The Housing Bubble

The Baton Rogue Business Report in Louisiana. “Jim Talbot, by his own estimate, built 80% of the subdivisions in Livingston Parish. Along the way, he has made a fortune estimated, by some, to be worth hundreds of millions. Not surprisingly, Thomason has his detractors. ‘You like to see developers come in and really create a quality product.’ says one life-long Denham Springs resident who is well connected in political and business circles. ‘They’re just interested in getting in and getting out and selling the cheapest crap they can.’”

“Thomason’s critics don’t make those comments just because he builds tract housing. They complain that he has truly lowered the value of real estate in their parish in general, and in some subdivisions in particular. Juban Parc is one of them. Thomason bought a majority of the unfinished lots in the Denham Springs subdivision last year because they weren’t selling and the New Mexico-based developer wanted out. The family construction company started constructing houses in the $130,000 range—about 50% less than the original price point of homes in the development.”

“That was troubling enough to residents, who’d paid a lot more a year or two earlier. Some residents, like Carolyn Barr, have moved out. ‘I bought in this subdivision because this was supposed to be a premier neighborhood,’ says Barr, who paid $190,000 for the 1,450-square-foot house in early 2009 and sold it a year later for $164,000. ‘There wasn’t supposed to be vinyl siding on the homes. Now all the houses built by Vicknair have vinyl on three sides.’”

“Thomason says he didn’t violate any covenants when he bought the development. The important thing, Thomason says, is that homes in Juban Parc are selling again, after sitting dormant on the market for the previous 12 months. ‘There were people out there with houses priced at $175,000, and we came in and built a better house for $140,000,’ Thomason says. ‘That drew some adverse reaction from the property owners, but all we were doing was establishing a market value.’”

NewsOK reports from Oklahoma. “Call the latest wave of refis hitting the mortgage business a ‘boomlet’ compared to the explosions of a few years ago. Rates have remained so low for so long that not even a fresh brush against the historic bottom can spark the kinds of repeated waves of refinancing seen during the housing boom, mortgage banker Sheryl Eastwood said. ‘Refis have picked up, but we refinanced so many last year you wonder how deep the well goes,’ said Eastwood, western regional manager for Bank of Oklahoma Mortgage Group.”

“There’s another reason for the more measured rush to refi: It’s simply harder to refinance now than it used to be. ‘We’re back to reality,’ Eastwood said. ‘You have to have a down payment. You have to have decent credit. You have to have a job. Liar’s loans are long gone.’”

“Realtors said homes in Oklahoma City sold fast in April — a week faster than the month before and two weeks faster than in April 2009 — in the closing days of the federal tax credits for homebuyers. Business is on the upswing, but negotiations can still be tense, said Bobbie Hartpence, a Realtor with Churchill-Brown & Associates.”

“‘There’s room for negotiation, but sellers are not giving away bargains,’ she said.”

The Maumelle Monitor in Arkansas. “New construction of single-family homes in Maumelle continues to fall behind levels met in both 2009 and 2008. According to the city’s permit report for single-family housing released at the end of April, there have been 29 permits issued for constructing single-familiy homes this year. During 2009, there were 49 permits issued during the first four months of the year. There were 98 permits issued during the same four-month period of 2008, according to the report. Of the 29 permits issued this year, the average value for each single-family unit is $264,748.”

“Jim Morley, director of Maumelle’s code enforcement and permit office, said the housing boom in Maumelle was experienced in about the year 2005 when 300 single-family house construction permits were issued. Morley attributes the slowdown over the past few years as mostly to the struggling economy.”

“However, Maumelle hasn’t been as negatively affected as many parts of the country. ‘We are the fastest-growing city in Arkansas,’ Morley said.”

From Arkansas Business. “According to the first quarter Skyline Report compiled by the CBER, the number of homes becoming occupied during the first quarter was up 19 percent from a year prior. Meanwhile, complete-but-unoccupied homes fell by 62 percent, to 351 total homes for the first quarter of 2010 from 913 a year earlier.”

“Kathy Deck, lead researcher for the CBER said the expiration of the homebuyer tax credits will likely slow home sales in the short term. There is a 106-month supply of lots in the market, down from a 111.5-month supply in the fourth quarter. On March 1, there were 5,079 homes listed for sale, with an average listing price of $226,872.”

