The Housing Bubble

The Rocky Mountain News reports from Colorado. “Caroline Hoyt, whose company next Saturday is opening the Casitas at Stapleton, said that today’s market is the worst since the downturn of the mid-1980s. This week, she discussed a variety of topics with Rocky Mountain News Real Estate Editor John Rebchook.”

“Q: What’s your take on the market? A: It’s horrible. We’re building about 150 homes now, while in the past we’ve built as many as 350. We had one home that we sold five times (before it closed.) And these were good contracts. We don’t accept contingencies. They all fell apart over credit issues.”

“If you want to buy a $1.5 million home in today’s market, there is no loan program for you, unless you’re practically paying cash.”

The Greeley Tribune from Colorado. “Sharon Herdman calls it a nutty real estate market. Then there are homes that have been sitting on the market for two years without an offer. Then there are the other homes out there that are getting low-balled.”

“‘We’re seeing people offer from $100,000 to $150,000 less (than the asking price),’ said Herdman, a Realtor with Sears Real Estate. So for Herdman, hearing word that the average home sales price in Greeley is dropping is no surprise.”

“‘We’re seeing a lot of price reductions,’ she said. ‘What we’re also seeing is that if you reduce the price to make it more marketable, people are still hitting them $50,000 to $75,000′ below their asking prices.”

“The lower home prices mean some great deals for buyers (try $139,000 for a home that sold recently in the upscale Kelly Farms neighborhood), said John DeWitt, president of the Greeley Area Realtor Association, but not so great for sellers, who reaped the benefits of strong markets for years.”

“‘When I got into the business nine years ago, all the stories were about the sellers and how they were getting contracts in one day,’ DeWitt said. ‘Now it’s a full-on buyer’s market and sorry, sellers. Stay put. … The days of selling a house … for an unreasonable price are gone.’”

KNXV TV from Arizona. “The prices are low, the inventory is high and the poor housing market is having a serious impact in the Phoenix community of Maryvale. ‘Everyday I search the listings and this neighborhood and I see five, six, seven new listings on a daily basis,’ said real estate agent Stanley Fosha.”

“For sale signs and empty homes pepper the small community where home sale prices rarely top $100,000. ‘It’s an evacuation and I think residents are leaving this area at a high rate due to the poor economy and bad bank loans,’ said Fosha. ‘I found that there were 955 homes for sale right now and that’s in a community that has less than 4,000 homes all together.’”

“Fosha says records show another 980 homes face foreclosure in Maryvale. ‘If the foreclosures go through, there’s basically going to be half a community that will be potentially bank owned by the end of the year,’ said Fosha.”

“According to Fosha, there are 600 Maryvale homes priced less than $100,000 and 40 homes listed at $50,000 or less.”

The Arizona Daily Star. “Of the 7,505 resale-home transactions recorded in Maricopa County in August, 44 percent were bought out of foreclosures, according to the realty studies department at Arizona State University. That’s a 2 percent increase from July and more than double the 20 percent of sales recorded in August 2007.”

“There’s no end in sight for the housing slump, said Jay Butler, director of realty studies at ASU’s Polytechnic Campus in east Mesa. ‘Most potential buyers still confront a weak economy, slumping levels of confidence and tighter underwriting guidelines,’ Butler said.”

“The median price of a home bought out of foreclosure in August was $161,875, compared with a non-foreclosure price of $193,550. A year ago, the median prices were $220,010 and $258,000, respectively.”

“The median price for homes sold in Tucson dropped sharply last month, according to a report from the Tucson Association of Realtors MLS.”

“The monthly sales report showed that the median price in August was $185,000, the lowest since January 2005. Previously this year, the median, or middle price of homes sold, has been holding steady at about $200,000.
The fall to $185,000 is 7.5 percent below where it was in July and about 16 percent below where it was in August 2007, the report said.”

“‘The market is showing signs of a rebound but it will not be a quick turnaround, and no one should be looking for a return to 2005 anytime soon,’ said Rick Hodges, CEO of the association.”

The Sierra Vista Herald from Arizona. “Community members with foreclosure concerns will have a chance to have some questions answered Thursday, when the Better Business Bureau of Southern Arizona hosts a seminar on the issue. Ann Gates, Cochise County manager for the Better Business Bureau, said the current state of foreclosures in Cochise County calls for such an event.”

“‘Foreclosures, according to the title companies, are increasing down here,’ she said. ‘There hasn’t been anything like this in quite a while down here.’”

The Reno Gazette Journal from Nevada. “Bank repossessions and notices of default saw significant increases in Washoe County in August while foreclosure filings reached record highs nationwide, a new housing report found.”

“Overall, foreclosure filings were reported on 1,105 properties in the county, up 46 percent from July and 127 percent from August 2007. Notices of default jumped up 46 percent to 596 while bank repossessions increased by 24 percent to 304. Auctions increased 97 percent to 205.”

