The Housing Bubble

The Province reports on Vancouver Canada. “Greg Jeanine is one of hundreds of Metro Vancouver property owners frustrated by futile attempts to sell their condos, townhouses and homes in a market where sales and prices have slumped. His two-bedroom condo in East Vancouver on Eton Street, priced around $300,000, has been on the market for three months. September sales were 41.6 per cent below the 10-year September average of 2,597, according to the Real Estate Board of Greater Vancouver. Sutton Centre realtor Leonardo Difrancesco said it’s ’shocking’ Jeanine can’t make the sale. ‘The condo is really aggressively priced,’ he said.”

“‘There are lots of showings,’ said Jeanine, 31, who wants to buy a larger townhome for his family. ‘People are just afraid to make a commitment to buy. They’re nervous because people in the news say pricings are going down,’ he said.”

“Pauline Kendall owns three houses and a condominium but she couldn’t get financing this summer when she tried to add to her real estate holdings. The East Vancouver resident says the federal government’s new mortgage rules have complicated financing for self-employed people such as herself and for first-time buyers. ‘I was a little bit shocked,’ says Kendall, 62, who put in an offer on a home she had her eye on in July but had to pull back when the only option was expensive refinancing of the home in which she lives.”

“Kendall sees it as the ‘federal government trying to protect us from ourselves.’ ‘It’s interesting times to have four properties in East Vancouver and not having a bank interested [in financing a purchase],’ said Kendall, who works as general contractor and as a landlord for her properties. Her homes ‘average out’ to be worth $1 million each and the condo is worth close to $500,000. ‘Now, no matter what we own, how much equity we have, we just don’t fit under the new rules,’ she said.”

The Seattle Times in Washington. “Carrie and Eric Ahlstrom decided to rent when they moved to Seattle two years ago — and who could blame them? They’d bought a condo in Chicago in early 2007, just before the crash, and gotten burned. A couple of weeks ago, however, the Ahlstroms started looking seriously for a house to buy. They had done the math and decided the time was right. ‘We wanted to feel like the housing market had reached bottom, so we wouldn’t overpay,’ says Carrie.”

“Last weekend they signed a contract to buy a four-bedroom house in Northeast Seattle’s Bryant neighborhood. How long do they plan to stay there? ‘At a minimum, five to 10 years,’ Carrie says. ‘Potentially longer.’”

“They still own the Chicago condo they bought in 2007. She and Eric, a Microsoft program manager, rented out the condo — at a loss — when they moved to Seattle. ‘We can’t get rid of it,’ says Carrie.”

The Billings Gazette in Montana. “Her name’s not on the deed, but this was Deanna McAtee’s home for three years. There are nine rock fireplaces in the log mansion, so many that both of the his-and-hers bathrooms in the master suite each have one. So, of course, does the master bedroom, where the curtains on the windows are made of leather.”

“More than 100 artisans and craftsmen were employed during its construction a decade ago. The largest and most elaborate chandelier, in the sunken great room, cost more than a lot of entire homes do – $375,000. There are five bedrooms and seven bathrooms in its 14,000 square feet of living space. That figure doesn’t include three pantries or any of the closet space that adds another 3,000. A six-car garage in the lower level – and, in case that’s not enough, another four-car garage on the main floor – help bring the total under-roof square footage to 21,000.”

“And that doesn’t count the 2,800-square-foot, three-bedroom, two-bath guest house, also made of logs, just across the creek that runs through the property’s 73 acres. ‘Honestly, it’s a lonely place with one old lady walking around in it,’ says McAtee, who was its caretaker. ‘It needs a wonderful family.’”

“McAtee says the attorney-owner of the home, who has had it for sale for more than two years, recently switched the listing to United Country for its ability to market the property worldwide. The typical potential high-end buyer, she says, will have done their homework on what is likely to serve as a second, third or even fourth home for them. The $38,000 in annual property taxes won’t faze someone who can afford a $10.5 million home, McAtee says.”

“The log mansion was built in 2002 by an Atlanta businessman and his wife, who are friends of McAtee’s. When they had to sell in 2008, McAtee, a former mortgage broker, arranged for a business associate of hers to buy it. The new owner, an Omaha, Neb., attorney, already owns multiple homes, and purchased this one as an investment, she says. ‘He hasn’t spent more than 10 to 12 days in it in four years,’ according to McAtee.”

High Country News. “The trouble with dream houses — the dream homes on the dream streets of big-city real estate tours, or tucked among canyons near resort areas like Sun Valley, Idaho — is that dreams tend to change over time.”

“There was the post-war dream of a single-family house on a single lot in the tidy green suburbs, which produced the lookalike starter homes of the ‘40s and ‘50s. Fifty years later, there were the luxurious, big-box houses overlooking the Snake River in the Lewiston, Idaho, hills, and the mega-mansions on Red Mountain outside Aspen, Colo., the culmination of individual housing dreams that morphed into something bigger, and much more extravagant.”

“I think about this when I hear that the housing market is beginning to rebound. My own notion, however, is that the housing market will never rebound to its most recent form, but instead will fumble along while builders, architects, developers, futurists and ordinary people living in the current economy figure out what the next housing dream should be. Or whether there should be one at all.”

“Though it is a long shot that may never gain wide acceptance, some are encouraging the idea that renting a house without the drag of an ownership represents freedom. This has gained in popularity because it offers families the chance to move quickly when family or job arrangements change. Just a few decades ago, in fact, renting a place was the norm for many working people.”

“What does this all mean for people living in my rural county of eastern Oregon, as well as for our larger economy? It means that many of the pricey dream houses of the past are for sale. These are the big houses used mainly for family gatherings during summer weekends or for just a couple of weeks, leaving the place empty for months with maybe a watchful caretaker employed or living in the cabin next door.”

“The consolation, it seems to me, is that some of us lucky people have chosen to live modestly in small towns that still have hardware and grocery stores, doctors, barbers and gas stations. It gives us a sense of self-sufficiency and completeness.”

“It doesn’t matter if the next generation of housing is single-family, co-op, apartment or condo-style. What we have learned is that living in suburbia, with its boxlike castles built all too close to a flammable forest, or owning a third and fourth vacation home on the shores of a remote lake, are yesterday’s dreams, yesterday’s economy.”