Last year, about 90 percent of the real estate transactions that broker Bryant Tutas handled for his clients were financed by subprime loans.

“We have been hit very, very hard by this credit crunch. In March, when all of the subprime stuff hit, our market came to a screeching halt,” said Tutas, broker-owner for Tutas Towne Realty Inc. in Poinciana, Fla., south of Orlando. “When they pulled that loan product away my market really came to a … halt.”

Dozens of subprime lenders have collapsed this year, creating a credit crunch and fueling buyer fears. Some real estate agents and brokers say these factors are taking a toll on real estate sales in their markets, to varying degrees.

Poinciana, Fla.

Tutas, who is a listing broker, said that the inventory of for-sale properties in the Poinciana area has swelled to about 1,800 homes, with only about 40-45 home sales per month. “Buyers are very far and few between. Buyers who are able to get financing are really holding all the balls,” he said. “Buyers are just so hesitant to do anything. They’re just beating sellers up on pricing.”

Government-backed loans, including Federal Housing Administration (FHA) loans and U.S. Department of Agriculture rural development loans, have become more prevalent in his market area, Tutas said. “I hadn’t seen (a USDA loan) in five years and I had two last week. A lot of the mortgage brokers who don’t have access to those types of products that are government-backed are having a lot of difficulties.”

Most of the homes in the market area sell for $200,000 or less, Tutas said, and he estimates that homes have dropped 15 percent to 20 percent in value in recent months. Investors gobbled up many homes in the area during the boom and may help to stimulate the market again as they buy up foreclosure properties, he said.

“We were really saturated with investors,” he said, and that has contributed to a rise in the number of listings and foreclosures as the market has turned. “Listings are a dime a dozen. There’s so much inventory.” Foreclosures are likely to accelerate, he added, as more properties with exotic mortgages head for a reset in rates.

He estimates that it will take at least another two years before the market begins to rebound. “It’s going to get a lot worse before it even thinks about getting better. My market I’m certain is not even going to have a chance of turning around until 2009,” he said.

Over time, he expects rental rates to rise and property values to sink to a point where buying property makes more sense to investors. “In my opinion investors are going to be the first one coming (back) in the market. They are going to start scooping up properties.”

Real estate professionals in several markets have complained that the inventory of for-sale properties is bloated by sellers who don’t need to sell, and that some sellers remain stubborn on pricing.

Boise, Idaho

Phil Hoover, an associate broker for RE/MAX West in Boise, Idaho, who has about 35 years of experience in the industry, said he wishes that sellers who are not motivated to sell would take their properties off the market given the slowing sales in the region.

Hoover said that while he hasn’t seen substantial impacts from credit tightening in the mortgage market, buyers are more skittish these days. “I think there’s a lot of uncertainty — fear, uncertainty and doubt. I’ve had several recently who are pretty much freaked out by everything they are reading in the paper. Buyers are all wondering if they’re buying too soon. They all think that (prices) could come down. And that’s a natural fear and that’s possible.”

Houses should not be purchased as a get-rich scheme, he tells his clients, and he said he has tried to focus on serious and capable buyers who are buying for the long term.

And rather than sugar-coating market conditions, Hoover said he has built up his business by telling it like it is.

“I vividly remember the (Savings and Loan) crisis in the ’80s. A lot of what’s going on now — I think the fallout could be worse this time,” Hoover said. While the Boise area may be more insulated from the market problems than coastal markets, Hoover said that sales are off about 25 percent to 40 percent compared to last year, inventory is at about a six- to eight-month supply, and prices are softening. He said in one deal a seller accepted a $390,000 offer for a home originally listed at $417,000.

“I don’t know that anyone knows how deep this (downturn) is,” Hoover said. “I think we’re nowhere near the bottom.” He said he believes the Boise-area market will move “sideways” for the next two or three years. “I don’t think we are going to collapse,” he said, and the market could be the beneficiary of people moving from higher-priced areas.

Hemet, Calif.

