The Housing Bubble

The Jackson Hole Daily reports from Wyoming. “Jackson Hole’s real-estate market has buckled under the weight of the economic downturn and new lending rules, a recent report says. The biggest evidence of the slowdown is in the single-family-home market. The number of sales is down 49 percent for the year, and dollar volume is down 44 percent. The number of homes under contract is down 46 percent when compared with this time last year, while the median asking price is down 23 percent to $1.88 million.”

“Of 281 single-family homes currently for sale, 56 are being offered for less than $1 million. ‘That’s a 500 percent increase over the third quarter of 2007, when only nine homes were listed for under $1 million,’ wrote David Viehman.”

“The least expensive home is a 1,360-square-foot house built in 1981 on a 0.21-acre lot in Rafter J for $595,000.”

“‘Sellers are not motivated to go below their 2007 values, so they in turn can’t or won’t buy their replacement property,’ Viehman wrote. Viehman wrote that sellers should determine what the last comparable sale price was and list for 5 percent to 10 percent less. ‘Savvy buyers are out there, but they are looking for bargains,’ he wrote. ‘Consider this: If you can mentally accept losing some equity when selling, you will probably make it up on your next purchase.’”

The Great Falls Tribune from Montana. “Months before the phrase credit crunch was coined, some mortgage products began disappearing. Things such as no down-payment-loans were pulled by lenders, shutting the window for some would be homeowners. That is pushing people who may have otherwise bought homes into the rental market.”

“Kim Meyers of Macek Property Management, which has about 120 residential rentals, said the demand for rental housing in Great Falls began increasing about a year ago. ‘We have seen more people who need a rental because they have property in another state that hasn’t sold yet,’ Meyers said.”

“NeighborWorks, which works to assist moderate income individuals and families become homeowners, has seen an upswing in demand for homeownership classes, said Carrie Koppy, the agency’s grant writer. ‘I think we are seeing people who in the past may have applied for no-interest loans coming to us now that those are no longer available,’ she said.”

The Idaho Statesman. “Christopher Thornberg, founding partner of Beacon Economics in Los Angeles, spoke at a real estate and development conference sponsored by New West. David Eacret, a real estate economist from Sandpoint, who predicted real estate prices will bottom out in late 2009…said ‘urban refugees’ will again flow to Idaho and other Rocky Mountain states. ‘People do want to live here,’ he said.”

“But high-end real estate in ‘amenity’ communities like Bonner and Valley counties is vastly oversupplied. In one master-planned community in Bonner County, Eacret said, not a single house has sold in 2008 in the $800,000 to $1.4 million range, and the builder is out of business.”

“Only after stability returns to California and Nevada will that market rebound, he said: ‘If you can’t sell your house in California or Las Vegas, you can’t buy a second home in our area.’”

“Thornberg says Idaho will struggle with foreclosure woes for two to three years. Currently, 1.6 percent of Idaho mortgages are 60 to 90 days delinquent. ‘Housing markets don’t bounce, they splat,’ Thornberg said. ‘And so when it hits bottom, it stays there for a couple of years. And we probably won’t see any substantial increase in prices until 2011. Remember, we were in an economy that was on an unsustainable path,’ said Thornberg.”

“Economic and financial woes are crimping DBSI, a Boise real-estate investment company that is delaying payments to some investors and says its income from some rental properties is no longer enough to cover debt payments. DBSI’s real estate business is shrinking, and it can’t get credit to bridge the gap.”

“‘We have seen a dramatic decrease in new business due to a steep decline in the number of people selling real estate and looking for like-kind exchanges or other real estate investments,’ said President Doug Swenson. ‘We are also seeing decreased occupancy and increasing tenant defaults because of the economic slowdown and lack of consumer confidence.’”

“Kastera Homes, a home builder in the Treasure Valley, is a DBSI subsidiary. Kastera laid off an undisclosed number of people in June. At that time, a DBSI marketing executive said Kastera wouldn’t be affected by DBSI’s restructuring.”

“While the company is updating its blog, it is not answering calls directly, and word on DBSI chat rooms is that regular payments to some investors have been suspended. Some are suspicious of the company’s behavior. ‘This is a lot of hard-earned money, and I’m really frightened,’ Tim Brophy, of Palm Springs, Calif., told the Idaho Statesman. ‘This is a lot of my retirement.’”

The Oregonian. “Home prices in Portland, once considered untouched by the nation’s housing downturn, posted another record decline in August in the Standard & Poor’s Case-Shiller Index published Tuesday. The index showed Portland-area sale prices fell 7.6 percent in August compared with August 2007. That’s the biggest annual drop since record keeping began in 1987. Seattle also posted a record decline of 8.8 percent.”

