The Housing Bubble

The Denver Post reports from Colorado. “Farm fields around the metro area are selling more slowly these days as national builders scramble to sell new homes they’ve already built, buyers and sellers involved in the transactions say.”

“For example, Brighton-area developer Craig Carlson said he recently dropped an option to purchase an 800-acre parcel south of Brighton after working on the transaction since 2000. Melody Homes, a division of national homebuilder DR Horton, walked away from a rumored $1 million that the company spent on plans and development issues on a parcel east of Longmont earlier this year.”

“KB Homes is one homebuilder that’s treading carefully in the more volatile market, said Rusty Crandall, the company’s division president in Denver. ‘We are being very careful about making any large investments and where we have our land acquisitions, we’re only buying those parcels that fit our strategy perfectly,’ Crandall said.”

“Farm-field sales are worse in states like California, Nevada and Florida than in Colorado, Carlson said, because new home prices shot up in those states even more quickly than they did here, and now…prices are dropping across the country.”

“Earlier in the year, property owner Jim Anderson sold more than 500 acres east of Longmont before the slowdown started in earnest. ‘We did close, even though some people did walk away (earlier),’ Anderson said.”

“With home foreclosures near record levels, banks are looking for alternatives such as online auctions to sell their properties. Freddie Mac listed four foreclosed properties with agent Roger Bottoms. When the properties failed to sell quickly, Freddie Mac decided to list them on (an) online auction site.”

“‘Only one has sold,’ Bottoms said. ‘If the banks had lowered the prices in the first place, they would have gotten more out of the properties and not wasted their time on an auction.’”

“Mortgage companies faced with an increasing number of delinquencies will do what it takes to reduce their inventory. ‘Our interest is in making the sale and getting a good market price to reduce our own credit losses, as well as creating an affordable homeownership opportunity,’ said Brad German, a spokesman for Freddie Mac.”

“During September, 4,485 Colorado properties were in some stage of foreclosure.

The Billings Gazette from Montana. “‘For sale’ signs are sprouting like weeds in the suburbs of Phoenix and Las Vegas, and foreclosures are way up in Colorado and Georgia. But as 2006 winds down, Billings real estate experts say the local market has avoided the ’speculative bubble’ that was real estate’s worry last year as well as the steep downturn in prices that many areas of the country saw this year.”

“The current rate of increase is well short of the double-digit price gains the Billings housing market experienced in 2004 and 2005. ‘Billings doesn’t have the sex appeal of some markets, but if you want a good solid return on your investment, it does provide that,’ said said Howard Sumner, a Billings real estate agent who closely tracks local real estate trends.”

“Ann Adair, economist at Montana State University-Billings, said economic indicators point to some softening in the Billings real estate market, but there’s little cause for concern. ‘It’s not anything huge,’ Adair said. ‘Sales appear to be in pretty good shape. There’s nothing huge and significant and scary.’”

“‘The traffic on our new houses and open houses has been very strong,’ (realtor) Rick Dorn said. ‘If you didn’t have people circulating, there would have been some nervousness.’”

“The number of houses on the market has increased by a larger amount. According to figures compiled by Sumner, 1,018 residential properties are for sale, compared with 864 at this time last year.”

“One reason houses are on the market longer is that some sellers may be pricing too aggressively, said Frosty Erben, president of the Billings Association of Realtors.”

“‘Because of what the selling public has read or heard, they may have an unrealistic view of the value of their home, and the tendency is to price it above what the market is,’ he said. ‘People want to turn their house into the goose that laid the golden egg, when the egg is silver now,’ Erben said.”

“‘Things are a lot better here than if you watch the national news,’ said Sam Picard, president of the Home Builders Association of Billings. ‘That’s not to say we’re where we were a year or a year and a half ago.’”