“Housing Slump Now Threatening Big Bets”
A report from the Wisconsin State Journal. “A housing bubble didn’t burst and the market didn’t crash, but a housing boom of nearly a decade came to an end last year in south-central Wisconsin. The high inventory meant that even attractive homes in desirable neighborhoods sometimes had trouble finding buyers. ”
“David Schield put his house on the market too late to cash in on the housing boom. Schield bought a house two years ago as an investment to fix up, sell and make some money. After the renovation was finished, he listed the house in Madison’s West Side Crestwood neighborhood with a for-sale-by-owner company in April.”
“When it didn’t sell by August, he hired a real estate agent. He reduced the price to $224,500, but the house still hasn’t sold, and he said the house’s ongoing expenses threaten to push him under the break-even point. ‘It took me a little longer to do the work I wanted to do,’ Schield said. ‘I hit the market when it just dried up last year.’”
“When a woman who lived on the other side of Jane Fitchen’s duplex sold her unit after a week on the market last June for the $250,000 asking price, Fitchen decided it might be time to put her unit up for sale. The other woman’s unit didn’t have a remodeled kitchen and bathroom like Fitchen’s unit, so Fitchen priced her unit higher at $269,000. It didn’t sell during the summer or fall and now it’s priced between $239,000 and $259,000.”
“‘It’s been really dismal,’ Fitchen said. ‘What’s really frustrating is the one next door had not been updated at all.’”
“What’s puzzling is that the local downturn came even as interest rates have been stable and employment remained strong, two conditions that usually signal a strong housing market. ‘I don’t know why things have slowed down here,’ said Chad Wuebben, president of the Madison Area Builders Association. ‘I can’t explain it other than people have gotten a little nervous.’”
“Greed, fear and publicity were three factors that contributed to the end of the housing boom, said John Tuccillo, former chief economist for the National Association of Realtors. ‘A lot of people out there decided that housing was a get-rich-quick scheme,’ he said. ‘Ultimately, greed overwhelmed the market.’”
The Capital Times from Wisconsin. “The boom times may be history for the local real estate market, but a leading industry official is optimistic that the worst has passed.”
“‘I think it will be a good year,’ said Realtors Association of South Central Wisconsin executive director John Deininger. ‘Not necessarily another record, but I don’t doubt that it will be in the top two or three (for sales).’”
“The most problematic issue for the industry remains the glut of homes and condos for sale. The 5,211 homes and condos for sale at the end of the year are 29.8 percent more than at the end of 2005 and 105.1 percent more than at the end of 2004.”
“‘The bubble is a coast story,’ he said. ‘I think the slowdown was a fairly soft landing. The question is what will happen as we move into the spring.’”
The Daily Herald from Illinois. “Despite all the hype, Elgin is not a bustling downtown - yet. ‘We were thinking people were going to come through here,’ says Elgin Books co-owner Gloria Theofanis. ‘It seems like they are building (the townhouses and condos), but I don’t know if they are selling them.’”
“‘Unless they are imaginary people buying them,’ she adds.”
“Suburbs across the region have their own fretting small-business owners waiting for customers - waiting for big condo buildings to sell and rows of townhouses to finally fill with families. The months-long housing slump is now threatening the big bets of mayors and real estate planners who are banking on citylike housing and businesses to rejuvenate their decaying downtowns.”
“Certainly not all are in danger of going belly up if the housing slump trips into a free fall, but experts are questioning just how many condos and townhouses the suburban market - especially a slow one - can handle.”
“Some of the numbers that can offer answers aren’t rosy. For example, some suburbs are grappling with a clear backlog of condos. Elgin has a 15-month supply of condos priced between $200,000 and $300,000.”
“Even Arlington Heights, which already has a rather developed and trendy downtown, has a nine-month supply of condos priced between $200,000 and $300,000. And these figures don’t include many condo buildings on the way, or those for sale strictly through the developer or by-owner listings.”
