The Housing Bubble

The Chicago Tribune reports from Illinois. “Need to sell your home in a hurry? Unfortunately, for most homeowners today it’s no longer as simple as putting a ‘for sale’ sign in the yard. Existing-home sales have fallen, and home prices have declined, too, as the number of houses for sale has reached new highs. In other words, it’s not an easy time to be a seller. There is too much supply for the demand.”

“If you overshoot the asking price, it could take longer to sell your home, and you may have to concede significant price reductions later. ‘The buyer thinks the longer a home is on the market, the less he should pay for it,’ said Andrea Geller, a member of the board of directors for the Chicago Association of Realtors.”

“‘There seems to be a disconnect now,’ said Terry Semmens, Chicago district director for ZipRealty Inc. ‘We’re showing lots of homes and our agents are busy, but it hasn’t correlated [with transactions] as it has in the past.’”

“Semmens said the supply of homes for sale in the Chicago region rose 3.6 percent in June, reaching a level 30.6 percent higher than the year before. He also said 37 percent of homes for sale had reduced their price at least once, up from 35.4 percent at the end of May.”

“Andrea Fraley has cut the price on her 3-year-old home in Aurora from $240,000 to about $220,000, below the appraised value, since it went on the market in May, and says she is feeling pressure because her family is moving out of state in August. Recently she began ‘make us an offer’ ads.”

“‘It’s in perfect condition, we’re keeping it really clean, and it’s freshly painted,’ she said. ‘We can’t get rid of it.’”

The Kane County Chronicle from Illinois. “Suzanne Ehardt, planning and development director for McHenry County, said single-family, detached-home building permits were down by about 50 percent in unincorporated McHenry County compared with the same period last year.”

“Greg Wallis, a partner at Cary-based builder Verseman Development, said local sales mirror the national trend. ‘Things are definitely slow,’ Wallis said. ‘We’re following the national average.’”

“‘Everybody was talking about the bubble and how the bubble was going to burst, and it obviously has,’ he said.”"

The Courier News from Illinois. “Earleda and Kevin Parrish were looking for a home for seven or eight months before they found the one they wanted in Carpentersville. By March 2007, not quite two years after they bought their dream home, the family’s belongings were being moved out to the front yard and the Parrishes were being evicted.”

“‘We literally lost everything,’ Earleda Parrish said. It was not just the house, but many of the things inside that they couldn’t fit into the storage container they’d rented. ‘It’s kind of hard to watch people from the neighborhood walking away with your stuff,’ she said.”

“Foreclosures in Elgin and South Elgin for the first half of 2007 are up about 32 percent over the same time period in 2006, according to Record Information Services Inc. In other areas of the county, foreclosure numbers through mid-July 2007 nearly are surpassing what they were in all of 2006.”

“The alarming growth rate begs the question whether prospective home buyers are spreading their finances a bit thin. ‘What we ran into now is what I’d call a perfect storm,’ said Mike Hawley, senior VP at First Community Bank of Elgin.”

“North Aurora-based real estate and tax attorney John Duggan, said these new loans have made it so that equity is no longer a requirement for buying a property, which also can contribute to the increased number of foreclosures. With no equity, there’s nothing to lose by foreclosing, he said.”

“‘They ride the foreclosure into bankruptcy,’ Duggan explained. ‘You just keep your house until they take it away from you.’”

The Press Citizen from Iowa. “Jim Kessler, Coralville building and zoning official, said builders are being more careful about the kinds of homes they build. He said the biggest drop he has seen is in the number of speculation homes, or homes that are built without a specific buyer already choosing the lot.”

“‘There’s a pretty darn good amount of pre-existing spec housing that is unsold,’ Kessler said.”

“Sally Cline, president of the Iowa City Area Association of Realtors, said this is true from her perspective.”

“‘There was this mentality a few years ago that was, ‘If you build it, they will come,’ she said. ‘There’s a big inventory out there. So, I think builders are saying ‘Gosh, I think I’ll wait until this sells.’”

“Bill Frantz, president of Frantz Construction Company in Iowa City, said last year and the year before that there was a boom in speculation housing, a lot of which is in North Liberty.”

“‘We’re just kind of waiting out this slump, if that’s what you want to call it,’ he said. ‘I’ve talked to some other builders, and it appears to us that there is a surplus of inventory out there.’”

