The Biggest Swing You Could Imagine
A weekend topic starting with Mother Jones. “Are we in a second housing bubble, as I suggested in a chart I posted a couple of days ago? Brad DeLong has an optimistic take: ‘There were three good reasons in the mid-2000s to believe that housing prices should jump substantially….How much were these worth? Not enough to boost housing prices to their 2005 values. But plausibly enough to boost housing prices to their values today. IMHO, the best way to view the graph is as a positive ‘displacement’ boom caused by true fundamentals, a bubble upward overshoot, a crash downward undershoot, and now (we hope) equilibrium.’”
From News Talk. “How do you spot an economic bubble? Generally, you only see it when it pops. Everyone who lived through Ireland’s Celtic Tiger boom and bust will know what it feels like when ‘good times’ turn sour. Ireland’s current rapid rise in property prices is being caused by a miss-match between supply and demand. Low stocks of houses available to buy make them more expensive - but that doesn’t necessarily mean there’s no ‘bubble’ element to recent price hikes. There is a saying in economics that when people start saying ‘this time is different’ it’s time to get worried.”
“FOMO - When bubbles start to form investors are afraid of being left behind when there’s money to be made - so they pile in. Euphoria - Valuations hit extreme levels (think Irish property prices in the year before the crash). Downfall - The shine wears off. Savvy investors realise a market is out of control and start to jump ship as values head south. Fallout - We all sit around asking ‘why didn’t we see this coming’ (and writing think pieces about how we’ll spot the next bubble forming).”
The Tampa Bay Times in Florida. “With the peak selling season in full swing, Tampa home sales didn’t disappoint in March — prices in all four bay area counties jumped again by double digits compared to the same time a year earlier. ‘We certainly have a great, healthy market right now,’ Charles Richardson, senior regional vice president of Coldwell Banker, said Friday. ‘I don’t see any adverse influences to cause it to slow down.’”
“March’s price increase marks the 61st consecutive month of year-over-year price gains. Despite some talk of another bubble, tighter lending standards have stopped the rampant speculation that sent prices soaring to unsustainable levels before the 2008 crash, bankers and Realtors say.”
The Tennessean. “Spurred by Nashville’s breakneck growth, Davidson County’s property values have soared by a record median 37 percent since 2013 under a reappraisal performed by the office of Davidson County Property Assessor Vivian Wilhoite. In Nashville’s most rapidly gentrifying neighborhoods — including large stretches of East Nashville, parts of North Nashville, The Nations in West Nashville, and Wedgewood-Houston near the city’s fairgrounds — values have skyrocketed the most.”
“It means these neighborhoods will be taking on a significantly larger tax burden than they’re accustomed. ‘The growing demand for real estate in the Nashville market drives up values,’ Wilhoite said.”
The Napa Valley Register in California. “The first quarter of 2017 saw continued improvement in the sale prices of American Canyon homes, where home values increased 45 percent over the previous five years. The average sale price of newer homes was $603,000, a 13.6 percent jump over 2016’s average sale price of $530,625. The newer homes sold for $216 per square foot. Older homes average sale price was $406,917, up 13.5 percent from the 2016 average of $357,947. Interest rates remain low, and American Canyon offers more value for home buyers compared to the rest of the Bay Area.”
The Green Bay Press Gazette in Wisconsin. “Difficult might be an understatement when it comes to finding a house in Brown County these days. Home sales data show 2017 is shaping up to be the busiest year for sales in a decade. ‘It has changed like night and day,’ Realtor Mark Olejniczak said. ‘The biggest swing you could imagine.’ Olejniczak said two or three offers on a property is no longer unusual. ‘I’ve seen five offers on one property,’ he said. ‘And it’s not just in certain areas. It’s the east side, the west side, Green Bay, Bellevue, De Pere, Lawrence, duplexes, rural homes, starter homes, condos. If a buyer has looked at a (starter home), they need to make up their mind pretty quickly and come pre-approved to buy.’”
The Des Moines Register in Iowa. “New data show central Iowa’s hot housing market has infiltrated every corner of Polk County. Home prices have surged around the metro in recent years thanks to a steady economy, an influx of young homebuyers and a historically low number of homes for sale, real estate professional say. With few houses on the market, some sellers have enjoyed bidding wars and above-list-price offers.”
“‘The story continues to be supply, historically low supply, lower supply than we have had for a long, long time,’ said Bob Burns, president of Coldwell Banker Mid-America Group. ‘It’s driving prices up.’”
From WFPL on Kentucky. “The supply of available homes in Jefferson County isn’t keeping up with demand. The sparse inventory is keeping home values here on the rise. Tony Lindauer, head of the Jefferson County Property Valuation Administration, held a news conference Friday morning at the PVA headquarters in downtown Louisville to brief reporters on the latest assessments. ‘We are one of the hottest markets in the country,’ he said. ‘That’s basically what’s driving the prices up.’”
“And John Nelson, an economics professor at the University of Louisville, said he’s more concerned about the longevity of market conditions and job creation than threats of a housing market bubble, despite rising home prices. ‘That’s the least of my concern,’ he said of a new bubble.”
The Colorado Springs Gazette. “Something is missing from front lawns across Colorado Springs: for sale signs. Actually, the signs are out there, but there are far fewer around these days. The result: Some sellers routinely field multiple offers, especially if their single-family homes are priced in the $200,000 to $400,000 range; buyers must act within hours - or even less - to make an offer or risk losing the home; and both sides are seeing prices soar because of the furious demand and supply problems.”
“‘We are experiencing something that I’ve never seen in this market before,’ said Joe Clement, broker-owner of Re/Max Properties and a 40-year real estate veteran. One of his agents recently listed two homes in the $250,000 to $350,000 price range. Within days, the first home had 34 showings and eight offers, while the second had 40 showings and six offers. ‘It’s like crazy,’ Clement said.”
“And while nobody wants higher mortgage rates, an uptick would eventually reduce the number of buyers in the market, Clement said. ‘The big cities and the medium-size cities like our size all have the same problem: inventory, inventory, inventory and demand, demand, demand,’ Clement said. ‘I’m not cheering for high interest rates or a bump-up, but it could help us in this case. It could put a little damper on the fire. It’s not out of control, but it’s getting there.’”