“‘We are definitely in a slowdown,’ said Bob Headrick, a property appraiser and partner at Naperville-based Appraisal Research, which compiles the condo supply data. ‘And in some cases, we are seeing some declining prices.’”
“Both political leaders and developers have inherent incentives to downplay any effect a housing slump may be having on their plans. Such comments, they fear, can scare away buyers. ‘I had a Realtor say to me, ‘I wish the media would stop all this negativeness because it is really hurting sales,’ Headrick said.”
“Some suburban leaders grudgingly concede they’ve had some worries. ‘I would be lying to say there wasn’t some concern,’ says John Lobaito, Mundelein’s village administrator. Mundelein started its bet in 2000, creating a downtown environment built around a village park, village hall, and more than 700 townhouses and condos on 100 acres of an aging industrial park.”
“Sales started on the bulk of the housing in February, and recent reports show 54 of 484 condos are under contract.”
“Most suburban leaders remain outwardly bullish on their downtown markets. ‘I don’t think anybody thinks this is going to be a real bust,’ said Elgin Mayor Ed Schock. ‘I’m not going to panic.’”
“In the coming years, that retiree boom will hit with a force that could both define and defy the market, said Steve Hovany, who has consulted with numerous suburbs on downtown developments. However, that demographic bonus may also be playing a role in today’s less-than-rosy suburban market picture. Most empty nesters must first sell their ranch houses before buying downtown, and a slow market makes that more difficult.”
“‘A lot of these moves are very discretionary,’ Hovany says. ‘In times like these, people put off decisions. ‘About a year from now everyone would have worked out all their issues,’ he predicts, before adding with a soothing voice, ‘This too shall pass.’”
“For Theofanis, though, the more critical question remains not if it will pass, but when. ‘We are running out of time,’ she says sitting in her empty Elgin Books on a weekday afternoon. ‘We are running out of money.’”
‘The months-long housing slump is now threatening the big bets of mayors and real estate planners who are banking on citylike housing and businesses to rejuvenate their decaying downtowns.’
Ah yes, the incredibly coincidental and perfectly timed demographic move into urban living. It couldn’t be a completely over-optimistic wish of consultants and developers (with the local govt. assistance) to cash in on a housing boom with condos?
After all, it has only happened with every boom in recent memory.
Here’s one from Montana:
‘Patricia Grabow has saved the turn-of-the-century Grabow Hotel and turned it into condos. ‘Condominiumizing is a reasonable way to go on historic buildings,’ she said. ‘It’s a tool to work with. I didn’t do this to make a killing and leave. I did this to save the building.’
“‘Condominiumizing is a reasonable way to go on ….blah blah.”
- Wasn’t there a ‘Condominiumizing’ project in a San Diego Bridge?
Yes, and the developers were a band of homeless residents of Balboa Park. Almost nobody failed to get caught up in San Diego’s real estate mania.
The homeless guys were the only ones who paid what something was actually worth in SoCal over the last couple of years. Homeless=Investment Guru
CON-DUMB-MINION-ISAY-ION.
What’s the percentage of the GDP that will go up in smoke with the real estate bust ? 40% ?
–
LOL!
I hope that some aspiring author is saving these choice quotes.
Jas
Ah yes, the incredibly coincidental and perfectly timed demographic move into urban living.
“Urban living” in the chicago suburbs? Anyone in that area who actually wants an urban lifestyle will have plenty of condo opportunities in Chicago city itself, and won’t need to try to invent a pretend downtown-urban-lifestyle in some distant suburb like Elgin.
“Ah yes, the incredibly coincidental and perfectly timed demographic move into urban living. It couldn’t be a completely over-optimistic wish of consultants and developers (with the local govt. assistance) to cash in on a housing boom with condos?”
But have you BEEN to downtown Elgin or Naperville IL? Experienced the vibrancy, the night life, the restaurants, bars, and shows? The upscale shopping? I mean, if you want to live in an urban environment in the Chicago area, forget about a condo downtown—Naperville is where it’s at.
