it is also doing better than a year ago, the Tuscaloosa News reports.Existing home sales in Alabama totaled 4,069 in February, a 14.7 percent jump compared to January’s total of 3,547, according to the University of Alabama’s Real Estate Research and Education Center.

The average selling price of $155,632 in February was 3.3 percent higher than in January, the center reported.

Statewide, fewer homes sold in February this year than in February 2006 and more homes were listed. But the average selling price was higher and the average number of days that homes were on the market was down.

In Tuscaloosa County, existing home sales in February totaled 168, well above the 128 sold in January, and the number of days on market was also down, from 139 to 135.

But even as Alabama home loan rates remained low, 1,689 homes were listed, 58 more than in January, and the average selling price was $165,863, a drop of about $6,000.

In February 2006, existing home sales in Tuscaloosa County totaled 151 units, the selling price averaged $168,387 and 1,358 homes were on the market for 140 days on average. The Birmingham housing market has been equally steaedy.

Although the indicators were mixed, if the market continues at this rate, this year should be as good as, or better than, last year for the Alabama mortgage market, according to the center.

• At the national level, existing home sales rose in February by 3.9 percent to 6.69 million units.
• The national median home price dropped to $212,800, a decrease of 1.3 percent.
• New home sales fell by 3.9 percent to 848,000 units sold.
• New home prices rose by 2.2 percent to $245,500.

Housing starts, which usually indicate future market activity, increased by a solid 9 percent in February to reach 1.525 million units, boosting the confidence of financial markets embroiled in bad credit mortgage turmoil.

National housing starts are, however, 28 percent lower than a year ago.

Selling your home can be exciting, but it also takes work. You’ll need to fix all those little problems you’ve let go for so many years. You need to decide if you’re going to try to sell your own home or use a professional real estate broker. And you’ll need to be patient! Selling your home can take some time, depending on your local real estate market.

Learn about the process and the pitfalls of selling your home, before you begin. Here are just some of the resources available

Interview with Real Estate Brokers

So your sister just introduced you to her friend Irving, a real estate agent, and now you can’t get rid of him, right? Wrong! Choosing the right person to sell your home is one of the most important steps of selling. Therefore, choose wisely.

At a minimum, speak with 2 or 3 brokers from different agencies. Ask prospective brokers the same list of questions, in order to compare their answers. Find out what they would do to sell your house.

Above all, choose a broker that you feel comfortable with and like. This person will help you make the biggest sale of your life, so find someone you think will do a good job!

The following is a list of questions that may be helpful to ask while speaking with prospective real estate brokers.

1. How many years have you been in business?
2. For how long have you sold houses in this area?
3. How many houses did you sell in the past year?
4. What is your commission?
5. If I were to work with you, how would you market my house?
6. Will you organize meetings with potential buyers and will you coordinate them personally?
7. Can you give me names and telephone numbers of other families that have used your services?