“Northwest Arkansas residents are on firmer financial ground now than they were two years ago, according to the 2010 Northwest Arkansas Omnibus Survey. Molly Longstreth, director of the Survey Research Center at the University of Arkansas, said the optimism evident in the results ‘contrasts starkly to results from two years ago,’ though she acknowledged confidence levels remain lower than in 2007.”

“In addition to believing their financial condition will stay the same or improve over the next year, northwest Arkansas residents also exhibited favorable expectations about the performance of the U.S. economy in the coming year and think now is a good time to buy a house.”

“Some less optimistic findings centered around the housing market. According to the survey, slightly more than half of area residents know someone close to them who falls into one of the following categories: Has a house on the market, but has been unable to sell it for 12 months or longer. Has taken a house off the market in the past three months because it did not sell. Has filed for bankruptcy or experienced a foreclosure during the past three months.”

The Dallas Morning News in Texas. “Texas will be the first state to recover from the housing market downturn, one of the country’s top homebuilding analysts predicts. Texas didn’t suffer from the plunge in housing prices seen in many major U.S. markets, Mike Inselmann, founder of Metrostudy Inc, told real estate journalists meeting in Austin.”

“The ready supply of new housing in Texas kept prices from overheating, he told members of the National Association of Real Estate Editors. ‘Dallas-Fort Worth, going back to 1995, never got to 10 percent’ gains in annual home prices, Inselmann said. By contrast, many markets on the West Coast and East Coast saw home prices more than double in just a few years. ‘We did not have that housing bubble,’ he said.”

“Builders say the market has already slowed since the tax credit, for as much as $8,000 toward the purchase of a home, expired at the end of April. ‘May was a flop,’ said Will Holder of Houston’s Trendmaker homes. He said the tax credit ‘moved the sales around’ and motivated some buyers to make a move earlier than they otherwise might have.”

“Home starts in the Dallas-Fort Worth area jumped more than 50 percent in the first quarter as builders started houses to meet demand caused in part by the tax credit. North Texas home sales were up almost 30 percent in April, driven higher by the federal incentive. Builder profits – even with recent sales increases – are much lower than a few years ago, he said. ‘We’ve seen our margins over this period down about half,’ Holder said. ‘Our margins have now recovered half of that.’”

The San Antonio Express News in Texas. “Thanks to foreclosures and a lackluster real estate market, Bexar County property appraisals have dropped for many homeowners. About 60 percent of them saw a rare dip in the taxable value of their homes. ‘The appraisers looked at as much data as they could to try to trend downward,’ chief appraiser Michael Amezquita said. ‘It’s important for us to reflect the market. Values don’t just go up. Sometimes they stay flat. Sometimes they go down.’”

“After years of steady price increases, in 2009, Bexar County property values dipped 2 percent. Prior to that, residential appraisals hadn’t decreased in Bexar County since the savings and loan crisis of the early ’90s. Heavy foreclosures in new neighborhoods to the south and west hit home values in those areas hard, Amezquita said.”

“‘The farther west you go and the more tract housing you see, we have higher incidences of foreclosures,’ he said. ‘They were part of the bad loans being made and there were lots of first-time buyers.’”

“Ron Daniels of Adams & Polunsky Ad Valorem Tax Advisors said he doesn’t think the appraisal district went far enough in lowering values. He said he knows commercial property owners who are not able to collect rent, but also don’t think they can afford to boot a tenant and have an empty space. ‘Generally, our marketplace has been suffering,’ Daniels said. ‘There are many, many things on the market. There’s not much lending available. Our real estate values are down. The appraisal district is not recognizing that as much as they could or should.’”

The Abilene Reporter News in Texas. “Foreclosures in Taylor County increased by about 70 percent in the first four months of this year compared to the same time period last year. ‘I think we are finally seeing what the rest of the country has been experiencing for the past two years. Some folks are giving up on selling their homes at what they owe and letting them go back,’ Taylor County Chief Appraiser Richard Petree said.”

‘”The Dallas Morning News reported last week that there were almost 32,000 home foreclosure filings so far in the four-county Dallas-Fort Worth area, a 10 percent increase from last year.”

