They’re Going To Have To Come Down
A report from the Canadian Press. “Real-estate experts say low mortgage rates and more affordable homes in many markets are drawing out first-time home buyers in droves, but one independent analyst says the correction in Canadian home prices hasn’t been nearly as dramatic as some believe. BMO senior economist Sal Guatieri said the average mortgage payment has fallen by one-third or $600 a month from its peak, while average resale home prices have fallen 14 per cent from their highs. But Peter Norman, a consultant with independent real-estate adviser Altus Group, said the dramatic drops in home prices seen in places like Vancouver, Edmonton and Calgary are the exception rather than the norm. ‘This is not a housing adjustment period in Canada,’ Norman said in an interview.”
“‘Certainly housing demand has slowed down because the economy is the pits, but housing supply has slowed down a lot as well as a result…. Outside of a couple of sub-markets there hasn’t been much of a downward adjustment on price. There are a lot fewer of those stories of really rapidly selling houses, bidding wars, all that kind of stuff, so I think it can be a bit more of a sane market for somebody who’s trying to buy right now,’ Norman said.”
“‘If it wasn’t for the recession and the aversion to financial risk that people have right now, it would probably be a very active market and a very good market,’ Norman said.”
The Daily News in Canada. “A pair of luxury Vancouver Island condos will be sold by auction without minimum bids this month, a sales strategy that the president of the Vancouver Island Real Estate Board says is unusual and risky. One residence is a 1,211-square-foot, two bedroom unit at 145-2300 Mansfield Dr. in Courtenay, which has an assessed value of $311,000. It was listed for sale at $399,900 until September of last year.”
“VIREB president Ray Francis doesn’t think more people will resort to selling residential property in unreserved auctions even in a slumping housing market. ‘I don’t see this as being something that would be favourable to anybody in any market condition really, to auction off their property without reserves,’ he said. ‘I definitely wouldn’t see that as a trend people would go towards. It’s too uncertain.’”
“An Alberta man is putting the condos up for sale by auction because ‘he realized he doesn’t need them,’ said Kim Schulz, spokeswoman for Ritchie Bros. Auctioneers, which is handling the sale. ‘I’m not even sure he stayed in the Parksville one to tell you the truth,’ she said.”
The Abbotsford News in Canada. “New housing starts in Abbotsford and Mission plummeted by 89 per cent from January to March this year, compared to the first quarter of 2008. The statistic is just one of the figures released last week by the Canada Mortgage and Housing Corporation.”
“When comparing March 2009 to March 2008, the agency also reported that construction on new homes in the two local communities dropped by 96 per cent. CMHC spokeswoman Carol Frketich said Abbotsford and Mission are ‘following the trend’ of much of the rest of B.C. To put the numbers into context, she pointed out that the first quarter of 2008 saw some record growth in terms of the region’s construction projects.”
“In Abbotsford, Jay Teichroeb, the city’s economic development manager, said the $8.7 million in new housing starts for the first quarter of 2009 compares to $52 million in new housing from January to March last year.”
“With the real estate market slowing, and with a glut of multi-family complexes being built last year, Teichroeb said some of those units still need to be ‘absorbed into the market.’ That is now happening, he said, partly thanks to a drop in prices.”
Montana’s News Station. “A report released by the Montana Building Industry Association shows that housing starts declined 70 percent in Missoula. Meanwhile, the numbers fell for the seventh straight quarter when looking at statewide statistics. The housing market has been experiencing significant problems because of a lack of available credit and a large inventory of houses for sale.”
The Missoula Independent from Montana. “The plan for a subdivision at the mouth of blue-ribbon Rock Creek appears dead in the water. The Ranch at Rock Creek is listed for sale for $5.75 million. And Michael Barnes, owner of the 200-acre parcel, plans to pull his controversial 36-lot subdivision proposal Friday during a meeting with the Missoula Board of County Commissioners, according to Geoff Sutton, a mediator in the three-year-long talks over the proposal.”
“Katie Ward & Associates’ lists the ‘once in a lifetime property’ on its website. Barnes reportedly bought the land for $1.1 million eight years ago, and now plans to sell 142 acres. Sutton says Barnes is content sitting on the land but will sell it for the right price. ‘I don’t think anything will be happening for at least a few years, at the earliest,’ Sutton says.”
The Heraldnet from Washington. “The going got tough in Puget Sound real estate more than a year ago, and it wasn’t the tough who got going — not into another line of work, anyway. It was the agents who entered the market when times were good, when success in real estate meant publishing a listing, then kicking back until the bidding wars died down.”
