The Housing Bubble

The Albuquerque Journal reports from New Mexico. “The Standard & Poor’s/Case-Shiller index released Tuesday showed prices dropped in October from September in 19 of the 20 cities tracked. Home prices have fallen roughly 32 percent nationwide since the housing bubble burst five years ago and are back to 2003 levels, according to the index. Homes that sold in the Albuquerque area in November did so at 2005 prices, as has been the case more often than not this year, according to data from the Greater Albuquerque Association of Realtors. The median price was $160,000, down 9.86 percent from last November.”

“‘New Mexico median prices continue to reflect the number of distressed properties still on the market,’ M. Steven Anaya, executive VP of the Realtors Association of New Mexico, said in a statement.”

Inside Tucson Business in Arizona. “Tucson’s economy is no longer ‘bouncing along the bottom’ and as 2011 comes to a close there are signs the recovery is accelerating locally, according to economist Marshall Vest, director of the Economic and Business Research Center at the University of Arizona. He cautioned there is a lot of ground to make up, but he expects the Tucson job market to recover all of the jobs lost during the recession by 2015. Continued distress in the housing marke has been altered by the recession as younger buyers no longer view home ownership as a worthy investment.”

“Vest’s colleague, Gerald Swanson, professor of economics, commented the recession had caused a change in terminology noting that economists never before had referred to 2 percent as ‘growth.’”

From NPR. “In the movie Groundhog Day, Bill Murray keeps waking up to live the same day over and over again. President Obama might feel the same way about the troubled U.S. housing market. In a 2009 speech in Arizona, he spoke about his plan to prevent foreclosures. ‘The American dream is being tested by a home mortgage crisis that not only threatens the stability of our economy, but also the stability of families and neighborhoods,’ he said.”

“But despite all kinds of federal initiatives, the housing market still hasn’t seen a real turnaround, which the president addressed this past summer. ‘[The housing market] is the biggest headwind on the economy right now,’ he said.”

Vegas Inc in Nevada. “With annual sales running at about 5,000 or less each year since 2009, no one is expecting a return anytime soon to the numbers seen during the economic boom. For Las Vegas-area homebuilders, the peak year was 2005 when sales totaled about 30,800. Dennis Smith, president of Home Builders Research, reported Friday that builders locally bought 250 building permits in November. That lifted 2011’s total to 3,348, down 21 percent from 2010.”

“‘It is truly amazing how much the new home industry has changed. Just five years ago we counted more than 23,200 new home permits,’ Smith commented.”

The Reno Gazette Journal in Nevada. “Statistics from CoreLogic show that 49,641 properties in Reno-Sparks — or 52.2 percent of residential properties with a mortgage — were underwater or upside down during the third quarter. For 2011, it could be possible to see upward movement in home values, not necessarily due to an improvement in market conditions but because of stricter foreclosure requirements resulting from AB 284, say some real estate watchers. The stricter law sharply has reduced the number of default notices filed in Washoe County from 612 in September to 13 in October and 15 in November.”

“‘New homes are unable to match the bargain basement prices of existing homes, over 60 percent of which are being sold in distress. Existing home prices have been relatively flat during the last few months, which is a good thing, but the sheer volume of distressed … and shadow inventory tells me that there’s nowhere but down for home prices until other areas of the economy begin to rebound. The ‘wild card’ in terms of sales volume is AB284, which has basically stopped NODs in Nevada. One thing is for certain: Banks will find a way around this,’ said Brian Kaiser, housing and real estate analyst, Center for Regional Studies, University of Nevada, Reno.”

“‘For 2012, I don’t see notices of default increasing anytime in the near future because I think it will take time for the banks to figure out how to comply with the stricter requirements from AB 284. As a result of that, you’ll probably see less inventory and an uptick in price. But I think this whole situation might cause a false bottom. You’ll still have all this distressed inventory just sitting there, and they have to be dealt with eventually. There’s also the question of whether there will be a trickle or flood of distressed properties entering the market once banks figure out what to do with AB 284,’ said Ken Wiseman, broker-owner, Reno Rancho Realty.”

The Associated Press. “Donna West could once name the homeowners on her affluent Las Vegas street. Then came the recession, the vacant homes, and the parade of anonymous renters. ‘To me, the recession hasn’t ended,’ said West, a 55-year-old retired state worker. ‘We have more foreclosures happening in my neighbourhood than a year ago.’”

“‘We are like somebody who is wearing a lead weight. We have jumped off the dock and finally stopped sinking, but that just means we are at the bottom of the sea,’ said Elliot Parker, an economist with the University of Nevada, Reno.”

“Evangelina Rodeiles works the night shift at the cafeteria at the Venetian casino-hotel on the Las Vegas Strip. Her house value has dropped from US$155,000 to US$80,000 in the past six years. Her husband is an under-employed construction worker. ‘I want to believe things are getting better, but I don’t see it,’ she said.”

The Aspen Times in Colorado. “Property tax collections for close to 50 taxing districts in Pitkin County will total $103.1 million in 2011, down 12 percent from 2010. Bills for the 2011 taxes will go out in mid-January, and not everyone will see a decrease despite the overall decline in collections. In the city of Aspen’s West End neighborhood, for example, a home valued at $3.7 million in 2011 will pay $9,402 in 2011 property taxes (with the bill that arrives next month). In 2010, the home was valued at $4.4 million and its tax bill was $9,354, according to records on file at the county assessor’s office.”

“‘In a declining market, it can be frustrating. The value of your property has dropped and yet your property taxes are going up,’ said John Redmond, county finance director.”

“On the other hand, an Aspen condo valued at $1.125 million in 2011 will see a 2011 property tax bill of $2,835. In 2010, the condo was valued at $1.83 million and saw a tax bill of $3,910. The condo’s value dropped about 27.5 percent. Because its value declined by more than 18.5 percent (the increase in the overall mill levy), its owner will see a drop in the property tax bill.”

‘In the midvalley, where property values generally dropped more substantially with the latest revaluation, property owners may be more likely to see a drop in their tax bills. A Basalt single-family home valued at $582,000 in 2011, for example, will see a tax bill of $3,477. In 2010, the home was valued at $878,400, and the tax bill was $4,248. The drop in that property’s tax bill comes despite a voter-approved tax increase for the Roaring Fork School District.”

“Dear Editor: I was recently in Dayton, Ohio. I stayed at a friend’s who lives in a multiuse development, akin to the Village at Crystal River (VCR) proposed for Carbondale: attractively built and depressing as hell. I wondered what the rich farmland that had been there looked like. Dayton’s economy is ‘in crisis.’”

“It got me thinking about Orange County, which reportedly used to have orange groves, as far as the eye could see. Now, it’s malls and multi-use developments, as far as the eye can see. And traffic: farther than the eye can see. Are they saving the economy? Hardly. The fastest-developed, Las Vegas and much of Florida, also happen to be the most depressed places in the country. Development for its own sake is disaster.”

“Think about California and other places that succumbed to ill-conceived development: so much building, with no thought to the future, the existing beauty of the place, or the actual needs of communities. (We don’t need 164 more housing units. How many for sale signs are in every neighborhood in Carbondale, including RVR? Do you know there will be 700 foreclosures in Garfield County this year?) Remember the lessons California gave us.”