It’s lunacy, of course. There are plenty of nice condos in the Chicago ‘burbs (my father lived in one for 20 years after he retired), but to suppose that they’re going to attract people looking for an urban lifestyle is ridiculous.
Maybe the real fastasy of the “urban condo experience” has more to do with staying inside and gazingly lovingly at your own reflection in the stainless steel while resting your elbows on cold granite.
That’s the same thought my husband and I had the first time we went to Naperville “downtown”. I told my husband that if you leave in downtown Naperville you have to go somewhere else for everything except way expensive eating out and buying books…but there are no many jobs (who would pay enough to pay the overpriced condos) and not many other practical amenities. I mean…I am from Southern Europe and I know what real urban living is!
RE: “big bets of mayors and real estate planners”
Government and big business in bed.
“This too shall pass”
Yes it will but you will lose your shirt and your pants
I don’t know why things have slowed down here,’ said Chad Wuebben, president of the Madison Area Builders Association. ‘I can’t explain it other than people have gotten a little nervous.’”
Chad you idiot. Is it because the average person cannot afford one of your overpriced homes?
Chad’s still scratching his head in feigned disbelief. Chad, like all of his realtor breathren “thought” the madness and easy money would go on forever.
“I have to get a real job?? Nooo, you’re joking, ha ha… you are, right?”
You just can’t tell me that the developers/builders that produced all these excess condo project weren’t marketing to the speculators . The baby boomers and regular buyers would take time to buy inventory in a regular market ,so they were building for the speculators IMHO .
I believe developers thought this speculation market would continue and they were caught holding the bag .
When you get new home tracts selling out in 2005 with 50 to 60% being investors ,you know who the builders were marketing to .
Now everybody is looking for the stupid “end-user” buyer ,or rich baby boomers who will save the market by paying inflated prices in these developments …… Isn’t going to happen .
There is a shortage of stupid “end-users” to match the glut of homes for sale at outrageous wishing prices.
Are people so clueless as to not understand the problem is high prices, not too much inventory. They act like there are no buyers out there. There are plenty of buyers, but not at their inflated prices. gordo nyc
‘“‘Unless they are imaginary people buying them,’ she adds.”
Priceless!
I love the woman who wants the buyer to pay a $19,000 premium for a kitchen/bath remodel job. How much do you want to bet she spent a lot less than $19,000 for the work. Personally, I’d rather buy the house next door as-is and redecorate/remodel to my tastes.
I love the fact that she is really mad about the fact that the dump next door sold for a whole bunch more than her remodeled one will ever sell for.
Whaaaaaaaa!!! Oh, and the “now it’s priced between $239,000 and $259,000″ BS is great, too. Let’s see if I can’t generate a bidding war with my pricing strategy. Hey, lady, my advice to you is to torch the place and see if the insurance company will pay you what you think your “investment” is worth.
what is this “between” joke all about?
It is obviously not priced between 239K and 259K when you can’t even sell it at the lower end of the range.
Might as well say, “it is priced between 239,000 and infinity”.
“However, that demographic bonus may also be playing a role in today’s less-than-rosy suburban market picture. Most empty nesters must first sell their ranch houses before buying downtown, and a slow market makes that more difficult.”
I can’t imagine that developers would plow ahead with these urban condo projects without having first determined that boomers will flock downtown but, as a boomer, am I in the minority in wanting to get as far away from urban hassles as possible? You couldn’t pay me to live downtown.
What they don’t mention is that the condos are priced higher than the price these empty nesters could get for their ranch houses. I thought downsizing meant in both size and cost.
A housing bubble didn’t burst and the market didn’t crash, but a housing boom of nearly a decade came to an end last year in south-central Wisconsin.”
There ain’t no stinkin’ bubble in Wisconsin.
