The Housing Bubble

The Gazette reports from Colorado. “A Colorado Springs real estate company that’s developing home sites in Cedar Heights — one of the city’s most exclusive neighborhoods and home to million-dollar mansions — has been hit with a $5.8 million foreclosure notice. Cedar Heights Development LLC, headed by custom homebuilders Larry Nichols and Claude Comito, received the foreclosure notice last month. Sales haven’t gone as projected because of the economic downturn in recent years, Nichols acknowledged. He and Comito purchased their property in 2007; Nichols has been building homes in the area since it was first developed in the early 1980s.”

“‘We’re making sales at Cedar Heights,’ Nichols said. ‘We have homes under construction at Cedar Heights. Cedar Heights is probably doing as well any subdivision in town. But it’s still a part of the economy that’s struggling.’”

The Las Vegas Sun in Nevada. “Constance Akridge just began a one-year term as president of the State Bar of Nevada, which represents more than 8,200 active attorneys. Q: Has the rough economy affected any particular specialties within the law profession?”

“A: Definitely. I can see it in my own law firm. The people who were doing real estate law in the past are having a difficult time because they’re not doing real estate transactions. They’re doing either foreclosures or workout work…A lot of clients we used to have in the real estate area aren’t in business anymore because they’re not building the houses and doing the deals they did before.”

“Q: Are law firms readjusting their specialties because of the economy? A: Yes. Whoever has a bankruptcy department, that department likely has grown. Now it’s huge.”

Inside Tucson Business from Arizona. “During June, the demand for new-built homes continued to fall and is now 31 percent behind last year’s pace. The City of Tucson has seen the largest drop in permits, down 38 percent compared to the first six months of 2010. ‘There is not anything on the horizon before the end of year that will change the market. Nothing changes until we get through the foreclosures, which could be about this time next year. Then, the market is going to get really interesting. We will have to pay close attention to any movements to see where the trend is headed,’ said John Strobeck, Bright Future Business Consultants.”

The Kingman Daily Miner in Arizona. “The housing market in Kingman improved slightly over the last few years, but federal regulations that have Realtors worried are on the horizon. Kathleen Murray, former president of the Kingman/Golden Valley Association of Realtors, said Realtors cannot hold houses off the market once aware they’re to be listed. Once a foreclosure is up for listing, Realtors, including those with KGVAR, have one business day to list the property. If they fail to do so, it is an initial $50 fine with subsequent $10 fines levied each additional day the property is not listed.”

“Realtors have nothing to do with ’shadow inventory,’ Murray said. Banks hold foreclosed properties off the market for various reasons, and Realtors have no control over banks, she said. Major banks work foreclosures, but in many cases, they do not own the properties. They’re merely servicing the loans for investors, Murray said.”

“Consider an investor who owns 10 home loans that go bad. He or she must decide which properties to sell and which to hold. Add the fact that these loans were for $300,000 homes that are now worth $100,000 apiece. The investor must decide whether or not to hold each property in hopes that the housing market bounces back or to sell each property at a loss in order to recoup a portion of the investment, Murray said.”

“Under this scenario, a foreclosed home may not be listed for a lengthy period of time because of investors and banks but not Realtors, Murray said.”

The Arizona Daily Sun. “Distressed home sales in the Flagstaff region are on the rise, now accounting for a majority of all sales. The median price for the first six months of 2011 was $265,000, the lowest since 2004. Paula Monthofer, president of the Northern Arizona Association of Realtors, said she has advised some home-owners not to sell unless they must. ‘I am telling them that if you don’t need to put your house up for sale right now, then don’t do it,’ Monthofer said. ‘This isn’t the best time to sell your house.’”

“Recent statistics released by the Northern Arizona Association of Realtors show it is still a buyer’s market. Homes are currently selling at pre-housing-boom levels of $134 per square foot. The median price is 7 percent below last June’s median of $296,450, and sales are down 13 percent from a year ago. Currently, there is a 15-month supply of homes across all price categories, with some larger homes part of a 36-month supply.”

The Salt Lake Tribune. “Tim Charlwood is among those who still views the Ogden Valley as an undiscovered paradise, though the shock of Utah’s real estate crash and foreclosure wave has brought that vision closer to earth. Each of the project’s six partly developed lots boasts a stellar view from more than 5,600 feet above sea level, is surrounded by 40-plus acres of private forest and retails for $850,000 to $1.75 million. Charlwood launched the project in 2004, when land prices all across this pastoral valley were starting to soar.”

“Today, his development is listed at a quarter of its appraised price of a little more than a year ago. ‘I’ve had to get very realistic about valuations,’ the U.K. import-export entrepreneur and real estate developer said Thursday while welcoming visitors at a mountaintop gathering to promote the sale.”

“In some hard-hit pockets, including several Eden subdivisions, more than one of every three homes has been listed as ‘real estate owned’ since mid-2007, meaning a lender foreclosed on the property but couldn’t find a subsequent buyer. Much of the trend, according to residents, has involved second homes bought after the 2002 Winter Olympics by out-of-state vacationers subsequently forced to cut their losses with the recession.”

“‘Most of the people that I know that aren’t around anymore are from California,’ said Jim Halay, proprietor of Alpine Pizza in Eden.”

“The Ogden Valley is distinct in ways that may have made it more vulnerable. With its proximity to Snowbasin (home of the 2002 Olympic downhill races), Powder Mountain and Wolf Mountain ski resorts, the area was seen as a more secluded, down-home and less expensive alternative to Park City and Deer Valley. ‘Up there, the bazillionaires bought places for $5 million in cash,’ Halay said. ‘Here it was different. Here, everyone seemed to have a second mortgage.’”

“Some homes in Eden, Huntsville and environs saw price appreciations of 40 percent to 60 percent a year — while the boom lasted. And the bursting of the housing bubble has been equally breathtaking. Huntsville resident and real-estate executive Gage Froerer recalled two recent and sizable land deals in which parcels that once commanded $80,000 to $100,000 an acre were sold for $2,500 to $3,500 an acre.”

“‘If you bought after 2003, you don’t have any equity in your home,’ said Froerer, also a state legislator representing the area. ‘We’re really back to early-2000 pricing in Ogden Valley.’”

“While not minimizing the pain of the recession, some residents are relieved a more substantial housing boom didn’t overwhelm the area’s small-town feel. Census figures peg the number of housing units in Eden at 204 and Huntsville at 249. Charity garage sales are featured on the local newspaper’s front page, and kids ride their bikes in the July Fourth parade.”

“‘It’s a quiet atmosphere, which is why I moved here,’ said Halay, a former Chicago resident who fell in love with the area during a four-day visit in 2001. ‘It’s a great place, but don’t tell anybody about it.’”