May 17, 2013

Sowing The Seeds Of A Housing Bust

It’s Friday desk clearing time for this blogger. “Central Iowa is one of the fastest growing populations in the Midwest, especially noticeable in suburbs bursting with new comers. ‘The market, right now is crazy,’ says Realtor Jason Stuyvesant, whose last two houses for sale were only on the market for eight and two days. ‘If you see something you like, you have to be ready to buy,’ says Stuyvesant.”

“It’s a side effect from a lot of home buyers trying to take advantage of low mortgage interest rates. ‘They say that term; it’s almost free money with interest rates as low as they are,’ says Stuyvesant. ‘Wow, we are really busy right now, is that going to keep up? All signs point to yes.’”

“In a market with a limited number of properties and plenty of eager buyers, home builders are happy to be in Casper. Naked tracts of land are sprouting subdivisions and high-end homes in the Casper metro area. Small towns like Bar Nunn and emerging areas in the east and west of Casper are seeing a new spree of growth that contractors and real estate agents don’t expect to subside anytime soon.”

“Broker One has more than 100 properties that the company is developing or will build on in the near future, said associate broker Michele Trost-Hall. It is developing a new subdivision on the west side of Casper that has 26 lots under way and a potential for 200 lots, Trost-Hall said. ‘We’re banking on the fact that things won’t slow down,’ she said.”

“When Trent and Clara Ping decided to start shopping for a house in La Crosse last month, the couple lined up a Realtor and sent him a list of about a dozen homes they’d found listed online. But by the end of the week, as they were preparing to drive down from Minneapolis, word came back that almost everything on the list was sold – or had an offer pending. Ping sent him several more only to find that those had offers, too.”

“There is a new sense of urgency for buyers. ‘You’ve got to change your sense of thinking,’ said Dave Snyder of Gerrard-Hoeschler. ‘It used to be, ‘Let’s go out and look.’ Now it’s, ‘Can you see it tonight?’ If it’s priced right, it’s getting sold in days.’”

“Home prices in Southern California popped to their highest level in 58 months during April while sales hit their highest level for that month in seven years, market tracker DataQuick said. ‘This is definitely good news,’ said Robert Kleinhenz, chief economist at the Kyser Center for Economic Research at the Los Angeles County Economic Development Corp. ‘The people who are getting loans now are very high-value borrowers. We are not sowing the seeds of a future housing market bust like the one that led up to the great recession.’”

“In some of the hottest markets, appraisals are coming in well above the selling price. Agent Eric Tan said one appraiser did a ‘drive-by’ of a West Covina, Calif., home he was selling in April. ‘He didn’t ask for any comps, to see the inside of the house, or even schedule a time to meet with me. He wrote up the appraisal right at the purchase price,’ he said. ‘I was able to sell the client’s home for about $40,000 more than I thought the appraiser would value it.’”

“Over the 12 months ended March 2013, Texas had 53,359 completed foreclosures, according to CoreLogic. Three states completed more foreclosures than Texas over the past 12 months — Florida with 102,847 foreclosures; California with 83,310 foreclosures; and Michigan with 70,315 foreclosures. On the national front, a total of 55,000 foreclosures were completed during the month of March. The market still has a ways to go. Between the years 2000 to 2006, the country was averaging 21,000 completed foreclosures a month.”

“Benton County ranked first in Arkansas foreclosure filings for April with 48 homes slated for auction and another 70 going back to lenders to put the homes up for sale in the coming days. The county processed 118 new filings, up 22.92% from the same month last year. Residents in the Raleigh Hills neighborhood of Bella Vista are anxious to see what happens to a home they have been watching since in July 2010, when the homeowners walked away. It has languished in the foreclosure pipeline since that time. In February the home went from lender Chase Bank back to investor Freddie Mac and has recently been assigned to Coldwell Banker agent Connie Turner.”

“‘There is a home in my Bentonville neighborhood that has been vacant for nearly two years and a ‘For Sale’ just went up,’ said Jim Long, an agent with Crye-Leike Realty in Bentonville. ‘We took turns mowing the yard to keep the place presentable while it languished in limbo.’”

“Just when the local housing market is looking stronger, red flags are emerging in Maryland, with foreclosure activity up triple-digits last month. Some families, like the Hoovers, are finding it tough to get by. Randy Hoover and wife Ann have enjoyed owning their home in Frederick since 2001. They received their first foreclosure notification in January, as Ann’s unemployment benefits ran out. Randy and Ann have equity in the home but they haven’t been able to pursade their lender to lower their 7.5 percent mortgage rate. ‘Every time I call the mortgage company they say they can’t work with me,’ says Randy, adding ‘I’m not asking for them to forgive my principal balance. I just want a cheaper rate so I can have a cheaper balance to keep my home.’”

“The Hoovers were able to get current on the mortgage by taking money out of Randy’s 401k. Come August, that money will run out. RealtyTrak’s Daren Blomquist tells WUSA*9 ‘the other shoe is dropping in Maryland when it comes to foreclosure activity as foreclosures slowed down by the state’s foreclosure mediation law and faulty foreclosure paperwork are finally working their way through the foreclosure pipeline.’”

“A new study finds that new construction and foreclosure activity are running neck-and-neck, with building permits and foreclosure both up in the first quarter from a year ago. Combine foreclosures and new home construction and the result in many communities could be a large stock of available properties. If it turns out that housing supply is greater than generally believed that the rise in home prices could slow, especially in overbuilt areas.”

“‘We are currently experiencing a feeding frenzy in the Reno area for inventory. While the increase of foreclosures and building permits will bring some much-needed relief in the future it will unfortunately be far from a feast,’ said Craig King, COO of Chase International brokerage covering the Lake Tahoe and Reno, Nevada markets. ‘We are particularly feeling the heat for properties under $350,000. Those properties are receiving multiple offers within days of hitting the market so the builder and foreclosure inventory will be a blessing but far from an answer to the inventory shortage here.’”

“The real estate market in Washington continues to improve according to a University of Washington report. One thing preventing more sales is that there aren’t enough homes for sale, says said Glenn Crellin, the associate director for research at the university’s Runstad Center for Real Estate Studies. ‘Construction activity is improving, but builders cannot improve availability overnight. Lenders need to release properties which have been foreclosed, but are still owned by the lender to allow the market to stabilize and prevent renewed bubble conditions.’”

“Welcome to the 2006 economy, where stocks are booming, the art market is setting records, and home prices are soaring all over the country. In fact— not to rush things along too much— it’s already time for you to start worrying about the collapse of the next housing bubble. ‘Aw gee, we just had a collapse of a housing bubble!’ you exclaim, kicking the dirt in frustration. ‘I still have three partially constructed condos in Bed-Stuy to flip and IT’S NOT FAIR.’ We know, we know. But what can you do? These things happen. It’s been, like, five years since the last housing collapse— plenty of time for Americans to put it out of their minds entirely.”

“I wouldn’t worry, though: if there’s anyone smart enough to get in and out before the whole thing collapses, it’s you. You’re smarter than the others.”

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Bits Bucket for May 17, 2013

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