The Housing Bubble

The Star Phoenix reports from Canada. “The city has been buzzing about housing since the beginning of 2007, when prices suddenly began to jump and bidding wars became the norm instead of the exception. Home buyers, however, may be forgiven for wondering — if not worrying — about the recent turn in the market: Listings have jumped 46 per cent this year and sales are down 15 per cent.”

“Last year’s soaring market attracted a lot of speculation, ’so people from B.C., Alberta and even syndicates from New York were purchasing properties. Some people did a nice job in spending some money and increasing the value of properties,’ said Harry Janzen, executive officer of the Saskatoon Region Association of Realtors.”

“But 2007 changed people’s expectations, and 2008 is not fulfilling them. ‘Our measures should be further out than just 2007, which was a very unique time in Saskatchewan and certainly in Saskatoon history,’ said Janzen.”

“‘Last year, we had 10 buyers for each house,’ says Gary Busch, a real estate agent with Century 21. ‘This year we have 10 houses for each buyer.’”

“‘It’s hard not to watch all these market reports,’ said new homeowner Janet French, a StarPhoenix reporter who takes possession of her home in September.”

“French and her fiance thought about buying a home last year, but were so turned off by the bidding wars and fast-rising prices, they decided against it. But in late May, friends of theirs put a house on the market, and eventually dropped the $260,000 asking price to $235,000.”

“‘When I heard how much they were dropping the price, I thought, something is changing here,’ she said.”

“French hopes the market correction won’t affect the value of her house, which she purchased for $11,000 below the original asking price. ‘The point is, I’m not pouring money into rent any more.’”

The Billings Gazette from Montana. “‘Sold! To the highest bidder’ is a shout used to close deals for antiques and even Picassos. Now, new high-end homes in Billings will be sold next month under that same auctioneer’s cry.”

“For what may be the first time since the 1980s, as many as 15 custom-built homes in the Billings area will be sold at auction on Sept. 9. Kenmark Construction has teamed up with United Country-Musser Bros. to sell the ’spec’ homes, built before a buyer has been lined up, ranging in price from $244,000 to $549,900.”

“On Tuesday, Mark Kennedy, one of the owners of Kenmark Construction, opened the front door to a 4,827-square-foot home at 4535 Gram’s Court in Rehberg Ranch to show off the granite countertops, faux-painted walls, crown molding and the wood floors. ‘This is the finest inventory in my career,’ he said. ‘They aren’t going to buy them for $1.’”

“While the occasional Montana trophy ranch or home is sold at auction, auctioneer Mert Musser said this sale is unique. ‘I would say it is the first time this has happened on this scale in Billings and in Montana,’ Musser said.”

“Marilyn Floberg, president of Prudential Floberg Realtors, said the auction approach is just one sign of changing business practices driven by the Internet. ‘I look at it as an alternative marketing plan not totally out of the realm of possibility, but not necessarily a sign of distress,’ she said.”

The Idaho Statesman. “Treasure Valley housing sales remained mired in a slump in July, with total transactions off 39 percent from a year ago, according to industry statistics. Mike Pennington, a residential specialist with John L. Scott, said consumers are hoping prices will fall further.”

“However, with the Federal Reserve expected to begin raising interest rates to combat inflation, waiting to buy may be a costly strategy, he said.”

“‘Somebody has to say that it’s safe to go back in the water,’ Pennington said. ‘If consumers wait hoping to save a few dollars, and interest rates shoot up, they could end up shooting themselves in the foot.’”

“Adding to the industry’s problems were inventory numbers that have risen 24 percent since the start of the year, from 6,668 in January to 8,270 in July. Experts say the growing number of homes in foreclosure could be adding to the inventory problem.”

“Home prices also continued to slide. The median price of a home sold in July was off 12 percent in Ada and Canyon counties from a year ago.”

“Another disheartening sign of market conditions is that even ‘competitively priced’ homes have not been selling, added associate broker Shaun Tracy. ‘It doesn’t appear that there is a great (upward) thrust in sales on the horizon,’ he said. ‘We’re just trudging along, selling a home here and there.’”

The Daily News from Washington. “Housing prices in Cowlitz County rebounded for a second month in a row in July, leading to speculation that the worst of the slump might be over locally. However, the number of home sales still is lagging well behind last year’s pace, and there’s still a big surplus of homes on the market.”

“‘Things are not looking dark around here. Gray, perhaps, but in the business here we feel like we’re seeing sunshine poking through,’ said Jerry Flaskerud, broker in Longview.”

“Buyers still have the advantage over sellers, but not by much, Flaskerud suggested. ‘Homes that are priced well from a buyers’ prospective are getting offers. But there are not a lot of buyers. It is a very difficult market for sellers and real estate agents now. But for buyers who think they can or should offer 20 to 30 percent less than sellers are asking, they are going to be disappointed. We do not have a lot of sellers who are motivated to sell for that much less.’”

