The Housing Bubble

A report from the San Francisco Business Journal in California. “Venture capitalists tightening their purse strings, startups shedding jobs and the continuing dearth of IPOs could be taking their toll on the Bay Area’s housing market. By almost any measure, the Bay Area’s roaring economy is cooling. The hardest hit segment of the Bay Area’s housing market is the luxury sector, according to research released Monday by San Francisco-based Paragon Real Estate Group. ‘It appears the luxury segment has softened to a greater degree than more affordable segments, some of which remain very competitive,’ Paragon said. ‘The number of high-end listings in MLS has jumped while sales have plateaued or declined. When economic uncertainty swells, this is a market segment often affected first.’”

“Paragon cites the supply of high-end condo projects to market as well as the fact that expensive homes are usually a buyer’s second or third home, not a primary residence. Apartment rentals also reflect job losses more quickly, with Paragon saying asking-rent appreciation has plateaued and that ‘it is quite possible that actual lease rents have already started to decline.’”

The Miami Herald in Florida. “For the second year, Miami-based polling firm Bendixen & Amandi International partnered with the Miami Herald to interview 100 of the county’s top real-estate professionals. In 2015, more than half of survey participants said foreign buyers dominated the high-end market. This year, only 33 percent — fewer than one-third — said the same. Those polled agreed nearly across the board that political and financial instability abroad have impacted Miami real estate, with only 8 percent of participants swinging the other way. ‘The weakened purchasing power of foreign economies has directly affected the residential real-estate market in Dade,’ said one industry professional.”

“‘The responses fit pretty much with what the economic environment and the markets overseas are telling us,’ said Tony Villamil, founder of the Coral Gables-based Washington Economics Groups. ‘Basically, South America is in recession, and the exchange rate has depreciated between 25 and 40 percent in most countries — major countries such as Brazil, Venezuela, Colombia and Argentina — because of low commodity prices and political problems.’”

The New Canaan Advertiser in Connecticut. “The New Canaan Advertiser called 15 realtors in town and heard back from five on what buyers are talking about this season. Candace Blackwood of Berkshire Hathaway NE Properties, said there were 94 public open houses in New Canaan on May 22. ‘That may very well be a record,’ said Blackwood. ‘Most of the agents I have spoken to, have lamented the paltry numbers of attendees.’”

“‘Buyers have become conditioned to knowing there is a lot of inventory,’ said Melissa Jones of Houlihan Lawrence. ‘They are paralyzed to make a decision because there might be a better house coming out next week. It’s truly an amazing time to buy,’ said Jones. ‘Prices are down, you have lots of inventory, buyers can pick and choose what they want at this point.’”

The Midland Reporter Telegram in Texas. “The average price of a two-bedroom apartment in Midland was $1,030 for May — about a 30 percent drop from October 2014, the peak of Midland’s housing market according to ApartmentList data. One-bedroom apartments averaged at $820 last month and three-bedroom apartments averaged $1,600, according to the data. The median rents are calculated averaging all available units advertised for that month, AL data scientist Andrew Woo said.”

“Overall, each type of apartment — one bedroom through three-bedroom — dropped by $230, $290 and $450 respectively from May 2015, or a 22 percent average drop. Rents correlate with the oil market but, while prices of oil have seen an increase, rents haven’t, Woo said. ‘I wouldn’t expect rent prices to have dropped quickly, but to have stabilized by now,’ Woo said. ‘What data is showing is that rent prices are continuing to decline month over month so they haven’t hit bottom yet.’”

From Go Local Worchester in Massachusetts. “For years after the 2008 Great Recession Central Massachusetts was devastated by foreclosures and now housing advocates have distributed new housing data that shows a significant increase. The Warren Group has published the newest foreclosure statistics that show a 16.6 percent increase in foreclosure petitions (the first step in the foreclosure process) for April 2016 over April 2015. This is the 26th consecutive month of year-over-year increases in petitions. There have been 4,484 petitions filed year to date, a 26.2 percent increase from last year’s figure through April of 3,367. For two years, every month saw a double-or triple-digit percent increase in petitions year-over-year.”

“‘I certainly am not surprised that foreclosures are up,’ said Rose Webster-Smith a post-’foreclosure’ homeowner still fighting to reassert her legal title and organizer for Springfield No One Leaves. ‘With 74,000 foreclosures and some 140,000 households having already lost their homes in Massachusetts, and this new thousands more losing their homes, where are these homeowners going to live now?’”

“Webster-Smith continued: ‘We’re finding more and more empty homes in Springfield. In my little neighborhood, there are 12 vacant homes. None of them are boarded up. Most are all recent bank foreclosures. Some of them haven’t even been to the auction. They are just panicking and leaving. The realtors are trying to say that homes now being foreclosed were bought between 2000-2006 but I know that some of them are from 2009, 2010, even 2013.’”

From The Record in New Jersey. “In the overheated housing market of 2005, Barbara O’Leary and Dennis Poletto bought a Bergenfield colonial for $440,000 — just five years after the previous owner had paid $175,000. Now, they’d like to downsize into a place with no stairs. But they feel they can’t move, because real estate agents have told them their home would probably sell for about $330,000. ‘Nobody expected the world to fall down and the housing market to fall through, and that’s where we stand now,’ said O’Leary, 77.”

“The couple’s experience is common across North Jersey, especially in lower-priced housing markets. Ten years after home prices peaked — before tumbling into the worst downturn in decades — most homes are still worth less than they were in mid-2006. One reason: New Jersey leads the nation in foreclosure starts, as the state catches up on a backlog of distressed properties. In towns where homes sold for less than $400,000 during the boom, median values typically are off by about $110,000 — a drop of 29 percent. For many lower- and middle-income families, losing so much value is devastating.”

“‘If they thought they were going to retire with the profits from the house, they have nothing,’ said John Susani, broker-owner of Coldwell Banker Susani Realty in Paterson.”

“As for O’Leary and Poletto, they still love their spotless Bergenfield home. But they know the stairs will become more of a challenge as they grow older, and are ready to move, if only they could get a better price. ‘You really do get frustrated,’ said O’Leary. ‘If I’m frustrated, there have got to be a lot of people who are frustrated.’”