The Housing Bubble

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Bloomberg reports on Texas. “Welcome to Dallas in 2015, a city whose bustling economy is attracting new residents at a rapid pace—and making it increasingly difficult to buy a house. New listings get multiple offers in mere days, said Steve Habgood, president of the MetroTex Association of Realtors. ‘People are saying, ‘Great, I can get a premium on the price I paid, but where am I going to live once I sell?’ said Habgood. ‘The options are pretty limited.’”

“Last year, Rick Smith put his family’s house in suburban Dallas on the market, hoping to find a new home close to better schools and the city’s downtown. Selling the old house was a snap; buying a new one wasn’t. In January the family moved to a town home in a rental community, and quickly found they weren’t the only family forced into renting. ‘If you drive around our community, you’ll see moving boxes stacked up in the garages,’ he said. ‘No one wants to unpack, because they think they’ll be moving again soon.’”

The Waco Tribune. “To say the local housing market is sizzling might be understating the matter. Home sales in the Waco area jumped 20 percent during the first two months compared with 2014; local real estate agents say they are seeing deals struck in a week or less on homes placed on the market. Kathy Schroeder, vice president of residential services at Coldwell Banker Jim Stewart Realtors said HGTV’s popular ‘Fixer Upper’ program has people from around the country inquiring about the availability of properties locally. Not all inquiries can be taken seriously, she said, but they show that Waco’s story is getting out.”

“The website Realtor.com, in a report that appeared March 6, listed Waco No. 1 under the headline: ‘Just in Time for Spring, These 20 Markets are Heating Up.’ Whatever the reasons, people are buying and selling homes locally at a pace that has real estate agents smiling. ‘I’m seeing people from Temple and Austin making trips up here to buy property,’ said Trammell Kelly, a residential sales specialist at Kelly Realtors.”

“Roman Novian, an agent with Coldwell Banker Jim Stewart Realtors, said he has sold 20 homes so far this year. He made two observations about the Waco market: It is attracting homebuyers from California and there is a shortage of homes available in the $150,000 to $200,000 range. ‘When inventory is low, that creates a seller’s market,’ Novian said.”

The Houston Chronicle. “The humming in Houston’s economy continues to soften, and economists say it’s likely to grow quieter still. ‘We’re all on edge as we’re watching oil prices decline,’ said Jesse Thompson, business economist for the Houston Branch of the Federal Reserve Bank of Dallas, adding he expects to see more of a spillover to manufacturing, legal services, financial services and real estate.”

“‘Our phone is not ringing as frequently as it was a year ago,’ lamented Tom Simmons, global energy practice leader for the executive search firm Spencer Stuart in Houston. Already, Simmons reports he is seeing more unsolicited résumés from veteran managers in the energy business, those with 20 to 30 years of experience. They haven’t had to look for work for years, he said. ‘I haven’t seen these types of résumés for quite a long time,’ he said. Simmons also is getting unsolicited résumés from investment bankers with three to five years of experience who specialize in energy exploration and production.”

“Boyd Nash-Stacey, senior economist at BBVA Compass in Houston, said he is seeing weaknesses in places he wasn’t expecting just a few months ago. Oil and manufacturing problems also seem to be affecting demand for housing. Nash-Stacey reported that construction specialists such as plumbers and electricians cut 4,000 jobs in February. People are reluctant to buy houses because they’ve lost jobs or they’re worried about job security, he said.”

From Reuters. “Sales tax receipts in the thriving oil town of Midland, Texas, fell this month, only the second decline in five years and one of the first signs of how low oil prices are beginning to ripple beyond oil company bottom lines and into the wider economy. The city’s overheated housing market has also shown signs of easing. The 514 unsold houses on the market in Midland County in January was most in years, according to county statistics. The average sale price fell 20 percent from June to January. Foreclosures starts jumped 193 percent from 40 in 2013 to 117 in 2014, with most of that growth occurring in the second half of the year, according to Realty Trac.”

“‘The most visible sign of cracks in the armor of the Midland housing market is the rise in foreclosure starts in 2014,’ said Realty Trac VP Daren Blomquist.”

