That's the title of Pulitzer Prize-winner Michael Chabon's first novel, a loving, semi-autobiographical ode written when he was still a student at Carnegie Mellon University in Pittsburgh.  It's one of my favorite books, and in it, the main character walks past a smokestack he calls the Cloud Factory, a remnant of Pittsburgh's former glory days as a steel town. 

Big steel is all but gone, but Pittsburgh, far from turning into a ghost town, has resurrected itself with new, thriving industries... So much so that the Obama Administration chose the city to host the G-20 Summit.  Pittsburgh?! some scoffed.  Yes, Pittsburgh.  White House officials wanted to highlight the city's renaissance from aging rust-belt has-been to tech-savvy metropolis. 

"Pittsburgh didn't have the party, so we don't have the hangover," said Paul Culley, president of the Realtor Association of Metropolitan Pittsburgh.  Prices remain stable, Culley said, and while they're "not immune" to the foreclosure problem, Pittsburgh has fewer than some other older industrial towns.   

"Well-maintained homes are moving well, while some houses that are not in good shape are moving slower in this depressed market," Culley told me by phone.

And what great housing stock the city has.  On the low end you can't beat $59,000 for this tiny two-bed, one-bath starter home.

Michael Chabon was right -- Pittsburgh is mysterious to many of us.  It's Pennsylvania's "second city."  It's got a great modern airport, which is all many people ever see of the city.  Lucky me, I have two close friends from “The Burgh," so I wondered what they thought of their hometown being thrust onto the world stage. 

"I ...remember the old J&L (Jones & Laughlin) steel mill still belching smoke when I was growing up," Lisa says.  "But it's gone now." 

But the old industries gone are gone, and downtown rolls up the proverbial rug after 5 p.m. "(S)ad, sad, sad," Lisa says.  "It's deserted.  Except for the arts venues, Heinz Hall and the Benedum Center, it's empty."

But there is life in many of those old warehouses.  "They have done a wonderful job of restoring, renovating, developing in certain parts of town, especially at the waterfront, of which there is an abundance," Lisa said.  "With three rivers, there's a lot of waterfront.  The old steel mills have either been turned into condos or dismantled and disappeared entirely," she adds.

Another friend and Pittsburgh native is Tamara Tunie, who plays medical examiner Melinda Warner on NBC's "Law and Order: SVU."  She grew up one of six children, living upstairs over their parents' mortuary.  "I miss the glory days of a thriving downtown Pittsburgh," she says. "However, I have seen it slowly coming back with new restaurants and clubs. Working on developing a night life downtown.  And oh yes -- the Strip District.  It is a mirror of the Meatpacking District here in New York.  Formerly, warehouses  and factories, now restaurants, shops, clubs -- and yoga."

Yoga and lofts.  Paul Culley said the city is making a big push to get people back into the city, promoting it through websites such as PittsburghCityLiving.com and BuyintheBurgh.com.  Not everyone wants a mansion like the one above, but there's a lot of interest in downtown lofts, he said, some affordable, some, like this one near where the G-20 is being held, pretty seriously luxurious and pricey.  But it's a great 'repurposing' of some venerable and sound old structures. 

But what will the G-20 attendees see?  Well, right now, they're seeing each other in meetings, and if they venture out they'll see protesters being tear-gassed.  Their spouses will see more of the beauty of the city, and all my Pittsburgh correspondents agree, if the delegates do get out and about, they'll encounter a beautiful, proud, thriving city that reinvented itself, and may have flown so low under the radar that the storm clouds of a bad economy may have passed right over. 

Fancy chatting over the backyard fence with a former president?  Are you okay with going through a checkpoint to get home?  If so, have I got a real estate opportunity for you. 

The stately residence next door to the Obama's home in Chicago has gone on the market.  Wish I could tell you the price, but the brokers aren't setting one.  They're waiting to see what the market will bear.  Typical homes in the neighborhood sell for between $1.5 million and $2.5 million.  The Obamas purchased their Kenwood/Hyde Park home in 2005 for a reported $1.65 million. 

The house has quite a history.  It was built in 1906 by a man named A. R. Clark, who actually was the original owner of President Obama's home. During World War II, it housed officers who needed to stay in the area, then became the boarding house for a military school.  The current owners purchased the 6000 square foot home from the military school in 1973 -- for $35,000. 

It is a stunner of a mansion -- grand staircase, original stained glass, hardwood floors, formal mouldings, ornate fireplaces, graceful plaster detail.  The listing says it needs renovation, and the brokers helpfully note that the buyer can add 4000 square feet -- but really, heating 10,000 square feet in a Chicago winter?  Brrrrr....

A couple of lighter stories to end the week.  No advice, just "things that make you go, 'Hmmm.'"

The first involves a Miami woman who found herself and her family evicted for a day, even though they had scraped up the dosh to save their home from foreclosure.  Or so they thought.  Due to a court mix-up, the house, purchased three years ago for $260,000, was sold at auction to another buyer for $87,000.  When the new 'buyer' came to claim the house, the sheriff ignored the pleas and papers of the actual owners and evicted them.  Just for a day, but still....  Plenty of comments at other sites saying they never should have let their payments get so far behind, blah blah blah.  I'm sure they know that now. 

