The Housing Bubble

A report from The Olympian in Washington. “The law of supply and demand is pretty simple. A product in great supply with weak demand can yield low prices. But couple strong demand with low supply, and the reverse happens. In the case of housing during a time of scarcity, prices can hit stratospheric levels. That focus on housing supply is a key argument made in a national report on housing and homelessness released Wednesday by a coalition of Democrats in the U.S. House. ‘We simply cannot build enough units in this country,’ U.S. Rep. Denny Heck, D-Olympia, told The Olympian Editorial Board last week as he previewed the report’s preliminary findings.”

The Seattle Times in Washington. “Single-family home prices continue to reach new highs despite increasing inventory in May, according to the Northwest Multiple Listing Service. The news isn’t all bad for home buyers, however, as total active listings in King County went up for the second month in a row after years of declining inventory, increasing 36 percent in May compared to the previous year. ‘There’s a little relief, meaning buyers don’t have to write an offer within the first hour,’ said Mike Grady, president of Coldwell Banker Bain. ‘Now they have maybe a day.’”

The St. Augustine Record in Florida. “A look at the population statistics or just a drive down County Road 210 would justify the belief that northern St. Johns County has seen an explosion of growth. The reality is that it’s just a long fuse that’s still burning. The real boom has yet to come. And it will. SilverLeaf’s entrance into the county’s busiest building corridor is the surest sign that massive housing growth is still in front of us rather than in the rear-view mirror.”

“That development, which stretches from the C.R. 210 area south to State Road 16, is set at 10,700 homes, but it’s certainly not alone — not even in that part of the county. In the northern sector of the county, there are several other large housing developments that just launched in the last two years. On the east side of Interstate 95, there are three new communities: Beachwalk, Creekside at Twin Creeks and Beacon Lake that recently started selling homes. Assuming they are successful, the three will combine to add about 3,000 homes.”

“Shearwater opened in 2015 to bring 2,000 more homes. And even that pales in comparison to RiverTown, in the extreme northwest. That development was relaunched about two years ago and sold about 250 homes last year. Still, that leaves more than 4,000 homes that can be sold there. So since 2015, just those developments have added or are about to add around 20,000 potential new homes in the northern part of the county west of U.S. 1. How about east of U.S. 1? Well, a not-too-secret development called Nocatee has pretty much set the bar for development in the area. There have already been 7,000 homes sold there, and Roger O’Steen, founder and chairman of master developer The PARC Group, said the plan is to sell another 3,000 homes. (The development is entitled to more than 12,000.)”

The Star Tribune in Minnesota. “Nearly 340 residential buildings sit empty and boarded across Minneapolis, despite a severe housing shortage and a steep vacant property fee that has raised $20 million for city services over the past decade. The problem isn’t specific to Minneapolis. St. Paul has 634 vacant properties, according to the city’s data. The Twin Cities’ situation is dwarfed by the street after street of boarded-up properties in cities like Baltimore, home to more than 16,000 vacant houses.”

“These days, many of the homes left vacant sit in the Twin Cities’ most desirable real estate neighborhoods and have increased exponentially in value in recent years. Instead of selling for profit, the owners pay thousands annually to the city as they wait for the right moment to renovate, tear down or sell. Timothy Alexon, who owns scores of properties in north Minneapolis, said the annual fee pales in comparison to what he plans to make when his company eventually sells them.”

“‘The houses are going up more than the [fee] is costing me,’ he said.”

From News 5 Cleveland in ohio. “Cleveland council members and residents report a spike in the number of homes and vacant lots that are filled with overgrown grass and weeds. Cleveland Councilman Kevin Conwell said he found more than 50 homes, in just two hours, that are in violation of the city’s high grass ordinance and are a potential safety and health hazard. David Imbordino said he’s tired of dealing with two homes in his East 72nd Street neighborhood, which are filled with high grass and weeds. Imbordino said he’s contacted the city about cutting the lawn and issuing a citation, but he’s said there’s been no response.”

“‘It’s pretty bad, a lot of bad animals out there,’ said Imbordino. ‘Big ones, like raccoons. ‘The city hasn’t cut these two lot in at least a couple years, I never see them.’”

The Northwest Herald in Illinois. “On East Lake Street in Woodstock, just past Raintree Park, a house sits in disrepair. The house has been empty since 2010, and it’s not the only home that went vacant around that time, Woodstock building and zoning director Joe Napolitano said. ‘With the financial crisis, when all the bad mortgages were issued, is when we started seeing an uptick in foreclosed properties,’ he said. ‘People couldn’t pay, and a lot of them just walked away.’”

“When a property owner washes his or her hands of the problem, the matter can become stuck in limbo between the owner, mortgage company and bank, Napolitano said. The banks can claim they don’t own the property until the mortgage is released. In the meantime, municipalities are left to pick up the pieces. ‘Sometimes the bank that holds the mortgage is tied up in the court system, and some foreclosures go on for years.’”

“One of the Harvard homes has been vacant for at least 10 years, and the two others have been abandoned for more than three years, said City Administrator Dave Nelson. ‘We’ve been doing maintenance of the lawns and general maintenance to secure them,’ he said. ‘It’s nothing egregious really, but people just walk away, and then the banks walk away, too. It’s crazy.’”

The Buffalo News in New York. “Lori and Dwayne Bell of Derby have been scared out of their minds for almost 10 years. The Derby couple has spent a decade living in a home that has been stuck in foreclosure and is in perpetual danger of becoming a ‘zombie’ home. But they are determined to stay there, rather than leave a vacant and abandoned property to drag down the neighborhood. ‘We’ve been going through utter hell, every day, wondering if we’re going to have our home,’ Dwayne Bell said.”

“When financial problems forced the Bells to miss mortgage payments, they started down a path trod by tens of thousands of Americans in the wake of the housing market collapse and financial crisis of 2008. But the Bells have managed to stay in their home through perseverance — and by reading the fine print. While the economy has improved, the threat of zombie homes continues. The number of foreclosures filed in Erie County went from a recent high of 2,759 in 2009 to 1,668 last year.”

“‘It’s nerve-wracking. People think it’s easy to sit here and not make a mortgage payment. I wouldn’t wish it on my worst enemy,’ Lori Bell said.”

From KRQE in New Mexico. “Boarded up doors and windows, dirty needles, and downright disgusting looking properties can be found in pockets all around Albuquerque neighborhoods. According to the Planning and Zoning Department, based on the report from the Vacant and Abandoned Houses Task Force, there are at least 1,300 neglected and vacant homes around the city on any given day.”

From NBC Philadelphia. “Every month, New Jersey resident Kimberly Deal has to decide which bills to pay and which to put off for another time. Housing insecurity burdens hundreds of thousands of Americans, especially people with lower incomes or those who live paycheck to paycheck. In Deal’s section of Atlantic County, 61 percent of residents pay more than 30 percent of their income on housing, according to U.S. Census data. The median income for her zip code is 41,802.”

“On the Pennsylvania side, families in North Philadelphia are the most burdened by rent and mortgages. Half of residents pay at least 30 percent of their income on housing. And the median income for that area is well below the poverty line: $21,630 for a family of four, according to U.S. Census data. It’s the same every month. Sitting on the stoop of her Pleasantville home, Deal pointed out one vacant house that had been foreclosed. On the other side, eviction crews empted another home. ‘It’s been going this way in this area for some time now,’ she said.”