The troubles facing most Seattle-area landlords are more like a Puget Sound drizzle than the stormy skies swirling around markets such as Phoenix or Orange County, Calif.

Certainly the economic turmoil buffeting the nation's property markets has touched Seattle. The area's median home prices are falling, and average commercial rent gains are slowing. The volume of large office, retail and warehouse sales has dropped dramatically this year, according to Real Capital Analytics. The area's job growth slipped to 2.3% in July, down from 3% in the year-earlier month, according to the Bureau of Labor Statistics.

DETROIT -- The faded elegance of this city's Boston-Edison neighborhood, once the home of Henry Ford, has survived white flight, the 1967 riots that destroyed nearby shops, and the long decay of the U.S. auto industry. But three years ago, residents started noticing a disturbing trend: More and more of the stately homes were vacant.

A buyer who agreed to pay $53.5 million for two penthouse condominiums in New York's Plaza Hotel sued developer El-Ad Properties NY LLC for fraud, seeking a refund of his $10.7 million deposit and more than $20 million in damages.

The lawsuit, filed Sept. 5 in New York State Supreme Court, is one of the highest-profile examples of the mushrooming legal actions by condo buyers throughout the country because of the collapse of home values. Until recently, Manhattan's luxury-condo market was relatively unscathed by the crisis, but it is beginning to show signs of stress.

In the library of her 5,800-square-foot house in Glen Cove, N.Y., Linda Teitelbaum keeps trophies from dog shows, needlepoint pillows of bulldogs and gold-framed photos of family. Though the plaid-papered room has a scattering of books, she often retreats to it not just to read but to remember the dogs she used to breed, to nap, or to get away from the TV. "It's my veg-out room," Ms. Teitelbaum says.

Reading rates are down and Americans say they love casual living. And yet, one of the most popular rooms in big new houses is a library. Rather than being about books, their appeal is often about creating a certain ambiance. "Libraries connote elegance and quality," says New York architect and interior designer Campion Platt, adding that most of his wealthy clients want one, even if they do most of their reading online.

When Richard Rainwater, the renowned Texas investor, sold Crescent Real Estate Equities Co. to Morgan Stanley for $2.78 billion early last year, some Crescent shareholders complained the price was too low.

Now it looks like Morgan Stanley's shareholders are the ones who should have been griping.

Morgan Stanley, one of the largest real-estate investors among Wall Street firms, originally planned to put Crescent's office buildings, resorts, housing projects and other properties in one of the real-estate funds it manages for institutions and wealthy individuals. But the firm decided to keep what is now $4.6 billion of assets on its balance sheet instead, exposing Morgan Stanley to potential losses. The company didn't disclose the value of the assets at the time, but the overall deal was valued at $6.5 billion, including the assumption of $3.1 billion of debt.

The number of homes listed for sale declined in many metropolitan markets last month.

The supply of homes available for sale in 29 major metropolitan areas in August was down 2.6% from a month earlier, according to figures compiled by ZipRealty Inc., a real-estate brokerage firm based in Emeryville, Calif. The ZipRealty data cover all listings of single-family homes, condominiums and town houses on local multiple-listing services in metro areas where the firm operates.

With Florida awash in tens of thousands of empty or unfinished condominiums, many investors there are turning to the courts in an effort to cancel their contracts and recoup their deposits.

So far, they haven't had much luck.

I wish I felt like joining the party that sent the Dow Jones Industrial Average up nearly 300 points on Monday on news of the Treasury plan to put mortgage giants Fannie Mae and Freddie Mac into a "conservatorship."

Not that I disagree with Treasury Secretary Henry Paulson's approach. People can and will argue about the details, such as whether the huge government-sponsored mortgage companies should have been put into receivership, wiping out shareholders, rather than being allowed to linger on as New York Stock Exchange-traded companies trading like penny stocks. But the important thing is that decisive action was taken.

The beaten-down stocks of commercial real-estate companies initially got a big boost in response to the government's decision to take over mortgage giants Fannie Mae and Freddie Mac. But that excitement started to quiet after investors began to contemplate the long-term outlook.

Investors had pushed up the stocks of real-estate investment trusts on Friday and Monday as the federal government moved to stabilize the reeling agencies. The Dow Jones Equity REIT Index -- which tracks the stock of 116 REITs -- gained nearly 4.7% from Thursday's close to Monday's after a 10.9% drop in the previous year. But the index retreated by 4.1% on Tuesday as investors started fretting about Fannie and Freddie perhaps scaling back their mortgage portfolios under the government's watch.

Shopping-mall owners have struggled this year with a darkening economy, slowing consumer spending and store closings by retailers. But they face another problem that may persist long after the economy bounces back: a decade of overbuilding.

