A Full Player In The Downturn
A report from the Oregonian. “Oregon suffered its first bank failure in 17 years Friday afternoon when state regulators closed Pinnacle Bank, a small, one-office institution in Beaverton. Pinnacle is the third Northwest bank seized by regulators since September. The Bank of Clark County in Vancouver failed in January. In addition to Pinnacle, regulators on Friday closed banks based in Nebraska, Florida and Illinois, marking 13 failures this year of federally insured institutions. Cory Streisinger, director of the Oregon Department of Consumer and Business Services, declined to speculate whether Oregon will see additional bank failures.”
“‘We’re in an economic downturn,’ she said. ‘A number of Oregon banks have certainly felt the effect of the downturn in the housing market. Overall, Oregon community banks will come out of this downturn as a vibrant industry. But it’s not unusual to see a contraction.’”
The Yakima Herald Republic from Washington. “Yakima County home prices are continuing to fall. Median home resale prices in the fourth quarter of 2008 fell by almost 8 percent to $140,800 compared to the same period a year earlier, according to the Washington State University Center for Real Estate Research.”
“The resale price drop in Yakima closely tracked housing trends statewide. Among all counties in Washington, the media resale price dropped 9 percent. Kittitas County, which has higher housing values, was hit harder. The median resale price there declined 21 percent over the same period a year ago, to $215,000.”
“Rick Fairbrook, broker at John L. Scott Real Estate,said even with the struggles, now is a good time to buy a home because of federal tax credits, low interest rates and lower prices. It’s really a perfect storm for the buyer,’ he said.”
The Daily News from Washington. “Cowlitz County homes are selling for more than 10 less percent less than a year ago, prompting people to drop out of the market to wait for better times, according to area real estate agents and other sources. Linda Weaver, co-owner of Assist 2 Sell in Kelso, said she’s advising clients who don’t need to sell right away to pull their homes off the market for now. Buyers are ‘looking for the best deal they can get for the least amount of money,’ Weaver said.”
“Low-end homes are selling because sellers are dropping their prices to more “realistic” levels, she said. Also, buyers are having a hard time getting financing for more expensive homes as lenders tighten their standards, she said. ‘It’s harder to get loans. You’ve got to be on top of things,” Weaver said.”
The News Tribune from Washington. “Local real estate agents said the number of bank-owned properties and short sales on the market are keeping prices down and frustrating homeowners who want more for their properties. Some are choosing to wait and are taking their homes off the market. Bill Riley, owner of Gateway Real Estate in Puyallup, said his office is telling sellers that they need to be serious ‘because their competitor is either a bank or a short sale.’”
“On the other side, buyers are getting some great deals. Andrew Welch, managing broker for Windermere Port Orchard, said he just sold a 2,300-square-foot log home on 7 acres for $440,000. The sellers had bought it for $600,000 two years ago.”
“Pat Maddock, an agent with Coldwell Banker Bain, said he’s been busy the past month. He sold two homes on Super Bowl Sunday. But he’s keeping expectations realistic. ‘I resist counseling my clients that the market is getting hot … that the record-setting years are back. They are not, they are absolutely not. If we get back to a balanced market by this summer, that might be the best we can hope for,’ he said.”
The Canadian Press “The Canadian Real Estate Association said seasonally adjusted sales through the MLS were down 3.1 per cent from December. ‘In seasonally adjusted terms, sales … now stand at the lowest level since the mid-1990s and barely half the heated pace seen in early 2007,’ BMO Capital Markets economist Douglas Porter commented after the CREA release.”
“The ongoing sharp drop in home sales points to further declines in prices as well as a deeper pullback in new home building,’ he wrote. He noted that recent data included a six per cent annualized plunge in euro-zone fourth-quarter gross domestic product, an 84 per cent year-over-year drop in Japan’s machine tool orders, a 74,000 rise in British joblessness and a 43 per cent drop in Chinese imports.”
“‘There are also now daily indications that Canada is a full player in the downturn, he said.”
“Porter added sardonically that economic forecasting has become straightforward: ‘Whatever the indicator, and wherever the country, simply take the worst-case scenario your 21 models and/or your gut tells you, and then cut the figure by another couple orders of magnitude.’”
The Vancouver Sun “About 52 per cent of Canada’s largest markets reported a decline in house prices from January, 2008. Calgary was the worst hit, with prices down 11.4 per cent over the year, followed by an 8.8-per-cent drop in Vancouver, an 8.2-per-cent fall in Toronto.”
“Derek Holt, an economist at Scotia Capital said the supply of unsold homes on the market was still too high relative to demand, putting downwards pressure on prices. ‘The fact that Canadian consumer finances are at their most stressed point since the early 1990s recession adds to the downsides facing the consumer sector,’ Mr. Holt said.”
