Turned Into A Money Vehicle
A report from the Associated Press. “Existing home sales in the Northeast dropped more than 9 percent in October from last year, while the median sales price in the region sank 5 percent to $277,000, the National Association of Realtors said Monday. Michael Lynch, regional economist at Global Insight, said the largest economy in New England, Massachusetts, is starting to show cracks after seeming ‘resilient’ for the past several months. Job losses are mounting, which could be a harbinger for the rest of the region. ‘It’s the place to watch right now,’ Lynch said.”
“Already, the New York City suburban housing market is teetering, said real estate agent Sandra Lippman of Prudential Centennial Realty in Westchester County, north of the Big Apple. Lippman said sales are ‘creeping’ while inventory has increased over last year. Sales in Suffolk, Nassau and Westchester counties, which surround New York City, dropped more than 11 percent, while prices fell almost 10 percent to $400,000, according to the AP-Re/Max report.”
“‘I had a few buyers who work for the investment banks or brokerage houses. Some of them have just disappeared,’ Lippman said.”
“Downtown Providence is still reeling from too many condos and rampant lending to riskier borrowers during the boom. About one in four sales are bank-owned properties or short sales, in which the lender agrees to accept a sales price below the balance owed on the mortgage, said real estate agent Julie Longtin, in East Greenwich, R.I.”
“The median price of a Providence home tumbled more than 12 percent in October, from a year ago, the largest decline of the Northeast metro areas. The supply of unsold homes decreased by 6 percent from October of last year. Still, Longtin said, ‘We’re on the cusp of stabilization if nothing else goes dramatically wrong.’”
“Steve Testa put his split-level ranch house in Cranston, a Providence suburb, on the market in January for $339,000. With very few nibbles, he slashed the price to $302,500 in the summer. Finally, to nab one buyer who kept coming back, he reduced the price even more. The final selling price for the three-bedroom house: $297,500.”
“‘If we didn’t negotiate with this potential buyer,’ he said, ‘there was a very distinct possibility we would be in the house through the holidays and into the springtime.’”
The Press & Sun Bulletin from New York. “In Broome County, there were 173 foreclosures between July and September, up from just 18 two years ago. More than 50,000 homeowners in New York face foreclosure this year, particularly in the Mid-Hudson Valley and western New York.”
“Property taxes will account for 39 percent of the City of Binghamton’s expected revenue next year. And while the Greater Binghamton area has been bucking national trends with its climbing housing values, Mayor Matthew T. Ryan is concerned. ‘We’ve already got our fiscal crisis,’ Ryan said, ‘and obviously we’re not looking forward to something that adds to it.’”
From New York Magazine. “Is there anyone in town—owner, renter, or especially buyer or seller—who isn’t watching the New York real-estate market right now? New York collected seven of the best real-estate minds we know for an afternoon roundtable.”
“Do they think we’re at bottom? Do you? “Noah Rosenblatt, Halstead Property vice-president: ‘I don’t expect to do a deal in the next three or four months. It’s not that I don’t want to. But my clients know what’s going on. If I said, ‘Buy now, you’re going to miss it,’ I’m going to insult their intelligence.’”
“Dottie Herman, CEO of Prudential Douglas Elliman: ‘I have to disagree. If you’re going to live there and raise a family, and you try to wait for that perfect time, you might miss something you like. [But] if you expect to become rich in a day or two, forget it.’”
“New York Comptroller Thomas DiNapoli said Monday that the financial crisis gripping Wall Street and the world economy could cost the state and New York City 225,000 private-sector jobs over the next two years. The securities industry in New York has already lost more than 16,000 jobs and could shed a total of 38,000 jobs by next October. In the first half of this year, New York Stock Exchange member firms alone lost nearly $21 billion, DiNapoli said.”
“‘These numbers are translating into job losses,’ he said. Before the current crisis, the securities industry accounted for 5 percent of New York City’s employment but nearly 25 percent of the wages.”
The Boston Herald from Massachusetts. “Eviction filings in state housing court hit a new high in the last fiscal year as the faltering economy and a worsening foreclosure crisis pushed more than 20,000 Bay Staters to the brink of homelessness. In particular, housing advocates are worried about the growing number of tenants in multi-family units who pay their monthly rent, but still receive eviction notices from banks who have foreclosed on their landlord’s property.”
“In March, Barclay’s Capital Real Estate Inc. foreclosed on the two-family home where Rob Chiampa had been renting an apartment for $700 monthly since 2003, according to Suffolk County land records and an interview. Chiampa and his neighbors were in Boston Housing Court last week because of eviction notices that had been mailed to their homes under the name ‘John Doe.’ He didn’t know why the landlord fell behind.”
“‘Lord knows,’ Chiampa said. ‘She certainly wasn’t paying the mortgage.’”
