The Housing Bubble

A housing report from the Idaho Statesman. “Treasure Valley home sales in November have dropped again, compared to either the banner sales year of 2005 or 2004, a more realistic sales year to most in the housing industry. It’s the third straight month that housing sales in the Valley were down from the same period in 2004. It’s the fifth consecutive month for comparable periods in 2005.”

“According to the Intermountain MLS, 970 new and existing homes were sold last month, compared with 1,714 in November 2005 and 1,068 for the same period in 2004. ‘The Realtors are doing damage control (when preferring to compare today’s market to 2004),’ said Boise economist John Church. ‘But I don’t know that you need to panic yet. There’s still an awful lot of construction going on around here.’”

“Some analysts say the local housing slump has become severe enough that comparisons to 2004 are beginning to shoot holes in the industry’s argument that sales activity has returned to the more historic levels of that year. ‘It’s a correction. And it’s hard to paint it in a sunny way,’ said Mark Zandi, chief economist at Moody’s Economy.com.”

“Ken D. Simonson, chief economist with the Associated General Contractors of America, said a slowdown in building permits signal that the housing slump may not be over soon. ‘Builders are pulling fewer and fewer permits. That tells you that they’re not confident that the market has touched bottom yet,’ Simonson said. ‘If they were confident that things are turning around, they would be down at the Building Office pulling permits.’”

“In Meridian, once the hottest real estate market in Idaho, the 43 building permits issued last month were 79 percent fewer than in 2005, 78 percent below 2004 and the fewest since November 2000.”

“Boise authorized only 35 single-family building permits last month, down 61 percent from 2005 and 48 percent fewer than in 2004. Nampa’s 43 building permits were down 58 percent from 2005 and 61 percent from November 2004.”

“Don Hubble, owner of Meridian-based Hubble Homes, said November was the low point of the year for his company, with sales 50 percent below a year ago. For the first 11 months of 2006, the company’s closings are down 10 percent, he added. ‘And most of that happened in the last six months,’ Hubble said. ‘We had a lot of (sales) contracts that were cancelled.’”

“The median price of an Ada County home has now fallen 7 percent since the housing slump began, or from $248,900 last July to $231,000 in November.”

“George Tallabas, a realtor with ReMax Advantage in Nampa, worried that since outside investors have fled the Valley, inflated housing prices will prevent many local residents from buying a home. ‘About 90 percent of the families living in the Treasure Valley earn less than $40,000,’ he said. ‘Where are the buyers going to come from for these expensive homes?’”

The Register Guard from Oregon. “A total of 128 millworkers abruptly lost their jobs Monday at two soon-to-be-dismantled Weyerhaeuser Co. plants in Lane County.” “The causes were twofold, spokesman Mike Moskovitz said: One, the cooling housing market dropped demand for plywood. Second, builders are tending to use oriented strand board from the South instead of western plywood because the price per square foot is about half.”

“‘Most people should be able to find a job before too long,’ Brian Rooney, a labor economist with the state Employment Department. Laid-off millworkers at the OK Lounge on Monday weren’t so sure. Starting pay at the Springfield mill was $16.22 an hour, they said. ‘Where are you going to find that in this area?’”

The Bellingham Herald from Washington. “When it comes to building condo towers in Bellingham, the sky’s the limit, but only if you can get good financing. Last year at about this time, developers said they hoped within a year to see ground broken on four tower projects, with the tallest, Bay View Tower, reaching 23 stories, or 240 feet, into the sky off North State Street.”

“More than a year later, only one project, the 18-story 1010 Morse Square project, has seen dirt pushed, and that’s about all that’s happened so far.”

“Developers of three of the downtown projects and one on Northwest Avenue say they’ve delayed construction because of the difficulty of getting good financing deals, high construction costs, confusion over plans or an uncertain economic climate.”

“‘We’re kind of reinventing the wheel,’ said David Hovde, one of the project’s developers. ‘To be honest with you, I don’t really know what’s going to happen at this stage.’”

“Bellingham doesn’t have any other big condominium towers, so lenders at national banks don’t have anything to look at to reassure them such a project could work. ‘When the big banks look at Bellingham, they go ‘Wow, it’s really an unproven market,’ said Terry Daughters, VP for Peoples Bank.”

“Two buildings of 14 and 12 stories with 190 condos above retail space and a twostory office/retail building, was put on hold in late summer after financing problems. ‘I would characterize it as like a lot of the tall buildings and projects right now: Things have slowed down a bit, financing is a little harder to obtain,’ developer Larry Willman said.”

“The Idaho builders behind the project are stretched too thin financially and need to sell off other projects before they can restart the project, Willman said.”