The Housing Bubble

It’s Friday desk clearing time for this blogger. “As Vancouver’s real estate market cools, losses on the troubled Olympic Village development could soar above $225-million unless condo king Bob Rennie quickly drops prices on unsold units that have languished on the market for too long. That’s the view of developer and architect Michael Geller, who suggests flawed pricing and weak marketing is turning the fiasco on False Creek from bad to worse. ‘The problem with arm chair gossip that the Michael Gellers of the world have, is they don’t sit in the board room with the decision makers and the stake holders … and we have fine-tuned the pricing all the way through,’ Rennie said. ‘People come to town and say it is a bubble, but what do they know? When you look at how conservative the banks are in Canada … banking has really restricted (housing) supply.’”

“‘I think Bob’s problem with me is that no one else is saying he’s not the condo king or even the condo prince,’ Geller said. ‘A lot of people in the real estate community are saying this project shouldn’t be taking years to sell out.’ In interviews with The Province, Geller said he fears the city will be unable to sell many of the remaining condos at current prices, as Vancouver’s real estate market seems to have peaked ‘a year ago when there was a lot of fervour from Asian buyers.’”

“A mortgage broker in Nelson Bay, the most mortgage delinquent suburb in Australia, agrees the blame on its unenviable record rests with impulsive holidaymakers. Local broker Ben Eick says holidaymakers bought a slew of properties in 2005 and 2006 gambling on prices going up. ‘[They thought] these places would keep appreciating … and of course what they’ve done since then is depreciate. And that’s where they’ve come unstuck.’”

“Imagine a brand new city built for 18 million people—yet only 4.5 million live there. Imagine another city built for 1 million—but only 25,000 people call it home. Picture 20 more such cities and no people. And the building continues. Only in the ‘economic miracle’ that is China could this be possible. Yet, sometimes supposed ‘miracles’ turn out to be little more than sleight of hand.”

“China’s massive real-estate boom has now eclipsed that of Japan during the 1980s. Construction spending in China hit a whopping 12 percent of gross domestic product last year. In Japan it peaked out at 10 percent. Everyone knows what happened in Japan next. Stocks and real estate fell by 75 percent and still haven’t recovered.”

“To put China’s property boom in perspective, in coastal regions the average house costs 18 times the median salary in those regions. In America, the equivalent would be expecting someone making $60,000 to purchase a $1.1 million house. In other words, it is not the typical Chinese person buying all the newly constructed homes. It is wealthy speculators who can borrow cheap money from the banks. China is still dangerously dependent on exports for the lion’s share of its wealth. Over half of its gdp comes from selling products abroad. And herein is the pin that may bust China’s bubble.”

“As an example of how interconnected the global economy is, international real estate stocks are hoping Federal Reserve Chairman Ben Bernanke will initiate stronger economic stimulus measures when he speaks this Friday at the economic policy summit in Jackson Hole. Xinyuan Real Estate, a Chinese home builder, and Gafisa SA, a Brazilian home builder, have both rallied in 2012. Traders are betting on a fresh round of quantitative easing or some similar policy initiative.”

“But Gafisa and Xinyuan Real Estate need strong local economies. The entire international real estate sector does: low interest rates can only do so much. For that, demand from the U.S. must be strong so the export sector in China and Brazil can provide the jobs needed for workers to buy homes.”

“Connecticut, for 25 years the state with the highest per capita income in the U.S., is now leading the nation in home-price declines as Wall Street trims jobs and bonuses that had driven multimillion-dollar property sales. Jeffrey Weisz put his five-bedroom house on five acres in New Canaan up for sale five months ago for $1.2 million. While prospective buyers came to ‘kick the tires,’ he received only one offer, which fell through because the borrower didn’t qualify for a mortgage. He said his neighbor has had three offers fall through because of financing problems.”

“‘I don’t think they have the wherewithal to put down down payments,’ he said.”

