The Housing Bubble

The Grand Junction Sentinel reports from Colorado. “Foreclosure filings and sales are declining in Mesa County, according to data released by the Colorado Division of Housing. Some lenders are taking more time to foreclose on a home after last fall’s robo-signing controversy. That slower pace means plenty of foreclosures still are in the works, and it could be years before foreclosure sales numbers drop significantly, according to Ryan McMaken, spokesman for the Colorado Division of Housing.”

“At the same time fewer foreclosures are coming onto the market, Bray Real Estate broker David Durham said he has been able to move more foreclosed homes out of his inventory of listings. He believes foreclosed homes are selling faster than others because banks will sell for less just to get rid of a home they don’t want. ‘Even three-and-a-half years into this downturn, owner-occupants have not come to grips that their house is worth a lower price. The lender doesn’t have that restriction,’ Durham said.”

The Park Record in Utah. “Most golf communities in Summit and Wasatch counties reported about eight sales for the second quarter of 2011 that ended June 30. Promontory, the leader of the pack in sales volume, is seeing distressed properties bought up in large quantities. Since opening in October 2007, Red Ledges has only had two sales from foreclosures out of almost 160 units sold, said chief operating officer Mitchell Burns.”

“July was a good month for closings for several reasons, Burns said. One is weather, another is developing amenities. Another reason, and probably the biggest, Burns said, is that their marketing is working. ‘We’re being discovered,’ he said. ‘As soon as you start selling homes and home sites, people hear about it and want to be a part of it.’”

“Although there are no deeply discounted distressed properties, Burns said the development did introduce a new home plan for $500,000. That makes owning a home in Red Ledges affordable to a lot more people, he said.”

The Deseret News in Utah. “For three years in a row, the average homeowner saw property values drop in Salt Lake County. At the same time, many are paying higher taxes. Utah law says cities, counties and school districts get a set amount of revenue from property tax each year no matter what happens to property values. ‘When (property) values decrease, the tax rate is allowed to rise so the same amount of money is generated,’ explained Kevin Jacobs, chief deputy at the Salt Lake County Assessor’s Office.”

“Brent Nielsen’s house is more than 20 years old, but new, expensive homes are going up not too far away. His property taxes have skyrocketed well beyond what he thinks is reasonable. A letter from the county assessor’s office last year said his property value rose by more than 60 percent and his taxes went up 88 percent. Nielsen said the new homes are in secluded areas by a golf course while his house is along a busy street, and their values should not be similar.”

“He appealed to the county and the property value was lowered. But Nielsen says it wasn’t lowered nearly enough, so he appealed to the state. That process was finalized six weeks ago when the judge ordered the value to be set at what Nielsen had been asking for all along. He just received this year’s assessment, and since it was set last January before the appeal to the state was finalized, he’ll have to appeal again to have it lowered to the amount the judge agreed on.”

“‘If we don’t push back as citizens I think we are doing an injustice to us all,’ said Nielsen.”

From Channel 2 News in Nevada. “It’s a scene repeated again and again, day after day across Las Vegas. Sgt. Patrick Geary: ‘Hello?’ Man: ‘Hello.’ The two deputies with the Las Vegas Constable’s Office then enforce a judge’s order on the foreclosed home. ‘We’re serving an eviction notice on you,’ says Sgt. Geary. ‘You have to get a change of clothes, stuff like that, and take off in about 15 minutes.’”

“The young couple and their son have only the time it takes a locksmith to change the locks — to grab what they can. They lost the house after falling behind on their payments and they’ll have to make arrangements with the bank to come back for the rest of their belongings. The case load is staggering. The vast majority — like this day — are apartment tenants behind in their rent. Deputy Scott McWilliams: ‘Today? We’ll probably end up doing 25 to 30. It’s been a steady flow. It’s almost like trying to hold back the tide with a teaspoon. I don’t see an end in sight.’”

“Sgt. Geary says the city is on track to carry out 40,000 evictions. This year, that’s 6,000 more than last.”

The East Valley Tribune in Arizona. “While recent news from the financial markets has not been good, there is an upside to the housing market in the Valley: There really is nowhere to go but up. ‘We are still at the bottom, though whether we have reached the bottom is argumentative,’ said Jay Butler, professor emeritus at the W.P. Carey School of Business at Arizona State University.”

