The Housing Bubble

The Sun Herald reports from Mississippi. “According to data from the MLS, which keeps track of homes for sale, home prices have risen more than 16 percent, from an August 2005 average $148,885 to $178,000 in August 2007. Some of that increase, said local Realtor Cheryl High, was because of labor and supply shortages. But some of it was wishful thinking.”

“‘We hit a price range where it was not uncommon for a seller to add $30,000 to $40,000. We were asking premium prices,’ she said. ‘We went too high too fast.’”

“Since then she’s seen builders knocking as much as $50,000 off the price of a home and has received an offer of $90,000 less than the asking price for one of her listings.”

“MLS data reported in April 2007, there were 814 homes on the market and only 293 sold. August 2007 had 846 homes on the market and 315 sold, in contrast with December 2005, with 475 houses for sale and 401 sold.”

“After Hurricane Katrina, there was a sharp increase in home sales, mostly to investors who planned to resell them, said Realtor Arlene Wall, but that ended quickly.”

“Joe McVey has had a higher-priced home on the market for about two years, a reflection, he said, of the national trend. Katrina drove away families with no local roots, but higher incomes. The people who remained can’t afford his listings.”

“‘The people who moved took their money with them,’ he said.”

“And though he thinks some buyers are perhaps subconsciously holding out for prices to dip lower, he thinks the dam will break once houses start selling again. He’s looking for that break as early as January, but probably in the later spring.”

“‘I think it’s going to be like a volcano going off,’ he said. ‘Maybe that’s wishful thinking on my part.’”

From City Business in Louisiana. “A $25-million residential redevelopment of the historic Sara Mayo Hospital in the Irish Channel has been put on hold indefinitely. ‘Based on the existing economic conditions and the status of the current mortgage market we feel it is premature to start construction at this time,’ said Sue Shelton, executive VP of Today Realty Advisors Inc., which bought the hospital in the spring of 2006.”

“The Dallas real estate company, which initially forecast the costly conversion would be complete in March 2008, is reviewing its plan to convert the 135,000-square-foot abandoned property into 78 condominiums ‘to be sure it is the most effective use of the (site),’ Shelton said.”

“The stalled development comes as a blow to neighborhood residents who have been waiting eagerly for progress at the vacant hospital site with overgrown shrubs and grass.”

“‘It looks like a place where anything could happen, and not necessarily good things,’ said Richard Hebert, who in 2001 bought a home near the hospital.”

“Land values in the Irish Channel rose when the city demolished the St. Thomas public housing development in 2000 to make way for River Garden. Following the demolition of St. Thomas, housing in the area was selling at unprecedented prices in the range of $350 to $500 a square foot, said Realtor Isabel Reynolds.”

“Values surged again following Hurricane Katrina when the city announced plans to redevelop 6 miles of land along the Mississippi River between Jackson Avenue and the Industrial Canal into a tourist-friendly attraction that would include parks, shops, cafes and cultural centers, Reynolds said.”

“‘There is a lot of (housing) supply out there and there are a lot of new choices coming on the market,’ said Lower Garden District builder Robert, who recently completed an 11-unit luxury condo building in the Lower Garden District and is in pre-construction phases for the three-story building at 625 Celeste St. as well a a $17-million, eight-story luxury condominium and a larger, mixed-use building at 1667 Tchoupitoulas St.”

“Keeping prices low to appeal to a wider market of buyers will be important for developers in transitioning areas such as the Irish Channel, he said.”

“‘The supply issue is coming down to what you are willing to sell at,’ said Armbruster.”

The Times Picayune from Louisiana. “The supply of houses and condominiums for sale right now in greater New Orleans is more than double what it was at the close of 2004 and 2005, a trend that brokers say is shaped as much by the national real estate slump as it is by the lapse in consumer confidence that followed Hurricane Katrina.”

“Buyers are out there, but brokers say they can afford to be choosy because of the profusion of homes on the market. Sellers, especially those with high-end real estate, have had to compromise on price after watching their homes idle without an offer for a few months.”

“Brokers say it is the affluent homeowners who have experienced the most disappointment about what their homes will fetch in a turgid market.”