My Central New Jersey. “Foreclosure filings on New Jersey properties hit 8,473 in October 2008. That’s a 75 percent increase over filings for October 2007 (4,844). ‘”I’ve been doing this job for almost 30 years and it’s as bad as it ever was,’ said Middlesex County Sheriff Joe Spicuzzo. ‘We were averaging, several years ago, maybe two or three sheriff sales a month. Now, we’re scheduling about 50 a month on average.’”
“In all, home foreclosures in New Jersey are now on pace to hit 50,000 this year. The situation is exacerbated by rising joblessness with employment in the state falling in eight of the 10 months of 2008. The Associated Press reported that unemployment in New Jersey climbed to its highest level in five years in October.”
“‘When I first became the sheriff, I would grant anybody all the time they needed to settle with the bank,’ said Spicuzzo who said a judge then called him in and explained that, by law, sheriffs are obligated to sell foreclosed homes on scheduled dates or risk becoming personally responsible for the debt.”
“‘I’ll schedule sheriff’s sales for this next coming Tuesday, and I can’t stand selling a person’s house two days before Thanksgiving, and two days before Christmas,’ said Spicuzzo. ‘But you know, that’s my job, and I feel really bad about doing it.”’
The Star Ledger from New Jersey. “Turns out there may be an upside to the prolonged downturn in home prices. With home prices down 25 percent in New Jersey from peak levels in 2006, some homeowners may be entitled to a reduction in property taxes come 2009.”
“‘We had 4,200 appeals, last year, which was up from the prior year and I’m bracing for even more this year,’ said Lawrence Vituscka, the tax administrator at the Ocean County Board of Taxation. ‘Every day people are seeing home sale prices falling in their areas and foreclosures, so they feel over assessed. The economy is bad. We’re seeing more layoffs and people are starting to look at every dollar very closely.’”
“One big stumbling block in this sluggish housing market, however, is the shortage of recent sales data. ‘It is very difficult to prove the value of real estate in New Jersey right now, because in this market, you may not be able to find a lot of comparable home sales,’ he said.”
“Another strike against homeowners: estate sales, foreclosures, short sale are not considered ‘arm’s length transactions,’ in New Jersey and therefore you are not allowed to present those types of transactions as comparable sales data during your appeal. ‘Make sure you present only valid sales — properties on the open market that have been sold in a competitive fashion and not under duress,’ Vitsucka said. ‘Foreclosures are considered under duress.’”
“Still, Timothy Duggan, a tax attorney in Lawrenceville, says in these unprecedented times, with home foreclosures and home price declines in record territory, it certainly wouldn’t hurt to include foreclosures along with your regular comparable sales data to really drive your point home, he said. ‘We are anticipating a lot of appeals this coming year,’ he said. ‘I don’t know how many will be successful, but I think in 2009, more people will be winning.’”
Public Opinion News from Pennsylvania. “The national housing downturn has touched Franklin County. Home foreclosures are up. The number of properties listed for sheriff’s sale has doubled. The median sale price of a house declined 3 percent. Sales are flagging.”
“‘I think people forgot a home was a home and turned it into a money vehicle,’ said Tina Long, Realtor/owner of Exit Preferred Realty, Chambersburg. ‘It’s still a home. There’s money out there to buy a home. I don’t remember seeing the public as afraid as they are now.’”
“‘It’s not a good time to buy if you’re going to live in a house for one year,’ Long said. ‘If you’re going to live in it for five years, and make a house a home, it’s a great time to buy.’”
“With national media attention focused on foreclosures, Exit Preferred Realty has scheduled a local foreclosure bus tour for Jan. 11. ‘The idea is to get investors looking at houses so the houses aren’t sitting in inventory,’ Long said. ‘Banks are working with people. It’s an excellent time to buy. It’s just a way of getting some interest.’”
The Cape Gazette from Delaware. “The Sussex County housing market took a sharp hit this fall as a perfect storm of problems developed both here and nationwide: an oversupply of homes, a credit crisis and a decrease in consumer confidence. Still, a local builder says the gloomy outlook will pass - and possibly sooner rather than later.”
“Schell Bros. President Chris Schell said sales are ugly right now, but that people should realize when it gets this bad, it’s good. Schell said his company and other national builders in Delaware reached their peak home sales in 2004 and 2005. A classic speculative bubble formed, he said, resulting in a huge surplus of new and existing homes despite a high demand in the area.”
“‘Back then, a lot of people got involved in real estate and everyone was making money,’ said Schell. But the problems implanted in the speculative boom came to an end, led by a mortgage crisis, and ultimately resulted in a huge drop in consumer confidence, he said.”
The Herald Mail from Maryland. “Don’t break out the champagne yet, but for those with a house to sell, there is good news: Washington County’s real estate market increased last month for the first time in nearly three years. The number of people buying homes rose slightly, boosting the market 2.4 percent.”
“That alone is reason to cheer, said Joan McLernon, president-elect of the Pen-Mar Regional Association of Realtors. ‘Any news is good news, and I will take it for all it’s worth,’ McLernon said. ‘And if the buying public has woken up and seen what wonderful buying opportunities there are out there, that’s wonderful.’”
