The Housing Bubble

The Register-Guard reports from Oregon. “Across Lane County, and especially in Eugene, many local real estate agents and housing market analysts say prices are rising at a pace not seen since the pre-recession boom years more than a decade ago. The record-breaking home prices — not just in Eugene but in many markets in Oregon and nationwide — are triggering familiar anxieties and debates. Are we in a housing-market bubble — or for that matter a stock market bubble — that’s inflated by desperate buyers and is doomed to burst? Or are the escalating home prices sustainable and reasonable?”

“Lisa Frey, a buyer’s agent with Keller Williams Realty in Eugene, has worked in real estate sales locally for 19 years. She watched Californians flood the market here during the mid-2000s boom. As the economy has recovered from the recession, they’ve returned to the Eugene market, competing with local buyers. The hot real estate market in California allows owners there to sell their property and direct the cash into Oregon. ‘The last six months is when I really noticed the frenzy start picking up,’ Frey said. ‘I just talked to somebody on Sunday who said, ‘We hate California. We want out.’”

“The recent price escalation puts pressure on buyers to up their offers and make snap decisions. That concerns real estate brokers such as Ron Blacquiere, who owns Equinox Real Estate in Eugene with his wife, Bess. After years of depressed home prices and inventory rates above 10 months, the market appeared to be heading toward a sweet spot between a buyer’s and seller’s market around late 2014, he said. The surge in prices ‘has kind of been in the making over the last 18 months,’ Blacquiere said. ‘The rapid increases give me pause, they make me nervous.’”

The Pueblo Chieftain in Colorado. “Real estate agents will tell you Pueblo’s housing market has heated up in the past few years — though they are divided over whether the cause is people coming to the area for legalized marijuana. ‘We’re going through a seller’s market right now that I’ve never seen before in my career here in Pueblo,’ said Betty Martinez, owner of a local real estate company. ‘You’re seeing multiple offers on property that are above the asking price.’”

“Laurie Linn, of the Pueblo Housing Authority, said that for whatever reason, Pueblo clearly is at the top of the list for many housing investors. ‘I had a call from a Denver man who asked me, ‘If I buy 25 or 50 houses in Pueblo, can I rent them all?’ she recounted. ‘And I told him that right now he could.’”

The Houston Chronicle in Texas. “The housing market in northwest Houston has remained steady this summer, despite the downturn in the energy sector. And builders are adjusting to suit the needs of the market. Last year, there were many builders who offered homes priced more than $300,000. But the demand now is for lower priced homes. ‘Builders start to adjust the product line they have out there,’ said Jill Wente, a real estate agent with Better Homes and Gardens, Gary Greene, in Spring. ‘We’re seeing some builders come back and make adjustments to offer lower prices in the under $300s to accommodate for that segment of the market where the demand is definitely still there.’”

“The more expensive homes are sitting on the market longer, and inventory is therefore greater. ‘It’s a different market in a sense that we’re seeing more inventory available in the higher price point,’ Wente said. ‘Buyers have more to choose from. They are taking their time on the higher price points.’”

“The housing market has returned to more normal levels, said David Patton with Heritage Texas Properties. ‘Over the $300,000 range, homes are staying on the market longer,’ Patton said. ‘That’s not necessarily a bad thing. It’s just not the frenzy we’ve had the last two years. It’s more a normal market.’”

“‘For higher price points, it is a buyers’ market because they have options they did not have in prior years,’ Wente said. ‘For lower price points, it’s still a sellers’ market.’ And more communities will be developed. ‘We still have land for them to build on,’ Wente said.”

A report from Bloomberg. “Welcome news for America’s renters could be unhelpful for the Federal Reserve. A 42-year high in the number of apartment buildings under construction points to an impending surge in supply that portends a moderation in the cost of shelter, which in June capped the biggest 12-month jump in almost a decade. Any cooling in the most pronounced driver of inflation means the Fed will have to wait even longer to reach their 2 percent price target — a prerequisite for some policy makers to raising interest rates.”

