The Housing Bubble

The Hungry Horse News reports from Montana. “Flathead County could be edging its way towards a larger surplus in the housing market. That was the message presented by appraiser Jim Kelley at the sixth annual Economic Forecast. According to Kelley the supply of land and housing being created is already higher than the demand. He said based on historical trends for housing demands and population increases there has been a surplus of homes constructed in the county since 2004.”

“Last year there was an estimated need for 992 homes while about 1,093 were actually constructed. ‘The demand goes up and down. There’s been a drop in demand, but we still build homes,’ Kelley said. ‘In nine of 11 years we’ve built more than the demand.’”

“‘It’s my personal opinion that the…Whitefish market will be like the 2001 .com bubble,’ he said.”

“In Whitefish, he said, about one in every 19 houses is currently for sale. On average a home in the Whitefish city limits will spend about 15.5 months on the market.”

“The average price for a home in 2007 in Whitefish was at $503,707. Kelley said that foreclosures and declining markets in other areas of the country are affecting the Flathead Valley market as well.”

“Kelley said that was because many of the people who buy those homes here are from out of state, but because the housing market has fallen more dramatically in other states folks won’t be purchasing homes here.”

“Since 2001, the number of lots created in the county has continued to outpace construction rates. Through 2007, Kelley estimates there an excess of about 2,800 lots. He said that without any new subdivisions created there is about a four-year supply of lots.”

The Idaho Mountain Express. “What may have looked like an attractive option during the real estate boom may now have lost some of its luster. Falling real estate values in Hailey are resulting in free-market home prices low enough to compete with deed-restricted homes set aside by the Blaine County Housing Authority as affordable housing.”

“‘If you had the choice of buying a home which was deed restricted and one which was not, and they were both the same price, which one would you choose?’ said Jim Fackrell, executive director of the Blaine County Housing Authority.”

“The asking prices for three three-bedroom, two-car garage homes designated as deed-restricted, affordable housing in the Woodside subdivision of Hailey have been reduced $20,000 each from $244,000 to $220,000. The homes have been on the market since 2006 and were recently listed by real estate agent Kris Halle.”

“Halle says his listing of the homes marks the first time a real estate agent has been used to market affordable housing in Blaine County. ‘The falling market has caused buyers to scrutinize these units more closely. There are similar homes on the same street with asking prices at $279,000,’ he said.”

“He also said buyers know they can take more time to make a decision in today’s market. ‘There has been some aggressive price-cutting after 10 years in which the seller was king,’ he said. ‘Now they have to be more flexible in order to sell their homes.’”

“Many who urgently need to sell their homes are finding no buyers and resorting to foreclosure proceedings instead. Sun Valley Title Co. President Manager Cassie Jones reported a ‘dramatic increase’ in foreclosure notices in the valley compared to last year.”

“‘In April of 2007, we listed three homes in foreclosure. This week we have fifty,’ she said. ‘These homes may sell, but the owner will lose any equity they may have in the home.’”

The Mail Tribune from Oregon. “Local housing is continuing its downward slide in prices with a saturated market further influenced by foreclosure sales. Overall, about 2,200 homes are on the market, in the mix with those repossessed properties.”

“‘That’s driving the market right now,’ said Ron Galbreath, an agent in Medford. ‘That’s where we are getting the most activity from homeowners and investors.”

“During the past three months, Jackson County real estate prices — both new and existing — continued their broad decline with pockets of resilience. The inventory of available homes grew by 5 percent. Southern Oregon MLS figures showed a 9.1 percent year-over-year decline to $230,000 in the median sales price of existing homes for the quarter ending Jan. 31. New home sales fell 12.2 percent to a median of $267,000.”

“In a separate report, prepared by local appraiser Roy Wright, focusing on January activity, the median price for all single-family residence sales in January declined 3.7 percent to $247,500. The sales pace dropped 29 percent in January.”

“‘Our slowdown is not as big as it is in some areas, but the interesting thing is that we tend to draw (buyers) from some of those markets,’ said Colin Mullane of REMAX Realty group in Ashland. ‘California is a relatively well-to-do market. Even though things have slowed, there is still independent wealth there. We really do feed off the California market.’”

“‘Right now buyers are looking for the best value, getting the most home they can afford for their dollar, whether it’s Medford, Eagle Point or Central Point,’ Galbreath said. ‘I’ve shown one couple 20-something houses in the $200,000 range in Central Point, Eagle Point and east Medford. They’re taking their time to see if there’s a better one than we looked at the last time.’”

The Bellingham Herald from Washington. “January is typically a slow time of year for residential real estate, but last month was especially quiet.”

“According to data released by the Northwest MLS, real estate agents sold 122 homes and 43 condominiums in Whatcom County, down 15.8 percent compared to the same period last year. The drop was even more significant in the Northwest MLS coverage area, which includes most of Western Washington: 3,622 homes and condos sold in January, down a whopping 35.7 percent from January 2007.”

