The Housing Bubble

The Great Falls Tribune reports from Montana. “Growth may not be noticeable from inside the city, but get to the edges of Great Falls, and it’s clear to see that the city is slowly creeping outward. Local real estate agent and developer Kyle Haynie is used to hearing that Great Falls isn’t growing, but he thinks that common assertion is easy to disprove. ‘Look at all the new homes,’ he said.”

“There are a lot more spec homes being built now, Haynie said. Eight to 10 years ago, there were usually about two or three going up at a time. Now, many developers will work on three or four at the same time. ‘There’s a lot of spec out there,’ Haynie said. ‘They’re popping. They’re selling. They’re coming out of the ground.’”

“While developers are seeing high demand for the new houses they’re building, no one seems to be able to pin the growth on one particular cause. ‘We must be getting some jobs here somewhere to build all these houses we’ve built,’ said Tom Skovron, of Tom Skovron Builders LLC.”

“More than 150 lots in Foothills Ranch Estate south of Highway 89, have already been approved. Plans call for roughly 900 acres to be developed. That subdivision has been very popular, said Todd Martin, who owns the Foothills project along with Keith Schermele and Nate Hoines.”

“Even before phase III was approved, the developers had deposits on 14 of the lots, Martin said. One spec houses in that development has a price tag of $670,000.”

“‘It’s well above what we anticipated,’ he said. ‘It’s just absolutely phenomenal to be honest with you.’”

From The Bee in Oregon. “As of early October, two Woodstock townhouse-style condos, on the market for many months, remained unsold — having been priced too high, in the view of one local real estate agent. Several blocks away, also in Woodstock, the for-sale sign in front of a single-family bungalow, listed for months, was recently revised to read, ‘Price reduced.’”

“For now, the days of multiple bids by potential buyers competing for houses in Portland are over, says Broker Ron Hackenberg. ‘It’s not a seller’s market anywhere, anymore,’ he adds.”

“Sales are down from last year, Hackenberg says; and, in some neighborhoods, home prices have fallen somewhat. ‘The key is pricing properly. It used to be that sellers would calculate their asking price by looking at sales prices for comparable houses, and then adding 10 percent. However, these days, if sellers try to squeeze every last dollar out of their homes, they might be in for a surprise,’ Hackenberg cautions. ‘I have a listing that has been sitting on the market for a long time. It’s overpriced.’”

“He adds. ‘In places like Hillsboro and Estacada, the market is just dead.’”

“Undoubtedly, on the national level, the housing market has taken a dive. But, according to a report cited by Hackenberg, as of last July Portland’s home prices year-over-year were actually up by 4.5 percent. ‘We have one of the best markets in the country,’ Hackenberg says. ‘Everything else is going south.’”

The Register Guard from Oregon. “Pending and completed home sales in Lane County in October lagged far behind levels for the same month a year ago. But the decline in year-to-year sales wasn’t as steep as it was in September, according to figures released by the Regional MLS in Portland.”

“The real plunge in sales happened in September, when the number of sale agreements dropped by 35 percent from the year before, and closed sales fell by 28 percent. Pending sales were off 27 percent in October compared with a year ago, and completed sales were down 22 percent below 2006 levels.”

“‘All in all, there’s still a down trend, but it’s less than it was in September, and the amount of unsold inventory has improved,’ said John Hoops, outgoing president of the Eugene Association of Realtors. ‘We should all be pretty happy with that.’”

“The real estate markets in places such as California and Arizona, where subprime mortgages and vastly overpriced purchases resulted in a housing crash, have affected the local housing market, Hoops said.”

“‘People in those areas are not selling their homes as quickly as they were a year or two ago, and they’re not getting the elevated prices, so they have less equity to bring up here to make purchases and they have to wait until they sell their homes there,’ he said.”

“In some cases, out-of-state newcomers are renting houses while they wait to sell their homes in more depressed markets, Hoops said.”

The Oregonian. “The U.S. Forest Service is running short of money to draw up new timber sales. The shortfall is related to the national housing slowdown, which has depressed lumber prices about as low as they have ever been, federal and industry officials say.”

“‘We didn’t know this was going to happen,’ said Peggy Kain of the Forest Service’s regional office in Portland. ‘The market hasn’t been this bad in a very long time.’”

“Lumber prices have fallen by nearly half since their last peak in 2004, said Kevin Binam of the Western Wood Products Association. Many Western sawmills are curtailing operations. ‘It’s probably as bad as it’s ever been — maybe worse,’ Binam said.”

“A few Forest Service timber sales have gone without bids, especially sales that required expensive helicopter logging, made even more costly now by higher fuel prices. The agency hopes to revise those sales and put them up for bid again, Kain said.”