“It is anyone’s guess how long oil prices will remain depressed. Some say it could be months, even years, before oil producing regions recover from low oil prices. ‘There is an incorrect assumption that we are further into this than we already are,’ said Karr Ingham, an economist who compiles the Texas PetroIndex, an annual analysis of the state’s energy economy. ‘We have a long way to go.’”

The Midland Reporter Telegram. “Apartment rates started falling in February after a large increase in the second half of 2014, according to data provided by ApartmentList. The data shows that median rents for one-bedroom apartments in Midland increased monthly by at least 7.8 percent year-over-year for the months of July 2014 through January 2015 before an 8.3 percent drop in February. Apartment complex vacancies is due to oil companies ‘trimming the fat,’ according to Alex Garcia, area director for Weidner Apartment Homes. Garcia has seen the rental market react to the shift in the local labor market. ‘We’ve done things like renegotiated contracts in the middle,’ he said.”

“‘They (the oil companies) grew so fast, so quickly, and needed bodies, and they hired anybody,’ Garcia said. ‘If you breathed, you went up to work with them. Criminal record didn’t matter, horrible credit didn’t matter, work ethic didn’t matter. Now is the time when they’re cutting 20 percent of their people who were those people.’”

“One of the groups that may be in the biggest trouble will be investors who have poured money into new complexes that either were just completed or are still under construction, he said. Garcia believes that high market rates drove that investment because investors could make their money back quickly. But he said that while the current level of apartment units in Midland may be sustainable, if more complexes are pushed forward that the city could start having issues.”

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A weekend topic on the media and housing bubbles. A curious thing has been happening in Ireland. From RTE News. “An academic who specialises in media analysis has told the Banking Inquiry that, overwhelmingly, the Irish media maintained that there was no bubble and that the boom would eventually end in a ’soft landing’. Dr Julien Mercille of UCD said there was a clear discrepancy between coverage of the housing bubble before and after it burst. He said that before 2008, the media tended to largely ignore it and it was only months after it had started deflating that reality had to be faced.”

“Dr Mercille said that after the crash, the media also presented the Government’s crisis resolution policies in a largely favourable manner. Dr Mercille also spoke about the large amount of money received from property advertising and he said the Irish media went even further by becoming owners of property websites themselves, acquiring a direct stake in the growing housing bubble. He said Prime Time also sustained the housing bubble. Between 2000 and 2007, 717 shows were aired. Of those, only ten, or about 1% of the total, had a segment concerned with the housing boom.”

“Dr Mercille said it did influence coverage and he said former business editor of the Sunday Independent Shane Ross had said there were explicit threats to move advertising and he said journalists were under pressure from bosses to give good coverage. It did not have to be explicit pressure, journalists knew very well the rules to play by within institutions.”

“The editor of the Irish Examiner has told the inquiry that he accepts that the newspaper contained an insufficient critique of frequent claims that there would be no crash and that the economic miracle would continue to be an example. Tim Vaughan said it was a matter of personal regret but he said that he doubted such coverage would have gone a long way to preventing the crash. He said if it was guilty of anything, it was that it believed and accepted that institutions like the financial regulator were doing their jobs competently and with due diligence.”

“He said they still have been faced with an alignment of authority in the form of the IMF, the ECB, the European Commission and the International Credit Agencies along with the Taoiseach and the Minister for Finance, the Central Bank and the ESRI, who were all of the view that the country’s economic fundamentals were sound - with the IMF giving Ireland a clean bill of health as late as 2006/2007. He said it would have been difficult to envisage how any media organisation could effectively challenge such a formidable consensus.”

The Irish Times. “Property porn in the media during the boom years helped push a social appetite for moving up the ladder, the Oireachtas banking inquiry has heard. Dublin Institute of Technology media lecturer Harry Browne said such material existed in TV and print journalism in the form of property programmes and lifestyle features. ‘[THIS] encouraged readers to constantly think about going higher and higher up the ladder,’ he said. ‘To think about how to getting that bigger house; to think about how to decorate their apartment in Bulgaria, that sort of thing.’”

“However he said there was not necessarily a ‘conflict of interest’ arising between invested parties during the formation of the property bubble. ‘It is tempting to conclude that there is no real conflict of interest at all but rather a congruence of interests between media organisations and the developers and financiers who were advertising with them and cashing in constantly on the speculative bubble.’”