“When a developer shelves a 400-unit condominium project, he not only puts the trades out of work, he pulls the plug on 400 new kitchens and at least 600 new bathrooms. The ripple effect of slowing construction also spreads to suppliers of lumber, drywall, flooring, machinery, windows, cement, wiring, paint, landscaping services — even the catering truck that hauls sandwiches to the work sites.”
“About one in 10 jobs in British Columbia is related to the construction industry, according to Helmut Pastrick, chief economist with Vancouver-based Central 1 Credit Union. With B.C. building permits falling faster than the national average, that spells more layoffs in the year ahead — and perhaps beyond.”
“A survey last month by the Independent Contractors and Businesses Association shows 50 per cent of construction companies expect work levels to decline, while 38 per cent expect the amount of work to stay the same over the next year. ‘I like to say that I am optimistic about the future, but I am not,’ Paul Boileau, vice-chair of the B.C. Division of Canadian Manufacturers and Exporters, said in an interview. ‘I know the real estate guys are all trying to stabilize things by saying there is going to be a little dip and then there’s going to be a comeback. I really don’t believe it. I think it is going to be intense and long.’”
The Globe & Mail from Canada. “The plunge in oil prices…has sent buyers flocking to the East Coast and kept them far from Vancouver Island, where they had raced to buy investment property and weekend getaways in recent years. ‘My phone’s ringing left and right - and has been the last eight months - with people leaving Alberta and coming back here,’ said Terry Campbell, a Halifax-based agent who is so busy selling property that he hasn’t had a day off since New Year’s.”
“‘Everything’s very positive here. If we didn’t own TVs [to see the bad news elsewhere], we’d be just fine,’ he said.”
“Contrast that with Victoria, where real estate agents are lamenting the drying up of the Calgary gusher - one said one-fifth of his sales were to Albertans in past years - and some homeowners simply can’t sell. Take Dunstan Chicanot, who has spent a year trying to sell his waterfront property at Victoria’s Fisherman’s Wharf.”
“‘I have seals playing six feet from where I’m reading my newspaper,’ he told a reporter. ‘It’s as sweet as it gets. You should forget your story, get out here, buy the place and get on with your life.’”
“The fact that Mr. Chicanot’s home is a small houseboat already narrows the number of potential buyers, but the state of the economy has made it far tougher, he said. ‘There was a category of people that would buy it as a second place,’ he said. ‘That market is dead.’”
From Calgary TV in Canada. “Seven thousand condo units are under construction in Calgary right now and as the economy slips, many buyers are trying to get out of their contracts. In British Columbia, one developer is suing buyers who have walked away from their deposits and some people are worried that could happen in Calgary too.”
“In some new condo buildings, buyers are trying to sell their units as soon as they take possession, even if it means taking a substantial loss on the property. Officials say there is currently more than six months of oversupply in the condo market right now and more than 200 empty units.”
The Alliston Herald from Canada. “Between September and November of last year, homeowners across the province and throughout our riding received their 2009-2012 property assessment notices based on the current value of their home as of January 1, 2008 and already they are badly in need of review.”
“After cynically freezing property assessments until conveniently after the 2007 election, Premier Dalton McGuinty’s Liberal government implemented a new assessment system that assessed homes based on Jan. 1, 2008 values - the height of a hot housing market - revising assessments from their previously assessed values of Jan. 1, 2005. Those now unrealistic values have been locked in and are now being phased in until a new assessment is conducted in January 2012.”
“Even Dalton McGuinty admitted that the assessments were ‘unrealistic’ given the significant declines in the housing market throughout the year, and yet, instead of taking action himself, he’s pinning it all on municipalities by telling councilors to ‘act reasonably and responsibly.’”
The Alaska Journal of Commerce. “Remember the days a few years ago when homes sold within 24 hours, buyers bid above the listing price and home construction was going strong? Those days are gone.”
“Through November 2008, the municipality of Anchorage has issued 220 building permits, down from 300 in 2007, according to the Anchorage Home Builders Association. That is down considerably from 2002, when the municipality issued 924 permits.”
“‘One of the challenges we are faced with right now is that banks are not loaning short-term construction money,’ said Vicki Portwood, Anchorage Home Builders’ executive officer. ‘What our builders have done is they have tightened their belts. They are not out building because they can’t get speculative monies, so they’ve had to take their existing company size and ratchet it down, waiting for the market to come back.’”
“Commercial construction is also slow, according to Jeff Thon, with Jack White Commercial Real Estate. Specifically, Anchorage’s retail industry is down due to overbuilding, he said. ‘Probably as soft as I’ve seen it in 30 years,’ Thon said. ‘You look at everything that’s done on the east side of town, couple new little strip centers in other areas, it is just plain overbuilding. What has been added to our marketplace the last 18 months has given us a huge surplus.’”