“‘A house sold today would have sold for more a couple years ago, but we’re not seeing as many distressed people and properties as they are seeing in Clark County,’ said Sue Lantz, broker in Longview. ‘It is still difficult and we certainly have sellers who want to sell their properties … but they are willing to wait it out.’”

“Flaskerud said housing inventory continues to build locally because people reaching retirement age want to downsize and may want to sell, but don’t need to sell. ‘The market is not where we’d like it to be, but it’s OK. We are seeing buyers come back into the market. We’re debating, perhaps we have seen the bottom in Cowlitz County.’”

The Columbian from Washington. “Two Creeks was meant to bring luxury living to east Clark County. Instead its upscale Camas townhouses continue to bring financial ruin for its developers and to cost those who backed the project millions. Now 29 unsold homes, out of 31 built near the Camas Meadows Golf Course in 2006, are heading to the auction block.”

“The timing couldn’t be worse. Home sales are down 41 percent and prices are down 3 to 5 percent from a year ago, which will make it difficult to find buyers for the Two Creeks homes in time.”

“It wasn’t supposed to end this way. When husband and wife Rick Bowler and Marilee Thompson unveiled plans for Two Creeks at Camas Meadows in 2004, the housing market was on the upswing and financing was available.”

“They borrowed from Columbia Credit Union, and planned eventually to build 122 two-story townhomes, each with 2,200 to 3,000 square feet of living space and each equipped with elevators.”

“They envisioned tennis courts, a pool and Jacuzzi, barbecue stations, charging stations for golf carts, walking trails, RV storage and more, Bowler said at the time.”

“The first phase, 31 townhouses, went on the market in 2006. Two people bought homes that year, paying $750,000 and $825,000. Since then, no other sales have closed.”

The Seattle PI from Washington. “When Moda Condominiums started accepting reservations in September 2006, prospective buyers lined up hours early and quickly locked up all 251 units.

Now, with the Belltown building two months from completion, Moda’s developers have changed it to rental apartments.

“The market and the financing conditions for condominiums have really taken a drastic turn,’ said developer G. David Hoy, head of HMI Real Estate Inc. ‘The vast majority of (Moda’s) buyers decided not to proceed with the purchase of their unit.’”

“Some buyers found they could no longer get a loan, particularly for second homes or investment units, while others just got cold feet, Hoy said. ‘Because the vast majority have bailed out on us, we have no choice now but to turn it into a rental.’”

“Several prominent area projects have switched from condos to apartments in recent months, citing the slowing for-sale market and relatively strong one for rentals.”

“Jereld Hamilton has been keeping his house in showing shape, despite his two small boys, since putting it on the market July 7. But few buyers have seen the fruits of his Sisyphean labor. ‘Traffic is so slow,’ Hamilton, an agent with Windermere Real Estate, said during an open house in late July. ‘It’s just been really brutal.’”

“Nearby, agent Paul Lau said the lonely open house he was hosting Sunday was consistent with his recent experience in southeast Seattle. ‘You’re lucky if you get five people,’ he said.”

“Lenders cutting back on loans and tightening lending standards since last summer might have hit southeast Seattle particularly hard because the area has a higher share of first-time buyers, who generally have smaller down payments and less-established credit.”

“‘A lot of the entry-level buyers have just disappeared,’ Hamilton said.”

“In Columbia City, seller Gabriel Newton had a steady stream of visitors flowing through his self-hosted open house July 27. Gary Montgomery, who was at the open house, said he was looking in Columbia City because he liked the neighborhood’s feel, older houses and prices.”

“‘Any other neighborhood where I like the home, it’s $600,000 or $700,000,’ he said.”

“Montgomery rents in Redmond and planned to hold off on buying until his girlfriend sold her house in Portland. But he got tired of waiting. ‘I’ll buy what I can - a smaller home - now, while prices are low,’ he said.”

The Enterprise from Washington. “Record high prices on gas and food are causing people across the Puget Sound to pinch pennies. In Shoreline, that has meant large crowds at food banks, officials said. ‘Donations are down by quite a bit, but we’ve seen an uptake in our recipients,’ said Hopelink’s Denise Stephens. ‘People really are using food banks more than what we’re used to.’”

“At the same time that people are paying more for food and gas, wary employers have been reluctant to raise wages. Unemployment has risen, too.”

“At the Family Center in Lynnwood, director Tim Gahm has been busy working with his staff to broaden their services in the wake of rising prices. ‘For the past six to seven meetings, what we have been discussing is the increasing needs of families surrounding basic needs,’ he said.”

“For some people, the price jump is forcing them to make decisions they wouldn’t normally consider. Take Kerry Breakfield of Lynnwood, for example. The married mother of two drives a school bus part time. A subsidy helps cover her $4,000 a month day care bill but it’s still not enough.”

“‘I’m actually having to consider taking my kids out of day care,’ she said. Her mother-in-law lives with the family ‘to help pay the mortgage and everything else,’ she said.”