May 16, 2008

There Is Only One Place To Go From Where We Are

It’s Friday desk clearing time for this blogger. “Nassau’s foreclosure-related filings last month jumped 113 percent from a year ago. Broker David Farrell, who on Saturday took house hunters on his first Long Island Foreclosure Tour in Nassau, said the higher figures reflect the bigger price increases in Nassau home sales during the boom years.”

“People who bought high during the hot market of three and four years ago now see their property values falling and are walking away from houses with mortgages worth more than their homes, Farrell said.”

“‘Last year at this time, people would ask you about foreclosures and you’d say, ‘Yeah, there are dozens of foreclosures, but there’s no use to them because they’re basically priced the same as the house next door.’ Now, all of a sudden, it’s insane. We went to a house in East Meadow, where the house next door was the identical split at $549,000 and we had the foreclosure to the right of it and it was $429,000,’ he said.”

“‘We have a fact where people now say, ‘I have a house. I paid $600,000 for it, and my next-door neighbor is paying $429,000. What am I doing here?,’ Farrell said.”

“Last month, St. Lucie County saw 1,529 homes entering some stage of foreclosure, up from 174 homes a year earlier. Some novice investors have walked away from homes that were worth less than what was owed on them, said Brad Hunter, director of West Palm Beach-based Metrostudy.”

“‘Even though it’s not official at the national level, it sure feels like a recession down here in these parts. Some people are just giving the keys back to the bank,’ Hunter said.”

“High-end auctions have become more common in affluent areas of Atlanta, where owners aren’t necessarily financially strapped, but want an option that can unload properties quickly.”

“A developer will auction 36 acres in north Fulton County approved for 23 home sites. The minimum bid is $1.5 million, about what the owner said he paid three years ago. The last asking price, when the property was offered through a conventional real estate sale, was $3.6 million.”

“Owner Steve Williams hired an auctioneer after the property languished for six months with a real estate agent. ‘I’m looking down the road,’ he said. ‘I’m carrying a lot of inventory. I want to handle it now.’”

“Britons on the Costa del Sol are suffering a measure of the pain which the end of the housing boom is causing across the wider Spanish economy. Sarah Smart is facing losing the home she thought would provide for her retirement.”

“‘We bought our house four years ago when everything was booming and there was plenty of work,’ says Sarah. ‘We bought it as a pension really and things have dried up and we are waiting for it to be repossessed. Its been on the market for two years. It started out at 495,000 euros and its now down to 360,000 and still we can’t sell it.’”

“Thousands of new flats in the Czech Republic are waiting for owners. Bankers and real estate brokers estimate the number to be higher than 5,000. Analysts say the number of empty flats will increase in the years to come.”

“‘Demand for new homes is already falling. This is due not only to more expensive mortgages, but also to the reform which has raised costs,’ says Jaroslav Novotný, president of the Association of Real Estate Offices.”

“The Association of Real Estate Investment Companies organizes the Eight Turkish Real Estate Summit on June 4-5 at the Swissotel Istanbul. ‘Turkey’s real estate sector has developed within the last three years and it is continuing to grow. We see nothing to fear about concerning the growth of the sector. Istanbul will keep to be the star of the real estate. And also Turkey have a great real estate potential which guarantees the next 100 years,’ said Nurhan Azizoğlu, GYODER’s vice chairman.”

“Some NT$120 billion worth of new houses will be on sale from May 15 to June 15, a property market research firm said yesterday, dispelling fears that Taiwan’s housing market is facing a bubble.”

“Ni Tsu-jen, R&D director of My Housing, said in Taipei City, prices will continue to be at a high due to a lack of land and strong demand from mainland China real estate developers who have expressed tremendous interest in Taipei City’s housing market.”

“‘Taipei City will only see a rise in housing prices,’ Ni said. ‘Talks about a bubble are baseless.’”

