The Housing Bubble

The Winston-Salem Journal reports from North Carolina. “For the first time in several months, the Winston-Salem MSA did not have the lowest year over year price increase of the state’s five major metro areas. By comparison, the average sales price of existing homes rose 17.6 percent year over year to $187,385 in May, according to the report from the Winston-Salem Regional Association of Realtors. The association reported 560 homes were sold in May, up 11.6 percent from 502 in April, but down 18.4 percent from 686 in May 2013. The statistics are based on numbers from the Triad MLS and include selected housing markets outside Forsyth. ‘We saw a large number of investors enter the market in the spring of 2013, driving our total units sold artificially high,’ said Glenn Cobb, the association’s chief staff executive.”

The Fayetteville Observer in North Carolina. “In early January, the executive VP of the Fayetteville Regional Association of Realtors predicted the local housing market would perform ‘a little better’ this year than in 2013. Based on those high hopes, Zan Monroe estimated that 6,000 properties would close - 4,200 resales and 1,800 new construction. Over halfway to year’s end, the numbers are falling short of that projection. ‘New construction sales have slowed down, and for the resale market, that’s wonderful news,’ said Realtor Doug Nunnally, a former president of the Realtors association. ‘It may be that the builders are slowing down. We have over 4,600 houses on the market right now. That’s a lot of houses.’”

“Wendy Harris, broker and owner of Team Harris Real Estate, said the new construction market remains healthy and, despite an oversupply of resales, the sales numbers on existing homes are improving. Judy Capps, an associate broker with Townsend Real Estate who works only in the existing homes market, put it this way: ‘It’s still a buyer’s market, of course. The statistics say that we’re up compared to new houses.’”

The Herald Mail in Maryland. “The diagnosis is rather clear: Washington County’s housing market in the first six months of 2014 has been on a path back toward healthy conditions. ‘Hopefully, the housing market is going to continue to forge on. We are by no means fully recovered. It’s still a fragile market. There’s still quite a few foreclosures trickling out,’ said Nancy Allen, president-elect of the Pen-Mar Regional Association of Realtors. ‘The key word here is, ‘jobs’, ‘jobs’, ‘jobs’. We need to have them. We need to do whatever we can to attract business and increase jobs.’”

“Dan Plombon, a Realtor for Mackintosh Realtors in Hagerstown, noted that more homes have been coming on the market. MRIS data shows there were 917 active listings here in June, compared to 742 a year ago. Whether that’s good for the market ‘depends who you talk to,’ Plombon said. ‘To me, from the different people you talk to — appraisers and such — they’re saying if there’s 700 or so in the market at any given time, it’s good,’ he said. But if the inventory rises to, say, 1,000 or more, the average price can drop because buyers have more properties from which to choose, he said.”

“Bob Ernst, regional president of Susquehanna Bank’s Hagerstown and central Maryland territories, said he wonders whether those who lived through the Great Recession of 2007 to 2009, will be as affected by it over the decades as have been those who lived through the Great Depression of 1929 to 1939. ‘In 2008, when the housing market took its shot in the head, a lot of people who had invested a lot of money and sweat equity into homes in the belief that the value of homes would always go up, got a sudden shock and realization that that sort of expected truth wasn’t always right,’ Ernst said.”

“‘My question is, was that shock great enough to turn enough people away from the desire to own a home long term, that they will really have a hard time coming back into the real estate market? Or, will their memory be short enough that when everything returns to normal — whatever that is — will they forget about that and come back into the market and say, ‘Yeah, I do want to be a homeowner?’”

“‘Or,’ Ernst continued, ‘will there be substantial numbers of folks who will say, ‘No, I’m just going to rent?’”

The Baltimore Sun in Maryland. “The market for luxury homes has struggled since the recession. In the Baltimore region, more than 560 homes listed above $1 million sat on the market in June, but just 36 homes in that range sold, according to RealEstate Business Intelligence. On the Eastern Shore, there were nearly 300 listings above $1 million in June. Number of sales? Seven.”

“Auctioneers said they are starting to get more calls from owners who have held off, growing impatient as they wait for a buyer. These sellers may also be more willing to accept that prices won’t return to the pre-crash heights: 1234 Cherry Tree Lane in Annapolis, listed in 2011 at $15 million, went to auction in May and brought $4.2 million after settlement in July.”

“‘It’s all about price,’ said Joe Cooper, president of Alex Cooper Auctioneers, which sold a five-bedroom Colonial brick home in Owings Mills at auction for more than $1 million in June, just slightly above what the original owner paid in 2006. ‘We try to explain to people what they might get. By doing that, we eliminate some people’s dreams, but we sell their properties.’”

“A Harris Creek estate offered for online auction with a reserve last fall failed to sell. A 3.27-acre waterfront property in Worton advertised with a suggested $950,000 opening bid drew no serious buyers to its May auction. ‘We were disappointed,’ said Joan Lessans, who said she and her husband had wanted to downsize and turned to auction when the 4,450-square-foot home didn’t sell via the traditional route. ‘It was puzzling. … It seems like it has to do with the market and what people are looking for today.’ Lessans said her family is enjoying the estate this summer, but the home, which has an indoor pool and tennis court, remains listed for $1.3 million. ‘It’s on the market … but we’re not going to auction again,’ she said.”

The Washington Post. “Depending on where you live in the Washington area, you’re either seeing homes sell within days or languish on the market for weeks or months. ‘There’s lots of activity in the market right now but buyers are also more confident that more homes will come on the market,’ says Ron Sitrin, a real estate agent with Long & Foster Real Estate in Washington. ‘Now the spring rush is behind us and the lack of inventory is less pronounced.’”

“Ida Kelley, a homeowner in Alexandria, listed her home for sale in mid-April and has waited in frustration for buyers to make an offer. Kelley, who has already relocated to Orange County, Calif., says that despite excellent marketing, few prospective buyers have even visited the home. The property was initially listed for sale at $885,000. Similar homes in the community have not sold in spite of the excellent location in a good school district, near commuter routes and shops, Kelley says. She recently dropped the price to $850,000 after an interim price reduction to $875,000 didn’t bring in a buyer.”

“‘It’s as if the buyers just disappeared,’ says Kelley. ‘We don’t know what to do.’”