“UCD academic Dr Julien Mercille said the media’s close relationship with the political and corporate establishment prevented it from being a critical watchdog of the growing property bubble in the build up to the crash. ‘A number of journalists simply acted as cheerleaders for the property sector,’ he said.”

My Suncoast in Florida. “The days when foreclosure signs littered neighborhoods are long gone, especially on the Suncoast. The increase in the number of homes being sold is just part of the good news. Toni Zarghami a realtor with Keller Williams, says the prices of those properties have also jumped. The news has many like Mollie Nelson, a longtime Sarasota resident who’s invested in multiple properties celebrating. ‘I am excited; so much of what I see in Sarasota reminds me of what I saw in Naples in 1998,’ added Nelson. ‘Naples began a really huge turn about where their property values doubled and tippled because they were found by the new young money. I say if you want it you better buy it now because it’s going to be like Naples in two years — it would be worth a lot more than you’d every dream of.’”

The Buckeye Lake Beacon in Ohio. “The average sale price of a home during the month of February was $180,527, which is a 10.4 percent gain over February 2014. The median sale price in February was $150,000, up 11.4 percent from a year ago, according to the Columbus REALTORS(r) Multiple Listing Service. ‘The increase in homes sold and in contract is an indication that buyers are hungry and ready to pounce on inventory,’ said Kathy Shiflet, Columbus REALTORS(r) 2015 President. ‘Buyers are eager, engaged and not wasting any time!’”

KSHB Kansas City on Missouri. “Sally Moore, Real Estate Agent at Keller Williams is telling clients it’s a seller’s market. ‘If you’ve ever thought of selling your home, now is the time to do it,’ said Moore. ‘We’ve sold one house the same day before we could even get the sign in the yard.’”

“Reggie Maggard is trying to buy a house as an investment property. He said he’s made offers on four homes and it was too late. ‘On one house, I put in an offer the first day it was available and I thought sure I would get it; but it turned out that someone made an offer and the homeowner had already accepted it so fast that other Realtors didn’t even know an offer had been made,’ Maggard explained. ‘It’’s definitely disappointing.’”

The Denver Post in Colorado. “Denver’s tight housing market has morphed into a version of ‘The Hunger Games,’ with buyers scrounging for whatever weapons they can find to remain the last bidder standing. ‘Everything is flying off the shelf,’ said Chad Ochsner, a broker with Re/Max Alliance in Arvada. ‘We are used to a market where the buyer has a house to sell. It is now a market where a seller does not have a house to buy.’”

“By some estimates, as many as a fifth of metro Denver home sales may be happening outside the multiple listing service, as buyers and their agents hunt down prospective sellers before they list. Of those that do list, a new sales approach, which looks more like an auction, is becoming the norm, especially for the most affordable homes. In spring 2013 — the last time mortgage rates dipped below 4 percent and buyers went into a frenzy — the local housing market was still recovering. Presenting the first and best offer often won the day.”

“With 30-year mortgages averaging about 3.78 percent today, the newer game still requires speed, but a buyer must outsmart and outlast 10, 15 or 20 or more contenders. To tip the odds in their favor, some buyers write ‘love letters’ or send videos pleading their case. Others bake cookies or send flowers. But agents give those tactics mixed reviews, and some don’t present the offerings to clients.”

“Two years ago, agents said higher home prices would restore balance to the market by bringing out more sellers. Prices did rise substantially, but the inventory of homes for sale remains tighter than ever. Of the active listings, only 1,212 were priced under $400,000, the part of the market in highest demand among buyers. Most are existing homes offered for sale. The volume of listings normally doubles in April versus January in metro Denver. But buyers this year have been out in force since mid-January after a sharp drop in mortgage rates.”

“Buyers entering the arena in coming weeks need to realize they will drop into hand-to-hand combat with battle-scarred competitors who are frustrated and still hungry for a home.”