“The real estate market on Guam slowed during the first quarter of 2008, compared to its performance during the same period last year, according to a report. The same report, however, noted that housing prices hit an ‘all-time high’ here on Guam, which is in stark contrast to the situation on the mainland.”

“Canada’s cooling real-estate sector is slowly moving toward a more balanced market - but there won’t be any bust like that seen in the U.S. following the subprime mortgage crisis, Scotiabank economist Adrienne Warren said.”

“‘First, home prices in Canada are not substantially overvalued,’ she pointed out. ‘Second, there is still little evidence of widespread speculative home buying that often accompanies the late stages of a housing boom.’”

“Manhattan meets the Prairies in a commercial-residential building on Broadway Avenue that developers are calling ‘hip’ and ‘contemporary.’”

“The LUXE, as it has been dubbed, is firmly aimed at the higher-end condo apartment market in Saskatoon, although Meridian partner Colleen Wilson says the starting price for 15 units is competitive with other projects, starting at around $450,000. In total, 24 condo units will be developed, with the three penthouse ’sky estates’ units likely priced at more than $1.3 million.”

“The company was working on plans for a building at least four storeys higher. However, the company backed off because construction costs are much greater for structural work the higher a building goes, partner Karl Miller said.”

“‘The (condo) pricing in Saskatoon at that time — a year and a half ago — was nowhere near where it is today,’ he said. ‘If we had known where the pricing was going for housing in Saskatoon we would have been fine to build that building. At the time, the indication was that pricing would never get to this level.’”

“The only thing everyone seems to be able to agree on, is that 2008 is certainly different from the previous two years in the real estate industry in Calgary. Record numbers of homes are for sale.”

“‘That clearly shows speculators who had been in the market are trying to sell now,’ says Don Campbell, who has written a couple of books on Canadian real estate. ‘There will always be ‘Chicken Littles.’ The market is cyclical, and it’s just taking a deeper breath right now.’”

“It’s becoming more difficult to sell your house in Tulsa and across the state. Kevin Gullett says he’s enjoyed living in his midtown home for about eight years, but for the last six months, Kevin has been trying to get someone else to do the same. ‘I have some big time medical bills and I’m not able to make the payments on it, so I’m selling it so I can get my equity back before foreclosure… I had two price reductions and I’m going to do another one here next week.”

“Kevin says he’s not alone. Many of his neighbors are also having trouble selling their houses. Realtor Darryl Baskin says the economy is part of the equation. ‘Things like the financing, the availability of funds, has changed. So where you have ready willing and able buyers, the able might not be there.’”

“The housing market is struggling and the economy is limping along at a snail’s pace. Not exactly the best time to launch a showcase of $1 million-plus homes, right? Actually, the timing is great, according to organizers of the upcoming Twin Cities Luxury Home Tour.”

“Jeff Schoenwetter, principal of an Eden Prairie-based luxury home builder, concedes that the housing industry is ‘definitely in a recession.’ Still, he’s confident that the darkest days for local homebuilders are in the rearview mirror.”

“‘History will prove that the summer of 2008 was the very best time to make a housing investment,’ said Schoenwetter. ‘The fortunate thing is there is only one place to go from where we are, and that is up.’”

“Construction of U.S. single-family houses in April dropped to the lowest level in 17 years. Lower prices and other incentives have yet to revive demand for houses, indicating builders will need to come up with even more discounts to attract buyers.”

“‘The trends are horrific,’ said economist Ian Shepherdson. ‘There’s just no reason things are getting any better. Why would you buy a house? Why would you spend money to buy a depreciating asset?’”

“The victimization narrative that is turning turbulence in the housing market into a morality tale involves borrowers victimized by ‘predatory’ lenders. The narrative remains murky because there is scant information about the percentage of currently distressed borrowers who were untruthful about their incomes or net worth when talking to lenders.”

“One symptom of the ‘crisis’ is that housing prices have fallen. Do young couples struggling to purchase their first homes concur with the sudden consensus that the decline in prices is a national misfortune?”