“According to banking and real estate insiders, Las Vegas real estate is about to take another big hit, and it could delay the recovery for years to come. Realtor Jared Jones,who the Wall Street Journal named the 4th most productive agent in the nation in 2011, is so convinced prices are going to drop here, that he’s selling some of his own investment properties now before prices decline. ‘A lot of experts that are watching the default data are saying there are 70,000 homes that are in some type of default status,’ Jones said.”

“The Charlotte Regional Realtor Association’s monthly report for July shows gains in both home sales and prices. That being said, we still have a major problem. One-third of Charlotte area homeowners owe more than their homes are worth. Jack Wilson is one of them, and his case is so bad, he’s thought of letting it go.”

“‘It’s very difficult,’ he says. ‘I have thought about doing strategic default and just relinquishing my property as it’s just not a good investment any more for me, because I’m so underwater.’”

“Zillow says the Charlotte metro area is underwater by $6.9 billion.”

“‘Occupy” protestors have taken up residence outside one family’s home in Van Nuys hoping to save them from eviction. A ‘tent city’ has sprung up for what Occupy San Fernando organizers are calling an ‘occuparty.’ They are there in support of the Hernandez family, who tells KTLA they have lived in the neighborhood for about seven years. About four years ago, their mortgage adjusted and went from $3,900 per month to more than $4,500 per month. That’s when they started fighting to keep their home.”

“‘This has happened to millions of families across the country,’ said Ulises Hernandez who lives in the foreclosed home.’

“There’s good news and bad news to be found in the latest research regarding the effect of foreclosed homes on neighborhood property values. The upside is the financial dents that distressed properties make on nearby home sales aren’t nearly as deep as thought in some previous studies. In fact, they are ‘economically small,’ according to the working paper from the Federal Reserve Bank of Atlanta.”

“But here’s the rub. Researchers also found that homeowners are wrong to start worrying about a decline in their own property’s value when a nearby home goes into foreclosure. Actually, their home values start to slip when the neighbors start skipping mortgage payments, months before the home officially enters foreclosure.”

“Because of that finding, the study’s four authors, two from Federal Reserve banks and two from Fannie Mae, argue that policies adopted to stretch the amount of time a home is in foreclosure don’t necessarily benefit borrowers but they do cost society.”

“The researchers also used their results to suggest that various policies that allow homeowners to linger in serious delinquency and foreclosure exacerbate the costs to nearby homeowners and communities. In the Chicago area, it takes an average of more than 600 days for a distressed home to move from initial default notice to bank-owned.”

“Most Aussies think housing is an economic driver. But it’s not. Housing is consumption. Housing, along with other consumption (such as food, fuel, clothing, etc.) is the reward for productive labour. So for the central bank to claim that residential building will fill the void left by the end of the resources boom is just barmy. Thanks to the fractional reserve banking system, banks can use $10 of deposits to lend $90 to borrowers. It’s not the $10 deposited in the bank that filters through the economy, it’s the $90 created by the banks from thin air that filters through the economy.”

“Or put another way, the $60 billion of exports to China doesn’t mean a $60 billion benefit to the Australian economy…it means there’s a $600 billion benefit to the Australian economy. The money flows in from China, it goes into bank accounts, and then the banks leverage this to create new loans. It explains why the Australian housing market was strong despite crashes elsewhere in the world.”

“But as anyone who knows about leverage will tell you, leverage is a double-edged sword. It magnifies returns when the market goes your way, but it magnifies losses when the market goes against you. In this case, even if exports to China only fell to $50 billion, it wouldn’t mean a $10 billion hit to the Australian economy. Because of the leverage used by the banks to drive up credit, it would actually be a $100 billion hit to the economy.”

“So for anyone to think that housing will boom once the resources boom ends, they’re in for a rude awakening. The fact is, contrary to what the brains trust at the RBA may think, far from leading the Australian economy to recovery, housing will be the worst investment to own when the resources boom finally end.”