“These aren’t those times. And mostly, the agents selling houses now aren’t those agents. ‘A lot of those agents who jumped in when the market was good, they don’t know what it really takes,’ said Michelle Macris, a Snohomish County agent. ‘When things are a little tough, it takes more than putting a sign in a front yard and crossing your fingers and saying, ‘I hope it sells.’”
“The secret to success in a recession-battered housing market? Macris advises realism, honesty and a strong aversion to just telling clients anything they want to hear. ‘Right now it’s all price,’ she said. ‘It has to be priced appropriately. If not, all your efforts go down the toilet.’”
“Clint Schlotfeldt, another of John L. Scott’s top sellers, said he’s seen a huge exodus of agents in the Puget Sound region — and it’s partly because they aren’t willing to adjust to the reality of the market. He’s finding buyers much more cautious than in past years. His role tends to more one of an educator these days, as clients want to research their options and get the best value they can.”
“‘Two years ago, we were still busy,’ he said. ‘But you didn’t have to get out there and educate the buyer.’”
“Holding a massive open house of many of the homes for sale in Snohomish County worked so well for agents last fall that they’re doing it again. This Saturday and Sunday will be open house weekend in the county, with as many as 500 homes available for inspection. There were about 400 homes opened at least year’s event.”
“It’s no secret that home sales around the nation have been slow during the recession, but Snohomish County Camano Board of Realtors director Nathan Gorton, said real estate agents are hoping to do something positive to get people thinking about a home. ‘The agents and I really feel there’s a lot of opportunity right now,’ Gorton said. ‘And it’s not just because it’s spring. It’s more that I think the market is starting to turn around.’”
“Gorton said it’s hard to guess the bottom of the real estate market. ‘But if it’s not here now, it’s not far away,’ he said.”
The Yakima Herald Republic from Washington. “Here’s further proof that Yakima is riding out the recession better than most places: We’re now among the nation’s top cities where bank loans to consumers actually grew last year, according to a recent study.”
“Octavio Saucedo is (a) 25-year-old Yakima caregiver was recently approved for a $70,000 mortgage to buy his first home. Saucedo will soon move with his wife and daughter out of his parents’ home and into a two-bedroom house of their own in Union Gap. ‘This is the best investment any person can make.’ he said.”
“All this positive attention for Yakima may draw outside investors into the area, said Nick Marquez, a real estate broker. ‘A lot of people are coming up here for the fact they lost their homes somewhere else and they’ve got to start from scratch,’ he said.”
The Oregonian. “Clark County’s jobless rate hit 12.5 percent in March, double that of a year ago and the highest peak since reaching that mark about a quarter-century ago. The county rate, unadjusted for seasonal factors, slightly exceeded Oregon’s seasonally adjusted 12.1 percent rate for the same month. Washington’s seasonally adjusted rate increased to 9.2 percent in March, up from February’s revised rate of 8.3 percent, according to the state Employment Security Department.”
“March is usually a month of job growth, primarily from housing construction emerging from a winter dormancy. But that didn’t happen in Clark County this year, and it’s impossible to predict when it will pick up again, said Scott Bailey, the state’s southwest Washington regional economist.”
“The grim news in Clark County recalled June 1983, the last time the county jobless rate hit 12.5 percent. In 1983, the unemployment rate peaked at 14.8 percent in February. In March of that year it was 14.1 percent. Construction of the Interstate 205 Glenn Jackson Bridge was completed the year before. The bridge was a catalyst for rapid housing growth in the county, which now faces a glut of unsold homes.”
“The good news in the Portland area: Homes started selling again in March. The bad news: They’re not selling for much. The median price of homes sold in March tumbled 14 percent compared with the same month a year earlier and are now down 18 percent from their peak. Both drops are the biggest since the recession began.”
“The inventory of unsold homes in Clackamas, Columbia, Multnomah, Washington and Yamhill counties dropped from a peak of 19 months in January to 12 months in March. But the supply of homes continues to outweigh demand. The federal government’s first-time buyer tax credit and aid to struggling homeowners could be helping stabilize the market just as spring home buying season begins. But the numbers show the Portland market may still be searching for a bottom.”
The Mail Tribune in Oregon. “There’s a tug of war between appraisers and real estate agents over establishing the value of residential property. In a forthcoming report, the Center for Public Integrity’s Land Use Accountability Project said it obtained copies of ‘blacklists’ containing names of thousands of appraisers, who refused to inflate home values.”
