The Housing Bubble

It’s Friday desk clearing time for this blogger. “ATTOM Data Solutions, on Thursday reported foreclosure filings for the first half of 2018. Counter to the national trend, 26 of the 219 metropolitan statistical areas analyzed in the report posted a year-over-year increase in foreclosure activity in the first six months of 2018, including Houston, Texas (up 10%); Dallas-Fort Worth, Texas (up 11%); Cleveland, Ohio (up 4%); Phoenix, Arizona (up 5%). ‘Localized foreclosure flare-ups in the first half of 2018 can no longer be blamed on legacy distress left over from the last housing bubble given that nearly half of all active foreclosures are now tied to loans originated in 2009 or later and given that the average time to foreclose plummeted in the first two quarters of the year,’ said Daren Blomquist, senior vice president with ATTOM Data Solutions. ‘Instead these local foreclosure increases are typically the result of more recent distress triggers in those markets.’”

“‘We’re also seeing early evidence of gradually loosening lending standards starting in 2014, specifically for FHA-backed loans,’ Blomquist added. ‘The foreclosure rate on FHA loans originated in 2014 and 2015 has now jumped above the average FHA foreclosure rate for all loan vintages — the only two post-recession vintages with foreclosure rates above that overall average.’”

“Counter to the national trend, foreclosures were on the rise in the Phoenix area in the first half of the year. But it’s no reason to worry. There were more than 5,000 foreclosure filings — default notices, scheduled auctions or bank repossessions — in the Valley through June, a 5 percent increase from a year ago, according to ATTOM Data Solutions. The good news? That’s just a fraction of the 74,000 foreclosures in the area during the worst times of the housing crisis a decade ago.”

“A decade ago, you’d see foreclosure signs across most Southwest Florida, which became the sign of a troubled economy and housing market. And now, despite a building boom across our area and a robust jobs market, we’re once again starting to see the number of foreclosures climb. A sight reminiscent of years past is once again popping up in Cape Coral and across the rest of SWFL. Cape Coral homeowner Jacob Rico says he notices fewer people in his neighborhood, ‘I see many houses like this – empty. Over there a couple houses is empty.’”

“More homeowners in Southwest Florida are struggling to pay their mortgages on time, an apparent lingering effect from Hurricane Irma. In the Sarasota-Manatee region, 4.4 percent of mortgages were at least 30 days overdue in May, up from 3 percent one year earlier, CoreLogic said. Charlotte County also posted a 4.4 percent mortgage delinquency rate, higher than the 3.5 percent last year. In Florida, the 30-day delinquency rate averaged 6.7 percent, ahead of the year-ago 5.5 percent. The rates of homes already in the foreclosure process are holding below year-ago levels, a sign that lenders may be postponing taking struggling homeowners to court.”

“‘The percent of loans 90 days or more delinquent or in foreclosure are more than double what they were before last autumn’s hurricanes in Houston, Texas, and Naples, Florida,’ said Frank Martell, CEO at CoreLogic.”

“Connecticut entered July with the fifth-highest rate of residential mortgages under foreclosure in the nation, according to a study of more than 360,000 foreclosures nationally over the first six months of the year. As of the most recent records posted by the Connecticut state courts, Bridgeport had the largest number of pending foreclosure sales in the coming month at 30 properties, followed by the cities of Stamford, New Haven and Hartford with 18 each. But affluent towns are seeing activity, as well, with a half-dozen foreclosure sales under way in Westport, five in Ridgefield and a pair of properties in Greenwich.”

“According to PropertyShark, Queens had 881 properties go into new foreclosure proceedings in this year’s second quarter, running from April to June. Queens — particularly the Southeast section of the borough — continues to be ground zero in terms of an ongoing mortgage crisis. Those numbers did not likely take leaders at Community Board 12 by surprise. ‘District 12 is still a hotbed for foreclosures,’ said CB 12 District Manager Yvonne Reddick.”

“Reddick’s oft-repeated advice is that dealing with the problem early in the process is far preferable to what can result if people as a matter of pride or other reasons choose to ignore notices and the ability to reach out for help. ‘When the marshal shows up to evict you, people are going to know,’ Reddick said.”

“President Donald Trump’s new tax cut plan may have created a shift in the Westchester housing market. According to appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate, home sales in Westchester plunged 18 percent in the second quarter from a year earlier. That is the highest amount since 2011. ‘When they look at a property, they are concerned about the amount of taxes they’ll have to pay,’ says Michele Silverman Bedell, broker/owner of Silverson’s Realty. ‘The taxes could be $20,000 $30,000, $40,000 on a house.’”

“Bedell says this could discourage buyers and convince potential sellers to downsize. It could also flood the market with inventory and force price reductions.”

“Both startling and subtle evidence is emerging that our housing market is changing course. Let me count the ways: 1) California notice of default filings (step one of the foreclosure process) were up a staggering 24 percent (4,144) in June compared with one year ago. And, the state has experienced three straight months (April, May and June) of increased foreclosure activity according, to Daren Blomquist, Attom Data Solutions senior vice president.”

