The Housing Bubble

The Jackson Hole Daily reports from Wyoming. “The market for real estate less than $1 million is favoring buyers for the first time in months, one broker said this week. David Viehman reports that the overall market ‘has been sluggish at best,’ with sales down 43 percent, dollar volume down 46 percent and average overall sale prices down 3.5 percent compared with the same time last year.”

“The median home price, which has experienced drastic increases in recent years, grew less than 2 percent to $1.2 million. It was $1.18 million this time last year and $920,000 in 2006.”

“Viehman said many properties were overpriced as much as 30 percent. Recent price reductions are a market correction, he said. In the under $1 million market, which Viehman calls the ‘locals segment,’ sales for the year are down 60 percent and properties under contract are down 85 percent. That’s coupled with inventory levels that are up 140 percent.”

“Viehman said 121 properties, or 21 percent of listings, had reduced asking prices between June 1 and July 15. ‘This is unprecedented for Jackson Hole,’ Viehman wrote. ‘Don’t expect to find below-market value, though.’”

The New West Network from Montana. “According to one developer’s survey, almost 200 condos have entered the Missoula market over the past 18 months. Yet the only sizeable project to sell fast has been the sold-out Wilma Theater building, which had prices as low as $88,000. Small condos in the $150,000-range and larger units priced above $250,000, on the other hand, have lingered.”

“And more are coming onto the market. The 44-unit Mullan Heights condominium overlooking the Clark Fork River has only just come on sale - with units priced from about $180,000 to about $325,000.”

“It’s hard for any development to escape the overarching housing downturn. All sellers said they’ve encountered prospective buyers who said they would love to get into a condo - if only they could sell their house. Others also complained about over-skittish lenders. Yet no developer wants to be the first to admit - publicly - the hard lesson that his or her particular building is overpriced or ahead of its time.”

“One builder said, ‘If I would have seen what was coming two years ago, I would not have built that building.’”

The Idaho Statesman. “The latest sales statistics compiled by the Intermountain MLS show median prices of homes sold fell almost everywhere in the Valley between January and June, including neighborhoods new and old, rich ones and poor.”

“‘Right now most of the subdivisions in the Treasure Valley are really, really struggling. And we have traumatized consumers who we have to convince to get into the market,’ said Mike Pennington, residential specialist in Boise.”

“‘People are looking for bargains no matter what the area,’ Pennington said. ‘All price ranges are being compressed because after a 26-month downturn, sellers have finally taken a bite out (of) the reality sandwich, and they’re lowering their price.’”

The Oregonian. “When South Waterfront started five years ago, skeptics wondered whether Portland had enough people interested in the condo life to support a batch of 300-foot tall towers.”

“At first, Williams & Dame Development and its partner found plenty of willing buyers. Their first project, the Meriwether, averaged about 20 sales a month and sold out in 2006 twice as fast as developers expected. Buyers buzzed for the second tower, the John Ross…spurring developers to speed up plans for their third and fourth towers.”

“Then the condo market deflated. Seventy-seven people asked to get out of their John Ross purchase. Since last fall, the developers have added just 12 new sales for a total of 182, still below the 2005 rush of pre-sales. Since last June, 11 of South Waterfront’s 481 buyers have defaulted on their mortgages”

“‘It started out like a house on fire,’ said Irving Levin, who runs a Beaverton finance company and invested in South Waterfront land holdings controlled by Williams & Dame’s principals. ‘Then the curtain came down in the condo market in general. Like a lot of developers, they were stuck with a lot of inventory.’”

“Jeremy Stoddart, who owned mortgage company Source One Financial, paid $1 million for a 2,300-square-foot Meriwether condo in May 2006. Stoddart, who did not return calls for comment, put his condo on the market last August as the mortgage market went haywire nationwide.”

“He asked for $1.2 million, then lowered it to $925,000, 13 percent less than he paid two years ago. In January, Stoddart defaulted on his condo.”

“At a South Waterfront election forum earlier this year, someone asked then mayoral candidate Sam Adams whether Portland had enough money to live up to its South Waterfront promises. Adams response: ‘The short answer is no.’”

“Developer Tony Marnella saw the slowdown in housing coming but had no idea how bad it would get. He opened Volare at Eagle’s Nest, a 115-lot development in Happy Valley just as customers and creditors were pulling back. ‘We opened knowing full well there would probably be a slowdown in the market,’ he said. ‘What we did not anticipate is that the market would come to a complete halt.’”

