Call It Variety, Or A Glut, Either Way Sellers Have An Issue
It’s Friday desk clearing time for this blogger. “A Dallas Morning News analysis of residential foreclosures shows the housing mess extends across North Texas – from high-end urban settings to far-flung suburbs. On the plus side for buyers, foreclosures have cut into housing prices. ‘There’s a lot of deals out here,’ said Valerie Daniels, who said she paid $171,000 14 months ago for her home on Ginger Trail. The 4,000-square-foot foreclosure was appraised then at $250,000.”
“Ms. Daniels, a mortgage banker in DeSoto, said lenders are offering reclaimed houses in her neighborhood for 25 percent to 50 percent below appraised value.”
“Tiffany McAdoo thought she saw a deal, paying $189,000 for a foreclosure on Gardenia Street, a five-bedroom, 3,800-square-foot house appraised at $265,000. But a foreclosure across the street, at just over half the size of her home, is listed at $139,000.”
“‘I’m constantly getting low-ball offers,’ said Ms. McAdoo, a mortgage broker now working at home. ‘I’m basically stuck until the market changes.’”
“Vicki Steele lost the home she hoped to live in with her two children. Ms. Steele said she decided to become a homeowner when she got a job and was no longer eligible for federally subsidized housing. She said she fell behind the payments when the interest rate went up from 8.8 percent to 11.5 percent, pushing her monthly payment from $853 to $1,300.”
“‘They think there’s a sucker born every minute and I looked like a sucker,’ she said of her lender. ‘I tried something for the benefit of my family but it didn’t work.’”
“Joe Osgood is preparing to move his family of five from their home, which is set to be sold on the Hinds County Courthouse steps in two weeks. This was Osgood’s first attempt at home ownership. He got an adjustable rate mortgage 5 1/2 years ago with a monthly note of $496.”
“Osgood said he knew the rate would adjust, but he never thought it would double. ‘You know they aren’t going to tell you that, because then you aren’t going to buy,’ he said.”
“A home-price index released Tuesday shows that Denver home values declined 4.5 percent between December 2006 and December 2007, the worst drop since a 5 percent annual decline in December 1988.”
“Filomena Carrillo lives in a neighborhood that has been hit hard. She bought her Aurora home in the fall of 2004 for $197,000. Today, she estimates she would be lucky to get three-quarters of that amount.”
“‘I’ve tried to refinance for a year now,’ Carrillo said. ‘I have big problems because they told me foreclosures nearby are selling for $150,000 to $136,000.’”
“The Springfield housing market has a wide variety of homes for sale, in all shapes, sizes and price ranges. The problem is that few of them are moving.” ”
“‘This is almost every day; people are slashing prices like you wouldn’t believe,’ said Richard Jones of Carol Jones, Realtors. ‘I have not seen the price reductions outnumber the new listings, thank God, but I’m waiting for that day.’”
“Among the properties being listed at below market value is the 13,000-square-foot home at 3769 E. Eaglescliffe Drive. Listing agent Indy Wallace said the home’s $1.9 million list price is well below the $3 million it cost to build the home for original owners.”
“Call it variety of selection. Or a glut. Either way, Triangle home builders and sellers have an issue: Homes are selling more slowly, and that has caused a buildup of inventory.”
“‘It’s more of a buyer’s market than a seller’s market right now,’ said Jill Flink, a broker in Raleigh. ‘The sellers have had a little bit of a slow time, and they’re much more interested in selling than they were before.’”
“So can you lowball ‘em? Sellers want to sell, Flink said, ‘not take a blood bath.’”
“Fannie Mae, the biggest source of financing for U.S. home loans, told lenders it will probably ban their use of appraisals by in-house employees or those arranged by brokers.”
“About three quarters of residential mortgage appraisals are arranged through brokers who only get paid if a loan closes, said said Jonathan Miller, CEO of Manhattan-based appraisal company Miller Samuel Inc. He called the practice ‘laughable’ because it creates a financial incentive for mortgage brokers to push appraisers toward higher valuations.”