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It’s Friday desk clearing time for this blogger. “My scientific data gathering techniques have produced evidence of a housing glut in Washington — a saturation of one- and two-bedroom apartments for rent that is having a negative effect on existing condo sales both on Capitol Hill and elsewhere in the city. The vast majority of Hill listings in MRIS, the realtor listing service, are sales, not rentals. Even Craigslist beats MRIS for rentals postings in my opinion, but it does provide a glimpse of what’s happening. Time and how much sun is being blocked out by construction cranes will tell if this is a rude awakening or a small bump in the road, but the advice remains the same as last year’s: Sellers, don’t take anything for granted. Buyers, don’t give up hope, there could be opportunities out there. There may even be a bargain in your future.”

“Dave Evans is president-elect of the Fayetteville Regional Association of Realtors. ‘If you don’t have to sell right now, you shouldn’t.’ Conversely, however, ‘The most exciting thing to be in Fayetteville is a buyer.’ According to Evans, Fayetteville has 1,200 excess houses on the market. He says a six-month supply is considered an even market. Fayetteville is well beyond a six-month supply and, at some price points, is at a 12- or 18-month oversupply.”

“But here’s the catch - Zillow senior economist Skylar Olsen’s numbers show a high number of foreclosures hitting the Fayetteville and Jacksonville markets. ‘I’m noticing by looking through the data though, right now there’s an uptick in the foreclosure resale. So enough homes have now made it through the foreclosure process.’ She calls that hidden inventory - homes owned by banks that don’t show up in the current for-sale supply because they are still making their way through the foreclosure process. Olsen says we just don’t know how much of that inventory is waiting to hit the market.”

“Coldwell Banker Owner and Real Estate Broker Kathy Vejtasa talked her perspective on Kern County’s proposed Land Use Management Plan. She said there are more rentals currently because ‘people working for the government cannot have a negative impact on their credit, they cannot have a short sale or a foreclosure, therefore they rent their house at a loss in order to protect their credit rating. That’s why the number of our rentals increased dramatically.’”

“Heather McAnerney of Peoria is one of many underwater homeowners in Arizona, who would love to sell their house, but can’t afford to do it. ‘We want to move because our kids are in a special program outside our boundary, but we can’t because we don’t have enough equity in the house to sell it,’ said McAnerney. ‘Our whole thing is that we need that equity so we can put equity towards a new house. The home values would have to skyrocket in the next 12 months for us to be able to put our house up for sale,’ said McAnerney. ‘All you can do is plug along and pay your monthly mortgage payment.’”

“Residential property prices fell across the country for the second straight month in February. In Dublin the decrease was 0.7% – and 2.4% since the start of December. Davy chief economist Conal Mac Coille said the slowdown was ‘not surprising or undesirable’ given that house prices no longer looked cheap by international standards. Savills research director John McCartney said it was hard for prices in Dublin to sustain the double-digit percentage rises that started in mid-2013 without peoples’ earnings also increasing enough to pay for them.”

“‘Agents are now reporting that buyers are no longer in a frenzy to buy for fear that prices will run beyond their means,’ he said.”

“So it’s time to buy! That’s the enthusiastic motto for Montreal’s 19th edition of Open House Weekends. Asked why developers keep going even as building exceeds demand, Jonathan Sigler, co-president of Prével, compared real estate to a cruise ship, in that it is slow moving, and takes time to get plans and permits in place, and then actually build. ‘A lot of the projects you see started way back when, in early 2010-11-12, when the condo market was very hot. We were selling out even before construction. What you are seeing is a consequence of the euphoric years.’”

“Offshore developers are outpricing locals as demand to build high-rises on Whitehorse Rd grows to ‘fever pitch.’ Allens Blackburn, director Grant Lynch, said the Federal Government’s proposed changes to foreign investment rules would have a mixed impact on buyers in the area. The Government is considering charging fees for foreign buyers for each attempt at buying a property; a fee of $5000 for property of less than $1 million and $10,000 for every extra $1 million in the purchase price.”

“‘I absolutely think there will be an impact on investors from Singapore, Malaysia and Hong Kong who have been investing in apartments in Australia for years,’ Mr Lynch said. ‘The market for investing in apartments in those countries is already a bit shaky because people haven’t been getting returns on their investment. However I don’t think there will be any impact on the multi-million dollar buyers from mainland China, whose main focus is on getting their capital out of China.’”

