The Housing Bubble

It’s Friday desk clearing time for this blogger. “By all indicators, Treasure Coast housing values continue to fall. At last, property appraisers are tumbling to that fact. After reporting increased valuations for 2006, local appraisers calculate that total assessed values finally declined in 2007. Welcome to our world.”

“When asked to explain why values in Port St. Lucie (down 19.7 percent) and Sebastian (off 14 percent) were particularly hard hit, Indian River County Property Appraiser Dave Nolte pointed to their disproportionately large percentage of General Development communities.”

“‘They were sold to a lot of absentee buyers who didn’t know what they were getting into (i.e., inflated prices),’ he said.”

“Analysts also say ’shadow inventory” must be factored in. So thousands more for-sale signs are just waiting to sprout. Property appraisers may say such data don’t enter into their calculations. Have our government officials repealed the law of supply and demand? Obviously not.”

“Two years after the height of the real estate boom, the slow housing market may finally be catching up to the Nashville area as the number of homes on the market here grows and prices drop. Much of the price-cutting that has occurred has been from homebuilders, who are under pressure to reduce inventory, said Mark Dobberstein, a broker in Murfreesboro.”

“‘When de mand was larger than supply, it could have a few warts and it was still sellable,’ he said. ‘Now it needs to be market-ready.’”

“Atlanta real estate agents trying to weather the slumping market by selling foreclosures have run into an unexpected problem. City code inspectors have begun ticketing some listing agents, holding them liable for code violations on run-down properties they are selling, often for out-of-state institutions.”

“‘Realtors are hurting right now,’ said Rick Hale, a Midtown agent who represents lenders with properties in some of Atlanta’s toughest neighborhoods. ‘This is not cool. They think we are just going to get reimbursed. But it doesn’t work that way. They are going to ruin some careers over this.’”

“The Strafford County real estate activity figures for the first six months of 2008 have been released, and show that the upward trend in property foreclosures continues. Bill Cormier of Hourihane and Cormier, while describing the housing market as ‘challenging,’ also said his company had experienced a pickup in activity in June, over May. He also noted that even in the downturn, they were moving three to six properties each week.”

“‘I continue to be bullish. This is a great real estate market for buyers. Prices have dropped 20 to 25 percent, and my belief is, as we head into the fall and the election that we will see people take advantage. Now there is affordable housing all over the place,’ said Cormier.”

“After years of favourable conditions for home sellers, the North Shore real estate market appears to be giving buyers the upper hand, according to a new report issued by the Real Estate Board of Greater Vancouver. Although housing prices, on a year-over-year comparison, continue to show single-digit percentage increases, we are beginning to see more price reductions in properties listed on the market today,’ David Watt, president of the Greater Vancouver Real Estate Board, said in a press release.”

“However, lower listing prices do not mean that home prices are decreasing, he explained in an interview. ‘It’s not even that prices have gone down, it’s just that they aren’t marked up,’ he said.”

“Is eight really enough? How about way too much? If you’re a spin-happy Minneapolis realtor, it’s not so bad. According to the Minneapolis Area Association of Realtors, the Twin Cities now has 8.11 homes for sale for every buyer.”

“In a July 2 post on the MAAR blog, one realtor claims we ‘appear ready’ to experience a rebound. ‘We are justified in celebrating the encouraging signs, but the housing market continues to face a variety of challenges-a large oversupply of homes for sale, lender-mediated property sales, tightened lending standards, tepid buyer activity, weakened home prices and home owners in positions of negative equity, among other grimace-inducing factors,’ he writes. ‘These challenges will thwart a quick rebound from our current conditions and make the road back to a balanced market a long and gradual journey. The encouraging news today is we appear ready to begin the return journey.’”

“Of course, who isn’t ready to ‘begin the journey,’ with homes sitting on the market for 159 days, negative equity becoming a major issue for many homeowners who didn’t put 20 percent down, and renting becoming a more money-wise option than buying in the Twin Cities?”

