The Housing Bubble

The Daily Times reports from Delaware. “At the Wood Creek Golf Community, rumors swirl that the 18-hole course won’t get cut this spring. The club house is functional, but partly: Kitchen equipment was sold at auction. Now, news has spread that the principal at PCS Homes that built Wood Creek filed for Chapter 11 bankruptcy protection in November 2010 on behalf of seven affiliated businesses. New construction stalled halfway through development of the 410-lot subdivision. That’s a problem because a buyer’s agreement requires a 75 percent build-out, or the sale of 300 homes, before control of the association can transfer from the builder to homeowners, said homeowner Lloyd Unsell.”

“On a recent tour, Unsell pointed to some retention ponds that have either dried up or are drying. Residents were notified recently to not expect golf course grass to be cut this summer, he also said. ‘The golf course closed today. The pond on the golf course is down 4 feet,’ Unsell said. ‘Another pond is down 6 feet, and the pond on the 5th and 6th holes is bone dry. The fish have died out.’”

The Baltimore Sun in Maryland. “The all-important spring selling season for homes is proving more bust than boom this year in the Baltimore area — and not just compared with last year, when an $8,000 federal incentive got buyers to the table. The 2,000 homes sold last month in the metro area represent the second-slowest April sales since Metropolitan Regional Information Systems began tracking the market through its multiple-listing service in the late 1990s.”

“The average sale price in the area — Baltimore and its surrounding counties — dropped nearly 4 percent compared with the year-ago period. That brought the average down to about $255,000, $55,000 less than the peak four years earlier. More than 140,000 Maryland borrowers were behind on their mortgage payments at the end of last year, so the number of homes that could yet appear on the market as foreclosures is substantial.”

“John Burns Real Estate Consulting estimates the ’shadow inventory’ of homes that will likely go up for sale as foreclosures at 14 months of supply in the Baltimore metro area.”

The Progress Index in Virginia. “Pressured by foreclosures and other lingering mortgage problems, sale prices for homes in the Tri-Cities tumbled in the first three months of this year, according to new figures from the Southside Virginia Association of Realtors. Prices were down sharply, and for at least the ninth consecutive quarter were below the level of the same period a year before. For the region outside Chesterfield, the average price of a house sold in the first quarter was $114,108, down 15.7 percent from $135,454 in the last quarter of 2010 and down 12.7 percent from $130,751 in the first quarter of last year.”

“‘A substantial share of all sales in the first quarter of 2011 was foreclosures, and the persistent inventory of foreclosures and short sales continues to put downward pressure on prices,’ researchers at George Mason University’s Center for Regional Analysis wrote in a report for the Realtors’ association. ‘The rise in the number of very low-priced homes suggests that the foreclosure and short-sale inventory is still relatively large and could take many months to clear out,’ the GMU analysts wrote. ‘Brisk sales activity will help to remove these properties from the inventory. However, processing delays at the banks and uncertain government regulatory activity could delay this drawdown.’”

The Roanoke Times in Virginia. “A Blacksburg condominium project delayed for the past four years will remain on hold until economic conditions improve, a project representative said. When the project was announced, The Colosseum was described as a six-story, $60 million sports condominium hotel with luxury features such as doormen, underground parking, a spa, ballroom and restaurant. The units were originally to be priced between $170,000 and $800,000 and expected to interest well-off Virginia Tech sports fans who visit Blacksburg frequently enough to justify owning a place to stay.”

“But in spite of setting up a sales office and Web site, the development team has not broken ground except for a road. The town has not received building plans, either. Mark Kinser, a Radford builder and member of the development team called the lack of visible progress at the 5-acre site ‘nothing more than a reflection of the current banking crisis.’”

The Virginian Pilot. “The region’s largest homebuilder has purchased a 133-acre site on Princess Anne Road where a troubled developer once planned a massive mixed-use project. But the Virginia Beach-based developer stumbled badly in the housing bust. With projects from Maryland to Florida, it fell behind on land and development loans, eventually losing some to foreclosure.”

“The Dragas Cos. paid $20.5 million for the Renaissance Park site. Dragas, which specializes in less expensive condominium homes, doesn’t have firm plans for the site yet and is doing market research, said Sally Horvath, a spokeswoman for Dragas.”

The Star Exponent in Virginia. “The town of Culpeper’s west side experienced tremendous residential growth in the past decade, gaining thousands of new houses along Sperryville Pike in an area that used to be farm fields. The growth occurred swiftly and dramatically and so did the decline with dozens if not hundreds of families on the town’s west side losing their homes to foreclosure, a trend that continues.”