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WFSU reports on Florida. “Florida Realtors President Summer Greene says she’s seeing a trend across the state indicating the housing market has not only stabilized, but it’s also gaining ground. She says home prices are rising in many markets even with 33-percent drop in homes up for sale in July from a year ago. ‘People are getting off the sidelines and they’re recognizing that ‘hey, if I don’t buy a home now, I’m missing out! Interests are going to start creeping out, I won’t be able to take advantage of the historically low interests rates, and the prices are going to bump on me,’ remarked Greene.”

The Pensacola News Journal. “Perdido Key’s inventory of unsold properties has dropped to 185 — the first time it’s been less than 200 in several years. What’s more, beach property brokers are noting that many of the recent buys are all-cash sales, a good indicator that smart investors are moving in and scooping up steals. ‘Sellers are pricing close to the buying point, and buyers think prices are not going to go down further,’ said Perdido Key Realtor Alison Davenport.”

“Perhaps the most active end of the market are those units that were on the market at $1 million and above and now have dropped into the high six-figure range. ‘People with that kind of money who can pay cash didn’t get there by making stupid decisions,’ Davenport said.”

From Marketplace. “Dundee is a town of 3,500 people, in the middle of Polk County. But not too long ago, Dundee was preparing for a population 10 times that size. At the height of the housing boom, developers thought this little town could become a bedroom community for nearby cities like Lakeland and Winterhaven, and maybe even for Orlando. Mark Wheeler grows Valencia oranges in and around Dundee. Back then, speculators were paying so much money for land, Wheeler couldn’t say ‘no.’ He sold two groves.”

“‘Put a lot of time and sweat equity and money into them,’ Wheeler recalled. ‘But it got to the point where the prices were just crazy.’”

“One of the first developers to get to Dundee was Ron Ben-Zeev. Ron Ben-Zeev has spent these last few years trying to get out of the development business, trying to get rid of the land here. ‘We are in negotiations with a bank to try to come up with a solution that makes sense, although right now, it seems to be hard to do,’ he explained. ‘And we’re trying to find some way to stave-off the losses as best we can.’”

The Herald Tribune. “Faced with slumping sales, Gibraltar Homes LLC appears to be having the kinds of difficulties many residential builders weathered three years ago. Gibraltar president Albert Sanchez Jr. blames the setbacks and affiliated layoffs on slowing sales. ‘In 2011 we sold about 50 homes,’ Sanchez said. ‘That was really great. We geared up for it, we added some people. Then you go through a period where you sell very few, and then all of a sudden you are overstaffed again.’”

“Florida is suffering from the recent retrenching by consumers. Nationally, 70 percent of the economy is consumer-driven but the number is much higher in the Sunshine State, said Don Grimes, a University of Michigan economist who has a home in Sarasota. Grimes questions the Federal Reserve’s policy of keeping interest rates low for so long. While low rates are aimed at spurring the economy — particularly business investment — that does not appear to be working.”

“The policy has been particularly detrimental in Southwest Florida, eroding investment returns for retirees and keeping consumer spending slow, Grimes said.”

“In 2011, the economy grew at a 7.6 percent clip, nearly twice this year’s rate. But Florida’s economy — led by double-digit growth in Miami — had been surging at a 9 percent pace during the first four months of the year, only to see that rate fall to 4 percent in May and June. ‘The economy has decelerated,’ said Sean Snaith, a University of Central Florida economist. ‘This is not the most sweeping recovery that’s lifted a lot of boats at the same time and at the same amount. There’s been a lot of holes in it.’”

The Sun Sentinel. “When South Florida’s housing bubble burst and home prices plummeted, they never fell far enough to make rents or single-family homes affordable for the average family. The median home price in Broward County last year was still $47,611 more than the median household could afford, according to an assessment performed by Florida International University’s Metropolitan Center. The gap was $47,263 in Palm Beach County and $60,243 in Miami-Dade County, the report said.”