“The Economist reports: ‘Monthly payments on a typical house with a 30-year mortgage and 20 percent downpayment were 18.5 percent of the median family’s income in February, down from almost 26 percent at the peak.’ By this measure of housing affordability, the ‘crisis’ is welcome.”

“Are we to assume that last year, when housing prices were, say, 10 percent higher than they are now, they were exactly right? If so, why is that so? Because the market had set those prices, therefore they were where they belonged? But if the market was the proper arbiter of value then, why is it not the proper arbiter now? Whatever happened to the belief, way back in 2007, that there was a housing ‘bubble?’”




There’s Not Enough Buyers Out There

A report from the Idaho Statesman. “There was some good news for the Treasure Valley housing industry in April, but not enough to offset the bad news in industry figures. Part of the increase is simply the normal upward trend that occurs each spring. And this year’s growth hasn’t been enough either to reduce the number of homes for sale - the inventory rose in April - or to stop the decline in prices. Meanwhile, foreclosure filings continue to rise.”

“‘It’s going to continue to be a buyer’s market,’ said associate broker Shaun Tracy. ‘This (downturn) will eventually bring us back to affordability in the market, especially if you’re a dual-income home.’”

“An IdahoDataProviders report said there 1,498 new notices of default filed Valleywide during the first four months of 2008, a 138 percent increase over the comparable period a year ago. ‘And they’re just going to keep going up,’ said IdahoDataProviders President Charlie Nate.”

“Tracy said existing home sales continue to outpace new home sales strictly on price. ‘New construction is still priced too high,’ he said. ‘Somebody who can only afford so much is only going to go with what they can afford.’”

“One example was southeast Boise, where 43 of the 50 homes sold last month were existing homes with a median price of $225,000, compared with a median price of $479,900 for a new home in the area.”

“One in seven subprime mortgage loans in Idaho was in arrears during the fourth quarter of 2007, a survey shows. But notices of default did not begin going out in bunches in the Treasure Valley until the first quarter of this year.”

“‘They should have taken them (the homes) in ‘07, but waited until ‘08 because it gave them more time to liquidate them,’ said Ed Caron, president of Boise River Properties ‘Bankers don’t like to take a big hit like that late in the year.’”

“The Mortgage Bankers Association survey found 13.5 percent of the 25,035 subprime loans in Idaho during the fourth quarter had payments that were past due, and 8 percent were 90 days or more in arrears and were considered ’seriously delinquent.’ On Monday, IdahoDataProviders announced there were 1,498 notices of default issued during the first quarter of the year.”

“‘It’s especially really going to frustrate the resale market, because investors and individual buyers are going to migrate toward foreclosures and short sales,’ said Mike Pennington, an agent in Boise.”

The Seattle Times from Washington. “In the first three months of this year, existing home sales dropped 31.8 percent in King County, 35.6 percent in Pierce, and 34.8 percent in Snohomish County, compared with a year earlier. The statewide average was 29.7 percent. Those three counties accounted for 44 percent of the state’s 97,630 first-quarter home sales.”

“‘During softer markets, those households purchasing homes are finding bargains in the marketplace, which allows them to buy more home for the money,’ said Glenn Crellin, research-center director. ‘The total amount spent may be increasing, but the quality is also increasing, and the median masks some potential price weakness.’”

“Affordability is still a problem. The average King County buyer had just 76.6 percent of the income necessary to buy the average house, the center found. First-time buyers had just 42.7 percent.”

“Building permits fell 46.7 percent statewide in the first quarter compared with the year-earlier quarter. Permits were down 44.2 percent in King County, 46.7 percent in Snohomish County, 51.6 percent in Pierce and 32.6 percent in Kitsap.”

The Kitsap Sun from Washington. “Very slow appreciation for homes that lost as much as 25 percent of their value make for a double-barreled reason to give up trying to sell, for now. ‘We’re seeing people taking homes off the market,’ said Justin Travatte, broker and owner of Westsound Realty of Port Orchard.”

