The Housing Bubble

A report from WCPO Cincinnati. “How hot is the housing market this year? So hot that this is the best time since the peak of the 2006 housing bubble to sell a home, with buyers offering more than asking price in many areas, even in Southwest Ohio and Northern Kentucky. New mom Corey Curran says trying to buy right now is ‘insane! Before we even get in to see houses, they are sold within a couple of hours.’ Husband John Curran says he’s learned the rules of 2018 the hard way. ‘You have less than 8 hours to get a bid in, and you have to go over asking price or you don’t have a chance,’ he said.”

“West Chester, Ohio realtor Lynn Schwarber has one big piece of advice: ‘You’ve got to rush out the first day a listing hits the market,’ she said. Once you get above $300,000 in Butler County, Schwaber says buyers have many more options. And above $400,00, homes can sit on the market for months, she says, because they are competing with brand new construction, with 3-car garages and miles of white granite countertops.”

From the Grand Junction Daily Sentinel in Colorado. “The Grand Valley’s residential real estate market continues to thrive as median prices have surpassed pre-recession numbers and building permits for new homes soar. However, strong demand and a continuing lack of available inventory make the market seem like an inbound train heading toward a still incomplete track. ‘We’re kind of hoping we can build the tracks before the train gets here,’ Bray Real Estate Development Coordinator Kevin Bray said.”

“The number of building permits issued in Mesa County in the first four months of 2018 is up 66 percent over last year, and the 86 permits in April were up 59 percent from April 2017 and the highest for the month since before 2008, according to figures compiled by Bray Real Estate. Bray, however, thinks it’s unlikely this pace can continue due to the time it takes to get a development off the ground. The current pace would put building permits over 1,000 by the end of the year, but the expectation is to hit 850.”

“Cody Davis has been building homes in the valley for 14 years and has noticed a big change from just two years ago. Demand has risen and more builders have entered the fray to meet the demand. ‘Before we were begging people to buy our houses, now people are begging to buy ours,’ he said. ‘It’s been quite a paradigm shift.’”

From the Deseret News in Utah. “A year ago, I asked readers whether the Wasatch Front could help ending up like San Francisco. A year later we’re still on track for that. The median home price in South Jordan, for example, is $425,255 right now, according to Zillow. That’s a 9.1 percent increase over the past year. Figures vary for the rest of the Wasatch Front. In Park City, it’s $679,189. In San Francisco, the median home price was $1.6 million in April.”

“According to the federal Department of Housing and Urban Development, a family of four could earn a salary of $117,400 there and still qualify for federal assistance. While that still sounds like light years ahead of the Wasatch Front (where a salary of $64,000 qualifies), a report in March by the Kem C. Gardner Institute at the University of Utah calculated that if trends from the last 26 years continue, the median home price here will be $1.3 million in 2044.”

“That historical trend, by the way, is an average annual increase of 5.7 percent in the price of a house. I doubt average salaries will increase 5.7 percent annually each year until 2044. If so, they’re off to a really sluggish start.”

The Orange County Register. “Southern California house hunters are putting 9 percent fewer existing homes into escrow this spring, a dip that caused one analyst to make ‘Cracks Appearing’ the title of his latest report. Steve Thomas wrote: ‘Noticeable cracks have appeared that illustrate a cooling market. It is not as if housing has suddenly tilted in favor of buyers. No, there are still multiple offers and plenty of homes flying off the market and into escrow just moments after the FOR SALE sign is pounded into the front yard. Buyers are still frustrated by the lack of available homes on the market below $1 million. Sellers are still in the driver’s seat. Nonetheless, trends have surfaced that highlight a cooling marketplace.’”

“Take the four-county region covered by the Southern California News Group. Thomas’ data from May 3 shows demand at 13,669 new escrows — down 1,341 sales contracts in 12 months or 9 percent. That’s also off 5 percent vs. the previous five years at this time of year. Four-county supply of 29,118 listings was down just 46 residences in a year but 5 percent lower vs. ’13-’17. That translated to local homes taking slightly longer to sell.”

From Park Cities People in Texas. “The slew of people pouring into the Dallas-Fort Worth area is keeping housing market prices high, real estate agents say. But an evening-out process is slowly forming. The market experienced a period of inflation – especially in the Dallas-Fort Worth area – where sellers could name their prices, because of the number of transplants heading to Texas for jobs.”

“But conditions are changing. There’s less of a ‘desperation’ for homes, and buyers are becoming pickier, said Marti Voorheis, an agent with Dave Perry-Miller Real Estate. ‘Prices continue to increase overall, but have slowed since last year,’ Voorheis said.”

From the Post and Courier in South Carolina. “One of the fastest-growing places in South Carolina is seeing signs of a home construction slowdown, easing concerns that an annual limit on building permits is necessary while raising worries about the town’s revenue. Two of four council members at a committee meeting this week, Tom O’Rourke and G.M. Whitley, said the town may need to raise taxes if revenue-generating development slows.”

“The subject of the committee meeting was growth management and Councilman Joe Bustos’ years-long effort to reinstate an annual limit on building permits. But the takeaway was that home construction may not need managing right now. ‘It’s easy to get emotional and look around town and say that things are spiraling out of control,’ said Councilman Bob Brimmer. ‘I think market forces are tapping the brakes on development.’”

“Driving around Mount Pleasant, it might be hard to imagine development is slowing. This year, the town expects to see nearly 2,000 new residences constructed, the most since 2000, but town officials say the development pipeline appears to be turning from a gusher to a trickle. According to Planning Director Jeff Ulma, during the past three quarters — the nine months ending March 31 — the town approved just 61 lots for new single-family homes. During the previous three quarters, there were 588. During the three quarters before that, which would be the first nine months of 2016, there were 677.”

“‘Do we need a permit allocation program? I think we’re entering one of those periods where housing is going to slow on its own,’ Bustos said. Bustos said the town needs ’some mechanism so that we can control growth, if need be, but we’re not going to slam the door too quick, because we need money.’”

“As rapid growth resumed after the recession — no city east of the Mississippi grew as quickly as Mount Pleasant did in 2015 — Town Council responded with a moratorium on apartment construction and sharply increased development impact fees. The town expects to have about 40,000 residences by the end of this year and thousands more have been approved. But if some early indicators prove correct, the desire to build more houses is waning. So far, the slowdown has only been observed with single-family homes.”

The Miami New Times in Florida. “If you ask a random visitor to name five things Miami is famous for, ‘nice restaurants’ is bound to make the list. There’s a reason rich people hang out here, after all. No one is laying out $3 million for a beachfront condo if they have to eat dinner at Denny’s on a Friday night.”

“Politicians and rich folks tend to justify how ludicrously expensive Miami is by claiming the city’s upper-class wealth trickles down to hotel workers, bartenders, and the like, but a new study this week from Trulia shows, once again, that the city’s economy is not designed with the average person in mind. Trulia reports that restaurant workers in Miami-Dade can’t afford 99 percent of homes in the area.”

“Of course, this is roughly the thousandth study that shows that Miami’s housing market is simply not designed for normal people to live here year-round and, instead, is optimized for international investors to stash money they’ve earned overseas in the local real-estate market.”

“In February and March, real-estate analyst Peter Zalewski released a huge bundle of reports that showed the city has let luxury condo developers build an unprecedented glut of million-dollar-plus condos. While the city is in the middle of a historic affordability crunch, Zalewski noted Miami-Dade County has built so many luxury condos that it will likely take four years to sell them all. In the meantime, restaurant workers can barely find a place to live, and thousands of Miami and Miami Beach residents are on waiting lists for affordable homes.”