Housing Slump Means Tough Times for Timber
With much of timber consumption based on new housing and new housing starts down by an estimated 50%, it’s a tough time for the timber industry. “We are in the midst of the steepest two-year downturn in lumber consumption in the history of the industry,” said Butch Bernhardt, director of information services for Western Wood Products Association. Composite lumber prices at Random Lengths show some of the lowest lumber prices in nearly two decades. Bernhardt said that total U.S. lumber consumption was at an all-time record of 64.3 billion board feet in 2005. By 2007, that dropped to 52 billion board feet, he said, with the 12 billion board food decline equal to the total annual lumber production of Oregon, Washington and Idaho combined. Bernhardt added that the current situation doesn’t match that of the early 1980s, when 60% of the West’s mills shut down. At that time, there were 1,000 mills. The year 2007 started with 210 mills among the association’s 12 Western states, and he expects that number to go below 200 this year. (www.capitalpress.info)
Capital Press Agriculture News (3/21/08); Elizabeth Larson
[Return to top]
Investors Rode Housing Boom, and Now Many Are Going Bust
Real estate investors in San Diego who are now in trouble have some things in common. Most bought at the peak of the market and several worked in real estate themselves. In 2003, Stacci Gemigniani bought a two-bedroom, 1,100-square-foot house in City Heights for about $295,000. The next year she got her real estate license and purchased three more homes in the succeeding eight months — two condos and a house — for about $1 million combined. Since October, she has lost all four to foreclosure. Pamela Khamo began a career as a real estate agent in 2002 after selling her coffee shop. As the housing market heated up, so did her commissions and by 2005 her annual income was $360,000. She had begun buying investment properties a year or so earlier, favoring new condo projects in downtown San Diego. In all, she ended up with 13 properties at the peak. Income from renting the properties fell far short of covering the mortgages, but the commissions she earned on the purchases helped offset the rental shortfall, she said. Things started to unravel early last year. The slumping real estate market cut her income to $180,000, she became ill for a time and her adjustable mortgages started to reset from low teaser rates to higher rates — sometimes doubling her monthly payments. She scrambled to refinance and sought loan modifications from banks, but lenders had tightened standards and wanted more equity in the properties than she had. Khamo filed for bankruptcy in February and expects to lose all of the properties. (www.signonsandiego.com)
San Diego Union-Tribune (3/23/08); Mike Freeman
[Return to top]
Bernanke’s Own Home on Capitol Hill Shows Housing Boom and Bust
Federal Reserve Board Chairman Ben Bernanke’s four-bedroom, 2,600-square-foot house in Washington’s Capitol Hill area may not be worth any more than he paid for it four years ago. The value of the home, which was purchased for $839,000 in May 2004, only a year before values peaked in the area, “probably went up to $1.1 million and it’s probably back down to $840,000,” because prices in Washington just a couple years ago “got out of control,” said William Wheaton, an economist at MIT. Home values in the District of Columbia were up 96% in the five-year period ending with the third quarter of 2007, the second-fasted pace in the country after Hawaii’s 100% appreciation, according to figures from the Office of Federal Housing Enterprise Oversight. Now, the nation’s capital is no longer insulated from the downturn, with the median home price on Capitol Hill last year falling to $545,000, down from $550,000 a year earlier. “Nearly all the Hill stumbled last fall,” said Joel Nelson, an agent with Keller Williams Capitol Property. “There were people who feared in 2005 that things on the Hill would just collapse like they did elsewhere in the country, but I think it’s better described as reaching a plateau.” Still, values in exclusive Washington neighborhoods such as Georgetown and Cleveland Park have held up better than in other parts of the city or elsewhere in the country. (www.bloomberg.com)
Bloomberg.com (3/20/08); Brendan Murray
[Return to top]
Amid the Gloom, Hope Finds Place
At the peak of the housing boom in Minneapolis-St. Paul, Twin Cities Habitat for Humanities had no inventory of lots and “couldn’t even talk to people about purchasing land, it was so competitive,” said Sue Haigh, the nonprofit organization’s president. At their peak, lots in suburban Chaska cost more than $60,000, but in the past year Habitat has been able to buy them for $45,000 and $50,000. In Hopkins, Habitat is buying two more traditional single-family lots from the city for $75,000 each, down from the list price of $89,000. The nonprofit and others like it are attempting to lock up as many lots as they can at today’s lower prices before the market rebounds. (www.startribune.com)
Minneapolis-St. Paul Star-Tribune (3/23/08); Jenna Ross
[Return to top]
Grand Rapids Housing Market Begins to Stir
On the edge of the spring selling season in Grand Rapids, Mich., home owners, agents and investors are asking whether the market may be finally pulling out of its deep funk. Home sales inked in the first two months of the year in the area were up more than 7% from a year ago. Single-family home sales alone were up 10%. Much of the sales fervor is being ignited at the lower end of the price range, and agents anticipate it will spread. “The market always starts from the bottom up,” said Sue Kazma-Hilton, a broker-owner of Re/Max Real Estate Professionals. “We should be very optimistic that we could see a rebound in middle-income housing this year.” Keller Williams agent Cheryl Grant said that this year is starting off strong. “Typically, the first quarter is slow,” Grant said. “If you do three sales, for me, that’s not bad. But my gosh, I’ve jumped to eight in the first quarter.” The number of days a home sits on the market is falling too, she said. Foreclosures and job losses that helped push the 2007 inventory to 12,000 homes on the Grand Rapids area market resulted in low-priced properties that are finally getting snapped up, Kazma-Hilton said. Of the homes sold in January and February, more than 27% of them were priced below $60,000. A year ago, only 11% of sales were in that price range. (www.mlive.com)
mlive.com (3/23/08); Cami Reister, Grand Rapids Press
[Return to top]
Slump in Housing Spills on Suppliers
Shelter Systems, a Westminster, Md. company that makes roof and floor trusses, has seen its employees shrink from 220 in 2005 to 90 today. With permits for new residential units in the Baltimore metropolitan area down 45% last year compared with 2005, according to the Baltimore Metropolitan Council, there has been a lot less demand for trusses, windows, doors, carpeting, countertops and everything else builders need. It’s not only that work is scarcer, said Bernard Markstein, senior economist for NAHB. Suppliers are also making less money — or even taking small losses — on the jobs they’re landing. “It’s been a squeeze on home builders, and the home builders have translated that squeeze on their suppliers,” Markstein said. “They say, ‘Look, I can’t pay these prices.’” Some material prices have plummeted. Lumber prices dropped from $475 per 1,000 board feet in the middle of 2004 to about $238 for the same amount in mid-March, he said. But the price of asphalt is rising, because it’s made from petroleum and requires gas-guzzling equipment to lay down. Pavement contractors are stuck between a rock and a hard place: penny-pinching builders and home owners on the one hand, and on the other, material prices jumping along with oil. (www.baltimoresun.com)
Baltimore Sun (3/20/08); Jamie Smith Hopkins
[Return to top]
|