“Despite people coming back into the market, the economics of the housing market seem amiss. ‘It is very strange. Our inventory, the supply of homes, continues to decline every month,’ said Mike Menefee of Keller-Williams Realty. ‘In a normal economy, if supply goes down you’d think prices would be going through the roof because there is just a substantial demand for homes. Pricing doesn’t seem to be moving like you’d expect.’”

“The stock market is up. The stock market is down. The U.S. credit rating gets downgraded. The national jobs market improves a bit. Despite forecasts of growth in the economy just a few months ago, the headlines show it’s anything but predictable right now. ‘The cost of borrowing for those people who can acquire a mortgage will be at historical lows for the foreseeable future. That I would submit is partially a good news story,’ said Dennis Hoffman, an economics professor at ASU’s W.P. Carey School of Business.”

“What has become a little more cumbersome is the amount of paperwork required to get that loan, said P.J. Saturno, regional manager for Taylor Morrison Home Funding. ‘For the people who don’t have previous homes, who don’t have bankruptcies, it’s just a matter of providing more documentation than we have in recent years. We’ve gone back to the old days of 10 to 15 years ago where you have to document everything,’ he said. ‘You have to be prepared to give us every piece of paper.’”

“That’s starting to become apparent, said Pierrette Tierney, VP of marketing and sales for Taylor Morrison, which has two fairly new developments in the East Valley. ‘I think all our buyers believe it is an unprecedented time to buy with the affordability of Phoenix, the purchase prices of new homes and the nearly free money when you’re talking about 4 percent interest rates on long-term financing,’ she said.”

The Nightly Business Report. “Kirsten Myers, Realtor, ‘ I`m going to be showing you a four-bedroom, three-bath in the main house with a one-bedroom, one- bath casita. At the peak of the market this would go between 450 and 500. We had it listed for 235 before we got a contract on the short sale.’”

“David Majure, NBR Correspondent: ‘Kirsten Myers, a realtor in the North Phoenix community of Anthem, is seeing multiple offers on homes in the area.’ Myers: ‘Yes, I’ve had them recently with four, five, and six offers. And it can be a challenge because most of these offers are coming in above list price.’”

“Majure: ‘Myers is helping Lori Blaine buy this house in Anthem.’ Lori Blaine, ‘We`re trying to upgrade a little. We filled up our house really quickly.’”

“Majure: Her ‘family`s current home is underwater. So instead of selling and losing money, she hopes to rent it and move into a bigger place.’ Blaine: ‘It makes me really nervous to do this but you know, you know, you really — or I really want to make sure I’m getting what I`m paying for and that the market is not going to drop any lower because it’s kind of a scary time financially as far as the real estate.’”

From City Caucus. “Earlier this week, we experienced the second major meltdown of world stock markets since 2008. It’s estimated that trillions of dollars worth of assets evaporated overnight. Yet, for many of us living in Vancouver, all this talk of economic malaise still seems rather foreign to us. That’s because the real-estate market has transformed thousands of local homeowners into instant millionaires – at least on paper.”

‘Despite all of this wealth generation, is it only a matter of time before what’s impacting other economies comes crashing down on our doorsteps? If you want to see what our future might look like one day, I’d suggest you take a glance at Phoenix, Arizona. Housing prices were climbing year after year and there seemed to be no limit to its growth. Three years later, it has yet to recover.”

“But, if you’re a Canadian looking to purchase property down there, consider yourself in the driver’s seat. Last month, our family was able to purchase a nice two-bedroom condominium in a gated lakeside community for just over $60K. A few years ago that unit was selling for over $170K. Now, if that same condo were for sale in Vancouver, it would easily fetch at least $500K.”

“Although most economists argue Vancouver isn’t on the verge of a housing bubble, just imagine what would happen if housing prices suddenly dropped by 15-20 per cent. A lot of Vancouverites would owe more on their home than it’s worth. Does this sound familiar? Unless you’ve traveled outside of Vancouver lately, it’s hard to fully appreciate how hard some economies have been hit by the recession.”

“And if you don’t think it could ever happen here, you’d best think again.’