The Housing Bubble

The Casper Star Tribune reports from Wyoming. “Federal data show that southwest Wyoming is bearing the brunt of the state’s population growth. ‘It’s not really surprising at all,’ Sublette County Planning Director Bart Myers said of the latest census figures, which are tied heavily to the development of the nearby Pinedale Anticline and Jonah fields, two of the nation’s largest natural gas fields.”

“‘The (natural gas) companies are telling us about 80 percent of the people that were going to be here for the gas exploration boom are already here,’ Myers said.”

“Myers said the county also tries to track real estate trends, and those trends are showing the beginnings of a slowdown in population growth. ‘I think we’re seeing for the first half of 2008 a leveling off, actually … We’re down about 100 building permits from where we were at this point last year,’ he said.”

“‘In June, there were about 300 residential lots on the market countywide … and I think just five or so sold and closed,’ Myers said.”

“‘And it’s the same thing with residential units already built,’ he said. ‘The inventory is increasing and demand seems to be dropping … so maybe we have seen the worst of the county’s population explosion. I think the lag time from when this first hit has shrunk or maybe even disappeared.’”

The Big Sky Business Journal from Montana. “Residential real estate closings in Billings are off by 16 percent for the first half of the year - pending sales are off by 24 percent - evidence that Billings is feeling the effect of the continued tightening of credit standards to get a home mortgage, according to real estate agent Howard Sumner.”

“‘There has been a substantial drop in the number and type of loans available,’ said Sumner. 50 percent to 70 percent of the decline of sales locally is due to the changed lending environment, said Sumner. The balance is due to ‘all the negative information about the home market.’”

“All that’s happening in the housing market might be a good thing, said Sumner - ‘It is wringing out any speculation that was going on.’”

From KTRV 12 in Idaho. “A sluggish economy doesn’t mean no one’s snapping up real estate. ‘Sales are good, believe it or not, but we’ve got almost 8,000 houses for sale in the area,’ said David Warrick, with Coldwell Banker Aspen Realty.”

“In the Treasure Valley, 700 to 800 homes are being sold a month, but many more are also coming right back on the market.”

“Meanwhile, some larger homes are going at a deep discount. ‘So taking a small hit on your smaller home, you’re going to make a large savings on a large home right now,’ said Warrick.”

“In typically more expensive neighborhoods, like north Meridian, Kuna, Star and even south Boise, for sale signs abound. Residents in those areas are left shaking their heads as prices continue to fall.”

“‘So that kind of bummed me out. Oh my gosh what I’d paid for my house has already gone down,’ said Karen Burden, a Star resident.”

“They’re also concerned about their future property values. ‘It’s frustrating because I know they’re going to get frustrated and they’re going to end up renting them out and, there’s nothing wrong with renters, but I hate to see it,’ said Burden.”

The Idaho Statesman. “The vacancy rate for single-family residential rental housing in the Treasure Valley spiked in the second quarter from the same quarter a year ago, according to an industry survey.”

“Industry members speculated that the vacancies result from struggling housing sales that have caused frustrated property owners to take homes off the market and rent them out.”

“According to Intermountain MLS statistics, 4,547 homes had listings that expired, were withdrawn or canceled during the second quarter. Some of the homes withdrawn from the MLS made their way into the rental market, said Mike Rampelberg of Greater Boise Property Management.”

“‘For some (homeowners), a rent of $800 is better than nothing when you have a $1,200 mortgage,’ Rampelberg said.”

The Olympian from Washington. “Thurston County home prices slid more than 9 percent from June 2007 to June 2008, the Northwest Multiple Listing Service reported, the steepest year-over-year drop this year and the largest decline South Sound real-estate experts could remember.”

“‘The is the first time I’ve actually seen (prices) drop, especially to this degree,’ said broker Doug Burger, who has spent nearly 30 years in real estate. ‘To take this kind of turn is surprising for everybody.’”

“After a period in which home sellers were unwilling to lower prices, they are starting to change their minds, Burger said. ‘They do that very reluctantly, but reality is hitting them,’ he said.”

“These days, the South Sound home buyer is in control, said broker Jeff Crandell. Buyers are more discriminating, they are not afraid to ask for discounts or incentives, and they are not buying the first house they see, he said.”

“‘Turnabout is fair play,’ Crandell said. ‘Sellers had it their way for years, and now we’re seeing the results. The pendulum is swinging in the other direction.’”

The SnoValley Star from Washington. “In a series of interviews with local realtors, anecdotal evidence seems to indicate the high cost of the commute is starting to take a toll on real estate prices. Economists say people who once followed the strategy known as ‘drive until you qualify’ - are now being forced to rethink the cost of that decision.”

“Joe Cortright, an economist (in) Portland, authored a study that has sparked a number of recent media accounts. Cortright’s study argues that low, stable gasoline prices in the 1990s fueled the housing bubble.”

“‘We’ve seen a lot of folks who, by stretching their means to get into houses, took on the longer commutes,’ Cortright said, ‘and now they’re the ones who are taking the biggest hits.’”

“Cortright said such homeowners are now finding themselves victims of ‘a double whammy’ - forced to pay the price of a long drive to and from work and with a home that has fallen in market value, largely because buyers with similar portfolios are no longer willing to buy into the longer drive.”

“‘Their houses now look a lot less attractive,’ Cortright said.”

“‘There’s been a trend of ‘back to the city’ for some time now,’ said Glenn E. Crellin, director of the Washington Center for Real Estate Research at Washington State University, ‘as evidenced by the high-end condo activity in the bigger cities.’”

The Seattle PI from Washington. “Plans have been delayed to build a twin-tower, 43-story building on Fifth Avenue in Seattle as the developer waits out a lull in condo sales.”

