The Housing Bubble

The News Record reports from Wyoming. “The local real estate market hasn’t gone cold, but the red hot sales of recent years may have tempered themselves in recent weeks. Agents from across Gillette say the housing market agreed this week that prices have begun to level off as more new houses get a ‘For Sale’ sign in front of them.”

“‘The good news for sellers is home prices have gone up and up and up and up,’ said broker Pat Avery. ‘Since 1985 they have gone up … this is the first time it has leveled off.’”

“Some segments of the market may even be turning slightly downward.”

“‘There’s a lot more new housing than there was in the past, and that’s created a drop in pricing in the used housing market,’ said Ben Novotny with Prudential Preferred Properties. ‘I’m seeing a 5 percent to 7 percent decrease in the used housing market.’”

“For people like Sue Hight, the leveling off came at an inconvenient time, just as she and her husband were trying to sell their Saunders subdivision home. After buying the house in 2005 and renovating it, the couple put their home on the market for $350,000 in May.”

“Almost six months later the home is priced at $315,000 and Hight thinks it may have to come down again.”

“To make matters worse, the Hights are now stuck with two houses after buying another home in Foothills subdivision. Both are for sale and if one doesn’t sell soon, they’ll have to start renting one to recover costs. In the meantime, their possessions are split between the two houses. ‘We’ve got part of it in this house, part of it in the other house because we want to see which one sells first,’ she said.”

“Anecdotally, many real estate agents say the character of the Gillette market is changing. ‘Sellers are having to adjust their mindsets,’ said broker Kevin Beck. ‘You’re seeing sellers that are willing to negotiate on price, willing to help pay closing costs, offer upgrade allowances, things we haven’t seen in a while.’”

“‘I think there might be a little bit of a correction,’said Jeff Riesland, chairman of the MLS. Riesland said the increase in newly built houses has left some homeowners trying to sell homes at the top of the market out in the cold.”

“‘I think a lot of people jumped on the bandwagon a little bit late,’ he said.”

“Brandon Kieson is another person trying to get money out of his house as he looks to sell. He’s reduced his price on his Sage Bluffs home by $10,000 to $215,000 since listing it over the summer.”

“‘When I bought my house, there were 79 (houses) on the market,’ he said. On Friday, there were 368 homes listed in and around Gillette.”

“‘There are just so many houses on the market,’ Kieson said. ‘I guess over $200,000 is a lot of money for people, too.’”

The Rural Northwest from Idaho. “For the first time in the six months, Boundary County’s plunging jobless rate has taken a significant hit.”

“After dropping below the 5-percent unemployment mark since April - a level Boundary County has not seen since 1989 - the county saw its seasonally adjusted jobless rate shoot up to 6 percent in October, a 1.7 percent increase from one month ago.”

“Regional labor economist Kathryn Tacke with Idaho Department of Labor, acknowledged that the growing possibility of a national recession is throwing a scare into many economists’ crystal balls.”

“‘There are more clouds out there regarding that, especially with the downturn of housing starts on the national level,’ she said. ‘It’s a scary prospect for Boundary County, since it relies so heavily on the timber industry.’”

The Oregonian. “The number of homes and condos sold in central Oregon is down about 41 percent from the same period last year, and the number of days a home spends on the market is up by a third.”

“A similar housing slowdown is under way in southern Oregon’s Jackson County, until recently another real estate boom area, especially in Ashland. Between June 2006 and 2007, Jackson County lost about 556 housing-related jobs…a drop of more than 11 percent.”

“Homebuyers in Bend, once as thick in the streets as Subaru wagons, have all but disappeared. That’s left people such as Cathy Cirillo struggling for months trying to sell their homes, sometimes while dealing with rising mortgage payments.”

‘”I just haven’t had any viable buyers,’ said Cirillo, who listed her manufactured home in south Bend on July 1 for $184,900 and has been dropping the price ever since. She is now trying to sell the house on a large lot for $169,900.”

“‘We all got so spoiled. We just stuck a sign in the ground and it would sell,’ said Carolyn Emick, a broker in Bend. ‘We have so much inventory here and no buyers.’”

