The Housing Bubble

The Orlando Sentinel reports from Florida. “During Christmas week last year, Robert Cook and his wife, Karen, rejoiced when they learned they had qualified for a government-sponsored mortgage reduction that would help them keep their home. More than eight months later, they still have no mortgage deal, and they fear they will lose the Altamonte Springs townhome they purchased in 2006 unless they can cut their principal and get out of their adjustable-rate mortgage. ‘You weren’t dealing directly with the state of Florida,’ said Robert Cook, 74. ‘You were dealing with this group that only answers the phone. If they had just acted interested, that would have been doing good. None of them seemed to understand — not one person.’”

“The couple are now able to handle their monthly payments of $416, an amount that doesn’t include property taxes, condominium fees or insurance. But Cook said he believes it’s inevitable the payments on their adjustable-rate mortgage will increase to the point they cannot afford them. Cook said it’s hard to imagine that he might eventually lose his home while the state faces the prospect of tapping only a portion of foreclosure-relief funds. ‘It’s almost inconceivable … but it could happen,’ he said.”

The Tribune Live in Pennsylvania. “Pat Cupido and her husband refinanced their home in Jefferson Hills 11 years ago to pay off debts and help their daughters financially. But they couldn’t keep up with the $1,800 monthly payments when Cupido lost her civilian job with the Army Reserve. At one point, she said, her attorney asked about the federal Home Affordable Modification Program. ‘‘Billions of dollars were given to the banks to help people like her,’ Cupido, 71, remembered her attorney telling the representative.”

“But Cupido was disappointed to hear that the program known by its acronym, HAMP, couldn’t help. She and her husband, living on Social Security, did not qualify because their income is too high. A new servicer took over Cupido’s loan on Sept. 1. ‘I’m very pessimistic about everything,’ she said.”

The Jackson Hole News & Guide from Wyoming. “Of all the homes in Teton County, 43 percent are vacant. Half the jobs in Teton County are in retail or in hospitality — the two lowest-paying sectors of the county’s economy other than mining, which employs three people. The high vacancy rate of homes in the county is the result of second-, third- and fourth-home owners, said the state’s top economist, Wenlin Liu. For the state as a whole, only 15 percent of homes sit vacant. Even among rental units, 19 percent of Teton County’s have no inhabitants, compared with the state average of 8 percent.”

“Contrary to popular belief, within the borders of Teton County, private property covers only 2.2 percent of the land.”

The Salinas Californian. “Home prices in Monterey County took a tumble in July, with the median price for a single-family home falling 7 percent, according to the Multiple Listing Service. The market is still very active and the supply is increasing, which could be a factor in pricing pressures. But demand also remains high. Given the bleak picture of income levels needed to buy homes, who are these buyers? ‘Cash buyers are edging out those who would opt to putting down a 5 percent down payment,’ said Sandy Haney, executive director of the Monterey County Association of Realtors.”

“Many of these cash-in-hand buyers are off-shore, particularly from China, Haney said. The attraction is first and foremost Chinese citizens cannot own property. They like the United States, and want to eventually have their children grow up here. Call it a pre-immigration move.”

The Strait Times on Singapore. “Mr Chia Boon Kuah, president of the Real Estate Developers’ Association of Singapore called for more dialogue between developers and the Government as the industry goes through ‘challenging times.’ He pointed to the swelling stock of unsold units sitting on developers’ balance sheets. Banks, which give out loans to developers and home buyers, are increasingly concerned, too.”

“Mr Alan Cheong, research head at Savills Singapore, said that while developers are concerned about how a slowing property market could affect the economy, the Government’s primary concern is to ensure financial prudence among borrowers. ‘The measures could have been calibrated at too high a level,’ noted Mr Cheong. ‘Singaporeans are put off by the total debt servicing ratio and foreigners are not bringing in the money because of the additional buyer’s stamp duty. Money is flowing out.’”

The Central Queensland News in Australia. “Chris Allen from Gladstone Designer Homes said the past 18 months have been the hardest he’s experienced in 15 to 20 years. He said high land prices combined with a large number of new investment houses built during the 2011 housing boom led a housing glut and a drop in approvals. But now investors have deserted Gladstone and land has dropped $60,000 from an average of $260,000. ‘Now that the land has come down, it’s made it more affordable and people can do a nice house for under $500,000,’ he said.”

“Gladstone president of the Urban Development Institute of Australia, Andrew Allen said property prices had corrected from an all-time high to a more sustainable level. ‘We saw that demand level off and supply caught up to demand, and in many cases particularly in the apartment and townhouse market, supply overtook demand,’ he said. ‘In terms of housing approvals, the reason that they dropped so much was that they were coming off a very high base. 2012 and 2013 saw an enormous number of investment housing approvals. That investment housing has slowed dramatically.’”

The Telegraph in the UK. “The summer is over for the UK’s frenzied house price growth as new data shows a drop in demand for the first time since January. The pace of growth has been ferocious over the last 12 months, particularly in London and the south-east, boosted by domestic and overseas wealth and a lack of supply. London’s performance has rippled out into the southern regions, as families move out into the home counties, cashing in on their London homes and searching for value for money.”

“‘London seems most vulnerable to any downturn and certainly the bubble (if there was one) was in the capital. I think you can already hear the hiss of air escaping,’ said Henry Pryor, high end estate agent. ‘The volume of emails I am getting from estate agents advising of price reductions or of ‘motivated sellers’ is what we saw when the market last turned.”