The Housing Bubble

The Palm Beach Daily News reports from Florida. “The number of demolition permits and new-home building permits issued by the town has soared over the past couple of years — and most of those are for projects on the North End. The frenzy has left many would-be home buyers and spec developers struggling to find suitable properties. ‘I note that (tear-down houses in) the current spec inventory — few that there are — are priced at or above $1,200 per square foot. Some of the new ones already announced by other brokers are well above $ 1,300 per square foot,’ said the Corcoran Group’s Bill Yahn. ‘To reward the developer for his effort and risk, a finished home on a $3 million site would likely be priced approaching $7 million. New homes priced in the $6 millions may become a thing of the past after 2015.’”

The Pioneer Press in Minnesota. “Home builders, consider yourself warned. A report commissioned by the Metropolitan Council says there are enough single-family homes in the metro area right now to last until 2040. The report says that aging baby boomers, fewer households with children, and changing tastes will flip the housing market around: More people will live in apartments and townhomes in transit-friendly developments. ‘I am giving communities the heads-up,’ said the author of the report, Arthur C. Nelson, professor of urban planning and real estate development at the University of Arizona. ‘I am telling them not to plan for any more of these.’”

“But they certainly are. Developers in Dakota, Washington and suburban Ramsey counties are building — or planning — thousands of the homes that Nelson says will become obsolete. The report is controversial because, if true, it means a glut of these homes will force down their value. John Lockner sells homes in Woodbury for RE/MAX Results — and sales are booming. ‘As long as there is market demand, the single-family home is what builders will be wedded to,’ said Lockner, a former president of the St. Paul Area Association of Realtors.”

The Arizona Republic. “Metro Phoenix’s housing market continues to slow. Sales and prices dipped slightly in September, according to the Arizona Regional Multiple Listing Service’s latest Stat report. What’s particularly interesting is the median price of houses listed for sale during September was $224,800 compared with a median price of $215,000 in August. Could it be that prices will tick up a bit in November?”

“‘There were no surprises in September,’ said real-estate analyst Tom Ruff of the Information Market, a division of ARMLS. ‘Home prices are stable, and anticipated declines in October can be attributed to modest downward pricing pressure as well as seasonal patterns.’”

The Deseret News in Utah. “While the overall Utah economy has bounced back admirably since the depths of the Great Recession, the local housing market has yet to rebound to prerecession levels, a new study published by the University of Utah’s Bureau of Economic and Business Research showed. The report found that the Beehive State experienced the slowest housing recovery of any post-World War II cycle, with residential construction having only recovered 55 percent.”

“‘This was unlike any other cycle,’ said Jim Wood, executive director of the bureau. ‘In no other housing cycle have we had housing prices decline. ‘We’ve had one or two years separated with years of growth, but we haven’t had a declining year since the 1960s. In terms of new residential construction, the prerecession peak was clearly too high, but the subdued demand and slow recovery is worrisome. Thirty-three of 50 states are down in single-family home (construction) this year.’”

Steamboat Pilot in Colorado. “A year ago, the Steamboat Pilot & Today’s classifieds section listed a one-bedroom apartment available for $700 per month, a two-bedroom for $1,150 and a three-bedroom, two-bath home for $1,550. The prices weren’t rare finds but representative of 40 other listings, including those at Mountain Village and large complexes across town. The rental landscape today is far bleaker for the prospective tenant, and last Sunday only six properties were listed for rent in Steamboat — including one-bedrooms for $800 and $1,200 apiece, two-bedrooms for $1,400 and $1,600 and high-end three- and four-bedrooms for $3,000 and $2,150 each.”

“Steamboat Springs City Council member and economist Scott Ford said while he didn’t disagree with the idea that the rental market is tight, the survey results may only represent a small sample of rentals. ‘This could be the tyranny of small numbers,’ Ford said.”

The Centreville Independent in Virginia. “Last month I ended my article stating that inventory is up and it is a great time to buy. I’m going to continue with that theme for October. The number of homes on the market in Centreville, Clifton and west Fairfax (22033) has increased across the board since April of this year. I have a chart on my website that illustrates these data for the number of Active Listings quite well. It is dramatic with the uptick in inventory that began with the entry of the Spring market and continued increase as more people placed their properties for sell and the demand for these properties decreased.”

“With more homes on the market and Sellers waiting longer to have their properties sell, right now is a fantastic time for a Buyer to get into the market. Anecdotally, I had the honor of taking one of my military relocation clients out in the Springfield/Kingstowne area this weekend and we had over 60 properties to choose from in their price range. It is a nice change to not be in a multiple offer situation with a buyer.”

The Greenwich Time in Connecticut. “After a strong showing in 2013, the real estate market in Greenwich’s backcountry has hit a slump this year, as houses linger on the selling block for longer periods of time and the number of sales declines. Backcountry homes on the market at the end of the third quarter were active for an average of 295 days, up 40.5 percent from 2013, when the average time was 210 days, according to a third-quarter report released by Houlihan Lawrence’s Greenwich office.”

“The glut of homes is likely due to the strength of the backcountry market in 2013, said David Haffenreffer, manager of Houlihan Lawrence’s Greenwich brokerage. ‘Any time you have a strong year in sales — and you saw that with the number of units that sold last year — you’ll see new inventory come to market, because sellers think it’s a good market for their home,’ Haffenreffer said.”

“Julianne Ward, a real estate agent with Berkshire Hathaway HomeServices, said she thinks buyers are willing to take their time, waiting for price cuts before diving in. ‘If you really want to sell your house, you can in any market and at any time. You just have to be flexible with your buyers, because the buyers are the ones who are making the market, and if they don’t like it at a particular price, they’re not going to buy it. And until they like it, it’s going to sit there,’ Ward said. ‘It used to be there was an overabundance of buyers and not enough houses, and now it’s the opposite,’ she said.”