The Star Observer from Wisconsin. “Additions have been made in the entryway of the St. Croix County Government Center to accommodate a growing number of sheriff’s foreclosure sale notices.”

“Once, only one bulletin board was needed to handle the announcements, but now three are jammed with foreclosure notices and a fourth may be needed soon.”

“St. Croix County Clerk Cindy Campbell said the additions were made recently. Three bulletin boards on the main entrance wall at the St. Croix County Government Center are literally jammed with foreclosure sale notices with more waiting for space. ‘There are three bulletin boards packed and more (foreclosure sale notices) waiting to go,’ Campbell said.”

“She pointed to a stack of 13 waiting for room on the board and said in two days her office received 23 foreclosure notices to post. ‘We added a third board two weeks ago,’ said Sheriff Dennis Hillstead, who conducts the foreclosure sales. ‘We may need a fourth — there is no slow-down in sight.’”

“According to records provided by the sheriff, 40 foreclosure sales were conducted in 2003. The number took a sharp rise by 110 percent to 84 in 2004, then rose 52 percent to 128 in 2005. Last year’s foreclosure sales totaled 188. The 2006 sales were surpassed by a substantial number, with 251 recorded thus far in 2007 with over five months left until the end of the year.”

“‘When I first started as sheriff in 1999, we had one or two sales a week,’ Hillstead said. ‘Last Tuesday there were 12 sales scheduled. Two were postponed or cancelled and 10 went.’”

“Hillstead recalled a time when the subject of a sheriff’s sale was most often a failed farm. ‘Most are single-family homes now,’ he said. ‘Lately a lot of them have been in the $300,000 to $400,000 range.’”

“The problem down the line, informed observers said, is that when there is an over abundance of foreclosed properties held by mortgage companies, they will be forced to lower prices to make sales, which in turn would lower property values throughout the county.”

The Pioneer Press from Minnesota. “At least 40 houses across the Twin Cities will be up for bid soon in St. Paul at a rare mass property auction complete with paddles, auctioneer and ‘Do I hear $150,000.’”

“The event - a ’short sale’ auction of homes in the early stages of foreclosure - is being organized by National Realty Guild, a small St. Paul company rolling the dice in a housing downturn.”

“It’s the latest sign of distress in the local housing market, and a new tactic in the “move that house” game under way as Twin Cities agents struggle with rising foreclosures, dipping home values and a record crop of for-sale signs.”

“Short sales are on the rise around the Twin Cities, said Keenan Raverty, immediate past president of the Mortgage Association of Minnesota. ‘I think it’s going to get worse before it gets better,’ Raverty said.”

The Mount Vernon News from Ohio. “Condominium sales in Knox County remain strong despite reports of a housing slump throughout most of the country.”

“‘The real estate economy is a local economy, and Knox County is nowhere close to the numbers experienced elsewhere in the Midwest,’ said Al Lindeman, the president of the Knox County Board of Realtors.”

“Mount Vernon resident Dee Reynolds and her husband recently passed on the chance to live in a condo. Dee said she and her husband had nothing against the condos they looked at, and that their decision was based more on the size of the condominiums.”

“‘We’re just used to a big home, and we didn’t want to be closed in,’ she said. The Reynolds, who are retired, did settle in a neighborhood where yard work is provided, like in condominium communities.”

“‘The condo market went crazy for a while,’ said Judy Cordle, Mount Vernon’s development services manager. ‘A whole slew of condos showed up at the same time.’”

“Beyond completing the Maple Wood and Colonial Woods projects, Cordle said there are no plans to build more condos in the near future. ‘There’s nothing new coming in right now,’ she said.”

The Beacon Journal fom Ohio. “With 2007 half over, said Tom Campensa, president of the Akron Area Board of Realtors, Summit County has seen better years for the home sale industry. There were 3,063 homes sold in the six-month period, down 11 percent from the first six months of last year, when 3,437 homes sold.”

“‘We had three record-breaking years — 2004, 2005 and 2006,’ Campensa said. ‘In 2004, there were 3,223 homes sold and 3,605 in 2005 for the same period. We are falling back in line with 2003.’”

“‘One of the challenges is to get home sellers more in tune of what buyers are willing to pay,’ said broker Deborah Loughborough. ‘Price and location are still key factors.’”

“‘It is still a buyer’s market; we just need more buyers,’ said Campensa.”