…because everybody wants to live there. Just wait until the baby-boomers, vacation home buyers, illegal aliens, first-time buyers…. show up to save the day. Heck, with all of the new industry moving in and high paying jobs, the downturn should only be a minor blip on the radar.
“The boom times may be history for the local real estate market, but a leading industry official is optimistic that the worst has passed. ‘I think it will be a good year,’ said Realtors Association of South Central Wisconsin executive director John Deininger. ‘Not necessarily another record, but I don’t doubt that it will be in the top two or three (for sales).’”
I also predict it will be in the top two or three (for increasing affordability).
GS - I think you’re talking about 2011 being in the top 2-3 for affordability.
You are talking about affordability level (a definite integral), and I am talking about the rate of change in affordability (a derivative). With that semantic clarification, I think we are on the same page.
“What’s puzzling is that the local downturn came even as interest rates have been stable and employment remained strong, two conditions that usually signal a strong housing market.”
We will continue to hear this crap until the MSM publishes articles that the boom had nothing to do with fundamentals. 1) RE became the new investment darling after the NASDAQ crash. 2) Lending standards went out the window. 3) Interest rates were kept way too low for way too long 4) Greed, greed, and more greed.
Don’t forget all the fraud that everyone up and down the food-chain allowed because everybody was getting rich on the gravy train.
“The months-long housing slump is now threatening the big bets of mayors and real estate planners who are banking on citylike housing and businesses to rejuvenate their decaying downtowns. Certainly not all are in danger of going belly up if the housing slump trips into a free fall, but experts are questioning just how many condos and townhouses the suburban market - especially a slow one - can handle.”
Some projects have already gone up in smoke (Escondido).
http://news.yahoo.com/s/ap/20070120/ap_on_re_eu/balkan_property_boom
The New (and last) Frontier for the Housing Bubble.
Sammy — Has the bubble reached Greenland yet? Because with the onset of global warming, I am guessing that Greenland will be ski resort heaven in fifty years…
“Greenland will be ski resort heaven in fifty years…”
Greenland will be BEACH resort heaven in fifty years.
From what I understand, Greenland and Iceland have strict laws on immigration and foreign ownership of property. I’d never “invest” in RE in eastern Europe or the Balkans, since the rule of law there, to put it mildly, is iffy. Just wait till all the seething underemployed locals who are priced out of apartments and houses in their own towns and cities start backing populist demagogs demanding nationalization and redistribution of foreign-owned property.
Laws on immigration? I’ve never heard of such a thing. They must be Nazis or some sort of fascists.
“What’s puzzling is that the local downturn came even as interest rates have been stable and employment remained strong, two conditions that usually signal a strong housing market. ‘I don’t know why things have slowed down here,’ said Chad Wuebben, president of the Madison Area Builders Association. ‘I can’t explain it other than people have gotten a little nervous.’”
Nobody, and I mean nobody quoted in the MSM gets the picture yet, which is that the bungy chord of relaxing lending standards so that subprime buyers have an overwhelming edge in the market has already stretched to the limit, and begun to contract. Unlike the normal kind of bungy jump, this one started with prices headed straight for the moon.
It can easily be explained by the ridiculously high prices.
Unfortunately during the jump the cord got wrapped around our economy’s neck
“What’s puzzling is that the local downturn came even as interest rates have been stable and employment remained strong, two conditions that usually signal a strong housing market. ‘I don’t know why things have slowed down here,’ said Chad Wuebben, president of the Madison Area Builders Association. ‘I can’t explain it other than people have gotten a little nervous”
A little nervous…Sheesh, they very scared and rightly so.
The Wisconsin Real Estate Industry Propaganda is very TIGHTLY controlled by the RE Industry and others with vested interests in this RE market.
The local TV stations and the 2 major state newspapers in Madison and Milwaukee are absolutely teriffied of seriously crossing the Realtors with the TRUE market conditions for FEAR of losing their revenues.
With this statewide Wisconsin media mentality in mind, it’s always amazing to see ANY housing stories that AREN’T geared to PUMP the maket.