“Twenty-two states posted year-over-year increases in foreclosure starts for the first half of 2018. Normally solid metro areas like Las Vegas, Dallas-Fort Worth and Minneapolis-St. Paul experienced increases, also according to Blomquist. Thirteen percent of Orange County home sellers reduced their asking prices in recent weeks, according to Steve Thomas of Reports On Housing. Orange County’s home-listing inventory hit 5,983 this time last year, Thomas reported. This week, there were 6,501 homes listed for sale, a 9 percent increase over this time last year.”

“Sellers would be best served by prudence. ‘We’ve hit the top of the market. Anybody new to the market better price their property at market rate or below,’ said Dan Keller of EXP Realty in San Clemente. In this current market, I see many buyers playing a fools game by way overbidding based upon actual closed comparable sales. You’ve got to get rid of that ‘got to have it no matter what’ mentality.”

“June’s home sales numbers for North Texas made me do a double take. Preowned home sales in the area were down by the biggest year-over-year percentage in four years. Okay, it wasn’t down by much — just a 3 percent drop from June 2017’s record high preowned home buys. But for the last few years, the only direction Dallas-Fort Worth’s housing market has known is ‘up.’”

“All good things must come to an end. And there are more signs that our runaway housing market is hitting a ceiling. ‘Maybe we are seeing the beginning of the slowdown of the hyper growth Dallas has had for the last six or seven years,’ said Dr. James Gaines, chief economist at the Real Estate Center at Texas A&M University. ‘We’ve been kind of expecting it for almost a year now. It’s going to slow down eventually,’ he said. ‘The eventually may be getting here.’”

“Another telling sign of where the D-FW home market is headed this year is the rise in homes on the market. The almost 25,000 houses with ‘for sale’ signs in the front yard is the largest local inventory since 2012. ‘It’s not necessarily that the market is gong to go bad,’ Gaines said. ‘But the almost double digit price increases and increases in sales volume are going to slow down we think. You are going to start seeing some small negatives on a year-over-year basis.’”

“One subdivision won’t end the Rogue Valley’s housing shortage. In a real estate market where a dearth of housing inventory is decried at the turn of every calendar page, however, a Mahar Homes subdivision is poised to provide more options for 55-and-older buyers. Prices haven’t been fixed on the 28-acre development that will eventually have 44 single-family residences overlooking orchards and vineyards, but Mahar Homes General Manager Randy Jones indicated price tags will range above the $400,000 mark.”

“The number of houses on the market grew 16.2 percent to 1,117 from 961 and topped 1,000 for the first time since last September. ‘We’re seeing more people jumping in,’ said Colin Mullane, spokesman for the Rogue Valley Association of Realtors. ‘We’re reaching peak prices of 2005 and 2006 after a much steadier build. We’ve been hoping for this for quite some time.’”

“The first wave of modern high-end homes is about to hit Akron. Private developers are busily buying up 35 acres of city-owned land to build 349 homes in four developments, some so dense that 15 houses will fit on an acre. The first of the homes will be on the market later this year or early next, carrying price tags of up to $280,000. It’s all single-family housing.”

“More cautious residents worry that developers are overestimating the market. That’s what happened on Hickory Street when two homes went up, the bottom fell out on the housing market and no more units have been built since. ‘That’s my biggest concern is that you’ll have 51 homes at $200,000 and nobody to buy them,’ said Jamie Brown, who lives beside the future site. Some neighbors also question the prices. How, in a city with a median household income of $35,240, can anyone afford a $200,000 home?”

“‘There are a lot of [used] homes here that are selling for half that. So why would someone spend that much?’ asked the Rev. Scott Campbell, whose Shoreline Church sits across the street from the barren Guinther Park. ‘Are they going to sit empty if no one buys them and eventually become Section 8?’”

“Prices for purchasing a house in Sidney are on the downward trend, but asking prices still remain pretty steep in the area. Leif Anderson, owner of Beagle Properties in Sidney, says that single family homes are selling fairly well. ‘But the other segments, commercial lots and multi-family homes, aren’t going very well,’ Anderson said.”

“He explained that homes have experienced a fairly significant correction or decline in prices. But are prices back to where they were prior to the pre-Bakken days? ‘Not even close, actually,’ Anderson said. He said people might think that way until they look back at the much lower prices from years such as 2005 and 2006. ‘You forget where our numbers were. Compare to that, the numbers are still pretty big.’”

“He is worried that the prices may even dip lower. ‘We felt because there’s more [oil] activity, it would strengthen the real estate market. So far, it hasn’t happened yet.’ Factors why the housing market hasn’t improved in eastern Montana include that most of the oil activity has been being conducted in North Dakota and that Williston and Watford City now has plenty of housing available. ‘We won’t have an overflow,’ Anderson said.”