The Housing Bubble

The Traverse City Record Eagle reports from Michigan. “Chase and Brent Ritchie entered the housing market about a month ago with a firm $150,000 budget. ‘It’s sort of impossible in this market because as soon as you find something you like, there’s an offer on it the next day,’ Chase Ritchie said. The couple jumped into the market as buyers while the supply continues to tighten, said Catherine Barris, associate broker at Real Estate One. Barris has seen the definition of ‘affordable’ for such real estate push $250,000. ‘Between $200,000 and $225,000 is hot right now,’ she said. ‘Prices have been going up really rapidly and demand is huge.’”

“Those who do sell will have an upper hand, said Barris, who frequently sees prices on property listings inflated by 10 to 20 percent. A client recently sold a house for $159,000 that two years ago would have been lucky to sell for $130,000, she said.”

The Idaho Statesman. “In a perfect world, Boise couple Christi and Micah Farrell could take a day to talk about spending more than $350,000 on a house. Sellers often field multiple offers at asking prices or higher the day their homes hit the market. The Farrells have been house hunting for two months and have visited 10 homes in the past two weeks. Christi Farrell said each home was a little too small or needed a little too much work for the asking price. ‘It’s nerve-wracking,’ she said. ‘I want to walk through a house and be able to sleep on it, process it just a little bit. I feel this pressure that if you want something, you have to buy it now or it will be gone.’”

“Some buyers — especially those who have lost bids on other houses — are winning bids after writing personal letters to sellers explaining why their families would cherish a house. Under normal conditions, a market with low inventory and strong price gains would attract more sellers, said Mike Turner, owner of Front Street Brokers in Boise. ‘Some sellers are waiting because they aren’t excited about what they can get for their house yet,’ said Turner.”

“More than half of Turner’s buyers hail from outside of the state, he said. Turner said there’s no reason to think out-of-state money won’t continue to support rising home values as long as buyers in expensive markets, such as California, can sell homes there and replace them at a fraction of the cost in the Treasure Valley. ‘Maybe prices are higher than what we’re used to, but for those buyers, the cost of living is still a fraction of where they’re coming from. That’s why I think it’s sustainable,’ Turner said.”

The Seattle Times in Washington. “It’s not just Seattle that’s seeing eye-popping housing costs. Soaring costs from Bellingham to Spokane have propelled the state to a record for home prices, surpassing its pre-recession peak for the first time. Just in the last few years, Washington has zoomed up the list of priciest states in the nation. ‘There’s no reason to believe that this is going to stop anytime soon,’ said Peter Orser, director of the University of Washington’s Runstad Center for Real Estate Studies.”

“In coastal Grays Harbor County, home costs are now “only” $141,000 — but that’s way up from $88,000 four years ago. It’s among the regions seeing soaring housing costs despite remaining fairly economically depressed: The unemployment rate in Grays Harbor is 8.3 percent, third worst in the state and nearly double that of King County’s.”

“Gragg Miller, a managing broker at the Coldwell Banker Bain office in Bellingham, remembers hearing from Seattle agents years ago about getting 10 or more offers on houses in Seattle, creating bidding wars that drive up prices. ‘I thought, ‘I hope it never comes up to Bellingham,’?’ Miller said. Now, ‘It’s starting to come up here.’”

The Bend Bulletin in Oregon. “The number of cash buyers as a percentage of all homebuyers in Bend is on the decline, according to data from the Central Oregon Association of Realtors. ‘It’s a much different environment in real estate than when cash was being thrown around,’ said Carrie DiTullio, a Bend real estate broker.”

“Curtis Delamarter, a Bend broker, said newcomers often arrive in Bend with cash on hand from the sale of their property in Seattle, Portland or Southern California, looking for a lifestyle change and relatively cheaper deals on real estate. They’re not as willing to spend that money on a home purchase as they were when prices were at their lowest. ‘In 2011, you could buy a house in Bend for $150,000,’ Delamarter said. ‘That’s no longer possible.’”

The Orange County Register in California. “For those who think the housing market is too hot, here’s a bit of comforting news. A late spring slowdown in Orange County’s thirst for resale housing is the sharpest reversal in Southern California, according to one benchmark. As of June 16, Orange County’s market time was 69 days vs. 66 days four weeks ago and 60 days a year ago. Why has Orange County’s market time jumped? Well, listing inventory of existing homes for sale rose by 601 homes (10 percent) in four weeks to 6,868. New pending sales fell by 155 homes to 2,989, a 5 percent drop.”

“‘Basic Econ 101 tells us that when supply increases by 10 percent and demand drops by 5 percent, the pace at which homes sell cools. As a result, homes are not selling like hotcakes like they were a month ago,’ wrote Steve Thomas of ReportsOnHousing.”

“CoreLogic reported Orange County homebuilders had their best May in a decade with 421 new-home sales. That was up 49 percent in a year and almost 12 percent of all home purchases. Resales of homes and condos were up just 2 percent from May 2015. If homebuilders keep their hot sales pace, it may be competition – not skittish buyers – making the resale market look lethargic.”

The Mercury News in California. “After 12 years in Sunnyvale, Jason and Freda Collier and their two children are moving to Austin, Texas. ‘The increases in prices we’ve seen over the last 12 years have been insane, and I don’t know how sustainable it is,’ said Jason, a tech executive who sensed that ‘the market had reached its peak point’ and decided it was prudent to ‘make a move’ before prices fall. The Colliers sold their 1,600-square-foot Eichler home in Sunnyvale — which they purchased 12 years ago for $750,000 — for $1.7 million. In Austin, where Jason often travels on business, their new 5,000-square-foot home on half an acre with a swimming pool cost $740,000.”

“Real estate agent Kevin Swartz of the Sereno Group, who represented the Colliers, said their deal is a window on the current market, which he said has softened. The house attracted just one offer — and sold for $17,000 over its listing price, not much by recent standards. ‘A lot of buyers are really becoming very picky,’ Swartz said. ‘The market has changed. … It used to be, ‘How much do I have to pay to make sure I get this house?’ Now it’s, ‘Well, what do I really have to offer? Because I don’t want to overpay.’”

“Other agents agreed that the market has shifted in recent weeks — a change that might not be reflected in CoreLogic’s numbers, which are based on deals that have passed escrow and have been officially recorded. ‘It’s an interesting market right now,’ said Alain Pinel agent Mark Wong, who is based in Saratoga. ‘It’s transitioning. Before, the seller took all the control; they could ask anything they wanted. Now, the buyer can take a little bit more control.’”