“Costs for shelter accounted for 63.9 percent of the run-up in the consumer price index excluding food and fuel in the 12 months ended June, the most since 2007 and almost four times the contribution of medical care, the next-biggest source of upward pressure, according to the Labor Department. That boost will be difficult to repeat.”

“Ben Weixlmann, who recently relocated to Washington, saw seven apartments over two months before moving with his girlfriend into a new development in Arlington. For a few hundred dollars more, they snagged a two-bedroom place instead of having to settle for a one-bedroom. ‘We found somewhere we’re both quite pleased with,’ said the 28-year-old, who works for an aerospace company. What helped cinch the deal: a 14-month lease for 12 months of rent.”

The Naples Herald in Florida. “Naples Area Board of Realtors Mike Hughes was somewhat subdued as he announced the latest data for the real estate market in Collier County. NABOR’s second quarter market report showed double-digit declines in pending and closed sales. It’s provided for a splash of cold water after a torrid 2015. ‘We’re facing some headwinds,’ Hughes conceded. ‘We have a nasty presidential election, and I don’t care who you’re for, it’s going to continue to be nasty until the election takes place. So that’s one thing that’s affecting consumer confidence.’”

“Pending sales dropped by 11 percent over the same period a year ago, with closed sales falling by 14 percent. Median closed price, which rose by double digits in 2015, has remained virtually flat, growing by 2.0 percent to $325,000. Meanwhile inventory on the market rose by 35 percent over this time last year. ‘[T]he days of impressively peaking values and expecting a price over market value are in the past,’ said Kathy Zorn, of Florida Home Realty.”

From Greenwich Times in Connecticut. “Second-quarter home sales in Fairfield County reached their highest level in a decade, according to a new report from Douglas Elliman. But not everything went up. The median sales price was $360,000, a decrease of 16.5 percent from the same quarter last year, and the luxury median sales price, at the top 10 percent of the market, fell 26.4 percent to $1,815,700. ‘What’s happening in Greenwich is what we’re seeing across the region,’ said Jonathan Miller, president and CEO of Miller Samuel Inc. ‘The market is softer at the top and firmer in the middle and at entry-level.’”

“In Greenwich, with its pricey real estate market, housing price trends and sales fell short of the levels from last year. Both the sales of single-family home and condos declined; the median sales price for the former fell 7.5 percent to $1,757,000 while it declined by 26.5 percent to $680,000 for the latter. Luxury-market prices followed the overall trends of the market.”

The Inland Valley Daily Bulletin in California. “The townhomes sit half-finished — or half-unfinished depending on your perspective — and the city of Claremont has had enough of what officials and residents are calling blight. So this week, city officials will be meeting with Newport Beach-based William Lyons Homes to discuss the status of a 95-unit townhome project near the 210 Freeway, Mayor Sam Pedroza said. The development has not been, well, developing for some time, said Pedroza, who, along with other city officials, is calling for the project to either get moving again or be sold to another builder who will finish it.”

“‘I think we’ll continue pushing to make sure that either the developer moves forward with something or they figure out a way to unload it to someone else. From a city perspective we’re not going to ignore it,’ Pedroza said. ‘Not only is it a blighting type of situation, but the community gets upset when they see nothing is happening as well.’”

“Claremont Community Development Director Brian Desatnik said the city is working to find options that would complete the project. ‘We don’t like any project sitting half-completed, so the site as it currently sits is a blight on the neighborhood,’ Desatnik said. ‘It is not acceptable to us.’”

“The Claremont City Council in February was informed that construction was halted. Desatnik said William Lyon Homes, which has 19 other projects currently for sale in Southern California, indicated it needed 60 days to reassess the market. ‘They did not believe the market was in a place where they needed it to be in order to proceed with the project,’ he said.”