The Housing Bubble

The Citizen Times reports from North Carolina. “Twice this year, real estate broker and analyst Don Davies has accepted a contract to sell property he owns in Leicester, once from buyers from Florida, once from a California couple. Both times, the buyers backed out. The bursting of the real estate market bubble in some of the country’s higher-priced markets is starting to be felt in Asheville and Western North Carolina as well.”

“‘It’s going very much from a seller’s market to a buyer’s market,’ said Ken Dula, broker in central Asheville.”

“With people moving to WNC making up such a large proportion of the local market, problems elsewhere have had a ripple effect in the region, analysts say. ‘If you look at those markets where they’re having real trouble, a lot of them are the markets that feed people here,’ said Tom Tveidt, of the Asheville Area Chamber of Commerce.”

“Some in the industry say that if the number of homes sold continues to fall, it can’t help but have an impact on prices. Davies sees evidence of that already. Buncombe County set a record Tuesday for number of houses on the market and the region set a record ‘almost every day in April,’ he said.”

“In turn, the number of houses on the MLS with price cuts is steadily increasing, he said.”

“‘We have a lot of people that come from out of the area, and I think in some of the areas that have been hit harder and experienced some actual loss (in real estate values), those folks are having trouble selling their house,’ said James Blue, president of the J.D. Jackson Associates brokerage.”

“And traffic on a bulletin board in which Realtors let their colleagues know about price reductions or other incentives to sell homes has mushroomed. ‘If it continues to be less units selling, the prices will have to change,’ Blue said. ‘Buyers are savvy. They’ll wait, and sellers will get anxious.’”

The Bradenton Herald from Florida. “Andrea St. Laurent and her fiance, Joseph Forte Jr., moved to Florida four years ago from Massachusetts. They finally started house hunting in November.”

“‘The first one, the guy reneged on it. The second one, the guy wouldn’t budge on the price. The third one, the house didn’t appraise to value,’ said St. Laurent.”

“Chad Kramer hasn’t found much to get excited about in his price range of $250,000 or less. ‘The ones in my price range, honestly, a lot of them I think should just be knocked down,’ said Kramer. ‘It seems like everybody is trying to unload something.’”

“The median sales price of a home in the Sarasota-Bradenton market at $291,500, compared to $321,400 last year, according to the Florida Association of Realtors. But $291,000 is still out of range for many wage-earners, particularly those trying to make it on the $44,414 median household income the U.S. Census Bureau projected for 2005.”

“St. Laurent figures she and Forte have already looked at 40 houses in Palmetto, Parrish, Bradenton and Ruskin, where they made their most recent offer. Since the sale is pending, St. Laurent wouldn’t be specific about the list price. It is in the couple’s low $200,000 price range, and the seller has come down considerably on the price.”

“‘They started much higher than what we were getting it for,’ St. Laurent said. ‘It was a substantial amount that he came down. Probably a good 30 percent.’”

“One thing is certain: There are many more properties on the market today for buyers to consider than there were just two years ago. As of April 30, there were 5,601 homes on the market in Manatee County, compared to 1,175 homes for sale in April of 2005, according to the Manatee Association of Realtors.”

The Boca Raton News from Florida. “Sales of existing homes in Florida remained at a sustainable pace in March, with buyers continuing to see favorable mortgage rates and a range of housing options available here in Palm Beach County and across the state, according to the Florida Association of Realtors.”

“While no local brokers we spoke with are even close to throwing in the towel, most were also realistic.”

“‘I have to look at the past nine months,’ said broker Sam Mina. ‘The market has not been the way we would like it to be. There has been a big, big slowdown in making decisions to buy. Buyers are very, very careful, and they are educated. Yesterday, I was at an open house with about 30 brokers, and they made the same comments I did.’”

“Broker Scott Agran says some of the concern stems from the reality that ‘marginal’ borrowers are going belly-up. When homes were selling at a rapid pace and prices soared, many lenders offered subprime mortgages to marginal lenders. ‘Now, the interest rates are going up,’ he said.”

“‘It was all right when properties were increasing in value,’ he said. ‘Then, if a person got in trouble, he could go out and sell. Now, people can’t sell, and they can’t afford to stay in their homes.’”

“And while Realtor Olive Belcher says the current market slowdown is among the worst she’s seen over the last 20 years, Mina offers an optimistic note: ‘My feeling is that we’ve seen the worst of it. Sellers are saying, ‘Enough.’ Just go and sell it. We are starting to see a transition.’”

“Agran noted that people who are trying to sell ‘don’t want to play games. The sellers understand that they have to energize the realtor. If you want to play games and try to outsmart the market, you will be holding on to your property for a long time.’”

The Venice Gondolier from Florida. “Area Realtors are beginning to smile again. March MLS figures showed a 16 percent increase in sales. There also are fewer homes on the market.”

“‘A year ago there were 300 Realtors wait-listed to get a lock box,’ Venice Area Board of Realtors Executive Vice President Marlene Merkle said. ‘We have 3,500. There’s no wait today.’”

“Prices of single-family homes reached a peak at the end of the summer of 2005 and sales bottomed out about three months later, according to Trendgraphix.com data for Venice. ‘It happened in October 2005,’ Realtor Tim Paradiso said.”

“‘We had the three biggest years in history,’ builder David Hunihan said. ‘Of course the prices would be down. You have to look in cycles of three to five years.’” “Trendgraphix.com data shows the average price of homes trending downward from the peak reached in 2005, but sales trending upward.”

“‘We have a great many cash buyers,’ Realtor Helen Moore said, adding that she also had buyers waiting for property to sell in Naples or somewhere else so they can buy here.”

“Hunihan said there is an eight-month supply of new homes available. More than 500 listings have expired, Realtor Janice Holloway said. Currently there are 1,616 listings, of which 79 have closed and 64 sales are pending.”

“‘Last year was tough,’ WCI Realtor Cheryl Youmans said. ‘I wasn’t here for the boom times, but I have enough listings. I don’t need anymore unless they are good. You can list your home or you can sell it.’”