“American International Group Inc., the world’s largest insurer, fell in New York trading after reporting the biggest quarterly loss in its 89-year history. The pretax writedown of $11.1 billion wiped out operating profit. AIG also had another $3.27 billion of losses before taxes on impaired holdings in its investment portfolio.”
“AIG guaranteed $61.4 billion in collateralized debt obligations that included subprime mortgages as of year-end.”
“Business terms have a long history of making a mark on the vernacular. Thus, it was probably inevitable that the word ’subprime’ would make a splash. Now, subprime is repeated many times daily, often with a sense of dread for fear the contagion will spread.”
“As a word, it’s become something of a celebrity. In fact, the American Dialect Society last month picked subprime as its ‘Word of the Year,’ underscoring just how far the once obscure real-estate term had barged into the mainstream. Some students, it seems, now describe about poor performance by saying they ’subprimed a test.’”
“‘When you have investment companies losing billions of dollars over something like bundled subprime loans, then you have to consider whether it’s important,’ said Wayne Glowka, dean of arts and humanities at Georgia’s Reinhardt College. ‘You probably also want to pay off that third mortgage.’”
“Foreclosures are on the rise in Douglas County and the rest of Oregon. Two years ago, Christina, 26, and her husband purchased a $192,000 home in west Roseburg with two subprime loans, set up as interest-only payments for the first 10 years. Based on their income, they did not qualify for a single mortgage and allowed their broker to ’state’ their income — inflate it on the loan applications.”
“‘I just really wanted the house,’ Christina said.”
“A few days ago, I heard a talk show host discussing the recent deluge of single-family home foreclosures. He seemed to agree with everyone else that the mortgage crisis was caused by financial institutions that gave out too many mortgages to too many unqualified applicants.”
“The talk show host went further than the rest of the pundits, though. He insisted that none of the blame should fall on those who had borrowed money to buy houses, which they could not afford and were about to lose. It was not their fault that they were drowning in debt. It was the fault of the evil moneylenders.”
“Then he abruptly changed subjects and said something that took my breath away. All banks, he demanded, should be banned from issuing credit cards. Why? Because credit allows us to buy things that we cannot afford, and people should not be subjected to temptation.”
“Good grief, I thought. Life without … temptation.”
“One thing pops into my head. I was young and had just moved from the Midwest to New York for my first full time job. To get to work, I had to walk past a bakery with prettily arranged pastries, pies, and cakes in the display window. The smells! My mouth watered. My taste buds threw up little white flags. I surrendered.”
“That I succumbed to it did not hurt people starving in Ethiopia. It did not topple empires. It would not, however, have felt good to a man suffering from diabetes. For him, surrendering to the enticement of a peanut butter cookie could trigger heart disease, blindness, kidney damage, stomach problems, and heavens knows what else.”
“If he had eaten one cookie, or three cookies, or ten cookies, according to the blame-game philosophy of the talk show host, it would not have been the diabetic’s fault that he landed up in a hospital … or dead. No indeed. It would have been the fault of the bakery. The bakery, you see, had provided temptation.”
“Similarly, department store windows should be covered with heavy draperies so that young secretaries won’t be tempted to buy pretty clothes; motorcycle shops should be forbidden from displaying Road Kings lest they attract the eyes of mid-life-crisis prone males; and brides should be prohibited from reading magazines advertising weddings gowns that they might, or might not, be able to afford.”
“We scrimp. We save. We work three jobs. We count our pennies. We add them up and wait until we can afford to buy it, whatever ‘it’ is. Or, at least, that is what some of us do.”
“Others buy what they want when they want it, whether they can afford to or not. And when they lose it, they blame the bank. They blame the credit card company. They blame fate. They blame temptation.”
“Silly, isn’t it? When we have the choice to be responsible or not …To blame the peanut butter cookie.”