The Housing Bubble

The Gazette Times reports from Oregon. “While city land inventories show no shortage of developable residential land, many of those properties are limited by wetlands, natural features designations or zoning restrictions, said Pete Sekermestrovich, the principal broker of Town & Country Realty. The high cost of buying or renting in Corvallis pushes many people who work or go to school here to live in neighboring communities where housing costs are lower. ‘Some would argue that we do have affordable housing: It’s in Albany or Lebanon or wherever,’ Sekermestrovich said. ‘The bottom line is I don’t think we’ll have affordable housing in my lifetime.’”

The Oregonian. “Portland-area homeowners are still sitting by the sidelines. New listings aren’t showing up, leaving would-be buyers fighting over what’s on the market. ‘This is the time of year when we typically see inventory balloon,’ said Peter G. Clark, a principal broker with Keller Williams in Portland. ‘They’re just not bringing homes on the market. There’s a real scramble for the inventory that exists.’”

“But many homeowners aren’t in a position to sell. At the end of last year, one in five Portland-area homeowners with a mortgage owed more than their homes were worth. And homes in foreclosure, which typically sell for a discount, continue to weigh on prices.”

The Seattle Times in Washington. “Early this year the biggest downtown project, Escala, began raising prices a hair on some units. Stephan Schier, a renter, bought a two-bedroom at Escala last month. ‘I don’t think prices will get this low ever again,’ he says.”

The Whidbey Examiner in Washington. “Home sales on Whidbey finally may be awakening after several difficult years of foreclosures, price declines and too few buyers. A factor expected to stabilize Island County home sales has been a significant drop in the number of houses on the market over the past year. Many sellers are continuing to hold off listing their homes until foreclosures and other distressed properties have worked through the system and prices look better.”

“Patty Folkestad, a longtime North Whidbey agent at Re/Max in Oak Harbor, said that, for instance, some military families on Whidbey were forced to rent out their homes when they were transferred out of the area. They wanted to sell those homes, but held off because they could not sell them without losing money. ‘That means a lot of homes that might otherwise come on the market this year won’t be, because they will be rented for awhile,’ she said. ‘If prices start to firm up this summer, I expect to see more listings come on the market.’”

“According to statistics studied by Glenn Crellin, a longtime analyst of the Northwest housing market at the Runstad Center for Real Estate Studies at the University of Washington, at least 77,000 Washington homes were in foreclosure or more than 90 days overdue at the end of 2011. By comparison, the number was 36,200 at the end of 2008. ‘At the rate we had been working through foreclosures over the past several years, it might take four more years to work off that inventory of distressed properties,’ Crellin said.”

The Northern Light in Washington. “Five years after all work stopped on the unfinished Marin condominiums, a potential buyer may be less than two weeks away from owning the multimillion dollar project. The original owners, Andrew and Wanda Shaw of British Columbia, poured $26 million into the project before being forced to hand the property over to Seattle Bank after defaulting on an $18 million loan. Only one of the three planned towers, expected to bring 54 high-end condo units to west Blaine, was finished. The individual Marin condos range in size from 1,056 square feet to 2,230 square feet. The former owners were planning to ask between $600,000 and $1.8 million.”

“Blaine mayor Harry Robinson said he’s concerned about the potential buyer seeking a break from the city. He said this may mean the potential buyer might not have enough capital to finish the project. ‘If they can’t afford the permitting fees, then they shouldn’t be considering buying the building,’ Robinson said.”

“Local realtor Mike Kent said the condos, once on the market, will most likely be snatched up rather quickly. He predicts some current Semiahmoo residents will buy condos in an effort to downsize, but said the most interest will come from across the border. As evidence of this, Kent said a condo tower across Boundary Bay in White Rock is already 63 percent sold, though construction is only halfway done. Kent said those condos are going for between $1,000 and $1,500 per square foot, while he expects the Marin condos to sell for between $300 and $400 per square foot.”

The Vancouver Sun in Canada. “Bubble? What bubble? That’s Vancouver condo marketing guru Bob Rennie’s take on concerns that the region’s real estate market is headed for a meltdown because of sky-high prices. ‘It’s not a bubble,’ said Rennie, director of Rennie Marketing Systems, in an interview. Rennie said there were about 19,000 condo sales in Metro Vancouver in 2011, and that while the average price for 80 per cent of those condos was $315,000, the overall average price was $427,000, which required an income of $66,000 to finance.”

“‘With the 80 per cent of the [condo] market that traded in [Metro] Vancouver last year, you only needed a household income of $52,800 to purchase. That’s not a bubble story,’ he said.”

News 1130 in Canada. “A luxury housing report suggests sales are surging in most major markets, except for a 31 per cent decline in Vancouver. What constitutes ‘luxury’ in this area, and how much you could save if you lived elsewhere? Luxury is $2 million in West Vancouver and places like Shaughnessy. But it doesn’t get you much, according to Keith Finney with REMAX.”

“‘For that you would get a three-bedroom bungalow. Nice location, quiet. Standard home, not a luxury home, no view. That is the story here; the luxury market doesn’t start until about $3 million,’ he explains.”

The Globe and Mail in Canada. “Mayur Arora is seeing something few would have expected in Vancouver’s real estate market – people walking away from deposits on houses, convinced prices will fall further. ‘It happened twice in the last month. One [deposit] was $75,000 and one was a $20,000 deposit, the guys just walked away from it,’ said Mr. Arora, who runs Oneflatfee.ca in Surrey, B.C. ‘They are going to wait it out. So they lost $75,000 and $20,000, but if the market comes down $150,000 on a $1.5-million house, that’s not uncommon.’”

“One reason for the decline is fewer buyers from Asia, something that had been driving parts of the Vancouver market in recent years, according to agents. ‘The number of buyers from China is definitely down this year,’ said Andrew Hasman, a real estate agent who specializes in high-end homes. ‘We’re seeing far fewer buyers from that part of the world and that’s the reason our sales are down.’”