Reports released today by three major New York City real estate brokers show that the housing bust has finally hit the city, with prices falling somewhere between 13% and 19% over the past year -- depending on who you believe.

The decline isn't out of line with national numbers, but in Manhattan, the decline has been remarkably rapid. In the first quarter of 2009, some brokers were reporting a price increase of as much as 6%.

What went wrong? The volume picked up, as sellers realized that the market had changed and slashed their prices to move inventory. Sales volume was up 28% in the second quarter compared with the first quarter, according to Prudential Douglas Elliman. That's the good news: Compared with the second quarter of last year, volume was down 50%.

We're used to Realtors spinning statistics to try and cast the most positive light on the bleakest situations, but this is a pretty new one: Realtors releasing data that is just plain wrong.

The Wall Street Journal reports (subscription required) that "The California Association of Realtors expects to make sharp downward revisions in its recent monthly reports of soaring home sales in the San Diego area, Robert Kleinhenz, deputy chief economist of the trade group, said in an interview. Those revisions will mean modest downward revisions in statewide sales, he added." (emphasis added)

Then later in the piece: "The California Realtors have reported that San Diego sales in April were up about 63% from a year earlier. Mr. Kleinhenz said that is expected to be revised downward to a gain of about 20%. For May, the group reported an 89% increase in sales in San Diego; that will be slashed to about 6.5%, the economist said."

The Wall Street Journal reports (subscription required) on the results of a new ING Group survey: "More than 40% of Americans believe mortgages that let borrowers buy a home with little or no money down helped contribute to the economic downturn."

That's great that 40% of Americans aren't completely stupid -- but what about the other 60%? I'm dreadfully curious as to what possible argument could be made that record lows in down payments weren't a major contributor to the housing and mortgage bust that ultimately led to the near-collapse of the financial system.

First, low down-payment requirements allowed people to buy houses they couldn't afford, with little "skin in the game." This helped drive home prices into a speculative bubble and made it perfectly rational for people to walk when their homes declined in value: When you have no equity in it, why stay?

Worse, the high loan-to-value ratios caused by down-payments of 0% and sometimes even less made banks' losses on foreclosures higher than they would be in a more conservatively-financed situation. If a home buyer puts down 20%, he "eats" the first 20% in losses on the house. These 0% down-payments left banks with massive losses in the event of a decline in real estate prices -- and that led to huge write-downs, a freeze in lending and a slowdown in consumer spending -- in other words, the economic downturn.

Anyone who says that the escalating percentage of little or no money down didn't help contribute to the economic downturn is terrifyingly ignorant -- and this crisis will repeat itself again unless people brush up on what happened.

The New York Times reports that people working on mortgage modifications are entering a dizzying world of missing documents, bureaucratic call centers, overwhelmed and poorly-trained employees, and the ultimate in customer service frustration: rude, nasty and incompetent people.

And therein lies the ultimate problem with this mortgage modification program: If every single person in the United States worked full-time in loan modifications, there still probably wouldn't be enough manpower to handle the volume and complexity of pay-option arms, piggyback mortgages, NINJA loans and stated-income loans.

Does it even make sense to offer government help to people who lied -- that is, committed felony mortgage fraud, a federal crime -- to buy their homes? Here's an idea: Before modifying any stated income loans, make sure that the numbers the borrowers claimed to be making represented their actual earnings.

Back in March, I wrote that "Given that bureaucracy and bungling have so far made federal efforts to modify loan ineffective, is there really much hope for the much, much broader initiatives that are now being plotted? Are there enough accountants and ethical mortgage brokers in this galaxy to oversee a restructuring of a system where 7.88% of mortgage holders are beyond on their payments?"

The Obama Administration will probably have to come up with another plan because so far, the number of mortgage modifications has fallen far, far short of the original estimates.

In a piece on selling your home in a hurry, Money Magazine staff reporter Beth Braverman offers some good tips -- but then there's this clunker: "And set your home at the lowest end of its price range; a $299,000 home will seem expensive to a buyer in the $250,000 to $300,000 range, but a $301,000 home is a deal to someone looking between $300,000 and $350,000."

I asked Alison Rogers, author of Diary of a Real Estate Rookie, about that bit of advice and her response was candid: "Well that's a bunch of crap. Everyone wants to live as well as possible, so buyers tend toward the very top of their range because that way they get the nicest home. Also, if you're taking a fixed-rate mortgage, your agent will encourage you to stretch because the assumption is that the majority of your housing costs are fixed while your income should hopefully rise over the period of the mortgage."