In Hemet, a Southern California community that is about 90 miles east of Los Angeles, the market has hit a near-standstill, said John Occhi, a Realtor for Mission Grove Realty.

“The market started to change back in March,” he said, timed with announcements about trouble at New Century Financial Corp., the nation’s second-largest subprime mortgage lender. New Century filed for Chapter 11 bankruptcy protection in April, and the following month laid off all but a skeleton workforce of 250 who were to liquidate the company’s remaining assets.

“Since then we have been a seeing a decline, decline, decline,” Occhi said. Sales have dropped to about 20 percent of last year’s level in the Hemet area, he said. Last year there were about 136 transactions in the market. “So far this month we closed 16. There are 350 Realtors and their families who are living off of this.”

The recent troubles in securing Alt-A loans — partial-documentation loans to borrowers who have stronger credit histories than subprime borrowers — has hit the region harder than the initial subprime crash, Occhi said.

“Now it’s almost impossible,” he said, for buyers in his market area to secure an Alt-A loan.

“I wish I could tell you about the buyers — I haven’t met one yet. Everyone is pretty much holding back and waiting to see what happens. Everyone is being cautious.”

It’s common for properties to sit on the market for 150-200 days, he said, and one recently sold property had sat on the market for more than 400 days.

As home prices have moderated or dropped in surrounding Southern California communities, that has drained some prospective buyers from the Hemet area, said Occhi. “We are at the end of the road before you end up in the desert,” he said — so buyers may be looking for bargains closer to the region’s job centers.

Occhi performs some broker-price opinions, which are value estimates that are in some cases requested by lenders for properties in a foreclosure process. Foreclosures are a big problem in the area, he said, and he expects that the current level of foreclosures are just “the tip of the iceberg.”

He said he hopes that banks will be more flexible in working out deals so that homeowners can stay in their homes without the need to foreclose.

Prices in the Hemet area have dropped to about 2002 levels, Occhi said, and he expects investors to reinvigorate the market. “The deals that will happen are going to be investor-driven,” he said.

The housing market downturn will likely have a large “ripple effect,” Occhi said. “It’s a vicious, vicious place we’re in now.”

Taos, N.M.

The outlook is not so glum in Taos, N.M., said James Kimmons, a sponsoring broker for Gallery Realty of Taos.

“I can’t tell you there’s any difference in perception for buyers … and they don’t seem to be having any more trouble getting mortgages than they did before,” Kimmons said. The area is a strong vacation-home and resort market, he said, so buyers typically have strong credit and bring plenty of money to the closing table.

“I can’t say there’s a buyer or seller who has expressed any kind of mortgage-related or mortgage news-related concern,” he said. “This area’s just not typical.”

Long Beach and Santa Rosa, Calif.

Meanwhile, in Long Beach, Calif., Chun Liu of Keller Williams Coastal Properties said, “Many people who were poised to be purchasing homes at the beginning of this year can’t now because of the new requirements.”

And in the Northern California community of Santa Rosa, Ron Street of RE/MAX Central said he has seen some transactions go bad. “It’s crazy — that’s the kindest thing I can say — the kind of issues that are coming up. Are they credit-related? More than likely,” he said.

Street said he had one house under contract three times “and then the (buyers) just disappeared off the planet. I think a lot of this is driven by fear more than anything else. I’ve seen people who are ready, willing and able to buy. It’s like there is some immediate change in them. I think everybody is afraid that they’re going to make a mistake.”

There have been transactions in which buyers were preapproved but the deals fell through because of credit issues that surfaced in later stages, he said.

Daytona Beach, Fla.

Midori Miller, a real estate trainer for Century 21 Sundance Realty in Daytona Beach, Fla., said, “It’s much harder to qualify for a mortgage, and the expenses involved in buying a home has caused an alarm with potential buyers. Many buyers are just sitting and waiting to see what will happen with the real estate prices.”

Buyers’ jitters are not just about the state of the real estate market. “World events, war, the economy, and presidential elections” also factor into that fear, she said, as well as tax and insurance issues.

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