“Also dropping slightly was the median price for residential homes in Whatcom County.”

“March numbers should show a clearer picture of this year’s housing trend, because spring tends to be a peak time for home buying and selling, said Peter Roberts, an agent for John L. Scott.”

“‘I think it will be a little busier than last year, because I get the sense that many think we’re approaching the bottom of this cycle, and we’ll see more investors coming back into the market, looking for buying opportunities,’ Roberts said.”

“Other nearby counties saw some big drops in home and condominium sales in January. Skagit County saw a 38 percent drop year-over-year, while Snohomish was down 33 percent. King County recorded 1,403 homes and condo sales, down 36 percent from January 2007.”

The Olympian from Washington. “For the second consecutive month, Thurston County home sales fell 30 percent in the year-over-year period, the Northwest MLS reported. The combined house and condo data for Thurston County in January also show that inventory increased 12 percent to 1,880 units from 1,673 units.”

“Broker Phil Harlan said an influx of buyers from Pierce County also continues to prop up home prices. ‘Residents can’t afford a home in one county so they go to the next county,’ Harlan said.”

“Still, Harlan acknowledged that the Thurston County housing market has slowed for homes listed at $300,000 or higher. Homes priced at $300,000 to $400,000 likely could see a 5 percent drop in values, while those $400,000 or higher could reach a 10 percent drop in price, he said.”

“‘The housing market has gone back to pre-2002 levels,’ Harlan said. ‘It has leveled off with normal appreciation.’”

The Seattle PI from Washington. “Seattle-area home prices are manageable for typical workers, according to the chief economist for the National Association of Realtors.”

“‘You may even say Seattle is underpriced if you believe Seattle is becoming a superstar city,’ Lawrence Yun told area brokers in Bellevue on Thursday. ‘Seattle is underpriced in relation to other West Coast markets.’”

“The fact that home prices rose much faster than incomes in recent years in Seattle and elsewhere has led some market observers to predict prices will drop to bring the relationship back to historic norms.”

“Down from a recent high of $481,000 in July, the median King County house sold last month fetched $435,000, up from $429,495 in January 2006, according to the Northwest MLS. January’s house sales volume was off nearly 31 percent from a year earlier, whereas the number of houses on the market jumped almost 56 percent.”

“The founder of the Four Seasons Hotels and Resorts said Seattle has become a ‘World Class’ city. ‘This city is really on the cutting edge of what most cities are hoping to achieve,’ Isadore ‘Izzy’ Sharp said in an interview after speaking to the Downtown Seattle Association.”

“Developer Seattle Hotel Group is building a 149-room Four Seasons Hotel topped by 36 condos on First Avenue, just south of Pike Place Market. The developer has sold 24 of the 36 condos, whose prices range from $2 million to more than $10 million, and expects to finish the project in late summer or early fall.”

“The Four Seasons has its own niche among the slew of condo, hotel and hotel-condo projects under development downtown, because it’s small and high-end, Sharp said. But he also said so many people were building because they saw an opportunity and dismissed the idea that downtown might be approaching saturation.”

“‘I think when a city starts growing, it keeps doing that, particularly when the political support is there,’ he said.”

“Housing sales have scaled back to normal levels from the ‘excessive boom’ of 2003 through 2006 and have stabilized, Yun said. ‘We are probably scratching the bottom in terms of home sales activity.’”

“But Yun noted that the market depends on fence-sitting potential buyers who are afraid of jumping into a market in which prices might continue to fall. ‘It’s hard to predict that psychology factor,’ he said.”

The Seattle Times from Washington. “Laurie Harlan of Lake Stevens found out the hard way just how much the region’s housing market has slowed. In August, after Harlan and her husband decided to divorce, they put their four-bedroom, 2,100-square-foot rambler on the market.”

“Having bought the house 8-½ years ago for $179,000, they figured it would sell within a month or two for the $395,000 asking price. It didn’t. And didn’t. In fact, the sale didn’t close until Friday, when the house fetched $333,000.”

“‘We were obligated to sell it,’ said Harlan, who’s staying temporarily in her husband’s new house in Marysville while she looks for a new home for herself and her three children. ‘Were we happy with the price we got? No.’”

“New listings have continued to pour onto the market, adding to already swollen inventories of homes and condos. There were 28,215 active listings in the region, 46.3 percent above the level a year earlier.”

“Though sales prices have slipped, Bob Melvey, associate broker at Windermere’s Ballard office, said he didn’t sense would-be buyers are holding off to see if they can get a better deal. ‘They do have the luxury of spending a couple of months comparing this house to that one,’ he said. ‘The way the market was before, you could spend less time picking a house than picking out a sweater.’”