The Housing Bubble

The Hook reports from Virginia. “Unloading inventory in a strong buyer’s market has many of builders resorting to techniques not seen in the last half dozen years: slashing prices, offering incentives, even converting for-sale to for-lease. ‘Our revenues are down 50 percent from last year,’ says Mike Gaffney, president of Gaffney Homes. ‘Every builder in the market, maybe every builder in the country, has cut staff and lowered prices.’”

“Gaffney says the need to sell the houses quickly has led to deep discounts. In Huntley, Gaffney has lowered prices on houses by $80,000, from $549,000 to $469,000. Still, even such discounts haven’t led to rapid sales, and he believes that’s because people have tuned in to national news predicting ongoing doom and gloom in the housing market.”

“‘It’s almost like a paralysis with people that they don’t want to buy,’ he says.”

From NBC 4 in Virginia. “No one showed up to bid or buy in Prince William County Friday, but the auctioneer will stay busy due to the growing number of home foreclosures in the county that are causing a ripple effect in the county’s revenue stream.”

“There have been nearly 1,000 foreclosures since August, and the ‘for sale’ signs are springing up like weeds.”

“Despite the downturn in the housing market, new houses are still being built and sold, but not at the rate they were at the height of the housing boom.”

“‘I imagine that there are some builders and developers who had started their projects and then, of course, the market changed and they had these projects under way and they’re making their own business decision,’ said Chris Martino, the county’s director of finance.”

“The director of finance said there is a silver lining, however. ‘When the market does correct and turn, we’ll have a lot of product,’ he said.”

From WJLA in Virginia. “The increasing number of foreclosures and the jittery housing market have many developers rolling out incentives to attract buyers. At the Metropole condominiums in Logan Circle, developers called in an interior design firm to provide buyers with pointers and even just the right furnishings for lush living.”

“The condo market is experiencing a glut, as units begun during the real estate boom come on-line after the housing market’s dip. That reduced demand and increased supply translates into lower prices for those willing to take a risk.”

“‘Developers are paying condo fees, buying down the mortgage,’ said realtor Jeff Lockard. ‘We’re seeing developers doing things we’ve never seen before-it’s pretty terrific.’”

The Daily Press from Viginia. “It continues to be a difficult time to sell a house and a great time to buy one in Hampton Roads and Williamsburg.”

“An oversupply led to a 22 percent sales decline, according to data from the Virginia Association of Realtors. Williamsburg sellers suffered through a median price drop of 15 percent to $269,450, and the number of homes sold declined by 39 percent.”

“The slowing market comes after years of unprecedented price increases. The median price in September 1999 in Hampton Roads was $107,400. Just eight years later, the median value has more than doubled to $235,000. The state median has increased 83 percent to $229,000 over the same period.”

“The region has also been dealing with growing rates of mortgage delinquencies and foreclosures. Subprime loans made up about 13.6 percent of the region’s outstanding loans as of June, according to First American LoanPerformance.”

Money Magazine on Maryland. “With a six-figure household income and good prospects, Heather and Todd Wade are off to a decent start in realizing their financial goals. But a few years ago, the young couple tried to speed things up by dabbling in real estate.”

“‘I started messing around because everyone seemed to be doing it,’ says Todd.”

“After flipping an investment property near their Baltimore home in early 2006 for a tidy profit of $40,000, Todd and Heather got the bug. In April 2006 the Wades bought a run-down house in a questionable Baltimore neighborhood for $62,000.”

“So far the project has produced a lot of pain but no profits. ‘It just took us a little longer to get this house in order, and we missed the window,’ says Todd.”

“Now the Wades wonder if their error in timing the real estate market may have set their finances back just as they’re hoping to expand their family.”

The News Post from Maryland. “House prices are returning to what one local Realtor calls ‘normal’ pricing. Terry Fox, head of the Frederick County Association of Realtors, said dropping prices were ‘an adjustment toward a normal market after the price surge in the past years.’”

“Fox said the price drop is bringing the market into reality, creating a more healthy atmosphere. With more than 2,400 homes on the market in Frederick County, it is still a buyer’s market. According to the Maryland Association of Realtors, the average home price in Frederick County in August was $359,949, down 5.2 percent from August 2006.”

“In September, the average price in the county was $340,478, down 7.7 percent from September 2006. ‘Prices are not dropping below what the homes are worth,’ Fox said.”

