A Frenzy Of Overbuilding That Was Bound To Slow Down
The Mail Tribune reports from Oregon. “Sales of existing homes in Jackson County for the last quarter of 2008 held steady when compared to a year ago, with notable increases in Central Point, Eagle Point and White City. But prices continued to trend downward. New home sales countywide dropped considerably, from 56 in 2007 to 21 in 2008. Steve Blanton, SOMLS CEO, issued the report with an upbeat note, saying the statistics give ‘reason for hope’ because buyers are being enticed by a market that shows double-digit percentage decreases in median price, combined with historic lows in interest rates.”
“‘It is a great time to be a buyer. Essentially, housing is on sale right now,’ he said.”
“Showing the biggest drop in median price for existing homes from a year ago was Jacksonville at 37.4 percent. The median price was $280,000 in late 2008 compared to $447,500 a year ago. However, these figures are based on a small number of sales — only 11 homes — and shouldn’t be interpreted as a significant trend, said broker Colin Mullane in Ashland, spokesman for the SOMLS statistical committee.”
“West Medford posted a decline of 23.4 percent, with median price dropping from $197,000 to $151,000. This figure is about the same as five years ago, the report said. East Medford dropped 14 percent from $256,250 a year ago to $220,000 now. Ashland, the most expensive town in the county, put in a comparatively good showing, with median prices dropping only 12.2 percent, down from $419,000 a year ago to $368,000 now.”
“Longtime housing sales statistician and appraiser Roy Wright, who also puts out quarterly charts, was optimistic about the outlook for 2009. ‘If all goes well and no more crises show up, we’ll see real improvement in the first and second quarters,’ Wright said. ‘I think there will be a marked improvement by April if interest rates don’t go wildly upward and unemployment doesn’t increase.’”
“The worst year for housing starts in post-World War II America led the Boise, Idaho, wood products firm to announce it will close the Antelope Road plant and lay off 110 workers on March 13.’Personally, I never thought we’d see anything as significant as the early 1980s,’ said Bob Smith, human resources manager for Boise Cascade’s Western Oregon Region, referring to the last deep recession. ‘But I think we’re now in a down cycle that is worse.’”
The Missoulian from Montana. “Within the last 12 months, the national housing market tanked, unemployment rose and economists declared a recession. Here, the number of construction projects going up has slowed. A December permit report from the Missoula Building Inspection Division puts the value of new construction this fiscal year at roughly $36 million. That’s compares with some $61 million the same time last year.”
“‘Quantity is just down year over year for everybody,’ said Adam McQuiston, president of First National Bank of Montana.”
“Nearly 150 employees are being laid off at Montana lumber mills by Plum Creek Timber Co., bringing total recent job losses at the company to more than 250. They are the latest in a long string of northwest Montana layoffs, which since summer have affected the mining, manufacturing, high-tech, construction and retail industries.”
“‘What we have,’ said company spokeswoman Kathy Budinick, ‘are some really unprecedented conditions in the housing sector. Housing starts have just collapsed.’”
The Columbian from Washington. “A call center business that plans to open a Vancouver operation this month took in more than 800 applications during a Tuesday job fair. The event was held…to fill between 20 to 30 positions. Call center job wages are between $10 and $12 per hour.”
“Clark County’s home building downturn was worse last year than in other parts of the state. From January through December, only 592 permits were issued to build single-family homes in unincorporated Clark County, down from 1,245 permit in 2007. Permits issued in 2008 were worth an estimated total of $130.4 million, down by nearly 50 percent from the $250.8 million in 2007. That means the local economy — builders, subcontractors, lumber and electrical suppliers, plumbers and dry wall crews — took at least a $120.4 million hit.”
“Subdivision builders took full advantage of Clark County’s desirable proximity to Portland’s job market, which led to a frenzy of overbuilding that was bound to slow down, said Brett Bryant, executive vice president of Vancouver-based First Independent Bank. ‘It’s important to realize that past housing markets were artificially inflated,’ he said, perhaps more so than in other parts of the state.”
The Olympian from Washington. “The number of Thurston County homes newly listed for sale rose 13 percent in December 2008 compared with December 2007, a possible sign that more foreclosed properties were coming on to the market, according to Northwest MLS data. The data show that 216 homes were listed for sale in December 2008, up from 191 in December 2007. Although December listings were higher, year-over-year sales fell 33.8 percent to 174 units from 263 units, combined condominium and single-family home data show.”
