The Housing Bubble

The Missoulian reports from Montana. “The DeArments put their Jackson Street home in the Rattlesnake up for sale a couple of months ago, and got exactly one offer. Last week, that offer fell through. Now, depressed by their inability to sell the house, combined with the difficulty of finding another one that suits their needs, they’re taking the house off the market. They’re also getting out of the buying market for now.”

“‘It’s a little bit harder to sell right now, so we’re just going to sit back, enjoy the low house payment we have now and wait for the time to be right,’ John DeArment said. ‘It’s sort of depressing.’”

“‘In 2004 and 2005, we had three buyers for every house,’ said Diane Beck, a Missoula Realtor. ‘You couldn’t not sell a house in those days.’ These days, however, houses are sitting on the market for considerably longer periods.”

“Missoula developed something of a housing frenzy in the past few years, where the prices of some homes were appreciating as much as 20 percent a year. Some of those folks are looking to sell now because they fear they’ll miss the top. ‘I think that accounts for some of the houses in the market right now,’ said Judy Wahlberg, president of the Missoula Organization of Realtors.”

“Tack on a slight rise in interest rates from the low 5 percents of two years ago, and you have the recipe for a glut of homes for sale, said (broker) Betsy Milyard. ‘Inventory is definitely up, particularly in the last month or so,’ Milyard said. ‘I think maybe some people on the buying side are waiting right now to see if prices come in a little bit further.’”

“‘Missoula is a market that is going to be in demand,’ (broker) Bruno Friia said. ‘There’s no way I can see any real depression in this market.’”

The Great Falls Tribune from Montana. “Paul Polzin, director of the Bureau of Business and Economic Research at the University of Montana, says there is evidence that the real estate market statewide is slowing.”

“Polzin notes that increases in real estate prices in several cities, including Missoula and Bozeman, along with parts of the Flathead Valley, have kept pace with a national run-up in recent years. Those markets may be vulnerable to a softening market.”

“‘I don’t see any reason why we shouldn’t be part of what’s going on in the rest of the nation,’ he said. ‘I think there was some kind of bubble in Montana.’”

“‘Things have slowed down in comparison with a year ago,’ said Donna Kostelecky, president of the Gallatin Valley Association of Realtors. ‘But the market is still very good. Buyers have a larger selection today than they had a year ago.’”

“In the Flathead, there are more homes on the market than in recent years, a sign of a changing market. ‘I think (the market) has done some adjusting, there’s no question about that,’ said Doug Gawe, a Realtor in Whitefish,. ‘Maybe even correcting. It has sort of leveled out a bit, but it’s certainly still moving.’”

“‘There may be some slowing down in the higher-priced stuff,’ said David Munroe, president of the Great Falls Association of Realtors, noting he has a listing that includes a home and 20 acres near Manchester priced at about $600,000 that has had ‘very few lookers.’”

The Jackson Hole Star Tribune. “‘Slump’ is not a word that applies to Wyoming’s housing markets. Moderation of price, perhaps, or modest cooling. But not slump.”

“Bo Short, president of the Cheyenne Board of Realtors, says its worth remembering that real estate locally is coming off a string record years. ‘Our market is still good,’ he says. ‘The difference is that our inventory is really high.’”

“Cheyenne has over 1,000 houses on the market, where 350 to 400 would be more typical.”

“As a result, there’s more dealing going on, in the form of modest price reductions, offers to pay some closing costs and other concessions, as sellers compete for the attention of buyers. Sellers might also have to wait longer to sell their homes.”

“‘Their house really needs to be in grade A condition when someone looks at it,’ Short says. ‘For buyers, it’s a great place because you’ve got lots of houses to look at,’ he adds.”

“In Sweetwater County, the energy boom continues to create labor shortages and a need for additional housing. ‘We’re finally getting more construction in,’ says Mary Manatos, a real estate agent in Rock Springs. ‘What I see is housing sitting a little longer on the market, and the prices either maintaining or starting to drop.’”

The Greeley Tribune from Colorado. “Tom Muniz and his wife weren’t worried when they decided to sell their Greeley house 18 months ago. They were so confident the process would just take a couple of months that they moved into their new place. Now they’re on their second Realtor, asking less than they expected and making two mortgage payments.”

“‘We didn’t anticipate it would take as long as it has to sell,’ Muniz said. ‘We thought we would be able to get out of that house within a few months. It’s just not going to happen. We’re kind of struggling.’”

“Muniz is living proof that a high number of foreclosures in an area doesn’t just affect the people who are defaulting on their loans. For two months, Weld County has had the highest foreclosure rate in the nation, according to a properties listing company.”

“In Weld County, one in every 168 households defaulted on their loans. That rate is 700 times higher than the national average. Colorado is following suit with Weld’s trends.”

“A high number of foreclosures means there are more properties than normal on the market, allowing buyers to be choosy when they pick a home. Also, it likely means a drop in prices for normal home sellers, said Rick Sharga, for RealtyTrac. ‘If you can buy a 5-year-old house for 30 percent below market value because of a foreclosure, it means that the 5-year-old house next door will also have to reduce its prices to move the property,’ Sharga said.”

“Along with home owners, a high foreclosure rate can mean less property tax generated by municipalities and a loss of jobs from Realtors to home builders. According to a 2005 case study sponsored by the Home Ownership Preservation Foundation, direct municipal costs from a foreclosure can exceed $30,000 per property.”

“‘A soft housing market it not good for anybody,’ said Matt Revitte, a broker associate in Greeley. ‘I would say a lot of people will be affected by this slow down.’”

“He said the Weld County housing market is simply going through a cycle and will rebound. However, he fears that the worst might not be over. ‘I don’t see anything in the immediate horizon that says ’stop,’ Revitte said.”

“For now, Muniz will continue waiting and hoping for a miracle. His house is average, it’s on a busy thoroughfare and needs a little fixing up. He would do it himself, but he’s strapped for cash trying while trying to make two mortgage payments.”

“When he first put it on the market 18 months ago, it was appraising for $115,000. Now, Realtors tell him he could get $93,000 for it.”

“‘I think buyers right now are wanting to find a house they can move into rather than anything to do work on… I’ve heard there’s such a surplus of properties available that buyers can afford to be choosy,’ Muniz said. ‘It’s just not selling.’”