The other problem is this: When people look for homes online -- which is how most people look for homes -- they often will put in parameters for how much they're willing to spend. If you list your home at $301,000, you will lose all the buyers looking to spend under $300,000 -- even though you'd probably be able to sell the home for $295,000.

"The properties that we have been taking to contract this spring have been properties where we lowered the price just under an internet search break point," added Rogers, a New York City real estate agent.

Lawrence Yun, the discredited shill economist at the National Association of Realtors, has identified one culprit in the disappointing home sales numbers that have been coming out: the stupid appraisers aren't being optimistic enough.

"Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional homes with distressed and discounted sales," Yun said in a press release. "In the past month, stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment. There is danger of a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected."

OK, Lawrence (Is it OK if I call you Lawrence?). Here's the problem: If you had been complaining about overly optimistic appraisals during the housing boom, you might have a point here. But the fact is that you didn't. You thought the corruption of the appraisal industry was a good thing because it kept home prices rising, and made NAR members rich. Now that the real estate bubble has crashed and appraisers are being more conservative, you're whining like a woman in an Ibsen play.

Fortunately, The Appraisal Institute whacked Yun wiith a rolled up newspaper and sent him to his doghouse with a follow-up press release: "We take offense with the notion that an appraisal is only good if it happens to come in at the sales price. That mentality helped cause the mortgage meltdown to begin with," said the Appraisal Institute's Bill Garber. "The fact that the value reflected in the appraisal does not match the sales price is not the fault of the appraisal but a result of the market today."

Yep. It sure is.

What's appalling is how much influence that National Association of Realtors continues to have in Washington.

Dear Mrs. Madoff:

I understand that with your husband in jail for the rest of his life and you losing claim to millions of dollars worth of real estate and other assets in the bargain, you are being left with only $2.5 million to your name. That gives you an income of about $125,000 a year.

Keep this in mind: 90% of Americans don't make anywhere near this. But for two-income professional couples on either coast, this represents a middle class income.

So allow me to give you some general tips on how to live like the middle class, although, as the character in Casablanca says, I don't know why because it can not possibly benefit me.

First thing's first, I'd find your AARP card and join up. Lots of discounts for you there. And you're gonna need them, lady.

Housing: You might have trouble finding affordable housing. This is sure to surprise you, having up until recently enjoyed lavish homes in half a dozen locations without a thought over how they were paid for. But, and I'm sorry to tell you this, your yearly nut won't qualify you for any home anywhere you'd be interested in living. The average cost of a home in Beverly Hills is $1.9 million. While in Manhattan the average cost is $1.4 million. It's looking like nobody in town is going to rent you anything there, anyway.

If you're looking for a light, personal finance read with a compelling narrative full of anecdotes about what went wrong and where the opportunities to profit from the carnage are, skip this this book.

But if you're interested in a look at the megatrends that will shape demand for real estate over the next few years, "After the Fall: Opportunities and Strategies for Real Estate Investing in the Coming Decade" is definitely worth adding to your reading list.

Veteran real estate journalist Steve Bergsman interviewed industry insiders about all facets of investment real estate, and looked at the trends likely to emerge in the office market, the industrial market, retail, multi-family, and single-family housing and condominiums.

But for the average small-time real estate investor or prospective home buyer, it's Bergman's analysis of the single-family market that is the most eye opening.

Changing demographics related to job growth and household size are likely to render homes in many nondescript, suburban towns exceptionally poor investments. Surveys show that baby boomers do not want to live in the far suburbs, and neither do young people.

In addition, the shrinking percentage of households consisting of a husband, wife and two children may render some large house obsolete. In areas with rising property taxes, it gets worse. University of Utah Professor Arthur C. Nelson tells him that "The dirty rotten secret is homeowners in these suburban counties won't ever make money on their homes."

Before you buy a home, pick up a copy of this book -- even if it's just to read Chapter 10 on "Urban and Suburban Infill."

This Old House recently put together a video with the top five mistakes people make when remodeling their homes.

Committing this list to memory could save you thousands of dollars. Here are the tips:

1. Don't hire a general contractor who gives you bad vibes, and don't try to do it yourself on a big project.
2. When you collect bids from prospective remodelers, make sure that the bids are detailed!
3. Never say "While you're at it. . . " Make a plan and stick with it.
4. Don't change your plan. It can lead to budget overruns and timing problems.
5. Don't ignore hidden things.

Check out the video below for the details:

With school out for summer and a bunch of seasonal projects, the time's right for getting young do-it-yourselfers involved in home improvement plans.

Working together to make a repair or build something new not only teaches lifelong skills and builds confidence, but also gives kids a sense of accomplishment and renewed pride in the home you share.

