The Housing Bubble

Taos News reports from New Mexico. “Records from the Eighth Judicial District Court show that 554 foreclosure cases have been filed in Taos County since 2007. About 150 were filed in 2009 alone — more than double the number filed in 2004. The flood of foreclosures means distressed properties now account for a significant portion of the local real estate market. At the peak of the market in 2007, the median price of a single family home sold in the Taos area was $380,000. Last year, that same number was down 25 percent to $285,000, and prices continue to slide.”

“Consider last week’s auction of the house by the high school: Wells Fargo was owed $130,000. It was willing to accept just over half that to get rid of the house. Because it failed to sell at auction, the house will likely sit vacant until it goes on the market and a buyer is found. Jeffrey Lake is a court-appointed ’special master’ — the person charged with running public auctions on foreclosed properties. After spending his days doing similar auctions across the state, Lake doesn’t think things are getting better. ‘I would say that we have not hit bottom yet,’ Lake says sullenly. ‘I just see more (houses) going to sale.’”

The Daily Camera in Colorado. “Darla Campbell purchased a $246,000 home in Erie last July, and got married a few months later in October. Her husband was unemployed for about six months after their wedding, but finally found work as a draftsman in Fort Collins early this year. Now, they’re looking to move out of Campbell’s house and onto some acreage somewhere between Fort Collins and Lafayette, where Campbell works as a physician’s assistant. They’re hoping to upgrade and look in the $300,000-$350,000 price range.”

“Campbell said her house has seen some activity — about 15 or so showings in the last two months — but so far no one has made an offer. ‘A lot of people say they’re not making any decisions, they’re just starting to look,’ Campbell said. “One buyer was going to come back for a second showing, but she had to get her finances in order first. We never heard from her again.’”

“If the house doesn’t sell by winter, Campbell will take it off the market until spring. She doesn’t have a realistic timeline for selling the house, and they won’t start seriously considering new houses until they see more concrete interest from buyers. ‘It’s a crapshoot,’ she said. ‘You just don’t know. We don’t have our hopes set too high. I doubt we will make anything, but we’re just trying to break even. I don’t want to have to come to the table with any money. We’re not desperate to sell by any means, which is a great position to be in. You have to put it on the market and see what happens.’”

The Arizona Republic. “In Arizona, affordable home prices and decades of steady housing appreciation from the 1950s until the beginning of the area’s housing boom in 2004 made the American dream easily attainable for many households. The affordability index for an existing Phoenix home fell to an all-time low of 74 at the height of the boom in 2006. Not long afterward, buyers began falling into foreclosure.”

“John Kaminsky said the decision to buy a home in Arizona ruined the American dream for him. The 44-year-old and his family moved from New York to north Phoenix in 2005, near the height of the boom. He and his wife bought a house, counting on its appreciation to pay for their children’s education. He said he regrets that decision every day.”

“‘I bought a home we could afford, but now it’s worth 50 percent less,’ he said. ‘My neighbors have all walked away or leased their homes out to renters. My kids are grown, and we are stuck.’”

“Heather Pierce paid a law firm to negotiate with her lender in hopes of avoiding foreclosure. ‘I very much regret buying my house in Phoenix. I owe $150,000 more than it is worth,’ she said. ‘We are done with it and are going to walk,’ she said.”

“Elizabeth Rehner moved to Tempe after graduating from college in California a few years ago. She sees the great deals for homes but has no intention of buying. ‘Like a lot of my friends, owning a home does not appeal to me. I may never buy,’ said Rehner. ‘It’s not just because I might move around for my job. I just don’t trust the housing market. My parents are facing foreclosure, and they paid their mortgage every month for years. They can’t sell.’”

“Other metro Phoenix homeowners refinanced or took out home-equity loans to buy new cars or boats or to take vacations, believing their homes’ prices would keep rising - as if the middle-class dream had become an upper-class reality. ‘It’s now all too obvious that not everyone who bought homes during the boom should have bought,’ said Arizona Housing Department Director Michael Trailor. ‘It’s also clear too many people used their home as a credit card.’”