“More than half the renters in Broward County – 107,107 in 2010 – are ‘extremely cost-burdened,’ spending more than half their income on rent, the report showed. ‘For people that are lower-income, even with low interest rates and low payments, they still can’t come up with the down payments that are now required,’ said Ralph Stone, director of Broward County’s Housing Finance and Community Development Division. ‘The foreclosure inventory is not making any kind of dent in the affordable rent housing.’”

“The city’s Affordable Housing Advisory Committee says the affordability gap will continue to widen as the housing market rebounds. ‘I think Fort Lauderdale is a different community than Coral Springs and Davie. It’s the urban center of Broward County. There’s a greater need,’ developer and committee member Peter Henn said. ‘When people’s kids can’t come back to Fort Lauderdale because they can’t afford to live here, that’s when [people] realize there’s a problem,’ Henn said.”

From USA Today. “Connerton is one of the places where the early 21st-century building boom went bust and America’s suburban frontier stopped in its tracts. Its predicament illustrates broader issues facing President Obama and Mitt Romney, including foreclosures, jobs, the environment and infrastructure. Here, hundreds of grassy building lots are served by nicely paved roads, alleys and sidewalks. There are evocative street signs (Billowy Jaunt Drive, Wonderment Way) as well as street lights, fire hydrants and electrical transformers. Utility lines sprout from the ground, waiting.”

“There’s everything you need for a complete town — except enough houses and people. Pete and Ellen Rundel arrived in 2007, paying $600,000 for a 3,500-square-foot house on Winsome Way that’s now worth $280,000. It’s not their only disappointment. ‘It’s sad what’s not here,’ says Ellen, pausing from her front-yard weeding. ‘This was supposed to be like Reston,’ the densely-settled planned community outside Washington.”

“Although they live in one of a few built-up parts of town, six vacant lots are visible from their yard. Two houses on the street are in foreclosure. The Rundels love their own house, Ellen says, ‘but we did expect restaurants.’”

“Randy Cook is a self-employed online security consultant who built a $900,000 house here in 2006, just before the crash. ‘I’m disappointed by how it’s gone, but who isn’t in the USA right now?’ he asks. ‘I have no intention of leaving. It’s just going to take time.’”

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The NWI Times reports from Indiana. “Single-family home sales increased 14.9 percent in July in Northwest Indiana. In perhaps an even more hopeful sign, the median selling price increased to $137,000 in July, an 11.4 percent increase as compared to the year-ago month, according to association data. ‘Interest rates are still low and prices are going to go up,’ said Minakshi Ghuman, a Realtor with Century 21 Pace Realty, in Valparaiso. ‘Those two things make buyers jump.’”

The Star Tribune in Minnesota. “John Folsom and his wife invested for retirement by socking money into safe mutual funds to build a nest egg that could support their dream of one day having a house on a lake. But at 53, Folsom looks at his retirement portfolio and sees that ‘the rules’ aren’t working. The market crash and housing collapse hammered his net worth. Now the Apple Valley man’s life savings are earning about half what he had expected, dragged down by record-low interest rates. ‘All of our calculations have been thrown asunder, and everyone has to rethink the whole deal,’ said Folsom said, who is planning to push back his retirement five years, possibly until he’s 67.”

“The Federal Reserve’s near zero interest-rate policy, aimed at stimulating the economy, has created bargains for borrowers refinancing a mortgage or buying a car. But the low rates are penalizing ’savers’ such as seniors and others on fixed incomes, forcing millions of middle-class Americans to reconsider how they will live when they retire, if they can retire at all.”

“‘We’re not really seeing the positive benefit of low rates, but we’re seeing a huge negative hit,’ said Tim Gillaspy, who recently retired. ‘It’s going to have repercussions not for one or two years, but basically for the rest of our lives.’”

Chicago Mag in Illinois. “In the past month, signs of vitality in the Chicago real-estate market have proliferated. Linda Levin, senior VP at Jameson/Sotheby’s International says that the perception of stability has brought out what she calls ‘better buyers. They’re not the bottom-feeders who are looking for a [steal]. They’re educated, and they see that it’s time to buy confidently.’”