“A shrinking residential market has real estate agents asking the City of Northlake for help. Two months ago Susan Maher of ReMax/Regency in Franklin Park asked Mayor Jeff Sherwin if the city could suspend its ban on putting open house signs on sidewalks or parkways.”

“The residential real estate market has slowed down, although Maher said there are still buyers. ‘The whole market, not just Northlake, has slowed up because of funding issues,’ Maher said. ‘Everything was on a boom because (lenders) were just giving away loans.’”

“U.S. banks are merging at the slowest pace in at least 15 years as the mortgage-market collapse depletes capital and makes lenders wary of buying firms saddled with bad loans. ‘Why would you want to buy somebody else’s problems when you’re still trying to figure out what your own are?’ Robert Patten, a New York-based analyst said. ‘Banks don’t know when the next guy is going to walk in and hand them the keys for a place.’”

“The company that for years brought hundreds, if not thousands, of people to Bella Vista in hopes of selling them a piece of the ‘village’ has gone out of business. National Recreational Properties Inc., with an office in the Village Center along Arkansas Highway 340, ceased operating in the city last week, according to a woman still on the payroll.”

“NRPI was known for its late-night cable commercials starring former TV star Erik Estrada, who tried to sell lots mainly to retirees.”

“The company will continue to offer its approximately 2, 000 Bella Vista lots through its offices on the West Coast as best it can, he said. ‘As the owner and seller of properties, we’ll entertain anyone interested,’ said Joe Joffrion, executive vice president and chief legal officer for NRPI in California, adding there probably won’t be much in the way of offers.”

“At 23, Adrienne Dodge didn’t think she’d be able to buy a house, but the fourth-grade teacher at Lakewood Elementary School closed on her new home last week. Dodge is one of 170 teachers who were given home loans and help with closing costs on new homes through a joint effort of the S.C. Department of Education and the State Housing Finance and Development Authority.”

“‘Just being a first-year teacher with a car payment, etc., I was just looking to rent,’ said Dodge, who bought a condo close to Lakewood Elementary School. ‘But this is just awesome. The money I would have been spending on rent is going toward something I own.’”

“JoLea Wegner, a math teacher at Socastee High School, also didn’t think she’d be able to buy a home any time soon.’I couldn’t have gotten a home loan without this program because my salary as a single parent is just too low,’ Wegner said.”

“‘I own a home here now. I am definitely tied to the area,’ she said.”

“Having studied America’s mortgage meltdown and the parties who struck the match, it’s hard to resist cheering the reckoning for Countrywide Financial Corp. Already, the nation’s largest home lender was under federal investigation for fraud, as executives allegedly understated the risks of investing in mortgage-backed securities.”

“It was reported that former CEO Angelo Mozilo - who cashed out as his company tanked - had cut special home loans for members of Congress.”

“Of course, Countrywide’s comeuppance is nothing to celebrate, since its senior managers dragged down so much with them. Still, it’s refreshing to see prosecutors pursuing alleged corporate abuses with vigor.”

“While some out there are eager to place the blame for the nation’s economic woes on ill-informed borrowers, in fact it’s a two-way street. Private lending institutions got in on the game, too, seeing securitization as a way to off-load loan risk onto investors.”

“Wall Street, meanwhile, salivated over the potential yield from securities backed by ‘nonconforming’ loans. Lenders were happy to oblige by originating these risky loans.”

“When they couldn’t pay … well, you know the rest. This cautionary tale of alleged greed trumping responsible lending practices is one for the books.”

The Journal News reports from New York. “You needn’t tell Paul Meda that the housing market in Rockland County has slowed to nearly a crawl in recent years. That’s because Meda and his wife, Maria, have been trying to sell their four-bedroom, 2 1/2 bath bilevel for about two years. ‘We’ve actually had offers on it,’ said Paul Meda, a retired police officer who now works in South Plainfield, N.J., managing commercial construction projects.”

“But the offers, often made by novice home buyers who think it’s still possible to get a loan for 100 percent of the purchase price, have fallen through, he said. Having initially listed their 1,900-square-foot Inland Road home for $469,900, the couple have since lowered the price to $411,900.”