Select a project together: Whether it's an easy fix-it project, a simple gardening chore or an opportunity to redecorate, every DIY project is a valuable chance to learn. Kit-based programs like Red Toolbox are also available, and help you learn together through three discrete skill levels, starting with very simple tasks and progressing to more advanced techniques. Along the way, parent and child have fun working together and create useful, decorative items that make great gifts.

In Tokyo, it's called "Operation Flower."

I, too, have observed the phenomenon: Pretty flowers deter crime. And in Suginami City, a district of Tokyo, there's pretty amazing data to back up the theories.

After a shameful year of break-ins in 2002 -- 1,710 in an area with a population of about 528,000 -- someone recognized that streets with more flowers had less crime.

The city began a campaign, encouraging volunteers to plant flower seeds in front of their houses, and tending them. The results stunned: Down 80% by 2008, to 390 total break-ins.

The theory is that with residents spending more time outside planting, weeding and watering their flowers, there are more people to keep an eye out for suspicious activity, deterring criminals.

I suspect it's a little bit of that, but more of this: With people outside tending to flowers, potential criminals put a face on the property. Instead of seeing the residence for its potential dollar value, the home is seen as that place with the nice woman who waves while she weeds.

And another thing: Well-tended gardens are lovely and demonstrate the care someone has taken over the home. When you respect your property, others will respect it, too.

Since we have fixed up our front yard, installing a friendly fence and lots of fruit, vegetable and herb plants, our property crime has gone to zero; and we lost a few bikes and a jogging stroller to criminals before the transformation.

The more people on the street who tend their gardens, the less crime we all have. Beauty and care begets respect; even from the criminal element.

Ken and Daria Dolan, America's first family of personal finance, answer your questions every Friday.

Click here to ask Ken and Daria your question.

This economic crisis is causing more and more of us to postpone our retirement, scale back our retirement dreams or worry about outliving our money. Tapping into those fears, companies are promoting a reverse mortgage as the answer. Watch today's video to learn whether a reverse mortgage is right for you, and get a few warnings about the potential risks.

Dear Ken and Daria,

I'm wondering if a reverse mortgage is a good deal. Thanks!

--Bill

Don't give up your retirement dreams! Get more retirement tips at Dolans.com.

A couple returning home from vacation found their locks re-keyed, the furniture gone and a man living there who claimed to be the legal owner in what has to be one of the most bizarre cases of home theft ever.

Daniel Judd, 66, has said he bought the house from a friend while Tom Decker and his wife Marie McArthur were away for six weeks, according to a Santa Cruz Sentinel story.

When the couple returned and complained to authorities about the man living in their home in Ben Lomond, Calif., Judd showed authorities a deed that is now thought to have falsified. The couple were barred from the property, although they're now back in after the scam was revealed.

Combine a limited home improvement budget with a green frame of mind, and you can find great ways to save on your next DIY project.

There are a lot of worthwhile, beautiful home materials ready to be reclaimed and reused thanks to savvy dealers, demolition experts and everyday folks who rescue them from a landfill fate.

Here are a few resources for trimming your project costs as you create and improve.

• Architectural salvage yards: Modern green-building principles meet the architecture of the past in these gardens of historical finds. Take a stroll through a dealer's offerings, and you may find replacement hardware, a period-correct fixture or an amazing garden ornament. Salvage gurus travel far and wide to collect the nearly-priceless artifacts that renovations and demolitions leave behind, and their breadth of knowledge is as valuable as their road stories are amazing. Visit the online yards of Ohmega Salvage and Recycling The Past to get a coast-to-coast feel for the latest in salvage finds, and then dig in with a visit to your local dealer.

Joel Rubinstein, who lost his full-time job more than a year ago, recently found the 11.5% unemployment rate in California coming around in an odd circle to his front door.

His roommate in a condo he shared in Richmond, Calif., was selling the condo and moving because he had recently lost his job.

So with an unemployed roommate and no place to live, Rubinstein quickly came across a friend who had converted his garage in nearby Pinole into a room that Rubinstein could rent.

Housing crisis solved, Rubinstein is back to searching for a job as an account manager in the insurance industry. For six years he worked for the same company, helping businesses find insurance. He was laid off in October 2007 and while still collecting unemployment benefits, he's had various part-time jobs to help extend the benefits.

Here's a video interview with Rubinstein on how his job search is going:



Without a mortgage and family, cutting expenses is a little easier for the single man. Along with cutting his housing expenses, Rubinstein is saving money by not taking his girlfriend out to eat as often, and not playing as much poker as he used to at a nearby casino.