The Housing Bubble

The Lakeland Times reports from Wisconsin. “Property values are continuing their dramatic downward slide in Minocqua and in other northern Wisconsin property-taxing entities, and the region is no exception as the nation struggles with a devastating housing market implosion that just doesn’t seem to have an end in sight. Even as people lose as much as 50 percent of the value of their homes, and sometimes more, average property tax bills are staying put right about where they were. Minocqua town chairman Mark Hartzheim said one property in Minocqua that had listed at more than $700,000 had sold recently for $269,000 or $279,000.”

“‘Now the sevens, that was way too high,’ Hartzheim said. ‘That’s when the market was hot. But there was a time when that could have been legitimately sold for 500-something.’”

“Others have cited other properties in apparent similar freefall, including a lakefront property with a 3,000 square-foot home and 150 feet of frontage, which was going at $350,000, down from around $850,000. Hartzheim says it’s the tax rate that fluctuates, not the levy amount, and fluctuation is a two-way street. Just as your taxes won’t go down by 25 percent if you lose 25 percent of the value of your property, they don’t rise by 25 percent if your property rises in value by that much.”

“‘You ride the bubble up, you ride the bubble down,’ he said.”

The Herald Palladium in Michigan. “Over the past year, Paul Dumke, a consultant with Core Real Estate in Bridgman and Stevensville said, many sellers have realized that houses must be priced according to current market conditions, not based on a value of five years ago. ‘Now they’re realizing this is no different from the stock market ‘and I have to take my pill,’ said Dumke, a Realtor for seven years and president of the association.”

“For example, a house in Union Pier sold for $295,000 last year, down about 13.5 percent from $335,000 three years earlier. But a person who takes such a loss in selling a house may come out ahead when buying a different house that has also lost value.”

The Post Bulletin in Minnesota. “Home sales in Austin increased by a whopping 17.1 percent in 2011. Low interest rates and a wide selection of homes helped increase sales, said Angie Schott, a Winona Realtor who’s the the SEMAR MLS president.”

“I would not say we are out off the woods yet with regard to the housing slump, since there are many sellers yet struggling to sell at a price that balances what they purchased their home for, Schott said. ‘Rather we may be at the start of a stabling market, and we can watch the data at the start of 2012 to know for sure.’”

The Northern Star in Illinois. “Members of the local Move On Council braved freezing winds to protest against banks foreclosing homes during the last four years. ‘The reason we’re out here is because in the last four years, one in 10 homes in DeKalb County has been foreclosed,’ said Richard Gallati, core member and recruitment coordinator for the Move On DeKalb Sycamore Council.”

“Although she is not a member of Move On, Julie Kiefer-Bells, of DeKalb, said she believes the crisis would not have happened were the Federal Consumer Protection Bureau (FCP) around years ago. Kiefer-Bells said it is too easy to misunderstand the fine print. This is why several homeowners believed their incomes would rise.”

“‘But that didn’t come out to be true,’ Kiefer-Bells said. ‘They started losing jobs, and that’s why so many who were innocent and believed those things could not handle the mortgage amount. It’s heart-breaking to skim through the classifieds and see so many homes for sale.’”

The Chicago Tribune in Illinois. “The Illinois Association of Realtors reported that existing-home sales in the Chicago area eked out a 1.3 percent gain last year, compared with 2010. However, sales within the city of Chicago dropped 7.2 percent from 2010, to 17,715 homes sold. For the year as a whole, median prices declined 11.9 percent and 13.8 percent for the Chicago area and the city, respectively.”

“‘People are gravitating toward foreclosures and short sales right now and that’s causing the median prices to drop,’ said Loretta Alonzo, a real estate agent at Century 21 Alonzo & Associations in La Grange and president of the Illinois Association of Realtors.”

“‘There’s this deflation-like attitude among buyers that the longer I wait, the better price I’m going to get,’ said Jack Ablin, chief investment officer at Harris Private Bank. ‘It’s a cat-and-mouse game with sellers. And buyers believe time is on their side. If we can get a couple months where homes stabilize, it will give buyers a sense of urgency.’”

The Newark Advocate in Ohio. “There were 778 homes sold in Licking County the last half of 2011, up from 666 during the last six months of 2010. But, the expiration of the home buyer tax credit likely stifled activity late in 2010. Anna Kuhns, a Newark resident in temporary housing since returning to the area in November, continues searching for a home for herself and her husband. ‘I’ve been a little disappointed, especially in the Newark-area older homes,’ Kuhns said. ‘People may have an overestimation of what their home is worth. Some look like they’ve been on the market a long time, but there hasn’t been a dramatic price cut.’”

“Kuhns said she bought a much larger home in Indiana for the same mortgage payment she made in Newark, before leaving for six months. She seeks a four-bedroom, two-bath home here for $210,000 or less. She finds some homes too old without proper maintenance, some newer homes too small, and others overpriced. The sellers are either downsizing or underwater on their mortgage and can’t afford to negotiate much on the price.”

“Still, she describes herself as optimistic about the market in 2012. ‘It really has nowhere to go but up,’ Kuhns said. ‘It’ll probably stay the same or go up a little bit.’”

“Stephen Johnson, the city of Newark’s auditor, bought a new house, but has been unable to sell his old house, so he’s stuck with two homes, for now. His former home has been on the market for six months. ‘I don’t believe anybody has looked at it the last several months,’ Johnson said. ‘I think it must just be uncertainty on the part of the buyer. People are afraid of losing their jobs or (having) their pay frozen.’”

“Johnson said he might resort to renting his former residence if it doesn’t sell by the summer. ‘We reduced the price once,’ Johnson said. ‘I’m willing to entertain any offers, but I don’t want to lower the price right now. Price doesn’t seem to be the issue. It’s just (lack of) traffic.’”