“Plummeting rates of new home construction, which consumes about 40 percent of Northwest lumber, depressed demand and prices. It’s unlikely to get much better before 2009, Binam said.

The Bellingham Herald from Washington. “According to two new reports, home values in Whatcom County were 4.3 percent higher than the same time last year. Less than 1 percent of homes purchased in the past year now have negative equity.”

“Gragg Miller of Coldwell Banker Miller-Arnason said he is seeing year-over-year numbers similar to the report. For him, the important factor is what the numbers say for people who bought a home more than a year ago.”

“‘Most homeowners are in a pretty good position if they bought over two years ago. The ones that purchased less than two years ago are still OK if they don’t have to sell,’ Miller said.”

The Columbian from Washington. “Lots of property owners’ holidays got a little gloomier last week as Clark County property assessments arrived in the mailbox. ‘They’re going to force us right out,’ said Patrick Morrison of Washougal.”

“Morrison’s 1,992-square-foot home on Mount Norway jumped in value from $400,090 to $529,700 in one year, the county assessor’s office found. The retired Georgia Pacific worker, who said he lives with his wife on about $34,500 annually, is dreading the tax bill that will arrive early next year.”

“Lots of owners are groaning. Because this year’s housing crash won’t go on government books until next year, the average assessment rose 12 percent, according to the county.”

“Assessment Q & A. I keep hearing about a housing slump. Is that something going on across the country but not in Clark County?”

“No. Clark County’s once-sizzling home market has cooled off substantially. The median price for houses sold in Clark County last month was 7.5 percent lower than what homes sold for in October 2006.”

“Can I appeal my property assessment? The Clark County Board of Equalization received slightly more than 1,400 petitions for the values set in 2006. According to the board’s Web site, more than 50 percent of the property values appealed to the board have resulted in some type of reduction.”

The News Tribune from Washington. “Pierce County’s rate of home sales in the third quarter fell far below the state’s and farther than its Puget Sound-area neighbors, according to the newest numbers from WSU. The figures exclude new construction and condo sales.”

“Sales dropped 32 percent compared to the same quarter in 2006. Statewide sales declined by 11 percent.”

“Pierce County prices, said Glenn Crellin, director of the center, could easily slip into negative territory in the fourth quarter, given the number of homes for sale. ‘That means buyers have a lot more market power. If they’re going to buy, they are going to negotiate aggressively,’ he said.”

The Seattle PI from Washington. “Jamie Goodwin knew it would be a tough time to sell her Central Area townhouse. ‘I’m a real estate attorney, and I knew that the market was soft,’ she said. That’s why she set her asking price at what another townhouse in her development fetched a year earlier.”

“Even so, agents weren’t even looking at the listing online, said agent Erin Goodwin, Jamie’s sister. ‘We listed in October, and I think maybe there’s 23 clicks.’”

“Sitting in a townhouse he was trying to sell last month, Real Estate agent Alex Eckardt said he’d seen a fair amount of traffic since listing the home about a month earlier, but no offers. ‘Six months ago this would have sold in the first week,’ he said.”

“More and more, homes of all types in Seattle are chasing a buyer pool that has become smaller and more cautious over the past year. But real estate agents and sales statistics show that the slowdown in townhouse sales has brought price cuts out of proportion with the rest of the market.”

“‘What we are seeing is these huge price reductions, where a guy’s asking $600,000 one week, then $550,000 the next week and $500,000 the week after that,’ said agent Ryan Thompson.”

“Greg Bartell, (an) agent who specializes in townhouses, says he has seen particular slowing since August. ‘I think the most apparent thing is prices coming down,’ he said. ‘I’ve seen some come down $90,000 off the list” price.’”

“The sales totals have held up better than those for all single-family homes, but have come at the same time as builders have put many new homes onto the market. ‘There’s just so many,’ said Susanne Stauffer, who is Erin Goodwin’s partner. ‘The market’s kind of saturated with them.’”

“The number of lots created through the permit process primarily used for townhouses increased notably between 2004 and 2005, then more than doubled between 2005 and 2006, increasing such lots from 50 percent of all subdivisions to 66 percent.”

“Builders rushed into the swelling townhouse market during the past few years, paying high land prices based on expectations of continued appreciation during construction, Bartell said. Smaller builders responsible for many of Seattle’s new townhouse developments had unrealistic expectations, Thompson said.”

“‘We got caught up in this frenzy,’ he said. ‘Then, when the market began to settle out, their ability to carry these properties was limited due to limited financial resources, so they began dropping prices very quickly.’”

“And many of the new townhouses are nearly identical, making it hard for them to stand out when they hit the market, Thompson said. ‘There was just nothing very special about (them) and the prices were super high. Those prices were first to stagnate.’”