WMBD in Illinois. “The housing market in Central Illinois is starting to look like it did before the recession hit. That might sound frustrating to those who still haven’t sold a house that’s been on the market for months. Arab Kattom said she and her husband haven’t felt the benefits of the upswing; their house has been on the market for seven months. ‘We’ve had plenty of open houses, but we don’t know what the problem is,’ Kattom said. ‘We are sad, really sad. Especially in the summer, we wish we could have sold the home in the summer, but we couldn’t.’”

“‘We are right now, we’re seeing an increase in value in the greater Peoria area,’ said Laura Martin, President of the Peoria Area Association of Realtors. Martin says price alone might not be what tips the scales, that curb appeal is also important. ‘Give it a pop of color, put some baskets of flowers or pots of flowers on your front porch,’ she said.”

The Journal Express in Iowa. “Marty Shukert, principal planner for RDG Planning and Design has noticed is a shortage of market-rate rental housing across Iowa. ‘One reason is the whole industry died off prior to 2008, and now all of a sudden it’s needed again,’ Shukert said. ‘People are viewing a home as more of an anchor … as something that keeps them from being mobile.’”

“Joan Sutterlin said as new faculty members have come to Indian Hills, they have struggled to find places to live. She has also noticed that while seniors are selling their homes, and those homes are sitting empty, others are having trouble finding housing. She said one problem could be that seniors ‘don’t realize there is a global financial meltdown’ and ‘they’re not all realists when it comes to originally pricing their homes.’”

Public News Service on Ohio. “The housing bubble may have burst several years ago, but many Ohio communities continue to suffer the effects of the foreclosure crisis. An estimated one-third of all homeowners in the state are ‘underwater’ on their mortgage. It’s a story Paul Simmons, Bedford, knows all too well. He paid $130,000 for his home 10 years ago, and now houses on his street are selling for just $75,000. He has tried working with his lender to reduce his loan principal, but has been unsuccessful.

“He says he feels trapped. ‘My home is a toxic asset because it’s not worth what I’m paying for it. It’s more advantageous to me to have the house foreclosed on and to file bankruptcy than to just throw away $40,000 or $50,000 and not be able to recoup that money.”

CBS News on Ohio. “In July, the number of building permits was up by more than 29 percent from a year before. But the housing rebound may be too late for those facing foreclosure. In Appalachia, 72-year-old Charlie Ward had no savings and lived on Social Security. But because of a special USDA program for low income families, he could buy his own home. Ward called it a day of pride for him.”

“A truck driver for more than 40 years, Ward and his wife Wilma expected to live out their lives in Nelsonville, Ohio. But last year, with Wilma dying of cancer, medical bills took a toll. Ward said his family finances ‘disappeared fast’ because of what happened to his wife. Ward fell behind on his payments. He says he was trying to work out a payment deferment plan when the USDA seized his $2,900 tax refund, and began taking $135 from his $900 monthly social security check. Ward said it really hurt because ‘I have to survive, and I can’t.’”

“Unlike private lenders, the USDA plays by a different set of rules. The government doesn’t need court permission to begin collecting on unpaid debts even before a home is in foreclosure. Although there are USDA programs to help borrowers when they first fall behind, it’s not always easy to get that help. ‘One of the things you have to understand is that you’re talking about borrowers who are not that financially sophisticated,’ said legal aid attorney Carlie Boos.”

“Boos is working to save Ward’s home, now in foreclosure. She says once a home is in foreclosure, federal statutes leave no options. ‘They’re not allowed to do anything after a foreclosure has started other than say, ‘give me everything that is owed,’ Boos said. ‘You are literally talking about squeezing blood from a turnip.’”

From St Louis Today. “The St. Louis market’s rebound over the past few months should continue this fall and lead, finally, to recovery. That’s the view of real estate experts, who say low prices and low mortgage rates appear to be taking effect. ‘We have been so busy,’ said Bob Bax, a broker-manager with Prudential Alliance Realtors, in Ladue, who tells of ringing phones and packed open houses.”