“Since the Interim Regulation on Real Estate Registration came into force in China on March 1, anxious cascade selling has emerged in the country’s housing market. Because the law requires full disclosure of property ownership, corrupt government officials who had bought multiple homes with illegal gains are worried that their irregularities would be uncovered. Many ’secret sellers’ have thus emerged in the used home market.”

“A real estate broker identified as Miss Huang said business was especially good last year, when the government began to push for the real estate registration system. Huang said she brokered more than 20 transactions in 2014. Many of the sellers had contacted her via telephone and did not show up until the transactions were about to be sealed, she said. Also, the sellers had lowered their prices in the hope that their homes would be sold quickly, Huang said.”

“A developer identified as Mr Zhao said the most anxious sellers now are government officials who had accepted real estate gifts from developers. In China, it is very common for developers to bribe government officials with gifts of real estate in order to obtain construction licenses, according to Zhao.”

“Las Vegas homebuilders are seeing more signs of a turnaround, but with borrowing costs poised to rise, sales could fall again, according to a new report. It’s ‘not a matter of ‘if’ but ‘when’ the Federal Reserve raises rates, according to Home Builders Research President Dennis Smith, who said he doesn’t believe that Las Vegas’ housing market — for new and used homes — is strong enough for buyers to withstand a jump in monthly payments.”

“There will be a brief burst in sales to people who jump in before rates go up, he said, ‘but that euphoria will likely be short-lived.’ ‘Some of the lenders we have spoken to recently are still very positive when they are in front of housing industry groups or individuals who only like to hear only the ‘good news,’ he wrote. ‘However, when we speak to them one-on-one, many are worried about what any rising mortgage rates could do to housing sales velocities.’”

“It is now clear that the shale boom was an illusion of prosperity. The same is true about improvements in housing. Following the financial crisis of 2008, real estate prices should have dropped, much, much more than they did relative to other prices. Today, housing is back, with price increases at bubble-era levels and construction activity is picking up. Yet, the overhang from the previous boom has not disappeared. It has just been left in limbo, because of the ‘extend and pretend’ strategy of banks made possible by the central bank’s massive printing over the last 6 years. The number of vacant units in the U.S. still stands at over 18 million units- a level reached back in 2008-2009. The number of units held off the market is still at a record level of over 7 million units.”

“Don’t be fooled by the euphoria of a boom built on a mountain of malinvestments. The problem in 2008 was too much debt, so the solution according to the geniuses in the Eccles Building is to lower interest rates to boost demand to induce households and governments to borrow even more.”

“Printing money cannot correct a misalignment created by government’s incessant interference with the workings of the price system. This printing however will actually make things worse since it alters relative and absolute prices, causing a greater divergence between what society wants to be produced and what is produced. Interfering with interest rates is by far the most damaging policy imaginable since interest rates are the price of time preferences and play a crucial role in aligning output with demand across time. The greater the misalignment across time, the greater the adjustment.”

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CBS Denver reports from Colorado. “Real estate brokers say year over year they’re seeing a lack of inventory in the Colorado housing market. Real estate agent Andrew Nagel says some of the brokers in his RE/MAX of Cherry Creek office are astonished by how many offers are going into some resale homes. Nagel says about 30 percent of his buyers are now choosing new construction, which also comes with some built-in perks. ‘In 6 or 9 months that pricing is going to go up and up and up, so by the time you close and move into your house you’ve built in some equity,’ he said.”

The Journal Sentinel in Wisconsin. “With home prices slowly increasing, consumer confidence rising and interest rates still low, home equity lines of credit are making a modest comeback in Wisconsin. In 2014, the amount of home equity lines of credit on the books of Wisconsin-based banks rose 1.9% to more than $3 billion — the first time since the recession and housing market crash that such loans increased from the previous year. ‘The biggest factor has been home prices going up rather than going down,’ Doug Gordon, chief executive of WaterStone Bank.”

“Landmark Credit Union has been offering a fixed 1.99% annual percentage rate for the first 18 months of a home equity line of credit. After that period, the rate goes to 3.99% or the prime rate, whichever is higher. ‘When (home) prices are going up, they’re are a little more confident in spending. And obviously, the home equity lines are a perfect way for people to do improvements or buy cars and such because of the deductibility of the interest,’ Gordon said.”