“It’s been pushed back, and Alec Carlin, project manager for developer Hummingbird Advisors, couldn’t say until when. Financing for condos is tough to get now, because the market for condos is soft.”

“‘But we think the market will come back, and we’ll be poised for it in 2011-2012,’ he said.”

“Columbia Banking System Inc. became the latest Northwest company to be tripped up by growing problems in the region’s real estate market when it announced sizable increases in delinquent loans and the money it’s setting aside to cover potential losses.”

“‘Columbia is not immune to the instability in the residential real estate markets and mortgage-related industries, which already has affected other financial institutions in the markets we serve,’ Columbia CEO Melanie Dressel said in a statement. ‘Given the nature of these types of projects, it is unlikely they will be resolved in the immediate future. It is reasonable, therefore, to expect our provision for loan losses in the next few quarters to remain at elevated levels compared with prior periods.’”

“Columbia said the biggest areas of concern are homes that developers have built but haven’t been able to sell, mainly in Pierce County and Clackamas County, Ore., and in commercial real estate construction, primarily condominiums.”

The Seattle Times from Washington. “Washington state foreclosure filings were up 69 percent last month compared with the previous June and up almost 10 percent from May. The year-over-year jump statewide was worse than the national increase of 50 percent.”

“There were 2,742 new filings statewide last month, a 155 percent increase over new filings in June 2005. Of the three Central Puget Sound counties, foreclosures again hit Pierce County hardest. The state’s foreclosure hot spots last month were Cowlitz and Clark counties north of Portland, and Adams, Franklin, Pierce and Snohomish counties.”

“In May, there were 47 percent more properties on the market than in May 2007, MLS numbers show. 29 percent more houses and condos were for sale last month than in the previous June.”

“Counseling sellers, associate broker Vija Williams, tells them that ultimately the market sets the price for any house, and ‘when you’re getting multiple offers below listing, you have to listen.’”

“One Ballard seller is dealing with that issue now. ‘I definitely expect to get an offer below list,’ the seller says. He says he got one offer ‘that was laughable.’”

“‘I understand the buyers’ side of things,’ he said. ‘It’s scary to think you could buy, and the house will lose another 10 percent.’”

“But he thinks many buyers don’t realize ‘the reduced value is already priced into the list price,’ and sellers aren’t asking top dollar from the start.”

“It wasn’t just prices that convinced first-timer Ian Hoyt, a 20-year-old landscaper, that June was the right time to buy a three-bedroom North Seattle town house. It was the comparison with renting.”

“‘Rents are so high, so I did the math,’ Hoyt said. ‘Paying a mortgage is in the same ballpark.’”

“Hoyt says he’s unconcerned about future price declines. He saved intensively for his first home and got help from his parents. That and an FHA loan allowed him to buy his 3-year-old town home for slightly more than $300,000.”

“He intends to live in his town home for many years, happy he’s not paying rent to live in a place he doesn’t own. ‘The money will come back to me [in appreciation],’ Hoyt said.”

The Statesman Journal from Oregon. “A northeast Salem apartment complex once known as a hotbed of prostitution and drugs was renovated, becoming a condominium complex. But the site has fallen victim to the housing slump.”

“The units at 2401 Wayside Terrace NE were extensively revamped and marketed as condominiums but didn’t sell during the past few months. So they are reverting to apartments.”

“Candidates for the condos could not get approved for loans, making rentals the best options for the owners to recover the money they invested in a $2.3 million acquisition and remodeling loan, said Geoff Edmonds, the managing owner of Wayside Terrace Condos.”

“If someone did step forward, proposing a lease option to buy, it would be considered, however, he said.”

“‘Right now, to get any type of financing you essentially have to put a minimum of 3 percent down, but if you don’t have sufficiently high credit scores, you’re looking to put 10 (percent) to 12 percent down,’ said Mark Sullivan, a loan officer for HomeStreet Bank in Salem.”

“The gated, Spanish-style condos hardly resemble the apartments that were home to a gang shooting in 1998; declared a public nuisance in 2003; and for years were plagued by arrests for sexual abuse, drug-related offenses and prostitution.”

“The 38 two-bedroom apartments will rent for $645 per month, and the one one-bedroom will rent for about $550 per month. They could remain apartments until the housing market recovers - possibly in a year to 18 months.”

“To keep out undesirable tenants, all tenants will undergo a criminal-background check. Plus, site manager Crown Property Management of Salem hired on-site managers, who are moving in July 14, said Crown Property president Kent Mack.”

“‘I think it’ll be OK for the neighborhood that this (is) going to be apartments for the time being,’ Mack said.”

The Daily Journal of Commerce from Oregon. “Portland’s housing market may have slipped substantially this year, but luxury home builders that will be showcased in the Home Builders Association’s Street of Dreams tour next month say they’re managing to avoid the fallout.”

“The housing market has ‘tanked,’ said Dennis Derby, owner of Double D Development, and luxury home developers aren’t immune to the drop.”

“The latest addition to the tour and the largest home by far, is ‘Cherith Brook,’ a four-bedroom, six-bathroom, 11,000-square-foot home with views of Mt. Hood, Mt. Adams, and Mt. St. Helens. Built in a traditional style, the home features a library, wine cellar and an indoor pool and sauna, as well as numerous secret passageways between rooms.”

“Construction in Altamont could be complete in four to five years, though Derby says the current market is causing him to ‘dial back’ development. Half the lots are now sold and the developer expects to sell all of them within two years. Once this neighborhood is complete, Double D will move on to its last undeveloped area in Altamont, which contains 36 lots for luxury homes.”

“‘There’s only so much land, for starters,’ said Derby, ‘and only so much river and view.’”