The Housing Bubble

A report from the Arizona Republic. “Complaints to the county about algae-laden “green pools” behind vacant or abandoned homes have leaped almost 250 percent since a year ago, increasing to 2,069 during the first five months of 2008 compared with 597 during the same period in 2007, said Johnny Dilone, spokesman for Maricopa County Environmental Services.”

“Kara Cox, a Maricopa County vector-control specialist, said she is working six 10-hour days a week, responding to as many as two dozen complaints every day. About 80 percent of the properties she visits are vacant, Cox said.”

“‘Our workload has increased significantly,’ she said.”

“Roughly 75 percent of green-pool calls to Maricopa County Environmental Services since July 1 have been for swimming pools behind abandoned or unoccupied homes, up from just 25 percent of calls the previous year, said John Townsend, manager of the Vector Control Program in Maricopa County.”

“In all, the county has received about 8,000 mosquito-related calls during that time and expects the number to reach 10,000 by the end of June.”

“‘It’s all kind of new,’ Townsend said about complaints leading to abandoned properties. ‘Last year, we had a few, and this year we’ve seen a lot.’”

“The increase in abandoned homes also has created an enforcement dilemma for the county, Townsend said, because in most cases the listed owners are long gone.”

“Townsend said if homeowners facing foreclosure decide to abandon their property and don’t want to drain the pool, they should at least call the Vector Control Office to pick up free gambusia fish from the county.”

“Troy Corder, committee member and resident of Surprise, said his community’s greatest concern is the consensus of housing-industry experts that the foreclosure rate has only begun to climb.”

“‘We haven’t even hit the tip of the iceberg when it comes to foreclosures,’ he said.”

The East Valley Tribune from Arizona. “The Valley’s average apartment rent hit a record high recently, but experts say it’s still the best time in years to be a renter. That’s because landlords are being forced to compete with thousands of vacant single-family houses put up for rent by frustrated home sellers.”

“Valleywide, 67 percent of landlords offered some sort of special deal to lure renters in the first three months of 2008. That’s up from 55 percent a year ago, according to a report by Pete TeKampe with commercial real estate brokerage Marcus & Millichap.”

“‘Compared to the last two years, this is a great time to be a renter,’ said TeKampe.”

“Failed condominium conversion projects have also added to the excess supply of rentals as investors returned thousands of units to the rental pool.”

“‘There’s just so many rooftops for people to live under,’ said Greg Thielen, associate partner with Hendricks & Partners.”

“Investors bought properties based on projected rents that never materialized, he said. And some investors are starting to miss payments to their banks, Thielen said. ‘Lending’s gotten more difficult, as well,’ he said. ‘In the past, they’ve been able to refinance to get help.’”

“The state’s new employer sanctions law has also hurt some apartment operators. Many landlords were impacted in December, when tenants left before the law went into effect, Thielen said.”

“The vacancy rate in one area near 29th Street and Greenway Road jumped from 7 percent to 22 percent in a year, said TeKampe. ‘That’s an area that just got absolutely devastated,’ he said.”

“Thielen said he’s heard of some buildings that are up to 30 percent vacant. It’s difficult to know if the growing vacancies are just related to immigration reform or also job losses in certain industries, such as construction, he said.”

The Las Vegas Business Press from Nevada. “Las Vegas’ housing downturn has ratcheted up competition amid area contractors, increasing bid lists and lowering profit margins, panel participants said at a National Association of Industrial and Office Properties event.”

“Several specialty trade companies which had relied on the housing boom for steady income, are finding themselves out of work and struggling to make ends meet. There were 1,781 Clark County housing permits pulled in March, a 77.7 percent drop from a year ago. Also, a 22.5 percent decline was reported in the number of active Las Vegas Valley subdivisions in March.”

“‘We’re definitely seeing longer bid lists,’ said Frank Martin, president of Las Vegas-based Martin-Harris Construction. ‘A couple of years ago, some of these jobs were lucky to get a couple of bids. Now, we’re seeing double and triple the number of bidders.’”

“Yet many of those companies are ill-equipped to move from residential to commercial construction.”

“The market slowdown is especially noticeable due to the deluge of general and specialty contractors that have migrated to Las Vegas in recent years, attracted by its building bonanza.”

“‘There is more competitiveness in the construction industry than we’ve seen in the past few years,’ said Kevin Burke, president of a Las Vegas general contracting firm.”

“The number of bids is reducing contractor margins, in some cases creating unrealistic expectations. Owners will ’shop’ bids, pitting one contractor against another, to secure the lowest project cost estimate.”

“‘It will drop margins by a percent, which, in contracting, is significant,’ said Brooks Williams, president of a Las Vegas general contractor. ‘We have (subcontractors) calling us constantly looking for anything to bid.’”