“The Washington, D.C.-based research center cited New York Attorney General Andrew Cuomo’s investigation, pointing to Fannie Mae and Freddie Mac’s purchases of mortgages without ensuring they were issued with accurate appraisals. A new Federal law goes into effect May 1, designed to deter buyers and sellers — or their representatives — and lenders from lobbying appraisers.”
“‘I think this is a bit overblown,’ said Steven Blanton, CEO of the Rogue Valley Association of Realtors. ‘There is frequently a bit of forecasting involved in appraisals no matter the condition of the market. This is true in up markets and down. I don’t think it’s a systemic problem. In an up market, there’s always a little bit of forecast involved and a tendency to factor that in.’”
“He recalled a California transaction during the up market when the property value rose $10,000 while the house was in escrow for 30 days. ‘Trying to be sure there is enough loan to value is important,’ Blanton said. ‘In a situation like that, there is a lot of finger-pointing after the fact. Conversely, in a downward market there is tension in the system. Do the appraisals lead to more of a downswing? No, I don’t think so, but there is a concern to get an accurate appraisal.’”
“Now that values are sliding, the use of comparable sales data is causing waves here in Jackson County. ‘Coast to coast, the biggest issue in the financing of real estate is the pressure put on appraisers to push numbers,’ says Medford real estate appraiser Roy Wright.”
“A recent memo from Rogue Valley Association of Realtors to local appraisers indicated current values would take a hit if recent historical data were carried forward, reducing a house’s worth. The memo noted that if two identical homes, side by side, sold three months apart, and the first fetched $200,000, the second one would be appraised at $195,500, based on an assumed 1.5 percent monthly decline from recent data.”
“According to the memo, the potential exists for transactions having to be renegotiated, driving down market values even more.”
“‘If your best comparable sales are six months old, then you’ve got to discount comps because they would have been worth less on the date,’ Wright said. ‘When prices are going up, real estate agents said we’re pushing prices out of everyone’s reach; so you get it both ways.’”
The Register Guard from Oregon. “They were a hot commodity three years ago. Million-dollar houses with frontage on the ocean, a lake or a river around Florence. Californians looking for a clean, quiet place to retire couldn’t seem to get enough. ‘The market rose markedly,’ said Tawfik Ahdab, analyst with the Pacific Valuation Group. ‘They brought with them lots of money and drove up prices. We have limited inventory, but we had a lot of demand. A lot of demand.’”
“But today, 67 high-end homes priced from $500,000 to $2.5 million are sitting on the Florence real estate market. At the current pace of sales, it would take 75 months to clear out that inventory. Even then, some of the properties might linger: Not one home in the $1 million-plus range in Florence has sold in more than a year.”
“Florence real estate agents say months go by before they find a prospective buyer to even look at the high-end properties. Million-dollar houses in the Lane County coastal community are severely overpriced, Ahdab said. ‘There’s no market response to them. They’re going to have to come down.’”
“Their owners have no intention of selling for less than they paid, Florence area real estate brokers say. More than half of the high-end homes are owner-occupied and the rest are vacation or investment properties, they say.”
“Upward of 90 percent of Florence high-end buyers came to the Oregon Coast from California, where they sold homes when the market was hot, said Dan Scarberry, principal broker at Coldwell Banker Coast Real Estate. Because they had comparatively large sums of cash, many put down upwards of 50 percent cash on their Florence properties. That means they can wait out the market now because their payments are low.”
“Besides, in the upper strata of properties, dropping prices a few $100,000 may not stimulate sales the way it would for the average house, said Dennis Johnson of TR Hunter Real Estate in Florence. ‘If you have someone with a place, for instance, for $1.7 million, dropping the price to $1.5 million isn’t going to sell it. You’re talking to the same customer, and if they really like it they’ll pay the $1.7,’ he said.”
“The problem is that well-heeled buyers from the Golden State are hard to come by in Florence these days. ‘They can’t sell houses in California to escape California and move up here,’ Ahdab said. ‘A lot of people are upside down in California, and they were the ones feeding this (Florence) high-end market. They may not be coming back for a while….If these people aren’t coming, we don’t have much of a market at all.’”
“Those Californians who do turn up have sold homes for from 30 to 50 percent less than they would have three years ago, so they can’t meet the sellers’ stubborn price point, he said. With less cash, they have to try for a jumbo loan to finance any half-million-plus house. ‘The jumbo loan market is not what it used to be,’ Ahdab said. ‘It’s evaporated pretty much.’”
