Thursday, February 17, 2011

Housing Crash Now Hitting Markets That Remained Stable After Bubble Burst

The housing crash is now spreading to cities once thought to be immune.
The bubble markets, where builders, buyers and banks ran wild, began falling first, economists say, so they are close to the end of the cycle and in some cases on their way back up. Nearly everyone else still has another season of pain.
The above is from a recent NYT article that tracks what's happening in Seattle, and quotes Stan Humphries, chief economist for housing site Zillow:
Mr. Humphries estimates the rest of the country will drop a further 5 and 7 percent as last year’s tax credits for home buyers continue to wear off.

“We went into 2010 feeling gangbusters, thanks to Uncle Sam,” Mr. Humphries said. “We ended it feeling penniless, with home values tanking.”
Another 5-7% decline in the C'ville area may be the best case scenario.

The article highlights underwater sellers: 
Megan and Ryan Dortch tried to sell their one-bedroom Eastlake condo for $325,000 two years ago. They rejected an offer of $295,000 as inadequate. A year later, they relisted it for $289,000, then $279,000, which was less than they paid. Without a sale at that price, they could not afford to buy a place big enough for them and their new baby. 
They have given up on real estate. They are renting out their old apartment at a small loss every month, and living in a rented house.

Add to the perils of the current market:
But whenever the market finally does pick up, all those accidental landlords will want to unload, putting another burden on the market. “So many sellers are waiting in the shadows,” said Redfin’s chief executive, Glenn Kelman. “The inventory is going to expand and expand and expand. I don’t see any basis for significant price increases.”
And from a related article--the following resonates with familiarity: 

"There is no such thing as a market price that cannot fall," writes David Leonhardt in his NYT piece, from which the above was excerpted: "Seattle's Foreseable Housing Bust,"

All of this sounds like the Charlottesville Albemarle area, albeit on a larger scale.  Buckle up.

Related:
Is the NAR Inflating Home Sales By 15-20%?
Sell Now: Local Realtor Warns Bubble Prices Won't Be Back Until 2023

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