The Housing Bubble

The Rocky Mountain News reports from Colorado.”The number of new and previously owned homes sold in the six-county Denver area fell by 10.6 percent in the first quarter, compared with the first three months of 2006. The report shows that the median, or middle, price of all homes dropped 1.3 percent to $235,000 from $238,000 in the first quarter of 2006 in Adams, Arapahoe, Boulder, Denver, Douglas and Jefferson counties.”

“‘There is no evidence of a rising market, no matter how you slice it,’ said Andrew LePage of DataQuick.”

“And the Denver area is in a different part of the cycle from other previously hot markets, such as Las Vegas and Phoenix, he said. ‘You have been weaker longer than other markets and did not have the run-up in prices in 2004 and 2005,’ LePage said. ‘Your market stands out because it has been the flattest the longest. But at what point Denver might level off is hard to predict.’”

The Denver Post from Colorado. “‘The national media would have you believe that the housing market in this country is getting trashed,’ said Vectra Bank Colorado economist Jeff Thred gold. ‘The reality is that new- (and existing-) home sales…posted their third-best year ever (in 2006). It just wasn’t as good as 2004 and 2005.’”

“Thredgold points to data from the Office of Federal Housing Enterprise Oversight showing that from the first quarter of 2006 through the first quarter of 2007, Colorado homes appreciated 3.3 percent.”

“The numbers don’t lie. These data are based on sales and refinancings. So why aren’t they reflected in my neighborhood? Less than a block away from my Arapahoe County abode stands a house that may have fetched $550,000 or more when it was built a few years ago. Bank-owned after a foreclosure, it has stood vacant for months, its lawn replaced with weeds.”

“A real-estate agent who works the neighborhood told me the bank would gladly take $450,000 at this point.”

“In the first quarter of this year, 72 percent of the foreclosures occurred in homes with a loan amount of less than $200,000, according to a report by the Genesis Group. Not surprisingly, these homes missed out on the average price appreciation OFHEO tallies for all Colorado homes.”

“Homes that sold at between $170,000 and $300,000 have seen zero appreciation over the past year, the Genesis Group reports. And homes for less than $170,000 have seen a 15 percent decline.”

“As a whole, the Denver metro area has also missed out. For 2006, the seven-county area posted a 4.2 percent price decline, according to the Genesis Group.” “‘I would expect to see stronger Colorado home-price appreciation in 2007 and 2008,’ said Thredgold.”

“Jeff Englestad, a professor at the Franklin L. Burns School of Real Estate and Construction Management at the University of Denver, isn’t so bullish: ‘I would not shy away from buying one house right now but wouldn’t be buying a bunch of rental houses, either.’”

The Arizona Daily Star. “The Tucson housing market downturn hasn’t bottomed out yet, but the end is near. The low point on the fever chart will be logged sometime in the next nine months, said John Strobeck, housing analyst and owner of Bright Future Business Consultants.”

“Right now, a home buyer could have his or her pick of nearly 10,000 homes for sale.”

“‘We’ve been saying this is a good time to buy because there’s a breather in the market,’ said Rick Hodges, CEO of the Tucson Association of Realtors. ‘There’s inventory out there and rates are still low, but that’s not going to last very long.’”

“Around 7,000 homes will be sold this year, and that’s around the same as in 2003, before things really heated up, Strobeck said.”

“But the downturn will have broad effects on jobs and the local economy. The sale of new homes contributed $2.3 billion to the local economy last year, and that might not reach $2 billion this year.”

“‘A half a billion dollars taken out of the Tucson economy is a good chunk of money,’ Strobeck said. ‘That would be like closing Davis-Monthan (Air Force Base).’”

The Review Journal from Nevada. “Local housing starts slipped in May, data show, reflecting a national trend. Home Builders Research reported that there were 1,724 new-home permits in the Las Vegas Valley in May. The 2007 tally is at 7,934, a year-to-year decrease of 4,154, or 34.4 percent, the company said.”

“‘I think we’re going to see permits staying flat, at best, until late 2008 or early 2009,’ Home Builders Research President Dennis Smith said. ‘We’d like to see things turn around faster, but unless we see resales start to move some inventory, I don’t we’ll see it change.’”

In Business Las Vegas. “Las Vegas is surrounded by desert and open space, but the limits of available land, its high price and the need for affordable homes will continue to drive density increases in the valley, a panel of experts said.”

“The need for density is driven by affordability, said John Ritter, chief executive of Focus Property Group. A boom in the housing market pushed prices to the point where they are no longer affordable, and that led to the slowdown in the industry, he said.”

“‘Land values are not going to come down,’ Ritter said. ‘So how do you build more affordable homes or attached products and still be able to deliver to the marketplace great products and affordable products. It is clearly through density.’”

“‘When you look at the housing market in 15 years, if you want to buy new, it will be attached,’ said Tim Sullivan, president of the Sullivan Group Real Estate Advisors.”

The Ely Times from Nevada. “Development of the master-planned Coyote Springs community 50 miles from Las Vegas is coming along on schedule, with the first production model village set to open in less than a year, an executive for the primary home builder said.”

“There have been no delays or scaling back of plans for the 43,000-acre bedroom community, said Klif Andrews, division president of Pardee Homes.”

“‘Not at all. I don’t know where that comes from,’ Andrews said in response to reports that Coyote Springs has become a victim of the slowing housing market.”

“Pardee entered an agreement with Coyote Springs developer Harvey Whittemore in 2004 to build about 7,000 homes on the first 2,000 acres. The homes were originally scheduled to be finished this spring. The community has been approved for 159,000 homes.”

“‘That’s really a function of our delays with the general improvement district and delays associated with the water treatment and sewer facility,’ Whittemore said. ‘It doesn’t have anything to do with the market at all.’”

“Despite the glut of homes on the market for sale, Andrews said, he’s confident Pardee will deliver its first housing units at Coyote Springs by the end of 2008.”

“Lincoln County Sheriff Kerry Lee, who meets with the developer at least once a month, said he’d heard the Clark County side wasn’t going to be as big as originally planned. He said developers had lightened up the density and increased open space.”

“‘We heard it was going to be coming in two years, then we heard it would be five years and then 10 years,’ Lee said.”

“‘It looks like one of those things that’s too big not to happen,’ said Larry Murphy, president of Las Vegas-based SalesTraq. ‘When you’ve got that many dollars and that many players, they’ve got too much in it not to go through with it.’”

“‘Coyote Springs is creating a new destination in the Las Vegas sphere of influence,’ housing consultant Tim Sullivan said. ‘With the golf orientation, a dying breed in the west because of the lack of land, multiple home types and village core, they’re establishing a new destination.’”