“The inability to sell has put the Medas in a pinch, since they can’t afford to buy another house, one that’s closer to his work, until they sell this one. ‘If we get a signed deal, we’ll start looking right away,’ he said.”

“Data released yesterday showed the median price for a single-family home fell 10.2 percent to $453,500 in the second quarter - typically the busiest of the year, down from $505,000 a year ago, according to data compiled by the Greater Hudson Valley MLS.”

“During the three months ending June 30, transactions fell nearly 29 percent to 280, from 393 in the quarter last year. For the first time in recent history, the inventory of unsold homes in Rockland surpassed one year, according to an analysis by The Journal News.”

“Given the current number of unsold homes and rate of sales, it would take 16.2 months to clear the county’s inventory.”

“In neighboring Orange County, the median price for a single-family home fell 6.2 percent to $300,000 from $319,900 last year; the number of units sold in the quarter fell 28 percent. The data revealed it would take nearly 19 months to sell all of the homes that are on the market in Orange County, given current inventory levels and pace of sales.”

“Though median prices fell just 1.9 percent in Rockland and 1.4 percent in Orange, the number of condo units sold in Rockland fell 42 percent. ‘At this point in time, we’re still not seeing a recovery in the market,’ said Ann Garti, CEO of the Greater Hudson Valley MLS.”

“Marsha Rand, founder and chairwoman of Prudential Rand Realty, which has 19 offices in Rockland, Orange and Westchester, said until home prices come down further in Rockland, sales won’t improve. Rockland may have experienced a greater inflationary push on home prices than other nearby counties, she said.”

“‘Therefore, we may have to correct a little bit more,’ she said.”

The Poughkeepsie Journal. “June home sales were down for both Dutchess and Ulster counties compared to a year ago, new reports show. In a year-to-year comparison, June sales fell 26 percent in Dutchess and 44 percent in Ulster. Dutchess prices were down, too, versus June 2007.”

“Average home selling prices in Dutchess dropped by 13 percent for single-family free-standing homes, from $409,828 to $357,303. Condominium, co-op and townhouse average prices decreased 7 percent, from $235,240 to $219,916, according to the Mid-Hudson MLS.”

“‘I do see a cause for optimism through opportunity because … the price of the sold home appears to be moving more in concert with the financial position of our buyers,’ said Sandy Tambone, executive officer with the Poughkeepsie-based listing service.”

“Anne Rajs, a Realtor in New Paltz, acknowledged the economy, fuel prices and the uncertainty of an election year may be factoring into home purchasing decisions.”

“The mid-range homes between $350,000 and $700,000 aren’t attracting people who normally want to trade up, she said. ‘Those people are being much more careful about what they do.’”

CNN Money on New York. “Only weeks after moving into their first home in 2006, Margarita Rios celebrated Christmas with her two daughters and their families. They finally had the room to do it right, with decorations outside the Valley Stream, N.Y., house and a nice tree surrounded by presents inside.”

“Christmas 2008, however, is shaping up to be a nightmare. No decorations. No tree. No house.”

“In February, faced with an unexpected jump in her monthly mortgage bill, Rios stopped making payments and abandoned the home, shattering her life and scattering her family.”

“She and her new husband moved into a tiny rental apartment in Brooklyn and are trying to negotiate with the bank to sell the house without foreclosing. One daughter relocated to Queens, while the other is heading back to Mexico with her three children to escape New York’s high cost of living.”

“Rios knew when she bought the house she’d have to skimp to make the mortgage payments. But she felt it was worth it.”

“‘It was a sacrifice but at least we’d have a home,’ said Rios, who spoke through a translator.”

“But counselors at the Nassau County Homeownership Center, to whom she turned for help in January, said they’ve seen cases like Rios’ too many times in recent years. ‘That type of loan should never have been made,’ said Haydee Rosario, a homeownership counselor at the center.”

“Rios was the owner of a $489,000 four-bedroom home. With her daughters each paying $1,500, she could cover the remaining $1,100. The real estate agent said she could refinance within two years and lower her payments.”