My West Texas. “Save a sharp increase in oil prices, area real estate professionals say home prices should remain stable through the next several months — selling at a slower pace than has been the case in recent years, but also giving buyers a chance to catch their breath before grabbing the last available home.”

“Since the 1980s, Realtors said, Midland homes have been among the cheapest in the state, selling for anywhere from 2 to 15 percent less than market value. The increases in average home prices of nearly 40 percent between some months in 2006 and 2007 and of nearly 10 percent from 2007 to 2008 when other states were seeing decreases of that much were in part because of the oil industry, but also because Midland was playing catch up, they said.”

“Plus, the more saturated market gives buyers a chance to take additional time looking and deciding when before if they hesitated on a home it would be under contract by someone else in a matter of minutes, Realtors said. ‘The hysteria we had in our market in 2007 and 2008 is gone but we have a very strong demand for houses,’ said Perry Taylor, with the Permian Basin Home Builders Association.”

“Danielle Ramirez, team leader at Keller Williams Realty, said if nothing else, the market is prime for buyers. Ramirez said they still see listings going on the market on a Saturday and coming under contract the next week. For the most part, she said, homes that are taking hundreds of days to sell are too high and would likely go if the price were reduced to closer to market value.”

“‘People are pricing their houses as if we’re in a boom,’ said Larry Hatfield, incoming president of the Permian Basin Board of Realtors. ‘The market is normalizing … they need to understand that.’”

From KHOU in Texas. “A high rise condominium development on Galveston’s East Beach is taking a creative approach to ease the burden in today’s struggling market. At the Palisade Palms the surroundings are posh, the amenities are top notch and with sweeping views of the gulf, you might assume a unit is out of your range. Maybe you shouldn’t assume. On June 6, 27 condos will be auctioned off as part of an inventory reduction, and for that one day it will be buyer, not the seller, who determines market value.”

“‘The towers have been very successful in selling in the past,’ says Deanna Sybrant, a project manager for the Kennedy Wilson Auction Group. ‘Prior to hurricane Ike, they sold more than 187 units. The hurricane came in, and there was a little bit of a decline in sales. Then the financial market took a hit. It’s been slow selling since.’”

“Starting bids will range from $125,000 to $375,000, which isn’t exactly chump change. But consider this: the most expensive condos in the development, penthouses, were previously priced at $1.3 million. ‘It’s a win-win situation for everyone involved,’ says Sybrant. ‘Sellers are selling the homes all in one day, and buyers are choosing their sales price.’”

My Fox Houston in Texas. “For potential home buyers who just cannot wait two more weeks, another auction kicks off on Tuesday in Houston. All of these offerings are foreclosures, including one on Mount Royal Circle. ‘The starting bid is $99,000,” said Rick Weinberg with REDC Group, which is overseeing the bidding. ‘It was previously valued at $405,000 so there are some good deals that people can get at these auctions.’”

“REDC Group auctions homes in default across the U.S. And these days, business is good. Very good. Weinberg says the company has already dropped the gavel on $1 billion worth of property so far in 2010. ‘2010 is the year of the foreclosure,’ said Weinberg. ‘Three to seven million will be hitting the market this year, according to our research.’”

The Daily News in Texas. “Downtown residents and business owners pleaded Thursday for the city to rewrite a 50-year-old noise ordinance that has pitted neighbors against each other in an area that is a mix of lofts and bars. Both the owners of Crow’s Southwest Cantina and The Loading Dock said they have tried to be good neighbors, but they are being bullied by neighbors who won’t be satisfied by any attempts to muffle the noise. The problem is that downtown loft residents want to live in a quiet, residential neighborhood, but downtown Galveston is a place of entertainment venues, bars and clubs, Lee Brown, an associate at Crow’s Southwest Cantina, said.”

“‘Why move to the area in the first place if you don’t want to be in a place that’s a vibrant downtown area?’ he said.”

“Jack McCoy, who owns a condo that overlooks The Strand, said the music from the nearby Crow’s Southwest Cantina is so loud, he can barely hear the television in his living room, much less sleep at night. He has stopped inviting friends to spend the night because of the music. ‘As a taxpaying citizen of Galveston, I should not be subjected to constant, loud blaring music when I’m in my house,’ he said.”