“Thurston County Realtors Association President Mark Steves said the increase could be a sign that more bank-owned properties were put up for sale, or that more homeowners in foreclosure were forced to sell their houses.”
“Also promising is that inventory levels continue to fall, combined data show. Total active listings for December fell 5 percent to 1,652 units from 1,739 units year over year. Having fewer homes being sold should help the housing market, he said. When there are more homes on the market, ‘buyers don’t have a sense of urgency to write a (purchase) offer’ because there is so much to choose from, Steves said.”
“Thurston County is home to 1,041 real estate agents and brokers who do business here, said state Department of Licensing spokeswoman Christine Anthony. Based on December’s 174 home sales, that’s one transaction for every 5.9 real estate professionals, according to licensing data.”
The Seattle PI from Washington. “Seattle planners are reviewing about 150 master-use permit applications that are large enough to require city design review, but pretty much none has a hope of getting construction funding in today’s market. ‘Right now, there’s nothing available to finance projects,’ Seattle developer William Justen said.”
“Lower construction costs will make it easier for developers to adapt to the current market by offering more affordable apartments and condos, rather than aiming for the high end, said Leslie Williams, president of Williams Marketing, a Seattle firm that works with developers. ‘In the past 12 to 18 months we’ve been pushing for smaller condos, more price-conscious.’”
“The lack of new projects breaking ground now will lead to a shortage, predicted Blaine Weber, a Seattle architect with a dozen high-rise buildings in some stage of the development process. ‘At some point in the next couple of years, we’re going to see a fairly serious lack of supply.’”
CanWest News Service from Canada. “The Canadian housing market is cooling but is not facing a U.S. style meltdown, builders here say. ‘A few commentators have drawn a parallel between the Canadian housing situation and the extreme difficulties in the housing market in the United States,’ the Canadian Homebuilders say in a report that dismisses such comparisons. ‘There is absolutely no merit in drawing such a parallel,’ it said in a report that contends the pace of housing construction in Canada is merely returning to a level that is consistent with underlying housing requirements following the boom of recent years.”
“‘The housing situation in Canada is totally different from that of the U.S.,’ it said. “There will be some price moderation in some markets, but there is nothing to suggest that housing markets in Canada are vulnerable to the oversupplies and plunging prices that characterize many markets in the U.S. We did not experience the same housing boom conditions that occurred in the U.S., and there is no reason to expect that we are in for the serious pain they are currently suffering,’ it said.”
“Michael Gregory, senior economist with BMO Capital Markets, said recently that ‘we won’t even come close’ to what is happening in the U.S. thanks to stronger employment and income growth here as well as banking system that ‘continues to make mortgages’ available to Canadian consumers.”
“But he cautioned that if unemployment rises in Canada, there will be a larger fallout for the domestic housing market. ‘Anyway you slice it, if you don’t have a job, you can’t get a mortgage and you can’t buy a house,’ Gregory said.”
The Province from Canada. “Earlier this week, Western Forest Products announced a further 720 layoffs on the coast. And Rick Jeffery, president of the Vancouver-based Coast Forest Products Association, believes more than 5,000 coastal forest workers are out of work. ‘2008 was the worst year on record for the B.C. forest industry in its history,’ Jeffery told me. ‘And 2009 is predicted to be even worse.’”
From News 1130 in Canada. “The latest issue of Maclean’s magazine has dire a prediction for the Canadian job market in 2009, with more than 250,000 job losses expected. The manufacturing sector will account for many of those job losses, but it’s not the only sector which will feel the pinch.
Maclean’s writer Jason Kirby spoke to economists about where they believe the job market will go this year. He says the exact figure for job losses in B.C. will depend on what happens to commodity prices and the housing sector. ‘We’ve got ten per cent of jobs in B.C. are tied to construction.’”
The Westerly News from Canada. “Most property owners in British Columbia will see identical or lower numbers on their property assessment notices compared to last year. Connie Fair, President and CEO of BC Assessment, said the move is in compliance with action taken by B.C. Premier Gordon Campbell at the beginning of November, 2008.”
“Acknowledging that real estate values have fallen since property assessments were done July 1, 2008, Campbell said he took the action ‘to help people cope with the turbulence in the housing industry.’”