“Cracks have been showing for much of the year, with no letup in sight. In August, builders got approval for about 173 new homes, condos and apartments. That is down two-thirds from two years ago.”

“Across central Oregon this year it was common to see for-sale signs posted with the first buds of spring, faded by summer’s sun and pelted by the gusted aspen leaves of fall.”

“The trend is as pronounced in southern Oregon’s Jackson County, where the rush up in home prices and building was similarly frenzied. The loss of about 556 housing-related jobs between June 2006 and 2007 is just from company payroll, so it doesn’t cover self-employed Realtors or contractors.”

“Jackson County also had one of the country’s highest rates of speculative buying, which inflated home values. As of last spring it has the highest rate of foreclosures in the state, according to Loan Performance. Twelve percent of subprime loans in the Medford area were at least 60 days delinquent, compared with 8 percent in Portland.”

“‘Three years ago the biggest, grandest holiday parties were thrown by Realtors and mortgage brokers. This year I don’t think that’s going to be the case,’ said Guy Tauer, regional state economist for southwest Oregon.”

“Tauer and his wife cashed in when the market was good, buying a three-bedroom place for $180,000 in summer 2005 and reselling it for a profit eight weeks later.”

“‘Now the musical chairs have stopped,’ he said. ‘If we did the same thing a year later we probably would have a rental right now and be wondering whether we could sell it for what it’s mortgaged for.’”

The News Tribune from Washington. “At a time when home builders beckon with shopping sprees and new TVs, new-home sales show a surprising range of fluctuation around the South Sound.”

“In the Fife area, for example, sales on new-construction homes through Oct. 30 are down 65 percent compared to the same period a year ago, according to statistics from the Northwest MLS. Countywide, new-home sales dropped 39.8 percent through Oct. 30 this year compared to the same several months of 2006. Sales activity for all homes in Pierce County declined through September by 40.5 percent.”

“Most areas had more homes for sale this week than the amount they’ve sold all year.”

“Among the worst off is the Bonney Lake area, which had 391 homes listed this week as sales through the end of October dropped 51.1 percent year-over-year. Just 156 homes have been sold in that area this year.”

The Heraldnet from Washington. “Real estate agent Teresa Sifferman ticks off the virtues of an Everett home she is trying to sell: the cathedral entryway, the chef’s kitchen, the big yard, the designer colors, the coffered ceilings in the formal dining room.”

“A year ago, this squeaky-clean home probably would have garnered multiple offers and a quick sale at the original $469,000 asking price. Now it’s a different story.”

“The home has lingered on the market for more than two months, even after the real estate agent dropped the asking price three times, a reduction of $40,000.”

“‘Sellers are getting panicky, slashing prices and taking lower offers, that’s what I’m seeing in Snohomish County,’ said Sifferman, an agent in Lynnwood. ‘At our weekly sales meetings agents are saying open houses are dead, buyers aren’t showing up.’”

“‘Two and three years ago, the sales prices used to be the starting point. Now it’s the ending point,’ said Nathan Gorton, executive officer for the Snohomish County-Camano Association of Realtors.”

“Inventory has swelled from this time last year, it’s up more than 50 percent countywide and 71 percent in Everett and Mukilteo, according to statistics from the Northwest MLS.”

“Inventory is up partly because a boom in new construction outstripped demand, Gorton said.”

“Leah Lang and her family recently bought a home in the Northshore School District. A year ago, four or five homes that met the family’s budget and criteria might have been on the market, said their agent, Barbara Athanas in Bothell. This year, she showed them 42.”

“Lang said that while the selection wasn’t as good as she would have liked, she previewed dozens online and visited dozens in their $800,000 price range. When one seller wouldn’t budge $4,000 on the asking price, the couple walked. Lang drove by that house recently, noting that after two months, the For Sale sign is still up.”

“‘Sellers don’t get it yet,’ Athanas said. ‘They have to put in some effort.’”

“In order to get the attention of buyers, sellers need to price the home realistically, and what’s realistic today might be less than what the house would have sold for six months ago, said Vern Holden, a broker based in Mill Creek.”

“‘Sellers have got to get out of the mode that my neighbor sold his for ‘X’ last year,’ he said. ‘They have to be in tune with the market at this moment.’”