In truth, considering wages and the economics of this state , the Wisconsin RE Market is FROZEN and slowly come apart at the seams with a very high Inventory and a lot more financial trouble than people or the media is willing to admit.
IMHO, although Wisconsin RE agents can hide the facts with spin and statistics and appear stoical about the conservative run up in housing prices, this state is headed for a major housing CRASH dispite what the so called EXPERTS are saying .
And, an expensive state to own property. Look it up: http://www.taxfoundation.org/taxdata/show/1913.html
The local paper, the Colorado Springs GAZETTE, seems to be totally in the pockets of the local NAR minions, who write almost all of the RE-related columns. While news of the national housing bubble has filtered through, thanks to the AP newswires and Statewide news that they can’t sweep under the rug, there seems to be a de facto blackout on independent, critical analyses of the local housing bubble (and yes, friends and neighbors, contrary to the local NAR shills, it is NOT different here). I’ve toyed with the idea of setting up a Colorado Springs Housing Bubble blog to counter the GAZETTE NAR touts, but have contented myself, for now, with urging any Kool-Aid imbibers to check out Ben’s blog.
It’s funny, sometimes I don’t really read these articles… I end up just looking at the strategies in place…
This article? Talk about the bubble/slowdown/etc in the past tense… pretend it’s over maybe it will be.
“Most suburban leaders remain outwardly bullish on their downtown markets. ‘I don’t think anybody thinks this is going to be a real bust,’ said Elgin Mayor Ed Schock. ‘I’m not going to panic.’”
I wonder if Mr Schock realizes that it hardly matters if he doesn’t panic. It matters what everyone else does, and when they PANIC, he’ll be in SCHOCK.
The Chicago suburb of Des Plaines, a couple clicks north of ORD, has been following the Arlington Hts. model with gusto for about ten years now. In an example of state sponsored development they cleared significant parcels near the Metra (train) Station and have planted several mid-rise condo towers and even a few new services throughout the area in hopes of creating the much sought after - “walkable” atmosphere.
My observations from two years of residency there, however, suggest this is an uphill battle with considerable risk. These suburbs are betting heavily on the desiribility of quick access to reliable public transit. That’s admirable for many reasons, but is it doable? The seniors I observed, and believe me in downtown D.P. there are plenty of them, didn’t do a whole lot of walking - or taking the train. These folks were typically former SFH owners who were wed to their cars. The low-maintenance condo life appeals to them, but otherwise the relevancy of the location to them remains an unanswered question.
If these suburbs are betting on empty nesters, they are hardly alone and will face much competition. Also, if they are betting on young singles, like myself, they have their work cut out for them too. Life in these suburban downtowns still cannot compare to the city of Chicago proper. True, the ammenties are coming to these mini-downtowns, but the executions aren’t always the best.
For example, I have since been told a Jimmy Buffett restaurant will be coming to Des Plaines. It might snag some nearby hotel guests from O’Hare - but the seniors prefer their old haunts - and few if any young singles will swap Chicago’s culinary variety for a chain restaurant.
It will take time to see, but obviously my impressions of the suburban mini-downtown weren’t good enough to keep my money there.
My boss did a closing for a house on the southside of Chicago. $200K house purchased by a 23yo 1st time homebuyer. She put none of her own money down. She received assistance from a non-profit to help her with the downpayment. 50% of her gross goes to pay the mortgage.
And the kicker: She got a couple of grand back at closing. Buy a house with no money down and get some money back! Oh this is all going to end horribly!
sounds like the community banking bill to me……..
“She got a couple of grand back at closing.”
Time to celebrate the new digs and powder her nose!
‘I had a Realtor say to me, ‘I wish the media would stop all this negativeness because it is really hurting sales,’ Headrick said.”
Yeah. And the constant 24-7 stenography by the media of the RE shills’ pronouncements between 2001 and 2006 had no effect on the price whatsoever. What goes up…