The Housing Bubble

A report from the LeMars Daily Sentinel in Iowa. “In an effort to get in front of the housing crisis that often plagues small towns, City of Remsen officials decided to expand city infrastructure west of town. ‘Like so many areas in northwest Iowa, there’s a housing shortage,’ said City Engineer Josh Pope.”

From Forbes on Ohio. “Most of the fastest growing cities in America are in the Sun Belt or the Pacific Northwest, but one city in ‘fly-over’ country is keeping pace—Columbus, Ohio. Realtor.com recently ranked Columbus as America’s fourth-hottest housing market. Columbus Realtor Jim Ross, a friend of mine, has experienced this strong housing market first hand. He notes that ‘In multiple offer situations, I’ve seen numerous cases where buyers are willing to pay well above asking price, purchase as-is (they’ll inspect the property but won’t ask for repairs), and even agree to pay thousands of dollars above the appraised value.’”

From National Public Radio. “Builders can’t finish homes fast enough to keep up with demand. All of this means prices for existing homes on the market are going only one direction — up, sometimes stranding people in their current homes even if they desperately want to move.”

“In Beaverton, Ore., Manish Gooneratne feels stuck in his home. ‘We bought in May 2017 when home prices in our area had reached levels compared to 2007,’ he said. ‘As of one year ago, our home is estimated to have appreciated in value by $10,000 to $12,000. This is great, but since we barely squeezed back into the market, we doubt we’d be able to get back in even if we sold with a profit.’”

The Union Tribune in California. “San Diego home sales recently dropped to their lowest level in years, likely much more to do with affordability constraints than the economy, but it might be a sign of things to come. In June there were 3,927 home sales in the county, CoreLogic said, which is the lowest in four years. The phenomenon is nationwide, largely led by a shortage of homes for sale, said Alan Gin, economist at University of San Diego.”

“Jason Cassity, a real estate agent who primarily focuses on downtown, said he has seen some properties sit longer on the market than last year and predicts a tough go for some real estate agents. He said top agents can wait for three months for a deal to close, and that will be very tough for struggling agents who won’t be able to go as long without getting paid.”

“‘For the last five years, it’s been really easy to be a real estate agent,’ Cassity said. ‘Now, I think you’re going to start to see maybe lower-end to middle-of-the-pack agents finding it tougher to wait 60, 90, 120 days to get a check.’”

“Matthew Shaver, a San Diego senior mortgage consultant with Finance of America, said he also predicts a drop off in workers for his profession. He said demand for refinance loans has dropped since interest rates rose. Nationwide loan applications in early July to refinance mortgages hit their lowest point in more than 17 years, said the Mortgage Bankers Association. At the same time, Shaver said many buyers are hitting an affordability wall, so there is not as much loan processing happening.”

“Shaver said potential buyers are having more trouble than last year qualifying for loans because prices have risen so much and, even if they do qualify, mortgage rates are high enough for them to want to avoid the payments. ‘There’s only so much new business to go around,’ he said.”

“Software engineer John Dorman, 31, of Mission Valley, started looking for a place to buy around June 2017 because of a desire to have more space and control of his own property. He got prequalified for a loan and began viewing properties, including condos in downtown, East Village, Mission Valley and College Area for $450,000 to $600,000. He also looked at a few run-down single-family homes for around $650,000 but wasn’t sold on them.”

“Dorman said he just didn’t see enough value for what he would have to pay and decided this May he wanted to use his money for other investments. ‘I think the market out here is reaching its peak and it is a terrible time to buy,’ he said. ‘I decided to keep my savings liquid, as opposed to tied up in a house.’”

“Chris Thornberg, economist and founding partner of Beacon Economics, said looking too much at the recent slowdown in sales is not the smartest idea. He said the economy is still strong and looking at sales numbers alone doesn’t tell the whole story. ‘There’s just not a lot there to panic about,’ he said. ‘It’s just a really tight market out there. There’s just not much to sell.’”

“There is no doubt that the desire for homeownership in San Diego County is strong, said Evan Morris, real estate agent based in Golden Hill. However, he has had potential buyers start to draw the line with rising prices. ‘People don’t want to pay $350,000 for a one bedroom, one bathroom (condo),’ he said.”

“However, Morris said there is opportunity for buyers if homes stay on the market longer, especially with many homes for sale that are priced much higher than what other homes in a neighborhood are going for. He said he recently was able to get $60,000 off the asking price for his clients purchasing a home in Bay Ho.”

From KIRO 7 in Washington. “After a red-hot housing market for the last three years, the Seattle area is showing signs of cooling as more homes sit on the market. The Northwest Multiple Listing Service said the number of active listings in King County in July was up nearly 48 percent from July 2017. Paul Endzell, of Dream Home Real Estate, has held five open houses at a 1941 home in Renton he listed for $525,000. If the same house were in Seattle, it might sell for $900,000. Endzell expected a lot of interest in the home.”

“‘I’m wondering where everybody is,’ he said.”