“Larry Saunders put his home in Metairie up for sale this year for $755,000, slightly less than what he believes it was worth before the storm. Katrina damaged the outside of the house and pushed water into the back two rooms, but Saunders finished the repairs before he went hunting for a buyer.”

“The home languished on the market for six months until Saunders found a new real estate agent who encouraged him to dial back his asking price. He sold the house within 30 days — for $551,000.”

“Saunders moved his family to Nashville after the storm, and he said he accepted an offer far below his original price because it was costing him to maintain the house and swimming pool in Metairie even as he paid a mortgage on the new house in Tennessee.”

“‘It was unfortunate to have to accept such a dramatic reduction in value, but that’s just the reality,’ Saunders said. ‘For homes at the high end of the price range, values have fallen significantly over the last two years because of the lack of new buyers entering the market and the excess supply.’”

“Michael Riley also had to stomach a lower selling price for his home in Old Metairie after he could not find a buyer for six months. A lot of potential buyers came through his house on Cedar Drive, but he found that no one would make an offer unless they believed they had found a real bargain.”

“‘There are a lot of houses that have been up for sale for a long time,’ Riley said. ‘If you want to move your house, you have to make it very price-attractive. I know a lot of people are reluctant to reduce the price of their house because they keep thinking in terms of what it was worth before Katrina.’”

The Record Chronicle from Texas. “Mike Ferguson flipped through a booklet of foreclosed homes. As he patiently waited for a foreclosure auction to begin, Ferguson reviewed the dozens of homes that he had highlighted, scribbled next to or marked.”

“By 10 a.m., Denton County’s foreclosure auction started, and within an hour, nearly all of the properties listed in the book had been sold — most back to the bank. Ferguson’s business was the only buyer that was not a bank to place a winning bid on a property.”

“The number of foreclosed homes posted for the New Year’s Day sale at the Denton County Courthouse reflected a 17 percent increase over January 2006 and was the highest January increase in a 10-county region. The question, foreclosure service officials say, is whether the foreclosure numbers posted for January could have been higher.”

“Denton County posted a record 450 residential foreclosures in November. In December, 447 foreclosure notices were filed. In a report released Dec. 13, a total of 392 residential foreclosures were posted for the January auction.”

“Lenders in a 10-county region posted 3,672 area homes for foreclosure in January, according to the Foreclosure Listing Service report — the biggest total yet for January foreclosure auctions in the Dallas-Fort Worth region and 30 percent more than for the same month in 2006.”

“Almost 43,000 homes in the region were posted for foreclosure in 2007 — a record, up 10 percent from 2006.” “The annual numbers for 2007 show several hotspots in the county hit harder than others, including Krum and Prosper and some developments along U.S. Highway 380.”

The Journal Record from Oklahoma. “Tulsa-area home sales fell 11.2 percent in November, the Greater Tulsa Association of Realtors reported Monday.”

“Oklahoma State University economist Suzette Barta’s report observed strength in Oklahoma’s real estate loan market…although she recorded declining activity. These factors support Barta’s contention that while the national housing market is enduring a serious slump, Oklahoma’s housing market could better be described as sluggish.”

“While housing starts have declined 6.1 percent in Oklahoma, she said, that pales against the 24.5-percent drop seen nationwide. She projected statewide construction employment would rise 0.6 percent next year, fueled by demand in Oklahoma City.”

“‘Actual home prices are not expected to fall,’ she said, ‘and neither is construction employment.’”

“Tulsa apartment complex sales plunged 40.4 percent in 2007 to $191 million, according to a report by broker Darla Knight.”

“Analysts through 2007 had projected the start of several construction projects, although some in the multifamily sector have suggested the credit crunch could curtail some expansion plans. While long-term financing remains available, Knight said some deals had faced a temporary squeeze from sub-prime lending problems.”

“While most economic studies point to slowing job growth in the Tulsa area this year, Knight said that follows a similar pattern seen in 2007.”

“‘While we’re modest, we’re still far above the rest of the nation,’ Knight said. ‘And then we had Forbes putting us in the top 10 places to live. That is encouraging.’”