“‘The problem right now is the economy is going dead and it’s going dead everywhere,’ said Patrick Newport, U.S. economist at a Massachusetts-based economics firm. ‘Going forward, I think everywhere things are going to get worse, including Portland and Seattle. It’s a lot harder to get a loan now than it was two or three months ago, and it’s getting harder.’”

“On average, the Case-Shiller index shows that Portland-area home prices are still up about 72 percent since January 2000. That said, people who bought a home after March 2006, on average, own a home that’s worth less today than when they bought it. The question left to answer in Portland is: How far do prices have to fall before they reach a point that’s sustainable?”

‘Tom Potiowsky, Oregon’s state economist, doesn’t expect Portland to fall as far as those Sun Belt cities. But he does think the numbers could get worse, given the region’s still bloated inventory of unsold homes. ‘It’s possible we could hit 10 percent or 12 percent,’ Potiowsky said. ‘I’d be surprised if it declined any more than that.’”

The Statesman Journal from Oregon. “Hampton Affiliates recently announced that it will lay off 50 to 60 employees at its Willamina Lumber Company mill about the end of October. The mill currently employs about 335 people. ‘As I have explained in the past, the lumber market is very poor and has gotten even weaker in the last 45 days,’ noted company CEO Steve Zika said in an e-mail. ‘Green Doug Fir (two by fours) is now selling for approximately $150 per thousand board feet versus $400 per thousand board feet in 2005.’”

“‘Willamina still figures prominently in Hampton’s long-term plans but with the market, and especially the California market this poor, we had no other viable options,’ Zika said. Housing-industry woes have necessitated the action, which may affect other Hampton operations. The company operates mills in Oregon, Washington and British Columbia.”

“‘These are unprecedented times in the housing industry,’ he said.”

From KVAL News in Oregon. “Lane County foreclosure notices have climbed 67 percent since last year (for the 3rd quarter), but that’s better than the national average of 71 percent. It’s much better than the Oregon average of 146 percent.”

“Eugene realtor Marie Due has been crunching the numbers. While the national statistics still look very dim, she says the mortgage mess is less messy in Lane County. ‘But we do see that the numbers of not only foreclosure filings but also houses going to auction, are really coming on a level,’ she said.”

“Russ Vann’s housing headaches began in 2006 when he had an accident and totaled his business truck. Just before that, he had refinanced the house. ‘It came out that they didn’t put my taxes and insurance in the impound, the escrow impounds,’ explains Vann. ”

“He adds his house payments soared from $1,300 a month, to $2,400. He defaulted on his payments. ‘It’s put a real damper on our outlook on life,’ Vann said.”

“Vann and his wife want to stay in Eugene, but it all depends on finding someplace to rent with bad credit. ‘We might even pitch a tent by the river,’ he said. ‘I don’t know. Don’t know where we’re going to be,’ he said.”

From Seattle PI in Washington. “Seattle-area house values continued their slide in August, falling 0.7 percent from July and 8.8 percent from August 2007, according to a national index. The Seattle area had the biggest annual declines, 9.7 percent, in the lowest value tier, which S&P defines as under $308,893. The high tier, over $445,285, was down 8.4 percent, while the middle tier declined by 8.9 percent.”

“Patrick Newport, U.S. economist for IHS Global Insight, noted in a statement that the latest S&P data did not yet reflect the recent turmoil in the financial market. ‘So as bad as the latest Case-Shiller numbers appear to be, they are bound to get much worse,’ he said.”

The Ballard News Tribune from Washington. “Ballard resident Gwyn Emery decided to sell her house on 28th Avenue Northwest in April after she got married. Half a year later, her house is still on the market. ‘When I bought my house a couple of years ago it was rare to see one on the market for more than a few weeks,’ Emery said. ‘Now the average in Seattle is six months.’”

“Paul Langer, who has been trying to sell his Ballard house for the past month, said he believes a lack of available loans is definitely affecting his ability to sell. ‘People can’t get the loans we got four years ago when we bought the house,’ Langer said.”

“David Arnesen, a professor specializing in real estate law at Seattle University, said in reality it’s a buyers market right now for people who can afford to put money down, but those people are nervous at the moment. ‘Buyers are being very cautious,’ he said. ‘Most banks today don’t have people lining up at the door to take out loans like they used to.’”

“Pat Redmond, president of Viking Bank, said the media is partially to blame for the insecurity of buyers. People are being constantly bombarded with projections of an economic crisis that they cannot escape, he said. ‘My concern is that we can’t keep confidence as high as it needs to be for success,’ he said.”