AZ Family in Arizona. “There are a lot of hard working Arizonans who can’t afford a new home. They’ve got jobs and good credit, but don’t have enough money for a down payment. For many of them, help may be on the way. The nonprofit housing assistance group Trellis, announced this week, that the FirstBank Holding Company, has invested $1 million to make housing more affordable for low and middle income families. The new program will provide qualified home buyers up to $25,000, to be used as a down payment towards the purchase of a new home.”

“To qualify - a family of four must make less than $51,000, and a single person make less than $35,850. However, the money is not a gift - its a loan. Home buyers must repay the loan to Trellis over a 15-year period. Peoria mom Jenelle Forrester said a program like this could make a big difference for her family. ‘Coming up with money, a lot of times is really hard,’ Forrester said. ‘You don’t want to spend all your savings, because you are buying a house. You want to have something to fall back on.’”

The Wall Street Journal. “Home prices in some U.S. markets are rising much faster than rental incomes or what it would cost to build new houses in those markets, according to a new study by a real estate valuation firm. The growing gap between sales prices, on one hand, and rents and so-called ‘replacement cost’ on the other is evidence of markets that are over-heating, said the report by Jacksonville, Fla.-based Smithfield & Wainwright. ‘The build-up of false equity is on the rise again,’ the report states.”

“During the last housing boom, inflated appraisals helped contribute to the run-up in home prices. In December, The Wall Street Journal reported that appraisers are increasingly being pressured to inflate home valuations. In the story, the Office of the Comptroller of the Currency expressed concern that some of the mortgages banks are giving out are based on inflated values. Freddie Mac said it had launched fraud investigations to determine whether lenders had approved mortgages backed by inflated home appraisals.”

“Using inflation-adjusted data, the firm concluded that recent sales prices of single-family homes in 13 states and the District of Columbia are 10% more on average than what the homes would have been appraised for using two other methods.”

The New York Post. “A new time bomb in the residential mortgage market is starting to go off — potentially pushing thousands of struggling New York families into foreclosure. This year marks the start of a 3-year period for thousands of home equity lines of credit, known as HELOCs, to reset from interest-only payments to interest-and-principal payments. New York state has the fourth-largest dollar volume of HELOCs set to reset between 2015 and 2018 — roughly $8.4 billion.”

“Nationwide, RealtyTrac estimates there are 1.8 million underwater homes with resetting HELOCs, to the tune of $88.7 billion. ‘The foreclosure crisis is not anywhere near done,’ said Tom Cox, a Maine-based attorney and foreclosure expert. ‘I can’t tell you we’ve had enough time with it yet to say the stats demonstrate an uptick in actual foreclosures through HELOC resets, but … we know it’s going to happen.’”

8 News Now in Nevada. “New numbers show Nevada’s housing market could be headed for trouble. Notice of default, which is the beginning stage of a foreclosure, saw a sharp rise in its numbers last month. According to RealtyTrac, more than 350 default notices were filed in February 2014 while 662 were filed in February 2015. That’s an 80 percent increase. The hardest hit zip code, 89108, is near Lake Mead and Jones boulevards. Currently, about three out of 10 homes in Clark County are underwater. ‘Even though the market has gradually climbed and increased in property value, it’s still going to be decades for many, many people,’ said attorney Tisha Black, who has helped many struggling homeowners through the foreclosure process.”

“Numbers from RealtyTrac show many zip codes spiked in default notices last month. The zip code 89108 led the valley with 32 notices and 89031 came in second place. The top zip codes all have at least 25 homes in danger of foreclosure. ‘I think it’s a combination of a number of factors as to why that number has increased,’ Black said. Some homeowners declared bankruptcy which halted the foreclosure process, until now. Also, homeowners tired of being underwater have chosen to walk away from their homes.”

“‘I think a lot of those people just don’t want to hang onto those loans, when you’re that far undervalue,’ Black said.”