“Nevada posted the highest foreclosure rate in the nation for the 20th straight month, followed by California and Arizona. According to the report, 11,706 Nevada properties received a foreclosure filing notice in August, up 16 percent from July and 89 percent from the same period last year. Clark County accounted for 10,099 of the properties, topping the state with a foreclosure activity rate of one in 75 households.”

In Business Las Vegas from Nevada. “The run of seven consecutive months during which home sales increased ended in August. There were 47 fewer sales in August than in July, marking the first month this year there has been a decrease from the previous month.”

“Prices continued their downward slide, which analysts said has prompted the surge in buying in recent months. The median price of the 2,545 homes sold in August was $210,000…30 percent below a year ago, according to the Realtors group.”

“President Patty Kelley attributed the continued decline in prices to the unprecedented number of bank-owned properties on the market and that two out of every three homes sold every month are owned by lenders. Kelley wouldn’t predict how far prices would fall and when it would stop. She said that will only end when the market sells off homes in or near foreclosure.”

“‘I don’t see how they can go much lower,’ Kelley said.”

“Dennis Smith, president of Home Builders Research, thinks $200,000 may be a barrier because he says he can’t believe that of all the homes built in the past five to 10 years, more than 50 percent are worth less than $200,000.”

“But for now, Smith said it looks as if prices will continue to fall and said it is likely to continue until spring. ‘Nobody can tell us how many foreclosures are coming in the system,’ Smith said. ‘Until we know what those are, we can’t run the calculations.’”

The Review Journal from Nevada. ” Creditors have forced the 63-unit Onyx condominium project into involuntary Chapter 11 bankruptcy. San Diego-based Crestone Co. was developing the 2-acre site, formerly the Tropicana Inn. The telephone number listed on the company’s Web site is no longer in service.”

“The $28 million mid-rise project was announced in 2005 as an affordable alternative to the high rises that were being built near the Strip. Units at Onyx ranged from 740 square feet to 2,300 square feet and were priced from the $400,000s to more than $900,000.”

“They came standard with granite counters, stone flooring, General Electric appliances and 10-foot ceilings.”

“‘I feel sorry for those guys,’ Las Vegas-based architect Howard Perlman said. ‘They owe me money, but they got hurt. Everybody’s getting hurt, but it’s just the timing in the market. Can you sell a condo for those prices? Their strategy was right on when they started.’”

“More than half of the 23,400 homes for sale in Las Vegas are sitting vacant. The system for disposing of bank-owned homes is ‘clogged up,’ Thomas Taylor of Desert Classic Properties said. Banks and mortgage companies have concentrated listings into the hands of a limited number of qualified brokers in Las Vegas.”

“‘Agents are holding from 100 to 600 listings each — way, way too many to handle properly,’ Taylor said.”

“Some agents aren’t prepared to handle the large quantity of listings they received from the banks, REO specialist Tim Kelly said. He’s looked at properties that don’t even have a ‘For Sale’ sign in the yard. Sometimes the staff representing the listing agent isn’t as ‘professional’ as he’d like. ‘They’re probably overworked and underpaid,’ Kelly said.”

“REO specialist Troy Kearns saw the foreclosure wave coming when his personal speculative investments turned sour and decided to ride it out rather than battle it. He has about 150 REO listings and pending listings, including a four-bedroom, 1,530-square-foot home at 7234 Bridgeview Ave. The pool is polluted, the home is trashed, the garage is a disaster and the place smells like cat urine.”

“He’s going to suggest a list price to the bank of $155,000 to $175,000.”

“‘We won’t put anything into it. We’ll sell it as is,’ Kearns said. ‘It’ll look a lot better once we clean this place up. It needs paint, but it’s not structurally damaged. It’s got tile, it’s got a pool. If there’s pipes ripped out, that’s a problem.’”

“One homeowner facing foreclosure in Anthem dismantled his air conditioner and threw it into the swimming pool. About 20 percent of people in foreclosure will tear things up because they’re upset and feel they’ve been ’screwed over,’ but the other 80 percent know it’s coming and accept it, Kearns said.”

“Robin Camacho of American Realty Investments said she makes very little money working with some clients buying foreclosures. She recently had offers accepted on a $60,000 home and a $920,000 home and spent about an equal amount of time on each transaction.”

“‘It’s all the same to me,’ Camacho said. ‘My only goal is helping my client find the right home. I can’t tell you what my clients are paying for these, but suffice to say, there are some great deals on Las Vegas homes right now.’”

“Of the 19,684 single-family homes for sale on the MLS, 5,624 are bank-owned and 7,183 are short sales, listed for less than the mortgage owed. That means that nearly two-thirds of the inventory needs lender approval, Kearns said.”