Pique News Magazine from Canada. “While it still remains to be seen what municipal property tax rates will be this year, residents will at least be guaranteed that their share of the tax burden will stay the same or go down compared to last year. Pat Kelly, owner of the Whistler Real Estate Company, said the province did the right thing by freezing assessments.”
“‘I can only speak from my personal experience, and that is my property in Pemberton was assessed the same as the year before, as the provincial government outlined,’ he said. ‘The market situation didn’t change in that period of time between assessments, 2007 to 2008, and we’re getting the benefit of a lower assessment than we maybe would have seen in July 2008, when the market was still strong. What will be interesting is to see values when they’re taken again on July 1, 2009, given the economic challenges we’re facing.’”
“And while sales volume may be down, that could change — with mortgage rates and prices coming down, Kelly said, it’s a buyer’s market. Kelly pointed out that assessments are based on home sales, among other things, and that ‘price always follows volume.’ He says the volume of sales in Whistler is much lower now than the last two years and that he expects to see prices drop slightly in the next year.”
“‘Certainly we can expect to parallel the Vancouver experience right now, and right now the Vancouver Real Estate Board is saying sales are down about 35 per cent over last year,’ said Kelly.”
“In the past two years the median price of homes in Whistler has ranged from $1,045,000 in the fourth quarter of 2007 to $1,395,000 in the first quarter of 2008. What is interesting to note is the number of homes sold in Whistler in 2008 is down significantly. In 2007 there were 186 homes sold in Whistler, compared to 100 homes from January to October in 2008, the last month data was available last year. There were 58 homes sold from July to September 2007, compared to 26 in the same period of 2008.”
“In Squamish, the median price for homes increased from $433,500 in January to March 2007 to a high of $522,500 in April to June 2008. That median dropped to $499,000, as did the number of homes sold. From July to September 2007 there were 80 homes sold, compared to just 35 during the same period in 2008.”
“The situation was similar in Pemberton, although Jason Grant, Area Assessor for Vancouver Sea to Sky Region, says its hard to attach significance to the numbers because of the relatively few homes sold. From January to March 2007, the median price of homes was $430,000, increasing to a median of $575,000 from April to June 2008. The median dropped to $535,000 from July to September, while the volume of sales ranged from six homes to 18 homes per quarter.”
The Globe & Mail from Canada. “Greater Vancouver’s seven-year housing boom snapped in the middle of last year, with existing home sales falling by 35 per cent compared with 2007, according to 2008 year-end data from the Real Estate Board of Greater Vancouver.”
“Condo sales fell by 54 per cent in December from the year before, the largest drop in activity by housing type. Sales of attached properties fell by 50 per cent, and attached properties by 49 per cent. Sales of residential housing units, including detached, attached and apartment properties, fell to 24,626 compared with 38,050 in 2007. Property listings for the year rose by 14 per cent to 62,561, compared with 54,945 in 2007.”
“Benchmark prices for residential housing units have fallen by 11 per cent between December, 2007 and December, 2008, the report said. The slide started in May of last year. In the last eight months of 2008, the benchmark price for residential housing has fallen by 15 per cent in Greater Vancouver, to $484,211 from $568,411, the report said.”
“At the start of the boom in December, 2001, the price of a single-family, detached home in Greater Vancouver was $357,770. Despite the decline last year, that average price had risen to $648,421 in December, 2008.”
“‘Trends in the latter half of 2008 showed a consistent month-over-month decrease in residential housing prices, a departure from the rising home prices and record-breaking sales that were experienced in Greater Vancouver for much of this decade,’ Dave Watt, president of the real estate board, said in a statement.”
The Vancouver Sun from Canada. “Figures released Friday showing lower housing starts, building permit applications and job losses in construction indicate that British Columbia’s building boom is ending in the climate of recession and tougher economic times. Building-permit applications across B.C. in November dropped 29 per cent from October to hit a value of $607 million, the biggest decline among all provinces. Within that figure, Metro Vancouver builders took out $350 million worth of permits, a 22-per-cent decrease from October.”
“Keith Sashaw, president of the Vancouver Regional Construction Association, said the decline in permit applications is a reflection of difficult economic conditions overall, something the construction sector expects to continue until consumer and investor confidence recovers. ‘We are definitely in the downside of the cycle,’ Sashaw said. ‘However, the industry has come off a very robust and sustained period, and the current levels of [non-residential] construction are above where the industry was in mid 2006.’”