The York Dispatch from Pennsylvania. “Home sales dropped by double-digit numbers in nine out of the 16 school districts in York County for the first nine months of the year, compared to the same period a year ago.”

“Steve Snell, the Realtors association’s executive officer, said the cooling in the housing market is ‘perhaps a little bit more extensive than we really had anticipated. My concern is the public will misinterpret the numbers,’ he said. ‘It may not be the greatest time to be a seller, but it’s a perfect scenario for the home buyer.’”

“Blue Bell, Pa.-based Judd Builders is currently offering up to $30,000 in savings on closing costs, condo fees and upgrades to a townhouse through the end of November.”

“Michael Wheeler, a developer and) Realtor, said he thinks York’s market is more normal than the national trend. Wheeler said people with a moderately good credit rating to a very good credit rating should be able to secure mortgages with low interest.”

“‘For people with horrendous credit though, there will be problems,’ Wheeler said. ‘And maybe there should be.’”

Capital News 9 from New York. “‘How could I allow myself to get into a situation like this,’ Louise Owens asked herself. After the Rochester woman lost her husband in an accident last year she took the advice of a mortgage broker and refinanced her home.”

“At closing she discovered she had agreed to two loans, not one. ‘What’s worse, the principal balance on loan number one had increased by more than eleven thousand over the first year,’ Owens said.”

From Newsday in New York. “The rate of foreclosure filings in Nassau and Suffolk counties rose by double digits in the third quarter, according to a report issued yesterday.”

“Nassau saw 1,241 foreclosure filings from July to September, an increase of 27.4 percent from the previous three months, according to RealtyTrac. Suffolk, meanwhile, had 1,080 foreclosure notices, up 14.4 percent from the prior quarter.”

“Todd Yovino’s company sells bank-owned properties and his inventory is growing, especially in Suffolk. While there were always people in financial trouble, in the past they could sell their homes or refinance their mortgages to alleviate their burden, he said. That’s no longer as easy to do.”

“‘Today, there are fewer alternatives and fewer alternatives translate into increased foreclosures,’ Yovino said.”

The New York Daily News. “The threat of foreclosure is worsening in the city — especially in Queens. In fact, in all the boroughs except Staten Island, more homeowners are struggling.”

“There were 2,790 foreclosure filings against homeowners in Queens in the third quarter, up 69% from summer 2006, according to RealtyTrac. Across the city, there were 7,314 foreclosure filings during the third quarter, up 37%.”

“The number of third-quarter foreclosure filings in the Bronx, 1,011, was 43% higher than a year earlier. Foreclosure filings in Brooklyn totaled 2,498, up 31%. Manhattan cases rose by 14% to 402.”

The New York Times. “Kenny Timmons has spent three long weekends in New York City since 2003, catching up with friends he knew in Ireland, visiting ground zero, restocking his wardrobe at Armani and Niketown and chatting about real estate with a bartender in an Irish pub in Midtown Manhattan.”

“That was enough of a glimpse of New York for Mr. Timmons, a 32-year-old carpenter from County Meath, Ireland. Last summer, he put down 10 percent on a $760,000 studio under construction at 75 Wall Street.”

“Mr. Timmons has never seen the apartment and does not plan to live there. Instead, he hopes to rent it out for $3,000 a month when it’s finished next year and eventually to sell it at a profit.”

“He predicts that a Wall Street address will always be in demand. ‘If you can’t rent on Wall Street, then where can you rent?’ Mr. Timmons said.”

“The increase in demand comes as a new tide of high-rise condominiums is hitting Manhattan. Buyers from other countries who don’t have credit histories in the United States or who do not intend to use their apartments as primary residences have historically had trouble passing muster with co-op boards.”

“But condos pose no problem for foreign buyers, and they often find that buying in Manhattan is less expensive than buying a comparable house or apartment in cities like London.”

“And while in the past an influx of foreign buyers could often be traced to boom times in a particular country, brokers say that the interest in Manhattan real estate is now worldwide, with buyers from Australia, Korea, Russia, Israel, Italy and Colombia.”

“‘In the late ’80s, we totally depended on the Japanese market,’ said Louise Sunshine, development director for the Alexico Group. ‘It’s a diversity of a different kind. There’s a huge amount of new wealth everywhere.’”