“Most homeowners who bought during the boom will likely have to wait at least 10 years to see their values rebound. But housing advocates say for people to be happy and own a home, they must stop focusing so much on the values. ‘Almost everyone has lost money on a house,’ said said Fred Karnas, former director of the Arizona Housing Department, who most recently was a senior adviser with HUD in Washington, D.C. ‘We have to move on.’”

Fox 13 Now in Utah. “The front yard used to have a nice, green lawn. Now it’s just a barren patch of weeds and dirt. Neighbors, fed up with weeds that grew several feet high finally mowed it down. No one will touch the backyard, where sod has grown several feet high. A satellite dish lays discarded by the back deck. A couch has sat in the elements for so long, it stinks. The owners moved out a year-and-a-half ago when the home was foreclosed on. ‘The people walked away from it,’ Riverdale City Administrator Larry Hansen said as he showed us around. ‘This used to be grass.’”

“All over the city, in just about every development, sits vacant foreclosed homes. The city is now cracking down on the abandoned homes, by putting liens on the properties in an effort to force the banks to take care of them. ‘We call it a nuisance because it is a threat to health, safety and welfare,’ Hansen said. ‘Frankly, with an unresponsive owner of record — whether they’ve abandoned it or it’s in the process of foreclosure — we as a city have had enough of this.’”

“Daivd Price, who lives across the street from another home that has been vacant for months, said it is affecting his property value. ‘It’s a good neighborhood,’ he said. ‘We have great neighbors, but definitely something like that tends to make people driving through think twice.’”

The Telegraph in Nevada. “There is perhaps some irony in the fact that the casino capital of the world should have suffered so disastrously from the reckless gambling of sub-prime mortgages. In the boom years, between 1990 and 2007, more than 470,000 housing units were built in the greater Las Vegas area, and property prices nearly doubled. Construction represented as much as 12.5 per cent of the workforce in southern Nevada. But since 2008, two out of three construction workers have lost their jobs, and house prices have fallen by more than half.”

“Driving out into the suburbs of south Las Vegas one passes endless housing developments, or sub-divisions as they are called, some fully built, others in a state of arrested development, skeletons of homes awaiting a skin, ground that has been cleared and levelled and then simply left. Beside the road, a solitary tractor was moving earth. I stopped the car and spoke to the foreman, John Blackwell. When, I asked, will these developments be completed? He laughed. ‘Not anytime soon.’ His team weren’t putting up buildings, he said, they were ‘laying kerb.’”

“Blackwell had come to Las Vegas from Utah in 1992. He talked about the boom years, when property prices were soaring so fast you’d have people waiting in line to buy houses and then immediately ‘flipping’ them – selling them on – without even moving in themselves. ‘You had a pay-stub and a heartbeat and they’d fall over themselves to give you a loan. You had people coming down here buying four or five houses as an investment, everybody ramping up the loans so they could buy all the toys – the RVs, the boat, and then… kapow!’”

“A lot of his friends had lost their jobs; he had been lucky – after a fashion. His team of 10 men have survived by rotating the workload. Last year he was down $40,000. ‘Everybody’s felt it. Everybody’s had to make do with less. So many lives have been damaged and destroyed through this and it’s all for what? Money. It’s so sad.’”

“‘But I think what we’ve found is that it gets you thinking about the things that matter: family, being able to eat and have a roof over your head… it brings things into focus.’ He laughed. ‘Time to give back the toys.’”

“On one street I counted nine out of 15 houses that had been left empty. Outside an occupied home a man was unloading furniture from a station wagon. Tony worked as a bartender on the Strip. He had bought his house for himself, his daughter and his five grandchildren two years ago for $110,000, he told me. Before 2008 it would have been worth close to $300,000. Its value now was less than $100,000. (Later on the internet I found similar sized properties in Eldorado advertised for $65,000.)”

“He gestured towards the empty houses on either side. Four people have gone in the last year, he said – one of them seemed to just vanish overnight. ‘This thing makes good neighbourhoods bad,’ another man told me. ‘If you were the first on the street and paid $300,000 for your home and you’re paying $1,500 a month you feel kinda stupid when all the other houses have gone into foreclosure and there’s new people paying $600 a month for exactly the same size house. Plus the whole neighbourhood’s gone to shit with a bunch of renters moving in… it’s kinda hard to swallow.’”