Cooling of a Previously Hot Market
As a number of markets throughout the nation are affected by the housing crisis, some markets have remained able to continue increasing property values and achieve very speedy sales. Nevertheless, these markets do show some evidence of being affected by the overall slump. This is certainly true of Provo, Utah and other like cities. Even homes which would be expected to jump right off the market have remained without takers, much to the surprise of homeowners in these markets.
The market slide of 2006 had affected most homeowners in the country, yet other markets continued to see price increases. For instance, average property prices in Provo rose by a staggering 4% within a very short time period.
In markets that were previously hot, homeowners found themselves resorting to more creative sales tactics and having to offer concessions in an attempt to get their homes sold. Had it been one year earlier, there would be no problem selling these same homes in a few weeks, whereas today months go by while these homes remain on the market. In a desperate attempt to sell, homeowners have now slashed prices by even thousands of dollars, while still offering discounts for buyers willing to close quickly or work without an agent, thus allowing the seller to avoid commission fees.
It has become clear that despite the previously hot status of these markets, no market can be considered immune to the current crisis. Even those markets which have been blessed to maintain property value increases have found that the rate of these increases has begun to taper off. It is clear that they have now begun to lose steam. To compound the situation, the rapid sales pace has also begun to wane. The crisis of sub prime mortgages has resulted in more stringent loan restrictions. It is, therefore, not a stretch to understand that selling homes will be very difficult if potential buyers cannot obtain the necessary loans.
The economy, in most cases, has been the one factor which has not appeared to have affected these markets. Utah, for example, has an economy that has remained strong but this has done very little to stave off the stalling of the housing market.
Another market which was once red hot but now appears to be faltering is Seattle. While it is still quite far from the frantic freefell seen in other markets, the prices increases are noticeably just not as rapid as they once were. Property sales have dwindled since last year and even the rate of foreclosures has begun to increase over the past few months.
Nevertheless, experts still hold the view that Seattle should well be able to avoid a complete collapse, unlike certain other markets in the country. In particular, Seattle's apartment market seems likely to continue holding strong despite the likelihood that home prices will begin to settle at a point closer to reality. Though the number of properties on the market has definitely increased since last year, the volume of sales has continued to outpace markets in other states.
The state enacted Growth Management Act has been partly responsible for helping Seattle and most of Washington State to evade the collapse seen in most areas of the country. This act prevented construction project developments from reaching the rates seen in other states.
This gave Seattle and certain parts of Washington a great advantage. Markets which had experienced a rush of construction projects suddenly began to crash soon after completion of these projects. Newly completed projects where, therefore, left vacant without potential buyers; thereby, resulting in an increased rate of construction loan defaults.