The second involves Bill Gross, head of Pacific Investment Management Corporation (PIMCO), and his wife Sue, who paid $23 million for an 11,000 square foot mansion on gated Harbor Island just off Newport Beach, CA.  The Georgian-style manse, built in 1979, has 9 bedrooms, 12 baths, and comes with 112 feet of waterfront -- enough to house both of your 100-foot yachts.  The original asking price was $26 million, but when you're paying cash you can get a deal.  And thank goodness for that -- the Grosses plan to tear it down and build their own home sweet home.    

Recession?  What recession? 

If we were looking for the sea of foreclosures to start drying up, it's not happening yet.

The Mortgage Bankers Association reports today that a record 1 in 7.6 homeowners with a mortgage were either late making a payment, or in some stage of foreclosure from April through June. 

Foreclosure numbers have been high -- but what's chilling about these latest numbers is that many of those late or not paying at all are homeowners with everyday ordinary PRIME mortgages -- those who have "skin in the game," as the saying goes.  Good credit, money down, and they didn't get those super-high, soul-destroying, sub-prime interest rates. 

Now we're talking about people who are losing jobs, or -- in smaller numbers, most likely -- people whose homes are underwater and who have decided there's no point in paying anymore.  Karen Weaver, an analyst at Deutsche Bank, says they expect that nearly half of all mortgage holders will be underwater by the start of 2011 -- that's revised upward from Deutsche Bank's current estimate of 27%.  Unreal. 

As an optimist, I believe that what's gone down will eventually come up.  So unless I had a really cheaply-made shoebox of a house that was waaaay overvalued when I bought it (and boy, have I seen some of those!), I like to think I would sit tight, having faith that the market will rebound and prices will, too.  Pessimists, feel free to burst my bubble.   

Want a house built from scratch?  Then here's good news for you:  The U.S. Commerce Department reports housing starts for July, as well as permits for housing starts, are up.  Again.  That's the fifth straight month of improvement for single-family housing starts, and the fourth consecutive month for permits.  "Everything is tenuous, one month doesn't mean recovery, but these are positive signs," said David Crowe, chief economist for the National Association of Homebuilders.

Speaking by cellphone from Chicago's airport, David said they kind of expected July numbers to rise, because July was pretty much the last month to get shovels in the ground to have a new house ready for those who want to take advantage of of the $8000 first-time buyer tax credit. 

But permits are up, too -- in fact, they're up way over housing starts -- 1.7% (490,000 units) for housing starts, versus 5.8% (458,000 units) for permits, which is a very good sign.  "The increase in permits anticipates the spark of recovery continuing," David said. 

Is that smart, I asked, with more than eight months' worth of housing supply out there? Yes, says David. 
"The inventory is in existing houses," he told me, hastening to add that that is indeed competition.  But new house inventory is low, and the number of months it takes to sell a new house has dropped.  Besides, he added, the new houses are being built in places "where people want to live."  Ouch.  They're not going into the already-overbuilt foreclosure hotspots of Nevada, Florida, California, Arizona.  Look, instead, for the sounds of saws and the smell of sawdust in "Texas and the states that stack up on top of Texas:  Oklahoma, Nebraska, the Dakotas, Iowa.  Places that didn't suffer as much with the downturn are more ready to respond to the upturn." 

The dark cloud here is multi-family housing, which is not getting off the ground (yes, pun intended) at the same rate.  That's because the purse strings are still tight on commercial lending, which could be a harbinger of slower starts to come.  Those numbers are not nearly so rosy -- tying a record low set in April of this year, down 13.3% to 91,000 units.  Multi-family permits fell a ginormous 25.5%, to 102,000 units.  At least we know where the challenges lie ahead. 

So we welcome the builders back into the market.  Let's just not get crazy with it like last time. 

Just when it seemed there were far fewer foreclosed houses available in Detroit when I was there a couple of weeks ago... 
When home sales were up....
When the jobs report wasn't great, but at least wasnn't as bad as expected...
Just when it seemed that things might be looking up, RealtyTrac releases a gloomy foreclosure report.  The foreclosure tracking company reported today that a record 360,149 homeowners were at some stage of the foreclosure process in July, up 7% from the previous month, and up 32% from a year ago. 

But, you may be saying, home sales are up -- both existing and new!  That's right.  I think that's because many people, both investors and personal buyers, are taking advantage of bargains.  Because there ARE bargains to be had -- I saw one in Detroit -- a six-bed, five bath, 4800 square foot "gingerbread" house in tony Palmer Woods (where the car execs built their mansions back in the '20s and '30s) for -- get this -- $84,900.  Okay, yes, the previous owners had the worst color sense I've ever seen (unless you've got a thing for turquoise), and it needs loads of work.  But the major systems are there, the bones are excellent, and it's $85,000 for a 4800 square foot house.   Unbelievable! 