“Originally a homebuilder, Mike Corbin said he hasn’t built any of those in seven or eight years. He deals mainly in property management now, having purchased numerous foreclosed homes in Culpeper at a discount and converting them to rental properties. Corbin said another round of local foreclosures loom.”

“‘There are a lot of empty homes out there that the bank doesn’t know it is getting back,’ he said. That’s how big the backlog of bad loans is, according to Corbin.”

Go Dan River in Virginia. “Home sales in the Southside region increased 4.5 percent from the 2010 first quarter to the 2011 first quarter, according to a Virginia Association of Realtors report. The median sales price for Southside home sales declined 10.6 percent from $82,488 to $73,750 from quarter to quarter. Southside has the lowest median sales price in Virginia, compared to a high of $280,000 in Northern Virginia, according to the report.”

“‘I really think that there is just a little bit of recovery here. We have a lot of homes on the market and our prices are holding,’ said Roger Freeze, president of the Dan River Region Association of Realtors. ‘With the lower prices, I think that it’s a good market to buy in. We should really be selling a lot more.’”

The Star News Online in North Carolina. “If you have a desire to live on the ocean, Intracoastal Waterway or river – and if you’ve got the cash – the old Realtor saying of ‘it’s never been a better time to buy a home’ could be true. Buyers may find their waterfront dream home costs 40 percent to 50 percent less than it did in the unrealistic boom times of 2005 and 2006.”

“Sometimes even less, said Margaret Rudd Bishop, who owns Margaret Rudd & Associates in Oak Island and Southport. For example, she has an oceanfront house in Oak Island priced at $349,900. You would have paid that for the lot a few years ago, she said. How about a house on the Cape Fear River in Southport that once cost more than $1 million and now is priced at $350,000 in a short sale? True, Bishop said.”

The Post & Courier in South Carolina. “April home sales in the Charleston region were slightly lower than the same month a year ago, a period when a popular temporary federal tax subsidy was still available to buyers. Values continued to slip, mainly because of an oversupply of foreclosures on the market.”

“Prices continued to be pulled down by the glut of repossessed homes, which lenders typically mark down when they try to sell them. ‘Once we work through the surplus of distressed property, prices will slowly recover. It’s not going to happen overnight, but it will happen eventually,’ said Charleston Trident Association of Realtors President Rob Woodul.”

“Ravenswood Plantation on Johns Island once offered views of freshly mowed grass as far as the eye could see. Now trees and shrubs are popping up here and there, signs of trouble and change. Gone is the daily sight of workers loading sod into trucks. The rolling irrigation sprinklers that resemble giant crawling insects sit idle. Several fields are sprouting corn instead of centipede and St. Augustine grass. The office is shuttered and the phone is disconnected.”

“When the housing market tanked, so did sod sales. The grass is not yet greener on the back side of the recession.”

“Dannie Barteet is still selling sod from time to time, but nothing like he was when home sales and construction were on a roll. ‘When sales started declining, it was a tough pill to swallow,’ Barteet said. “I didn’t stick around. I like to eat.’”

“Super-Sod is the leading division of Lakeland, Ga.-based Patten Seed Co., a family-run business for more than a century. With 18,000 acres in sod, the company is one of the largest turf operations in the world, according to CEO Jim Roquemore. Super-Sod has sales and locations in the Southeast from northern Florida to Virginia. ‘I don’t see the real volume picking up for at least three years, and I never see it coming back to the big boom.’”

“Barteet said his eyes reveal the state of the economy. ‘I can judge it by seeing the number of sod trucks on the road. When things were crazy, you couldn’t count the sod trucks on I-26 between Charleston and Columbia.’”

“The portion of South Carolinians who own the homes they live in was lower in 2010 than a decade earlier, as the housing meltdown took its toll. ‘Homeownership was the big drive, and that’s maybe no longer a given or even a goal,’ said Mike MacFarlane of the state Office of Research and Statistics. ‘This is one of the indicators about what’s going on.’”

“‘If you look at the numbers, there was probably some considerable overbuilding,’ said Philip Ford, executive VP of the Charleston Trident Homebuilders Association. ‘We built a lot of houses, especially in that peak time frame. It’s hard to know when to quit building.’”

“Lynn Carmody, former head of the Charleston Trident Association of Realtors, was surprised to learn the census found higher rates of rental vacancies than a decade ago. ‘Our rental market is strong right now,’ she said. ‘I feel like there’s a strong surge of renters out there due to foreclosures, short sales, and people walking away from homes where they are upside-down on their mortgages.’”

“Carmody suggested the rental numbers could be inflated by people trying to rent houses they are unable to sell. Ford agreed, and noted that some condos have also been converted to rental properties. ‘I know that on my street there were several houses people couldn’t sell, so they ended up renting them,’ Ford said.”