“Since April, Marnella and four companies he controlled have filed for bankruptcy protection, all related to Volare. According to Marnella, as the situation worsened, he approached his banks.”

“‘I wasn’t asking for debts to be forgiven,’ he said. ‘My goal was to get the credit line extended. I tried to explain that the market had ground to a halt but that I thought it would come back. I was not, and am not, trying to avoid any debts. But the banks would not talk to me.’”

“The result, he said, was bankruptcy protection. ‘It was the last card I had to play,’ he said. ‘I had no choice.’”

“Washington mortgage regulators announced Wednesday they intend to revoke the license of Paramount Equity Mortgage, a Roseville, Calif., firm that has blanketed Northwest radio stations with commercials promising cheap and easy mortgages.”

“Paramount made more than 1,700 mortgage loans to Washington borrowers in 2007, collecting more than $8.7 million in fees.”

“‘Paramount failed to make proper disclosures in almost every loan we reviewed,” said Deb Bortner, director of consumer services for the finance department.”

The Seattle PI from Washington. “IndyMac Federal Bank, which was taken over by the federal government two weeks ago, is laying off as many as 65 employees in its Washington state mortgage operations, a spokesman said.”

“IndyMac’s operations in Washington had opened in just the last year. ‘A year ago we had nothing in Washington,’ said Evan Wagner, a spokesman for IndyMac. ‘We opened them up in the past year to take advantage of the troubles other companies were going through, and ultimately we fell into the same kind of trouble.’”

From KIMA TV in Washington. “It’s a safari unlike any you’ve seen before– it’s in your neighborhoods. More than 40 people took a bus tour of foreclosed homes around the Tri-Cities Saturday.”

“‘We’ve got a lot of eager buyers on that bus!’ said mortgage planner Dana Mundy, who helped organize and guide the tour.”

“‘Foreclosure tourist,’ Julie Molvik, agreed that buying foreclosed real estate is a creative way to turn a profit. ‘We were looking for something that we could invest in, or maybe something we could fix up and maybe something we could rent out or resell, flip.’”

The Daily News from Washington. “For years, Woodland’s real estate market has been superhot, fueled by home buyers seeking more value than they could get in the Portland metro area. But troubles like Jim Groth’s are a sign that even the hottest real estate in Cowlitz County is feeling the effects of a nationwide housing slump.”

“Groth planned to offer million-dollar homes in an upscale development along the Lewis River in Woodland. ‘Then the market shifted,’ said Groth, a builder.”

“As a result, he’s abandoned plans for the $1 million homes, and he’s taking $200,000 less for some houses in River’s Mist that could have fetched $500,000 two years ago. And he’s stopped building new houses altogether while he sells off his unsold inventory of eight homes in River’s Mist.”

“‘It’s a beautiful development,’ Groth said, but he said he can’t continue losing money in the cooling market.”

“Prices are falling, and city officials say 50 percent fewer homes are expected to be built this year than last year. And 2007 saw a 50 percent decline from 2006, said Bob Jones, who issues building permits for the city of Woodland.”

“‘It’s dead,’ he said of the housing market. ‘But it’s trying.’”

“A slower market is translating to lower home prices. According to the listing service, the median prices fell from $304,000 in June 2007 to $237,5000 last month.”

“Gary Gonder, a broker in Woodland, said part of the problem with the current market is when people price their houses above the current market value. It’s a trend becoming too common and has prompted Gonder to turn down some listings.”

“‘There’s a lot of houses on the market that are overpriced,’ he said. ‘If it’s been on the market more than 30 days, I tell people it’s overpriced.’”

“It’s becoming common for people to sell their homes for less than they owe on it and working with banks to forgive the difference, Gonder said.”

“‘I’m working with one right now that there’s like a $30,000 discrepency,’ Gonder said. ‘And it’s simply because what these people have done is they’re chasing the market down. They originally put the house for sale at $335,000, and it should have been $300,000. Now it’s for sale at $249,000.’”

“Gonder said the Woodland market isn’t dead - but people need to understand they’ve got to price houses to sell.’

“I’t’s O.K. if you have to sell it at today’s market (price) because you get to buy at today’s market” prices, he said. “You can get more house for your money than you’ve ever been able to. … Once the market takes another slight correction, these houses are going to be worth a lot more,’ said Gonder.”