So I've been telling my property virgin friends that NOW is the time -- prices are low, there's inventory, and there's that $8000 first-time homebuyer tax credit as long as you get the deal underway by November.  Do you agree -- is now the time?  What's happening to prices in your area??

Today it's Philadelpha, Saturday it was Boston, but yesterday it was New York.  About 1000 people packed the ballroom of the Hyatt Hotel at Grand Central Station in Midtown Manhattan on Sunday, all trying to snap up a bargain on one or more of the 120+ houses up for auction. The houses on offer were   from all around the metro New York area -- upstate, Staten Island, New Jersey, Connecticut.  (Nothing in Manhattan, though -- which would surely have been a sign of a real estate Apocalypse).  It was the second auction in this area for the auction company REDC, which previously sold more than $18 million worth of real estate in the NY area (about 200  homes) at auction in March.  It was my first time at a real estate auction, and it packed as much drama as a Broadway play. 

There were vocal protestors outside, organized by Bail Out the People (Bail Out the People - Not the Banks! is their motto...bailoutpeople.org).  Spokesman Tony Murphy said they want a moratorium on all foreclosures and evictions.  "These auctions are promoted as a good deal, as a way to put people in houses," he said.  But what about the people who were living there already, he asked?  "The media often writes that 'one person's misery is another person's gain,' but we say that an injury to one is an injury to all." 

"Nobody likes to see foreclosures, they're an unfortunate event," agrees REDC's president, Jim Corum.  Standing outside the circus going on in the ballroom, Corum tells me that all the homes being auctioned on Sunday are vacant, have been for at least 90 days, some for as long as two years.  And from the pictures projected in the front of the room, the houses appear a forlorn lot.  But buyers were snapping them up. 

The tuxedoed bidding assistants were running up and down the aisles, flashing hand signals like  a catcher.  One caught my eye and winked -- it's amazing they can keep up with everything going on in their section -- the nods, the hand waves, the slight smiles that indicate bidding (did I mention that NOBODY raises their assigned auction number?  Too obvious, I guess).  "Sell it!" they yelled.  "That's a lot of square footage for the dollar!" said the auctioneer, inbetween his almost-impenetrable price patter.  "Time to take advantage!" said another.  "What goes down always comes back!"   From his lips to God's ear.  

 In the bare bones brochure, the properties look like wildly good deals -- bidding starts on some as low as $500, but within the space of five seconds (I timed it) they'd usually risen to $50,000 or $60,000.  And that's where some stay -- a sad-looking frame house in Elizabeth, NJ went from $1k to $60k in three seconds flat -- but there it stalled, selling eventually for $70,000, though its previous value was listed at $260k.  Hard to know if that was a recent value, or overheated pricing leftover from the go-go days of the market bubble.

Corum said most of the buyers were end-users -- about 80%, he estimated.  Purchasers were sent to one of two places after their winning bids -- investors stayed in a roped-off area inside the ballroom (the better to be near the action), while those buying only one property were sent to a separate annex nearby.  The annex was much busier. 

Anita Walker from East Orange, NJ came to see what would happen to a vacant property near her.  It sold for $42,500, despite being what she described as "trashed."  "I have dual feelings," she said.  "I feel bad for some families who lose their homes, but there are some really irresponsible people out there." 

One winning bidder who agreed to talk (but not give his name) was a slight man, also from New Jersey, who paid $300,000 for a house he said was worth about $100,000 more than that.  "My heart was pumping, my face got red, I was nervous," he told me of the bidding process.  The house was an investment, he said.  And though he's owned other investment properties before, he said this is the only one he'll have now..  "I try not to be greedy," he laughed, as he headed east on 42nd Street. 

Last Friday I was in Fort Meyers, Fla., shooting a piece on the foreclosure court there. Watch the report, which we crashed for air Friday night:

Toward the end, the real estate agent we interviewed started telling me how the government is responsible for the mortgage mess because it forced banks to lend to people who really couldn't afford their homes. Through the use of clever editing, you don't see the steam bursting from my ears or the top of my head blowing off.

Why? Because hearing this kind of nonsense just makes me crazy. The government FORCED banks to make risky loans? To become greedy? To start selling mortgage "products"?!

No. No. And no again. Where do people get these ideas? Never mind.

I kept my cool during the interview, but afterward in the "two-shots" (TV talk for the wide establishing shot), I let that poor guy have it. He's into the Kool-Aid on this subject, and needed schooling. I delivered an on-the-spot lecture, then e-mailed him this superb article from the Sunday Baltimore Sun on the anatomy of a bank failure.

Imagine this bank multiplied MILLIONS of times across the country during the housing bubble and you will begin to comprehend the origins, scope and magnitude of the problem. Just so you know, I recognize that the home buyer in the article who filed suit should have known he could not afford that house, so he's as much to blame as the bank. But Suburban Federal was not doing the government's bidding in making that loan.

Read, please, and then let's discuss.