Happy Memorial Day everyone. I hope you and your families are enjoying the holiday.

Attached is a feature article in this week’s Barron’s on the housing sector, notably the second home market. It is important to see how severely a number of areas have deteriorated. As you know I have been concerned about housing for some time. It has been the greatest prop to the consumer wealth effect and spending in the current recovery cycle.

Warm Regards,

Morris

443-394-6806

The Big Glut

Trouble in Paradise

By ROBIN GOLDWYN BLUMENTHAL

A Walk on the Wild Side

IT WOULD SEEM TO HAVE IT ALL: four bedrooms, a guest house, a pool and a rock waterfall. But the vacation home in Naples, Fla., hasn't been drawing much interest from buyers, so the seller recently threw in that most modern of amenities: the $1 million price cut. That's brought the asking price down a full 25%. "If you want to sell, you've got to go back to '04 prices," says Chip Harris of Coldwell Banker Previews International, which is handling the property.

The market for second homes could use a second wind. After a long string of double-digit annual price increases, a number of second-home meccas across the country are suddenly suffering from plunging sales volume and burgeoning inventories of unsold homes. Result: Naples-style discounting is starting to spread. It hit the town of Pocasset, on Massachusetts' Cape Cod, just as retired executive Jack Reen was trying to sell his four-acre, six-bedroom beachfront home. He cut the price several times, for a total of 42% off the listing price, before striking a deal at $3.95 million. Reen takes a philosophical view of the experience, noting that the original price was set at the top of the market. "Calling the tops and bottoms is impossible," he says.

Though the official figures on sales prices have yet to reflect the current round of cuts, interviews with real- estate pros and others strongly suggest that the averages ... Log in to view full article.