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A report from The Telegraph. “Inflation hit zero for the first time on record in February, sparking concerns that long-term deflation could wreak havoc in a muted UK housing market already spooked by general election uncertainty. Bad deflation - as seen in Japan over the last two decades and now a lurking threat in the eurozone - is down to subdued inflationary pressures. According to Anthony Codling, an analyst at the broker, Jefferies, this is dire news for existing homeowners. ‘If property prices drop existing homeowners will struggle to trade up, as a lower selling price will force them to take on a higher loan-to-value mortgage,’ said Mr Codling. ‘Why would you buy if you think prices are going to go lower? Homeowners like buying into a rising market.’”

The McKenzie County Farmer in North Dakota. “Even though oil prices continue to be low, city officials aren’t seeing the housing market or rental prices dropping in the area. Instead, they have been in somewhat of a holding pattern. ‘Because of the timing of the first building opening in December, and being that it was around Christmas, we didn’t fill up very fast,’ said Katie Walters, managing partner for Homestead Management who manages one local apartment complex development. ‘We also manage some modular cabins, and when people left for Christmas, they didn’t come back.’”

“‘Rents don’t seem to be coming down for apartments or duplexes, but I have heard of lease rate and lease-term reductions for modular and camper type of rental units,’ says Watford City Mayor Brent Sanford. ‘If the newly constructed apartments don’t fill as soon as expected, and if hotel occupancy and rates begin to decline this summer, there may be some downward pressure on the rent levels. Time and the West Texas Intermediate oil price will tell.’”

The Katy Rancher in Texas. “Figures released by the Houston Association of Realtors (HAR) indicate the housing bubble that the Houston market has enjoyed in recent years may be showing signs of weakening, and Fort Bend County has not been immune to the decline. According to HAR, falling oil prices and related layoffs, combined with limited housing inventory and rising home prices contributed to the decline in sales. ‘We’ll probably continue to see a shift from a seller’s market to a buyer’s market in the months ahead,’ said Realtor Kim Patrick with Keller Williams Premier. ‘We’ve been in a seller’s market for a few years, so it was just a matter of time before we started seeing numbers switch the other way.’”

The Financial Post in Canada. “So you think Calgary’s housing market has seen a major downturn this year? Just take a look at what’s happening in the heart of Alberta’s oilsands industry as crude’s price collapse continues. MLS sales of single-family homes in Fort McMurray and its surrounding area have plunged this year. In February, sales were down by a whopping 66% from a year ago, at just 48 units. That followed an annual decline of 53.19% in January.”

“Don Campbell, senior analyst with the Real Estate Investment Network, said smaller centres located in resource-based regions, such as Fort McMurray and Grande Prairie always have higher highs and lower lows than the more diverse and larger cities. ‘When a city or region’s economy is based on one major industry, when that industry slows, the consumer confidence in the whole city begins to fade thus increasing the overall market fear,’ said Campbell.”

The Australian. “Port Hedland — the dust-coated Pilbara town at the heart of the ­nation’s economic miracle of the past decade — grew at breakneck speed during the boom as thousands of people poured in to seek their fortunes. As property prices in the town plummet in response to the end of the mining construction boom and the recent collapse in iron ore prices, its once-overheated economy is returning to normal.”

“A sudden availability of workers means small businesses — many of which were forced to close during the boom due to the dearth of labour — are opening at a rate not seen in years. And cheaper housing means families are again able to live in town, reducing the need for iron ore mines to rely on fly-in, fly-out workers. Mine worker Tom Hillcoat decided to switch from being a fly-in, fly-out worker to moving permanently to Port Hedland with his wife, Kylie, and two young children, who he says all enjoy the outdoor lifestyle.”

“Looking around for a rental property, he found a house that had once been rented out for $2600 a week but the price had fallen to $1700 a week — and has since plummeted to $900 a week. ‘To have my family up here is the best thing I can imagine,’ he says. ‘And as prices come down, it’s becoming more family oriented and more people are moving here.’”

“Yet not everyone is convinced that Port Hedland can return to normal so soon after the economic revolution of recent years, or that it can grow from 20,000 people to reach the Barnett government’s vision of sustaining a population of 50,000 in the next two decades. One of the town’s longest-­serving residents, former mayor Arnold Carter, says the average rental value of a house in today’s market is still about $800 a week — far higher than in Perth and other centres. ‘It’s a long way to go to be back to normalisation,’ he says.”