“All that said, the inventory of single-family homes continues to grow in Kitsap County - 22 percent so far this year over the same period last year, according to the NMLS.”

“Contributing to any run on rentals might be the fact that more people are facing foreclosure and having to leave their homes, or they are no longer qualified to buy.”

“‘Our housing counselors have seen in the first two months this year 30 times the amount of foreclosures as of all of ‘07,’ said Sarah Lee, KCCHA deputy director.”

“The year-to-date median price for condominiums in Kitsap County is a full $100,000 less than last year, according to the NMLS. Pending sales of homes and condos combined in Kitsap County were down 36 percent in April from a year ago.”

“Travatte said that now’s the time to buy. ‘Most likely, we’re nearing the bottom on the prices,’ he said. ‘In all likelihood, it’s going to be the best buying opportunity in a long time.’”

The Tri-City Herald from Washington. “The sales of existing homes in Benton and Franklin counties dropped about 22 percent in the first three months of the year, compared with the same time last year.”

“‘It’s not out of character with what we’re hearing about the housing market nationwide,” said Glenn Crellin, director of the center.”

“But perception is keeping a large number of buyers out of the marketplace, he said. ‘They think prices are plummeting; they’re not. They think every other house is foreclosing; it’s not. Let’s hope what takes place in Vegas stays in Vegas,’ Crellin said.”

The Columbian from Washington. “Clark County home sales and prices continued to show signs of a market correction in April, according to a report.”

“A total of 452 new and preowned homes changed hands last month, down 36 percent from the 706 houses that sold in April 2007, according to Vancouver-based Riley & Marks Inc.”

“The median price (half sold for more, half for less) of homes sold in April declined to $249,764, down 5.5 percent from the median sale price of $264,000 in April 2007.”

“‘This is simply an adjustment to a more normal market,’ said Kale Dunning, a Vancouver broker. Dunning said he does not expect an upswing in home sales this year, calling the county’s recent home-selling boom something that could not continue.”

“‘No healthy market can sustain it forever,’ Dunning said.”

“Others say the drop in home sales through the first four months of 2008 - about 38 percent from last year - means investors and house flippers are leaving the market.”

“‘People are still buying because they’re relocating, divorcing or downsizing,’ said Rowena Lusby, a Vancouver real estate consultant, who called the April sales figures a return to normalcy. ‘People just aren’t buying three or four homes and hoping to make money,’ Lusby said.”

“While Clark County home sales have slowed, foreclosure activity jumped by nearly 238 percent here in April, according to RealtyTrac. Countywide, 304 homes were in some stage of bank foreclosure last month, up from 90 homes during the same month in 2007 and 236 homes in March.”

“When added to an oversized supply of houses for sale, the foreclosures are a headache to sell, said sales associate Sharry McNeel. ‘The listed price might not be the actual price,’ McNeel said, adding that the properties’ banker owners will try to negotiate for the highest and best offers. ‘And it’s taking longer because of that,’ McNeel said.”

From KDRV 12 in Oregon. “According to numbers just released by the Southern Oregon Multiple Listing Service, a home in Jackson County sits on the market for an average of 117 days. In 2007, the average was 91 days.”

“Workforce analysts say the slowdown has affected the construction and manufacturing industries to varying degrees.”

“‘We’re basically in a situation right now where we’re operating just to keep our employees employed. We’ve got a number that are laid off at this point, but we’re just looking to survive through this recessionary time,’ says General Manager of Timberland Logging Mark Gibson.”

“‘Our logging operations are down a minimum of 50 percent. Trucking is off 50 to 60 percent. Our construction business is probably off close to 70 percent. So it’s had a major effect,’ says Gibson.”

“Local real estate loan officers say there is a silver lining in the slowdown. With prices so low, people are now able to buy homes they couldn’t have previously afforded. However, loan officers warn home owners to hang on to their home as long as possible. They say in the current market, a home owner won’t lose money until they sell.”