“Instead, the opposite happened. This past January, the monthly payments jumped to nearly $4,400, overwhelming the family. They were already struggling to make the payments and even a $300 increase was too much to bear.”

“Though it was difficult for her to accept, Rios decided to let the home go. ‘We just couldn’t do it,’ said Rios. ‘It was taking everything we had. It was just too much.’”

Bloomberg on New York. “Brooklyn apartment and townhouse sales fell 44 percent in the second quarter from a year earlier and prices dropped 1.9 percent. The median sales price declined to $525,000 from $535,000 in New York City’s most populous borough. The number of sales fell to 2,031 from 3,601, property appraiser Miller Samuel Inc. said in a report.”

“Brooklyn is experiencing a wave of new condo development as Manhattan prices have more than tripled over the last 10 years. The median price in Brooklyn is about half the $1.03 million median in Manhattan. New developments comprised more than half of all condominium sales in the borough.”

“Six out of every 10 banks raised standards for home loans to their most creditworthy borrowers in the first quarter, according to a Federal Reserve survey of senior loan officers. The property market in New York City is also slowing as financial firms cut almost 90,000 jobs after taking more than $400 billion in mortgage-related losses and writedowns.”

The Westport Minuteman from Connecticut. “John Gerlach, associate professor of finance at Sacred Heart University, a co-owner of a wine shoppe in Fairfield, recently advertised for a part-time sales job that drew 45 resumes - two with Masters Degrees and 17 college graduates.”

“‘There will probably be the loss of more jobs around here,’ Gerlach said. ‘As the part owner of a liquor store, we received forty-five resumes. It shows what the employment market is like in Connecticut now. Many of our graduates (Sacred Heart University) are not finding jobs. Last year, many had two and three offers.’”

“Gina Picon, owner of Chic Mommy in Westport, is weathering a significant reduction in customer spending. A maternity boutique, Chic Mommy had developed a growing customer base over six years, but Picon fears the slumping economy is tightening her customer’s purse strings.”

“‘We’re in a recession. We see it. People are not shopping like before,’ Picon said. ‘Many of my customer’s husbands work in the stock market and financial institutions. The wives are watching what they spend.’”

The Patriot News from Pennsylvania. “The midstate housing market still favors buyers. The nearly 4,500 homes listed for sale at the end of the second quarter are the most since before 2000, said John Andrews, a real estate agent in Lemoyne. Houses are taking longer to sell, according to Central Penn Multi-List. That means buyers can be more aggressive with haggling, Andrews said.”

“That wasn’t the case during the housing boom, when fewer homes were on the market. They sold fast — often within weeks — and prices were rising so fast that buyers felt they had to pay whatever a seller demanded.”

“‘Buyers are more particular,’ said Michael B. Yingling, a broker in West Hanover Twp. ‘A couple [of] years ago, if the house needed to be painted, [the buyer] would take it because it may not be on the market long. Now they want it painted and in move-in condition.’”

“Building permits approved in the Harrisburg area have returned to the 2002 level of 1,200 a year, from an annual pace of 1,600 in 2004 and 2005. About 500 fewer homes sold in the midstate in the second quarter of 2008 than in 2007.”

“‘The market is going to get softer. By the end of the year, you will see prices start to dip. This inventory can’t continue to grow [and not] result in lower prices,’ Andrews said.”

“Ryan T. Riley, 23, said he was able to get a good deal after he qualified for a 30-year fixed-rate at 5.95 percent. He bought a rehabilitated house in midtown Harrisburg for $140,000, despite having never owned a home and having just one year of employment.”

“The seller, WCI Partners, will pay Riley’s closing costs. His mortgage company will cover the down payment — an incentive offered to first-time homebuyers. His only concern is that if he had to sell in the next year or so, he might not get $140,000.”

“But he said he is confident that after two or three years, midtown home values will be much higher. ‘I found this to be an advantageous time to buy,’ Riley said. ‘There are mortgage brokers who need clients and need jobs. I think they find creative ways to make it work.’”

Please post off-topic ideas, links and Cragislist finds here.