The Housing Bubble

It’s Friday desk clearing time for this blogger. “Median new home prices in the Las Vegas area fell 9.2 percent in October to $299,575 while sales plummeted 49 percent to 1,302, compared with the same month a year ago, according to SalesTraq. Existing home prices dropped 11.4 percent in October to $257,000 and sales were down 44.3 percent to 1,549. SalesTraq president Larry Murphy said in one subdivision of the Anthem community in suburban Henderson, new home prices were slashed $250,000, or about 30 percent.”

“Nearly all home builders in Las Vegas have reduced prices in new subdivisions around the valley, said Murphy.”

“North Las Vegas homeowner Steve Rohl sold his home at auction in October after watching it linger on the market as home prices dropped. ‘Putting your home on the (MLS) and expecting a sale is like watching dinosaurs dodge asteroids,’ Rohl said. ‘It’s an exercise in futility. Have you tried to do an open house lately? There are six open houses within a block of me. You’re lucky to get one person.’”

“Metro Detroit’s once-booming condo market has hit the skids. Caught in the middle of the condo slump is Anne Feighan, who bought her two-bedroom, two-bath condominium at the SkyLofts Market Square building in Royal Oak for $310,000 in October 2005. Just two years later, it has lost $50,000 in value.”

“‘I wish I would’ve rented,’ Feighan said. ‘It stinks. For me to try and sell right now would be insane. I know that no matter what happens, I’m going to lose money on it.’”

“October figures released by the Southern Twin Cities Association of Realtors, indicate that 63 single family detached homes are currently for sale in the community (55009 zip code). There are also 13 condominiums or townhouses on the market. Local sellers closed on the sale of only three homes in October, compared to six closings last October.”

“‘The office isn’t getting many inquiries about lots or new construction,’ Jim Althoff of Edina Realty noted. ‘People are also asking ‘Why would you build a new house, when you can buy a used one so cheap?’”

“Tom Carnel has been in business for 30 years, and this is the most foreclosures he’s ever seen. ‘It’s also the worst market since the ’80s,’ he said.”

“Andy Walker, president of the South Carolina Realtors said the recent declines in local home sales indicate a return to a normal market. The biggest problem, Walker said, is a tightening in the mortgage industry, which has become more cautious about verifying income, credit, job status and property value.”

“‘That’s just normal. That’s not unusual,’ he said. ‘What’s been unusual is the ability of buyers to just walk in and get a loan for whatever they want … without there being any verification.’”

“They lined up in the cold for days just to get a chance at buying into one of Toronto’s hottest condominium buildings. But all the buyers literally fighting for a spot in the queue for the 80-storey tower were really at the end of the line.”

“About a week earlier, the developers held a posh party in a nice warm sales office for the home-run hitters among Toronto’s real estate agents. About 24 hours later, those agents and their clients got first dibs at buying.”

“‘It’s like owning a night club. If you have a big lineup outside, you let the people in first who keep coming back,’ said Brad Lamb, generally regarded as one of the city’s superstar agents. ‘The regulars get to come in because they are the ones who continually support your business.’”

“Peak season for Shenzhen’s property market is the autumn months of September and October. But this year, the number of transactions dropped sharply over that period, as banks tightened credit and local governments issued policies to curb rising prices.”

“Wang Feng, Deputy Director of Shenzhen Real Estate Research Center said ‘Currently, more and more properties smaller than 90 square meters are being sold. More properties in the 70 to 90 square meter range will hit the market next year. So property prices will experience an adjustment.’”

“According to the research center, both investors and home buyers are taking a wait-and-see approach and that creates a stagnant market. But prices, which soared from an average 9000 yuan per square meter last year to 15,000 yuan in August, are expected to remain high.”

“Election day will be another day of house-hunting for thousands of Victorians still fighting to get into the market. Irena Kades was determined to get her dream piece of land at Sanctuary Lakes by camping out last night to be in the running today.”

“Ms Kades and her husband recently sold their first home at Pt Cook and said they were keen to secure the land in an effort to beat soaring prices.”

“Australians for Affordable Housing spokesman David Imber said whoever wins the election will have to act fast to address the dire situation. ‘The reality is, when people wake up on Sunday, there will still be 1.1 million Australians in housing stress,’ Mr Imber said.”

“Kasey* from Boronia is addicted to credit. When she sees advertising offering her money, she applies. At just 23, Kasey has racked up more than a quarter of a million dollars of debt. Her minimum monthly repayments outstrip her income by almost $500.”

“‘I’m kind of addicted to finances (sic). Now I’m up s–t creek without a paddle.’”

“Now that her repayments are more than her income, you might think the financial institutions would stop lending her money, but you’d be wrong. Just last month, she applied to GE Money for another personal loan of $7000. Not only was the $7000 approved, she was offered $10,000.”

“‘I answered all their questions honestly and told them about all my other debts and my income,’ says Kasey. ‘When I was on the phone to them, I was actually kind of thinking to myself. ‘God, I hope they don’t approve this.’”

“No one can say how or when the subprime mortgage crisis will end. But the next act will not, or at least should not, include Fannie Mae and Freddie Mac riding to the housing market’s rescue. That became clear Tuesday when Freddie reported an all-time record quarterly loss of $2 billion, just 11 days after Fannie Mae reported a $1.4 billion loss.”

“A Fannie-Freddie rescue always seemed unwise to us, in part because it would address the crisis by boosting home prices generally rather than delivering relief targeted to those borrowers who need it most. It also didn’t seem terribly feasible.”

“The losses at Freddie Mac and Fannie Mae show that not even the GSEs are immune to the rot spreading from the subprime market. This is no time to pile new risks on top of those, known and unknown, that Fannie and Freddie already bear.”

Warning, a PDF file with Swerve Magazines’ cover story from Calgary. Right click, save to disk, second page from the end, “If you want to know more about why the U.S. housing market is wobbling like a Weeble in a hurricane, you might want to check out the Housing Bubble Blog. Ben Jones’ readers are a smart, sensible lot, hailing from across the political spectrum.”

“Because his readers are able to highlight local trends as they happen, Jones has been able to connect seemingly isolated dots. As early as 2005, what could have been dismissed as individual pricks in the bubble instead add up to signs that the air is whistling out of the U.S. economy as a whole.”

“‘We call it a Rolling Bubble,’ says Jones, describing how what happens in Florida rolls into Nevada… South Carolina… California… Massachusetts. ‘Similar trends break out all over the country, they’re just not in sync.’”

“‘This isn’t an academic exercise, this is real life,’ he says. ‘You have to look at the Housing Bubble Blog as a lens. Now we’re into the clean up, the explanations and the reform.’”