The Review Journal from Nevada. “Sen. Barack Obama led a sober town hall meeting Tuesday in North Las Vegas where people told the Democratic presidential candidate that there’s more to the housing crisis than foreclosures and that its effect isn’t limited to those who bought more home than they could afford.”

“The Illinois senator used the campaign stop to highlight his plans to address the nation’s real estate troubles. Obama also told the crowd that he favored a plan proposed by Sen. Chris Dodd, D-Conn., that would use the Federal Housing Administration to convert high-cost mortgages into more traditional, and affordable, loans.”

“The mortgage lending industry needs more monitoring and consumer protection requirements, he said.”

“During the North Las Vegas town hall meeting, Francisco Lomeli told Obama that tighter lending standards in the wake of the foreclosure crisis, with student loan debt, were preventing him from buying a home.”

“Lomeli and his wife decided to put off buying a house until she finished nursing school, he said.”

“‘It seemed back then that the house dream was there. Make it through college, we can make it happen,’ he said. ‘But now the dream seems to have gotten further away from us. We don’t know who to trust. We don’t trust the lenders. We don’t trust the banks.’”

“And because they have student loan debt, the lenders do not trust them either: ‘Now the credit people are, ‘No, no, no,’ because we’re in debt.’”

“Tighter regulation of lenders could have prevented their plight, Obama said. ‘A lot of this wouldn’t have happened if we had done a better job of regulating the banks and the mortgages. Nobody was watching them,’ he said.”

“Before the town hall meeting, Obama stopped briefly at the downtown Las Vegas residence of Felicitas Rosel and Francisco Cano, who are worried they might lose the home they bought three years ago with an adjustable-rate mortgage.”

“‘At the beginning it was OK, but all of a sudden, it started going up and up,’ Rosel told Obama.”

The Spectrum from Utah. “Southern Utah’s real estate sales were at their peak in May of 2005. The numbers had dropped by nearly half in December of 2007. While it’s not what it once was, the market is still solid. That was the message from Joseph McPhie, general manager of Southern Utah Title, at Wednesday’s meeting of the Chamber.”

“‘There’s a lot of good news, particularly if you’re a buyer right now,’ McPhie said. Foreclosures, unfortunately, ‘are something that can’t be ignored’ because they are affecting the product available as well as the price point.”

“McPhie said drawing something from the numbers is a matter of attitude. He told the story of an ancient ruler who dreamed he was losing all his teeth. When he asked for an interpretation, one wise man told him all his family members would die before he did.”

“Disliking that message, the ruler had the man beheaded. The second wise man told him he would live a long life and outlive many of his family members. Same message, different delivery.”

“McPhie’s ultimate message is that the market has been growing slowly the past few months. He said he believes that growth will continue.”

“‘I hope all of us will be cheerleaders for our area,’ he said of the way to help the area rebound. ‘We live in a great place with great people. I think we’ll enjoy a renewness(sic) in our market.’”

The Daily Herald from Utah. “A Las Vegas real estate auctioneer is putting up for sale more than 50 foreclosed residential properties and lots in Utah in yet another sign of softness in the high-end residential market.”

“The inventory, owned mostly by Centennial Bank, is valued at more than $20 million in total. About 35 of the 52 homes and lots for sale are located in northern Utah County.”

“On the auction block are 23 finished and unfinished homes ranging between $175,000 and $2.6 million, based on previous list prices or bank-appraised values. Also included in the sale are 29 custom lots that range between $111,800 and $408,000.”

“‘Many of those properties were owned by speculating owner-builders who had hoped to finish the homes and resell them, but ran out of money and time,’ said Eric Nelson, founder of Eric Nelson Auctioneering. ‘If the bank can sell the properties all in a short period of time, that prevents vandalism, reduces holding costs and helps them recover the loans faster.’”

“‘The bank is not in the business to hold real estate. If they find themselves with a lot of foreclosed property, auctioning them is one of the fastest and fairest ways to sell the properties,’ said company co-founder Aleda Nelson. ‘The builders may have been unable to sell the properties, make payment on the lots or obtain financing for construction.’”

“Sales of homes priced above $500,000 in Utah County plunged 71 percent in April from a year ago. No sales were recorded for homes priced above $1 million in April — the second time this year, said said Taylor Oldroyd, CEO of the Utah County Association of Realtors.”

“‘Mapleton and Alpine are some of the highest-priced areas that are seeing a lot less sales,’ Oldroyd said.”

“Median sales prices of all residential types in Utah County fell to $219,500 in April from $225,000 last year, according to the latest data from the Utah County Realtors.”

“Nelson sees more bank-owned property auctions being held in Utah in the coming months. ‘We’ve held two such auctions in Arizona in the past few months. And we’re doing the same thing in Nevada, and now Utah, although the market here isn’t as bad as in Nevada or Arizona.’”

“‘These are basically brand-new homes, the majority of which are 80 percent to 90 percent finished,’ he said.”"