“The corridor’s median home price of $213,000 is flat from a year ago and ’still pretty pathetic’ but will likely begin to edge up, said Russ Nolting, a broker-manager at Keller Williams Realty in Kirkwood. Nolting added that many homeowners, ‘awakened to the reality of today’s market,’ realize their houses no longer fetch the bubble-fueled prices of a few years ago, when almost any buyer could get a mortgage.”

“‘People are staying put,’ he said. ‘Back in ‘03, if the bathroom was pink, people would just sell the house.’”

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A reader posed these questions. “I approach this premise carefully. With a certain depth of thought and a lack of resultant clarity, I ask: What if:

1) Home prices rise to meet current rents.

2) Resulting in underwater homeowners newly afloat

3) Resulting in fewer foreclosures and more lenders/mortgage holders willing to forgive some debt, refi, or agree to a short sale because their loss margins are diminished.

4) Resulting in greater demand and greater supply.

5) Resulting in equilibrium; homeostasis.

6) It’s all local.

7) Given the current job market and prospects, the interest rates will need to be artificially suppressed, or GENX and GENY will be totally screwed without parental contribution.

Ain’t the future bright??”

A reply, “None of what you suggest makes sense in light of current market fundamentals. However, with enough government-sponsored gearing, I suppose any kind of wacky price movement is conceivable.”

Arabian Business. “Some assets in Dubai’s property market are now undervalued, and it is realistic to expect that prices can regain their 2008 highs, one of the emirate’s most prominent property bosses has claimed. Hesham Al Qassim, the CEO of Wasl Asset Management – which is the emirate’s largest landlord, managing the property portfolio owned by the Dubai Real Estate Corporation – said that current prices meant that now was ‘the right time’ to invest in the local market.”

“When questioned as to whether prices could regain the peaks of four years ago, Al Qassim said: ‘They might get higher.’”

From Gold Coast. “In a glimmer of hope that the city’s battered housing market may finally be turning around, median house prices in the June quarter increased 2.8 per cent to $467,000. ‘I do think this is a sign that finally the Gold Coast housing market has bottomed out and we are seeing a move in the right direction,’ John Newlands, Real Estate Institute of Queensland Gold Coast chairman, said. ‘This is the first positive move in house prices in four years, which is significant. First homebuyers have also been reasonably active over the quarter in certain price ranges. The $400,000 bracket is considered good value by buyers in the entry-level market.’”

“Mr Newlands said there were signs that interstate investors were returning to the Gold Coast market. ‘I think they have been waiting for signs that the market really was at the bottom before they finally committed,’ he said. ‘But affordability and increased confidence in the market are meaning we are definitely seeing a lot more sold signs around the suburbs.’”

The Wanganui Chronicle. “ASB chief economist Nick Tuffley said house prices here had stayed high compared to incomes and would likely continue to rise. ‘We may look like we’re over-valued and high compared to other countries. We’re still likely to see in the short term a little more house-price pressure coming through. We don’t have an oversupply of housing in general and we have some fundamental supply constraints in places like Auckland and Christchurch.’”

“Barfoot & Thompson managing director Peter Thompson said house prices here were set by a free, open and transparent market. ‘It’s what a person is prepared to sell for and to buy for,’ he said. ‘I admit it’s making it harder for people to get into property. Getting more properties on the market will stabilise it. We’re coming into spring so we might start seeing that.’”

“Last week, a two-bedroom Sandringham house valued at $720,000 fetched $1.1 million at auction. The 1940s weatherboard house at 23 Watea Rd surprised listing real estate agent Christine Wooding at Barfoots. Expectations were more around the mid-$800,000s, she said. Developers bid against one another for the property, which is on a section of more than 800sq m.”

