Submitted by Anonymous on Sun, 06/03/2007 - 05:00.
Waterloo-Cedar Falls Iowa housing market escaped real estate bubble
The Cedar Valley did not experience the rapid increase in home prices some other areas of the country did. For the bubble to break, you have to have an oversupply of homes and a bad economy, and Cedar Falls did not have either one of those.
The Waterloo-Cedar Falls housing market took a step backward in the first quarter of 2007, and some of the warning signs of a slump are present. But most area experts agree the dip in the local market is nothing more than a blip on the radar.
The Waterloo-Cedar Falls metro statistical area (including Black Hawk, Grundy and Bremer counties) home values dropped 5.3 percent from the first quarter of 2006 to the first quarter of 2007, but the views are mixed on whether or not the area housing market is in trouble.
The first quarter drop in home values could be attributed to the winter ice storms and the cyclical nature of the business. Dave Page, president of Oakridge Realtors, agreed. "After the ice and snow, we saw a little cabin fever kick in," he said. "But now the market appears to be recovering."
The median sale value of homes in the Cedar Valley have historically risen at a fairly steady rate --- around 6 percent annually. The largest increase in sales price in the last 17 years was between 1996 and 1997, when home values rose by 9 percent. The lowest was a 1 percent gain between 2004 and 2005, a time when many other areas were experiencing the huge price gains due to subprime lending.
Other factors kept the Cedar Valley from forming a bubble. Unemployment levels have remained low and income is up, both of which could keep consumers out of exotic loans.
"Back in the boom days, just before we had the crunch in the 1980s, we had high unemployment because John Deere had just gotten rid of 10,000 people," said Reisinger. "Interest rates were as high as 17 percent, and those were all bad indicators for the housing market. We went all the way down to 800 sales in '82, but we just don't have any of those things right now.
"I think the builders are still remembering back to the '80s, so they're not coming in and mass building like they did back in those days."
Statistics for foreclosures are difficult to obtain, but the Black Hawk Abstract Co. tracked the total number of foreclosures in Black Hawk County, including commercial. The numbers showed an increase in average monthly foreclosures from 23 in 2005 to 29 in 2006. So far in 2007, the average number of monthly foreclosures has shot up to 33.25.
"The foreclosures are up all over," said Atwood, whose nonprofit organization counsels individuals with credit problems. "The subprime market has contributed to this."
All of the housing numbers were down in the first quarter for the Cedar Valley when compared to 2006, albeit not by a wide margin. Total permits for new homes dipped from 76 to 29. Total sales were down to 452 from 468, and the median price of the homes that were sold dropped from $108,600 to $107,100. The average days on the market for listed homes rose from 84 days in 2006 to 86 days in 2007.
The trouble with trusting statistics such as median house prices is that they don't factor in which segments of the housing market are being affected, said Keith Jones of Valuation Services in Cedar Falls.
He said the majority of the subprime lending was done on the "older housing stock, under $50-$60,000." As those homes are put back on the market by banks and other lenders at distressed prices, the median price of housing sales is dropping.
Jones attributes most of the slowdown in sales to market nervousness, saying buyers are reading too much into national stories and trends. "There is not a crisis in the market," said Jones. "Just a recognition that markets tend to cycle."
Source: http://www.wcfcourier.com/articles/2007/06/03/business/local/
fc979a46bad53cc6862572ed003949ab.txt
The Waterloo-Cedar Falls housing market took a step backward in the first quarter of 2007, and some of the warning signs of a slump are present. But most area experts agree the dip in the local market is nothing more than a blip on the radar.
The Waterloo-Cedar Falls metro statistical area (including Black Hawk, Grundy and Bremer counties) home values dropped 5.3 percent from the first quarter of 2006 to the first quarter of 2007, but the views are mixed on whether or not the area housing market is in trouble.
The first quarter drop in home values could be attributed to the winter ice storms and the cyclical nature of the business. Dave Page, president of Oakridge Realtors, agreed. "After the ice and snow, we saw a little cabin fever kick in," he said. "But now the market appears to be recovering."
The median sale value of homes in the Cedar Valley have historically risen at a fairly steady rate --- around 6 percent annually. The largest increase in sales price in the last 17 years was between 1996 and 1997, when home values rose by 9 percent. The lowest was a 1 percent gain between 2004 and 2005, a time when many other areas were experiencing the huge price gains due to subprime lending.
Other factors kept the Cedar Valley from forming a bubble. Unemployment levels have remained low and income is up, both of which could keep consumers out of exotic loans.
"Back in the boom days, just before we had the crunch in the 1980s, we had high unemployment because John Deere had just gotten rid of 10,000 people," said Reisinger. "Interest rates were as high as 17 percent, and those were all bad indicators for the housing market. We went all the way down to 800 sales in '82, but we just don't have any of those things right now.
"I think the builders are still remembering back to the '80s, so they're not coming in and mass building like they did back in those days."
Statistics for foreclosures are difficult to obtain, but the Black Hawk Abstract Co. tracked the total number of foreclosures in Black Hawk County, including commercial. The numbers showed an increase in average monthly foreclosures from 23 in 2005 to 29 in 2006. So far in 2007, the average number of monthly foreclosures has shot up to 33.25.
"The foreclosures are up all over," said Atwood, whose nonprofit organization counsels individuals with credit problems. "The subprime market has contributed to this."
All of the housing numbers were down in the first quarter for the Cedar Valley when compared to 2006, albeit not by a wide margin. Total permits for new homes dipped from 76 to 29. Total sales were down to 452 from 468, and the median price of the homes that were sold dropped from $108,600 to $107,100. The average days on the market for listed homes rose from 84 days in 2006 to 86 days in 2007.
The trouble with trusting statistics such as median house prices is that they don't factor in which segments of the housing market are being affected, said Keith Jones of Valuation Services in Cedar Falls.
He said the majority of the subprime lending was done on the "older housing stock, under $50-$60,000." As those homes are put back on the market by banks and other lenders at distressed prices, the median price of housing sales is dropping.
Jones attributes most of the slowdown in sales to market nervousness, saying buyers are reading too much into national stories and trends. "There is not a crisis in the market," said Jones. "Just a recognition that markets tend to cycle."
Source: http://www.wcfcourier.com/articles/2007/06/03/business/local/
fc979a46bad53cc6862572ed003949ab.txt
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