LODZ, Poland -- In 1990, Jacek Szwajcowski disregarded the advice of friends and gave up a prospering engineering business to invest €3,000 of his own money in his mother-in-law's pharmacy.

Soon he was supplying a handful of local pharmacies in Lodz (pronounced "Wootch") with medicines and his wholesale pharmaceuticals business was born. Today he is running a 4.4 billion-zloty ($1.92 billion) wholesale and retail pharmacy business with a 20% share of the Polish market. As Polska Grupa Farmaceutyczna SA grew, he built 12 distribution centers throughout Poland. Now he is about to expand into Central and Eastern Europe.

The rate of U.S. home mortgages overdue or in foreclosure rose again in the second quarter as housing markets weakened, particularly in California and Florida, and more borrowers defaulted on so-called prime loans.

Among mortgages on one- to four-family homes, 9.16% were at least a month overdue or in the foreclosure process in the second quarter, according to the latest survey by the Mortgage Bankers Association, a trade group. That is up from 6.52% a year earlier and is the highest level since the MBA began such surveys 39 years ago.

Andre LeBel knew he had come home when he walked into a bar in St. Petersburg, Fla., ordered a Bloody Caesar and the bartender made it without cocking an eyebrow.

The spicy drink -- a blend of vodka, Tabasco, Worcestershire sauce and tomato and clam juices -- is popular in his native Canada, but until recently it was virtually unknown elsewhere. That was before Canadians started to snap up property in the U.S., drawn by the buying power of the newly strong Canadian dollar and the depressed prices of American real estate. The largest proportion of foreign buyers of U.S. homes from May 2007 to May 2008 -- 24% -- were Canadian, double the percentage a year earlier, according to a recent report by the National Association of Realtors. (See today's House Talk column for tips on how to attract Canadian buyers.)

After a couple of years of falling home prices, homeowners are understandably nervous about how they can protect what for most is their biggest asset.

For investors in stocks and bonds, successful strategies to combat the ups and downs of the marketplace are fairly straightforward. Have a diversified portfolio to balance risk, be disciplined about consistently saving money and don't chase returns or the latest fad.

Homeowners face a trickier landscape. Diversification, for one, isn't really possible. Owning ten homes, besides being very expensive, just multiplies the trouble in a falling market. Also, buying and selling homes isn't as easy as buying and selling mutual funds or shares.

Residential Capital LLC hopes a $1 billion facelift will revive the struggling mortgage lender.

But the nips and tucks -- including cutting jobs, closing offices and exiting from business lines -- will sharply curtail ResCap's ability to lend and its potential to earn money.

ResCap's plan to slash expenses, announced Wednesday, could lead to savings of $1 billion each year starting in 2009, according to a company official. In 2007, it had total expenses of $3.86 billion, so a reduction of $1 billion would shave more than a quarter off ResCap's noninterest costs -- an ambitious goal.

Residential Capital LLC hopes a $1 billion facelift will revive the struggling mortgage lender.

But the nips and tucks -- including cutting jobs, closing offices and exiting from business lines -- will sharply curtail ResCap's ability to lend and its potential to earn money.

ResCap's plan to slash expenses, announced Wednesday, could lead to savings of $1 billion each year starting in 2009, according to a company official. In 2007, it had total expenses of $3.86 billion, so a reduction of $1 billion would shave more than a quarter off ResCap's noninterest costs -- an ambitious goal.

A Very Recession-Like Employment Report

The unemployment rate jumped 0.4 percentage points to 6.1 percent in August, which is the highest it has been since September 2003. Legislative changes may be causing the unemployment rate to be slightly overstated but there is no denying the labor market is deteriorating. Nonfarm employment fell 84,000 during the month.

Extended Unemployment Benefits May Be Boosting The Jobless Rate

The unemployment rate jumped 0.4 percentage points in August, which was much worse than expected. The increase results from a 342,000 job drop in household employment and a 250,000 person rise in the civilian labor force. While the household numbers move around quite a bit, the recent increase in the labor force looks suspicious. The labor force normally declines when labor market conditions deteriorate. The extension of unemployment claims benefits may be causing a larger number of people than usual to state they are unemployed because this allows them to receive extended benefits. Jobseekers may also be lengthening their job search a bit. If the labor force had remained unchanged in August, the unemployment rate would have risen just 0.2 percentage points to 5.9 percent.

NFP Signals the Start of a Recession Currency Pair Overview

Overall: Friday's non-farm payrolls report showed that the unemployment rate (6.1%) jumped to the highest in five years, and the rate of unemployment excluding 16 to 19 year olds rose to 5.8%. The economy has now lost 605,000 jobs in 2008. The number of unemployed has risen by 2.24 million over the past 12 months and the 1.4% increase in unemployment over that time is the highest in the post World War II period. The report also showed that the private sector shed 101,000 in August.

