December 26, 2017

Is The Much-Touted Frenzy Just A Bubble?

A report from the Waco Herald Tribune in Texas. “On a recent Thursday afternoon at Magnolia Market at the Silos, tourists line up for $3.50 ’shiplap cupcakes.’ In the shadow of the rusted silos, children toss beanbags on a village green of artificial turf. Parents slouch in striped beanbag chairs. Food trucks dispense wood-fired pizza, crepes and pineapple-kale smoothies. A journalism teacher from Chino, California, carries a wreath of artificial magnolia leaves, as seen on ‘Fixer Upper,’ the wildly popular home improvement TV show that has started its fifth and final season. This year, with an average of more than 30,000 visitors a week, Magnolia Market should draw about 1.6 million people, according to the Waco Convention and Visitors bureau. Those include four chartered buses that have carried tourists from New York to Waco over the past year.”

“‘I don’t think I’ve ever felt this way about any show before,’ said Annette Deming, the California journalism teacher, who made a three-hour round trip to Waco while attending a convention in Dallas.”

“Are Chip and Joanna a fad that will fade as the fickle American public moves on to other charismatic personalities? Is the much-touted ‘Magnolia effect’ — the force that has filled hotels, roiled the local housing market and fueled a downtown development frenzy — just a bubble? Some blame it for skyrocketing downtown property tax values, which increased 20 percent this year and 31 percent the year before. Some say it has caused a housing speculation bubble in Waco.”

From the Columbian in Washington. “As a renter, Will Mantz, a 44-year-old software sales representative, said he’s ready to put down roots. He wants to build equity and be able to mold a house to his liking. But finding such a place in Clark County’s housing market lately has been a footrace that he and his family refuse to run. He and his wife, Jannae, got pre-approved for a loan last spring and went house shopping — only to find ‘a complete mess,’ he said.”

“‘Rather than paying it away to somebody else for their equity and their home, I’d rather do it for my own,’ he said. ‘One of the places we went to, that we liked, in the span of a week it had 30 offers on it. Even in places where we were high bidders, people would come in with $10,000 to $15,000 (on top of that).’”

“This is the fourth year in a row for double-digit increase in local home prices. In 2016, prices rose 10.7 percent between January and November, on top of 14.2 percent in 2015 and 15.9 percent in 2014.”

“Terry Wollam, managing broker for ReMax Equity Group in Vancouver, said it seems would-be buyers such as the Mantzes are finally starting to pull back. ‘It’s a reflection of a price increase we’ve seen and buyer sentiment growing with wages not following suit,’ he said. ‘I think it just shows that there’s not going to be buyer support for 10 percent appreciation year-over-year that we’ve had in years past.’”

The Hartford Courant in Connecticut. “Home sales in greater Hartford got a welcome bump in November compared with a year ago, but buyers did not pay up for their purchases, a new report shows. The median sale price of a single-family house in the greater Hartford area was $215,000 in November, down 1.8 percent from $219,000 for the same month ago, according to the Greater Hartford Association of Realtors. The industry group tracks a 57-town area from Enfield south to Middletown.”

“In October, inventory dropped nearly 17 percent compared with a year ago, the latest in a string of monthly declines, according to the report. While a tightening inventory can generally push up prices, too few houses — especially ones in attractive locations or with updated kitchens and baths — can hold back the housing market. Without enough fresh properties coming on the market, buyers can lose interest and retreat to the sidelines.”

“Low prices certainly are a boon to buyers but the failure of the median price to move up significantly signals a weakness in the housing market still struggling to recover from the last downturn a decade ago. Economists blame the state’s weak employment growth and a tenuous fiscal situation in state government that are combining to create uncertainty among potential house buyers.”

From Queens Courier in New York. “A new report released by members of the state Senate found that bank-owned, foreclosed homes in Queens have caused property values to drop $17.9 million because financial companies failed to properly maintain the properties they acquired.”

“‘Nightmare Neighbors: How Badly Maintained Homes Damage Neighborhoods’ was released by the Independent Democratic Cause (IDC), an eight-member group in the state Senate. The report identified hundreds of bank-owned properties in Queens, Brooklyn the Bronx and Staten Island to analyze how these foreclosed homes affected surrounding neighborhoods. After the housing market crash in the mid-2000s, Queens saw an increase in ‘zombie properties.’ In 2009, then-Governor David Paterson signed a law that made financial institutions responsible for maintaining a property until it was transferred to another owner.”

“According to the report, however, banks circumvented this law by declining to accept ownership of the properties after the foreclosure process, leaving it up to home owners to maintain them. In 2016, the state passed a law to give municipalities and the Department of Financial Services (DFS) power to enforce the 2009 law and created a registry for these zombie properties.”

“‘Queens is unfortunately all too familiar with the damage done to communities by poorly maintained bank-owned houses,’ said state Senator Tony Avella, who represents Flushing, Whitestone, Bayside and College Point. ‘Residents are growing tired of these bank-owned properties that lower the quality of life in our communities. Shame on these financial institutions for allowing this to happen to our New York communities.’”