The Housing Bubble

The Detroit Free Press reports on Michigan. “Dawn Mueller, a Realtor with Coldwell Banker Weir Manuel in Northville, said the market is fast-paced on both ends. She said in the past month, she’s listed two houses that attracted multiple offers and went for at or above asking price. ‘On the other end, it’s a disaster. If it comes on the market, you have to be there in 24 hours to see it,’ Mueller said. ‘You have to be on the fly all the time. It’s so crazy and busy.’”

“Charlie Lutz, a Realtor with Re/Max First in Clinton Township, has been working with a number of people who can’t sell for what they owe and are instead buying another home first and then trying to get their bank to approve a short sale. He helped a St. Clair Shores couple relocate to a larger home in Oakland County recently. They owe more than $120,000 on the brick ranch that is on the market for around $70,000.”

“He said that 1,200-square-foot ranch homes in good condition can sell for $95,000 while those that need some updating are going for $70,000. And bank foreclosures of similar size are selling for $30,000 to $50,000. ‘All of the cities in Macomb County have houses under $100,000,’ Lutz said.”

The Journal Sentinel in Wisconsin. “Home sales jumped 18.9% in May from May 2011, the 11th consecutive month of a double-digit increase from the same month a year earlier, the Wisconsin Realtors Association said Monday. At the same time, the median home sale price in the state rose 1.5% in May to $138,000. ‘I think we’re starting finally to get people saying, ‘You know, life goes on. I’m going to have to have a place to live. I can basically lock in my cost of housing for the next 30 years at 4%.’ You’d be insane almost not to take advantage of that,’ said Jim Smith, president of W.E. Smith Realty Inc., in Appleton.”

The Springfield News Sun in Ohio. “Foreclosure actions in the Springfield area grew significantly last month as lenders worked to get a backlog of distressed properties off their books. Tina Koumoutsos, executive director of the Neighborhood Housing Partnership of Greater Springfield, says that while the filings are new, many of the people have been delinquent on home payments for months, sometimes years.”

“Koumoutsos cited a period when banks were unable to do foreclosures. ‘There was a moratorium on foreclosures so banks were in a holding pattern,’ she said. ‘There were a lot of delinquent accounts and now they are taking foreclosure action.’”

The St. Louis Post Dispatch. “When J. D. Tucker and his domestic partner split up, he became a single father with five adopted children, and only one income. It wasn’t enough to pay the mortgage on their south St. Louis home. He bought it at the height of the housing boom. He owed $265,000 on a house now valued at only about $155,000.”

“Tucker put out a for-sale sign last fall asking for $220,000 on his city home. ‘Everybody said it was too high for the neighborhood,’ said Tucker, so they began steadily dropping it. ‘When we got into the $160,000s, I said I can’t believe this house isn’t being snapped up.’”

“Then came an offer for $155,000, and they took it to the bank. His lender said it would take the offer if Tucker signed a promissory note for $30,000 – a little less than a third of the deficiency. After more bargaining, they cut it to $10,000 and Tucker agreed. Last week, Tucker was packing up to move. ‘I’m happy with it. Ultimately I’m glad it’s going to be over,’ said Tucker. ‘I never in a million years thought I’d be in the situation I’m in.’”

The Times Online in Indiana. “Some 11 million U.S. homeowners remain ‘underwater’ on their mortgages, according to CoreLogic. In local markets such as Dyer, Portage, Griffith, Hammond and Gary, price drops have been steeper than the overall region median. In Chicago’s southeast suburbs, price drops have been even greater than those nationally. In Gary, the median selling price of a home dropped last year to $11,900 from $46,500 in 2004. The drop in Gary was matched by Calumet City, where the median price fell last year to $37,000 from $130,000 five years ago.”

“But it is not just the decline in prices that created a sense of crisis in housing markets. Contributing greatly was the expectation, based on long experience, that home values always would appreciate. Between 1991 and the end of 2007, home prices nationally appreciated 5.5 percent annually and never fell in any single three-month period during that time, according to the Federal Housing Finance Agency’s Home Price Index.”

“In the early years of the housing crisis, Realtors strenuously objected to the use of median selling prices as a barometer for home values. They said those numbers were skewed by the high numbers of foreclosures and distressed properties on the market. But not so much anymore. ‘In 2008, you could stand here and say, ‘Well that was a foreclosure, so you can’t compare it,’ Realtor Zeke Morris said recently while standing outside a home for sale in South Holland. ‘Now, 70 percent of the market here is foreclosures.’”

From Progress Illinois. “Five years after the housing bubble disastrously burst, federal and local government has tried, with limited success, to address each new wave of the foreclosure crisis. In Chicago and Cook County, the focus is increasingly on the surging number of properties vacated because of foreclosure. Cook County Commissioner Bridget Gainer proposed in May a county ‘land bank’ for which a quasi-governmental organization will seize and then manage properties until they can be put into productive use.”

“In Cleveland, properties were sold to churches and hospitals, redeveloped into rental sites, or simply rehabbed by the city to eliminate blight. In many instances, financial institutions actually paid the county land bank to get rid of the property. ‘There is evidence that not only are financial institutions willing to transfer responsibilities, but they are interested because these have become a liability for the bank,’ says Adam Gross, director of the regional affordable housing initiative at Business and Professional People for the Public Interest in Chicago.”

The Chicago Tribune in Illinois. “Declaring that things are getting better in Chicago, Donald Trump is moving forward to fill the empty commercial portions of his Trump International Hotel and Tower. The market for Trump’s 339 hotel-condo units, aimed at investors, has ground to a halt and less than half the units are sold, but the residences continue to attract buyers, said Gail Lissner, a VP at Appraisal Research Counselors.”

“Trump said he feels no urgency to start cutting prices on the condos. The 89th floor penthouse, a raw space, was recently listed for $32 million, making it the most expensive Chicago residence in the local multiple listing service.”

“Celebrity hairstylist Anthony Cristiano is shooting for a mid-July opening of a 3,400-square-foot salon on the building’s mezzanine level. The black and white salon will offer manicures, pedicures and haircuts, priced at $85 to $200. A haircut from him costs $350. ‘We’re friendly,’ he said. ‘I didn’t want to make us so exclusive that no one could afford us.’”

From Slate. “Earlier this month on the website Hooked on Houses, former ‘House Hunters’ participant Bobi Jensen called the show a sham. Jensen writes that the HGTV producers found her family’s plan to turn their current home into a rental property ‘boring and overdone,’ and therefore crafted a narrative about their desperation for more square footage. What’s more, producers only agreed to feature Jensen’s family after they had bought their new house, forcing them to ‘tour’ friends’ houses that weren’t even for sale to accommodate the trope of ‘Which one will they choose?’”

“‘House Hunters’ was always much more about showing us an attainable reality than a fantasy. The show (and its many iterations), in which people just like us go shopping for the best home their money can buy, not only glorifies the dream of home ownership but makes it seem achievable. This plays right into our inexplicably unwavering attachment to home ownership: Despite the collapse of the housing market, polling continues to demonstrate that we regard owning a home as the cornerstone of the American Dream, a perception that undoubtedly played a role in the home-buying craze prior to the bubble’s burst.”

“Doesn’t HGTV have some obligation to portray the housing market as it is? Maybe they could fix this whole mess and wipe the slate clean with a good old-fashioned ‘where are they now’ episode, showing us the truth after those mortgage payments start taking a toll.”