“‘Sometimes, they can contact their lender, call them directly, and try to negotiate that into a fixed rate mortgage and make that an affordable property,’ says Real Estate Loan Officer Judi Robinson.”

The Oregonian. “The empty lot at 1949 S.E. Division St. is going to stay empty for at least another year. Plans for the Seven Corners Condominiums, a proposed mix of market-rate and affordable condos above street-level shops, ‘have been put on ice for a year or so,’ says Michelle Haynes, housing development director for nonprofit Reach Community Development.”

“The reason? The condo market collapse. ‘We have a waiting list for our affordable housing units and don’t anticipate any problem selling those. Right now, though, is a bad time to go ahead with building market-rate condominiums,’ says Haynes.”

“Prometheus Real Estate Development, a California firm that plans to build as many as six high-rise residential towers in the South Waterfront district, is backing off plans to build a one-story sales office just north of the Old Spaghetti Factory restaurant.”

“Instead, Prometheus will probably put its sales office in retail space planned for its first tower. ‘Retail space is going begging’ in the new district, says Ellen Brown, Prometheus project coordinator.”

“With buyers still wary, the Portland area saw its median home price drop 3.5 percent in April compared with April 2007 — the biggest such decline since at least 2001.”

“The year-over-year decline was the first reported by the listing service in the current housing slowdown. ‘That’s not startling or surprising,’ said Jerry Johnson, a Portland housing economist. ‘That’s not a disaster scenario, but it’s not good.’”

“Portland’s home prices have followed a weakening trend since peaking last August at $302,000. Since that peak, the region’s median has fallen 9 percent. The Portland area saw the number of closed sales fall 39 percent in April, compared with the same month in 2007.”

“The inventory of unsold homes rose to 10 months for Clackamas, Columbia, Multnomah, Washington and Yamhill counties.”

“The housing market continues to be worse in Clark County. The once-fast-growing county suffers from an oversupply of new homes. Clark County home prices fell 5.7 percent in April to $250,000, down from $265,000 last April. The inventory of unsold homes was 12 months.”

“A lack of buyers across the market is part of the problem, said Kathy MacNaughton, a broker in Portland. MacNaughton cited three factors dampening buyers’ enthusiasm: Buyers find themselves ineligible for mortgages under lenders’ new tighter credit and income standards. They worry that prices will continue to fall. They fear they won’t be able to sell their current homes.”

“‘This has really become apparent in the last 60 days,’ MacNaughton said. ‘There’s not enough buyers out there.’”

From KTVL 10.com in Oregon. “A surplus of houses for sale is forcing homeowners to find new ways to make their homes stand out.”

“Doug Londergan has had his home for sale for more than a year. And while several people came to see the house he wasn’t getting any offers. So londergan decided it was time to get creative.”

“‘Now you got houses that have dropped in market value and a wide variety to choose from at bargain prices,’ says Londergan.”

“Month after month went by and still no offers. All the while, Londergan says he was on a mortgage rate rollercoaster. ‘Because we’re in an adjustable rate mortgage we decided let’s take advantage of the situation and get out of this adjustable rate mortgage. Because as rates kept going up our mortgage kept going up,’ he says.”

“He figured, if he was stuck with a nice house and a bad loan, maybe someone else was too. Now Londergan says he’s willing to trade.”

“‘We decided we’re going to try this trade or swap. You take over ours, we’ll take over yours. You get out of your adjustable rate, we’ll get out of ours. Life will be happy for everybody,’ says Londergan.”

“Realtors say homeowners are trying anything they can to sell their houses. ‘They’re including appliances, paying closing costs. One seller even included their Volkswagen with their sale. And that didn’t work but they kept trying anyway,’ says Broker Bobbie Lancaster.”

“Londergan says, anything to draw attention to your home and set it apart. ‘It’s just not the same as having ‘for sale by owner’ or ‘open house.’ People are interested because they don’t see that kind of a swap [they ask] what do you mean swap?’”




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Bits Bucket And Craigslist Finds For May 16, 2008

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