Toll Brothers Inc. swung to a fiscal-third-quarter net loss as the U.S. housing-market declines led to more write-downs for the builder and sales continued to fall.

Home builders have written off billions of dollars of land and land options bought before the housing market cracked. Toll Brothers recorded $139.4 million in write-downs during the quarter ended July 31.

Two NBA All-Stars who listed their houses last year have cut their prices -- Allen Iverson by 37% in the Philadelphia area, Rasheed Wallace by 6% in Portland, Ore.

Long & Foster Denver Nuggets guard Allen Iverson has cut the price of his 14,000-square-foot, six-bedroom home in Villanova, Pa., by 37% to $4 million. Iverson put the home on the market last year.

Starwood Hotels & Resorts Worldwide Inc.'s high-end St. Regis brand will make its first appearance on the Las Vegas Strip as part of a deal in which Starwood will manage a luxury condominium development for Las Vegas Sands Corp.

Could CVS Caremark's pending $2.61 billion purchase of Longs Drug Stores come undone?

Dissident shareholders hope so, having intensified their campaign to disrupt the deal just as the proceedings hit the home stretch. Their potential wedge is the value of Longs' real estate.

Longs' largest stakeholder, the hedge fund Advisory Research, has renewed calls for the Walnut Creek, Calif., drugstore chain to release details about its real-estate holdings. Longs owns as much as 20% of its 500 stores, and where it doesn't own, it holds long-term leases struck long before real-estate prices boomed. Its stores also are in high-traffic areas, such as town centers.

The Subprime Solution By Robert J. Shiller (Princeton University Press, 196 pages, $16.95)

In recent times, investment bankers have used "financial engineering" to design ever more complicated ways to manage risk. Such efforts, though, helped to bring about the current mortgage-default debacle: Bankers, overestimating the powers of their own sorcery, deluded money managers into thinking that there were safe ways to invest in subprime home loans, even the ones granted to flagrant deadbeats at the peak of a housing bubble.

Lehman Brothers Holdings Inc., trying to shore up its balance sheet, has settled on a structure that will allow it to offload billions of dollars in real-estate loans from its books.

The Wall Street firm run by Chief Executive Officer Richard Fuld is still hammering out the final details and it isn't clear when a plan will be unveiled. One sticking point: finding financing in this cash-strapped environment for a spinoff or sale of these assets.

LONDON -- The U.K. government is planning to unveil Tuesday plans to help homeowners facing repossessions as well as first-time buyers as it seeks to mitigate the impact of the economic downturn.

The government will take a bigger role as the landlord to the country's poorest households for the first time since Margaret Thatcher, in a landmark move, began allowing low-income households to buy previously public housing. Expanding on plans announced earlier this year, the government is now prepared to buy housing and rent it back to tenants; lend money to people to buy homes; and build more homes, a spokesman for the Department for Communities and Local Government said.

Gulfport, Miss., like the rest of the state's Gulf coast, was spared the full fury of Hurricane Gustav. It's also showing new signs of recovering from Katrina, which pulled no punches when it slammed into the region three years ago.

NEW YORK -- Fannie Mae and Freddie Mac are demanding higher returns from lenders in exchange for buying loans that help finance rental-apartment buildings, as the two mortgage-finance giants expand in the sector.

The rate increases, the most recent of which came in the past week, are attributable to generally higher borrowing costs and efforts by companies to maximize gains from the sole bright spot in their portfolios.

Fannie and its smaller rival, Freddie, have recorded combined losses of about $14 billion in the past four quarters from soaring defaults on single-family-home mortgages. Those losses are expected to continue for at least another few quarters, and some analysts don't think the companies will return to the black before 2011.

Seeking views, Sara Antani bought a 17th-floor condo last August in a new Manhattan high-rise with floor-to-ceiling windows overlooking the Hudson River.

Glen DiCrocco The sun faded Sara Antani's sofas and made it tough to read her laptop until she installed shades in her Manhattan high-rise.

SHANGHAI -- In a big bet on China's post-Olympics economy, Japanese developer Minoru Mori opened the country's tallest skyscraper in a challenging environment.

Fannie Mae shook up its senior management in a move it said was designed to drive the mortgage company's efforts to conserve capital and contain a surge in costs stemming from defaults by homeowners.

WASHINGTON -- Federal bank regulators said they believe a plunge in the preferred shares of Fannie Mae and Freddie Mac would have limited impact through the banking system.