The Globe & Mail. “The Vancouver housing market isn’t the pressure cooker it used to be, which makes buying a house a far less painful endeavour than in years past. But no one’s about to call Vancouver a ‘buyer’s market.’ Nice houses that are priced right are selling within days, some in bidding wars. But anything priced too high or considered undesirable is apt to sit idle in this market, which is, according to the Real Estate Board of Greater Vancouver, witnessing the lowest total sales for the region since July, 2000.”

“Teacher Barb MacKay says it took her about a year and a half to find the right house to buy. She found it recently on a 30-by-90-foot lot in New Westminster. She’d originally seen the bungalow a year ago, listed for $490,000. However, she thought it needed too much work. Someone else purchased the house, did the renovations, and recently relisted it. By now, Ms. MacKay knew the house was a good deal, especially with the renovations all done, and she made an offer. There were other offers, but she got the house a couple of months ago for $592,000. ‘I think there is still stuff out there, but a lot of it is unaffordable,’ she says.”

“Jay Berman, who lives in Manhattan Beach, Calif., purchased an 800-square-foot condo in Vancouver’s West End 20 years ago, with a dream of one day retiring there. His plan has changed, so he put the condo on the market two months ago, for $299,000, which would seem a steal for a large one-bedroom in one of the most desirable neighbourhoods in Canada. But so far, he’s had no interest.”

“‘We’re not in a hurry, so it doesn’t matter much, but yeah, I guess I thought it would be pretty quick at that price,’ says Mr. Berman. ‘I think in a neighbourhood as nice as that, it would be at least $100,000 more for a comparable condo in Southern California.’”

The LA Times. “If you are looking to buy a starter home in Southern California, then you are likely to pay a premium from last year. With fewer low-cost homes and foreclosures on the market, people looking to get into the market at a cheap price are paying more. DataQuick reported that the number of homes in the Southland that sold for less than $200,000 fell 5.8% from the same point a year earlier. Homes between $300,000 and $800,000 surged 13.4%. Sales of homes costing more than $800,000 rose 7.2%.”

“Those changes in the kinds of homes selling helped lift the overall median last month. The median price for the region last month was $306,000, a 2.0% increase from June and up 8.1% from July 2011. But the median is also far from a perfect measure of home price appreciation. It often reflects the kinds of homes selling during a certain period and the kinds of neighborhoods these homes sold in.”

“For instance, during the worst of the housing slump the median price dragged as foreclosures dominated the market, particularly in inland parts of California such as Riverside and San Bernardino. The trend for now is headed in the other direction. The firm DataQuick estimated that about half of the 8.1% annual gain in July’s median sale price could be attributed to the change in the mix factor.”

“PGA champion Tiger Woods has sold his condominium in Corona del Mar for $2,213,875. But like many other residential real estate owners, Woods landed in the rough when it came to selling a place bought before the housing downturn. Public records show he bought the property in 2004 for $3 million.”

The East Valley Tribune. “In a turnaround that may be nothing short of amazing, the price of the average home in Arizona rose more in the last year than anywhere else in the country. New figures today from the Federal Housing Finance Agency show a year-over-year hike in sales prices of 12.9 percent. And prices in just the last quarter are up close to 6 percent. What makes this particularly noteworthy is the same report issued exactly one year ago found exactly the opposite. The FHFA found prices had dropped almost 15 percent from the same time in 2010.”

“But Michael Orr said that there may be a bit less to the increase than the pure numbers show, at least as it affects the typical Arizonan. Orr, director of the Center for Real Estate Theory and Practice at Arizona State University, said much of the market is being driven by investors anxious for a bargain. As the inventory of affordable homes dries up, he said, the investors find themselves bidding against each other.”

“He said, though, that this double-digit price increase recorded by FHFA does not necessarily reflect what all homes in Arizona are bringing. Orr said the index tends to weigh heavier with the sale of new homes which are being financed with conventional mortgages. At the other extreme, he said the federal agency seeks to filter out ‘distressed’ sales forced by foreclosures. ‘It depends on what you measure,’ he said.”

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