The Housing Bubble

A report from Michigan Live. “Another real estate report, another big jump for metro Detroit home selling prices. The October RE/MAX National Housing Report says that of the 52 largest metro areas surveyed, Detroit had the largest rise in median selling prices with an increase of 45 percent. ‘What we’re seeing now are predictable seasonal cycles, which is just another sign that the housing recovery is bringing us back to a more normal market,’ Margaret Kelly, RE/MAX CEO, says in the latest report. ‘Home sales are expected to slow down during the holidays and winter months before returning to the next growth cycle in the spring.’”

The Grand Rapids Business Journal in Michigan. “The latest Grand Rapids Association of Realtors data showed the average West Michigan home sold for $155,648 in September, a dramatic 12 percent increase from the previous September. The number of transactions also was up in September, by almost 14 percent from the same month last year.”

“‘If you list something today and you price it right, it’s going to go. I can give you story after story after story. One that I heard yesterday is somebody put a (for sale) sign in the yard and somebody pulled up in their car and said, ‘I want to see it now’ and then wrote an offer,’ said Julie Rietberg, GRAR CEO. ‘It’s like the market we had way back. We haven’t seen this kind of market for years. I’m going to say it’s almost too much too fast.’”

The Chicago Tribune in Illinois. “Dana and Jim Metz recently moved into a new house after looking for three years. They were motivated by low mortgage rates, finding the right property in their price range and discovering that they had to make a fast decision. During their lengthy search, they found that there is a severe lack of inventory, and a buyer’s market had turned into a seller’s market. As a result, they had to make a quick decision because of competition from other buyers.”

“‘Five days after we first saw Lexington Place, seven of the nine homes had been sold,’ Dana said. Under pressure, they immediately decided to buy a 3,600-square-foot plan with five bedrooms — one of them for their baby daughter.”

From Chicago Mag in Illinois. “Q: Dennis, I was hoping you could offer some advice on the sale of our condo. It is a 2Bd/2Ba that my wife and I purchased in October ’06 for $410,000. We are trying to make the move to the suburbs but are having a hard time finding a buyer. We have lowered our ask from $420,000 (aggressive) down to $350,000, which is where the last two sales in our sister building [next door] were. My question is: do you have any tips on marketing or anything else for high-end ground units?”

“A: Aside from the fall slowdown in the market, there are a few other things that might be working against you, Justin. But you didn’t ask what’s wrong; you asked how to market the property. My first suggestion is always price, because a good price will always bring in potential buyers. So first, I would determine how much farther you can cut it. The neighboring units sold when the market was a little frothier; you might need to get a little lower than they were. Not a ton, just a smidge. Buyers might then bid it back up.”

From Chicago Business. “Chicago had 33,902 vacant homes at midyear, up 22 percent from the end of 2010, according to DePaul University’s Institute for Housing Studies. In some census tracts in South Side neighborhoods such as Englewood and Back of the Yards, 1 in 6 homes is vacant. Vacancies in suburban Cook County have jumped 79 percent since the end of 2010, to 21,479 homes at midyear. In one census tract in Harvey, the vacancy rate is 17 percent, while it topped 16 percent in a tract that includes parts of Chicago Heights, Steger, Ford Heights and Sauk Village.”

“More than 17 percent, or 12,856, of all Chicago-area homes in the foreclosure process are ‘zombies,’ properties that have been vacated but have yet to be repossessed by lenders, according to RealtyTrac. Compounding the problem, it takes an average of 828 days—more than two years—for a home to go through foreclosure in Illinois, the fourth-longest among all 50 states.”

“A turn down its side streets in Washington Park, Englewood, West Englewood and Back of the Yards reveals the impact of decades of poverty and neglect, compounded by the housing crash. Blocks with a half-dozen board-ups or more are common. Sitting in between many are vacant lots, often overgrown and strewn with garbage. ‘Look at that poor person trying to sell that house. I mean, are you kidding me?’ says Cook County Commissioner Bridget Gainer, pointing out a small frame house listed for $29,900.”

The Columbus Dispatch. in Ohio. “After roaring back from the dead, the housing market appears to be quieting down. Home sales declined in central Ohio and throughout the nation in October. Experts attribute the low inventory level of the past year to several things, including homeowners nervous about moving up after the housing crisis or being unable to sell because they owe more than their home is worth.”

“One expert says that rising prices contributed more to the sales decline than did a low inventory. ‘Prices have reached a point where buying a house isn’t the great deal it was 18 month ago, so fewer people are buying,’ said Richard Green, director of the Lusk Center for Real Estate at the University of Southern California.”

From WOSU in Ohio. “The Central Ohio real estate market has seen its ups and downs over the past 10 years. Prices peaked seven years ago, then plummeted when the housing bubble burst. Now sales and prices are on the rise – raising fears of another bubble. One area of concern: foreclosed properties still left over from the recession. Bank repossessions in the Columbus metro area have nearly doubled this year. Those properties soon will be for sale.”

“RealtyTrac’s VP Daren Blomquist worries about a potential bubble caused by outside investors who may overpay for the foreclosed properties. ‘It could be creating a sort of a bubble. It’s not the same sort of bubble that we saw in the last housing boom and bust where that bubble was facilitated by loose lending…This is a totally different phenomenon in many ways,’ Blomquist said. ‘But it could be pushing prices up to higher than they really should be.’”

From KCRG on Iowa. “Mayoral challenger Greg Hughes is losing his house to foreclosure and a sheriff’s sale. The light blue-colored, two-story where Hughes has lived since boyhood, will be sold to satisfy debts at a Linn County Sheriff’s sale on Dec. 10. Hughes called the move to let his house go a ’strategic’ one designed, in part, so he does not have to pay two people back to whom he owes money, he said. As for the possibility of a bank losing money on his house or his debts, Hughes said, ‘We don’t feel sorry for the banks. Look at the bailouts they got. … They have insurance for this kind of stuff.’”

“Hughes said he’s likely to rent an apartment after the December sheriff’s sale of his house, which he said he’s lived in for 47 of his 56 years. Hughes said he’s ‘not ashamed’ of the foreclosure of his house now and of his bankruptcy a year ago. ‘I just did what I had to do,’ he said. ‘… Just like anybody else.’”