The Housing Bubble

A report from the New York Times. “One of the latest symbols of the overinflated luxury housing market is a pink mansion perched above the Mediterranean on the French Riviera. The home’s name befits its price. ‘Le Palais Bulles,’ or ‘the Bubble Palace,’ is being offered for sale at approximately $450 million. The listing is part of a global pileup of homes listed for $100 million or more. A record 27 properties with nine-figure prices are officially for sale, according to Christie’s International Real Estate. That is up from 19 last year and about a dozen in 2014. If you add in high-priced ‘whisper listings’ that are offered privately, brokers say the actual number of nine-figure listings worldwide could easily top 40 or 50.”

“The rise in nine-figure real estate listings comes just as sales of luxury real estate have cooled. Last year, only two homes in the world sold for over $100 million, according to Christie’s. Many say the sudden surge in hyperprice homes — often built and sold by speculative investors — is the ultimate bubble signal. The last time a sudden pop in $100 million-plus listings occurred was in 2007 and 2008, just before the housing crash. ‘When you have a record number of homes for sale at a price point of $100 million or more, that tells you these homes aren’t selling,’ said Jonathan Miller, president of Miller Samuel Inc., a real estate appraisal and research firm. ‘It’s not as deep a market as some might hope.’”

The Wilmington Biz in North Carolina. “The Wilmington area’s real estate industry has been booming in many ways in recent months and years, but when it comes to the area’s highest-priced homes, the numbers tell a different story, experts said. ‘In the luxury portfolio division, it’s a buyer’s market because prices are high, inventory is excessive,’ said Chris Livengood, vice president of sales at Wilmington-based Intracoastal Realty Corp. ‘We’re [at] about 20 months of inventory in New Hanover County in the million-dollar-plus category.’”

“Compiled from N.C. Regional MLS statistics, the report said New Hanover and Brunswick counties saw a decline in the combined number of closed sales on homes priced at $1 million or more, from 10 in April 2015 to six in 2016. Total volume in that category was down from $17.4 million to $7.15 million, according to the report. ‘April marks the second month in a row with total sales volume of high-end homes down more than $10 million compared to the same month last year,’ the report said.”

“‘I don’t anyone thinking, ‘What’s wrong with Wilmington?’ There’s nothing wrong with Wilmington. … This is happening across the entire country that in the upper end there’s too much inventory, and we have to get those prices right,’ said Steve Harney, founder of a New York-based company that tracks and analyzes real estate trends.”

The New Canaan Advertiser in Connecticut. “A national story about the value of various residential home renovations in the Saturday, May 28, edition of the New York Times (Renovations that add value… ) suddenly went hyper-local when discussing the housing market in general, and targeted New Canaan specifically as having a ‘glut’ of large homes listed for sale at present. Paul Sullivan, writing in a Wealth Matters story, quoted Amanda Briggs, brokerage manager at Houlihan Lawrence, saying that the town had a lot of listings for ‘large, four-story homes that are 10 to 15 years old.’”

“[Editor’s note: Typically New Canaan homes are not referred to as four-story, unless one counts finished basements and finished third floors. New Canaan homes are commonly referred to four-acre homes, if they are in such a zone.]”

WTOP on Virginia. “Arlington County remains Northern Virginia’s most expensive housing market, but prices fell last month. Long & Foster Real Estate Inc. said that based on 261 closed sales in April, the median price of homes in Arlington County was a hefty $587,470. Arlington’s median home value was more than $100,000 higher than the next-most expensive Northern Virginia jurisdiction: Alexandria. But Arlington County’s median price last month was down 6 percent from a year ago. And it was the only Northern Virginia community to see median prices fall.”

The Sun Sentinel in Florida. “Palm Beach County’s total taxable property value has increased for the fifth consecutive year, rising to a level not seen since the peak of the housing boom, according to preliminary estimates. But the most recent economic indicators show growth could be slowing, said Ken Johnson, a real estate economist at Florida Atlantic University. ‘We are seeing a rebound, but we are seeing a slowdown of the rebound,’ Johnson said. ‘We seem to have learned on the residential side that prices can get too high.’”

Southern California Public Radio. “In her campaign for Barbara Boxer’s U.S. Senate seat, California Attorney General Kamala Harris often mentions the record settlement her office negotiated with five of the largest mortgage lenders after the home foreclosure crisis. The deal that brought about $20 billion in relief to California won national media attention for Harris. But the mortgage meltdown continues affecting homeowners to this day.”

“In the home Rosario Frisse rents in a quiet neighborhood in Antioch — a city about 45 miles east of San Francisco — there aren’t many decorations on her walls. Even though she’s been living there for a few years, there are unpacked boxes on her patio outside and more in the garage. The home she once owned sits about a mile away. In 2009, Frisse lost the house after her adjustable mortgage was raised to an amount she couldn’t afford. Her husband was working with the bank to modify the loan. At one point working out a deal looked promising and they were waiting on an offer from the lender, she said. Instead, the lender foreclosed on Frisse’s house and it was sold at auction, she said.”

“For all the settlement relief that homeowners received to help them stay in their homes, the smallest number got a first mortgage reduction. The most widely distributed relief, which was given to about 200,000 homeowners, was the $1,500 in restitution that Rosario Frisse got. ‘That was like a slap in the face for a lot of us,’ she said.”