“In Washington County, the real estate market peaked in 2005 with a mind-numbing 45 percent gain, according to MRIS data. In that one year, buyers grabbed up a total of 2,254 houses here for a total of $578 million, a record high. During the heady days of 2005, there was an average of 607 homes for sale in Washington County. On average, sales were taking 50 days.”
“This past month, by comparison, there were 1,292 homes on the market. And, on average, sales were taking 184 days. Such figures are a lesson in the effects of supply and demand, McLernon said. When the supply is high and demand low, prices fall. That’s why Realtors have been trying to reduce the supply by urging clients ‘who don’t have to sell’ to pull their houses off the market, McLernon said.”
“‘If you don’t need to sell or, more importantly, if your house is not priced appropriately, you are hurting more than helping,’ McLernon said. ‘Some sellers are in denial of what the market is’ and won’t accept lower prices, she said.”
“MRIS figures show the average price of homes sold here last month was 13 percent lower than the average asking price. In 2005, the average selling price was 2.8 percent lower than the average asking price. Properties that don’t have 2008 prices are ‘just going to sit there, but the inventory is going to stay up,’ McLernon said. ‘So it’s hurting all the other people who need to sell, who maybe their job has moved or they really need to reduce their mortgage and downsize.’”
“McLernon listed a log home with acreage a few days ago. Almost immediately, she said she began receiving ‘a huge number of inquiries from people who are considering second homes.’ The response was so unexpected, she said she began asking callers why they were interested.”
“‘A lot of them are saying, ‘The money in my 401(k) is going down. … They’re saying, ‘If I buy a second home soon, not only do I get the enjoyment of a second home, but the property will appreciate and more likely than not, will end up being a better gain for me in the long run,’ McLernon said.”
“In the same way, she said, October’s uptick in sales indicates ‘the buying public is finally starting to listen to us, that there are tremendous buying opportunities out there, and interest rates are at historic lows.’”
“Sales are important now, regardless of the product, McLernon said. ‘We, as a public, we need to invest in our country. We need to buy cars. Everyone can’t be paralyzed,’ she said. ‘People are afraid. But to spur our economy to keep us strong, as a buying public, we need to buy when it is appropriate.’”
From WVEC. “In the hard-hit real estate sector, Virginia in October saw a tenfold increase in the number of home foreclosures since 2004. People who held onto their homes have seen their equity wither the past two years. One telling measure from the Washington, D.C., market is that the percentage of people who forfeited deposits they had put down on contract to buy a house increased from 4 percent in 2005 to spike at 66 percent in August, largely a measure of buyers who could not secure financing, according to a George Mason University analysis.”
“In dismaying detail, legislative budget writers got their fullest look Tuesday at a darkening fiscal crisis that will soon force them to cut government priorities once held harmless. ‘You are at the juncture where all the low-hanging fruit is gone,’ members of the House Appropriations Committee learned from the chief of the committee staff, Robert Vaughn.”
“The credit crisis has brought an end to discretionary shopping and consumers are avoiding frills, explaining why upscale retailers are suffering and discount chains such as Wal-Mart that cater to basic needs remain profitable, said legislative fiscal analyst Ann Oman. ‘Americans don’t stop spending when they run out of money. They stop spending when they run out of credit. That’s what appears to be happening,’ she said.”
The Washington Independent. “With graffiti-scarred walls, an overgrown lawn strewn with crushed cardboard boxes and empty cans and a rusted swing set next door, it’s fair to say that the foreclosed townhouse, part of a complex called Irongate in suburban Prince William County, Va., doesn’t have a lot going for it. It’s hard to tell if things look any better on the inside, since someone broke the lockbox and stole the key.”
“The unit sold in 2005 for $285,000, but these days it’s going for $50,000 — and it’s still been sitting on the market for more than six months, with no takers in sight. Places hit hard by the foreclosure crisis, like Prince William County, are dealing with hundreds, and sometimes thousands, of abandoned and deteriorating properties like the Irongate townhouse.”
“Despite a commute that can take an hour or more, Prince William boomed during the last decade, as buyers flocked to brand-new, spacious homes on wooded lots, or to affordable middle-class rowhouses. It soon became one of the country’s fastest growing areas, emblematic of the expansion of the exurbs around the country. Housing values skyrocketed.”
“The housing bust was just as dramatic. Foreclosures rose from 246 in 2006 to 2,800 in 2007, and the county expects more than 7,000 this year, said finance director Christopher Martino. It’s the highest number of any jurisdiction in Virginia.”
“Some 5.5 percent of the county’s housing was in some stage of foreclosure last spring, according to the George Mason University Center for Regional Analysis. Home values have also taken a tumble, down 30 percent this year for single family homes and 40 percent for townhouses. With the economy weakening, and many loan resets expected next year on interest-only mortgages, more foreclosures could be coming down the pike, Martino said.”
“Sales of foreclosed houses are soaring in the meantime — but prices aren’t going up. Average sale prices dropped by $90,000 between January and October, said local realtor Keith Elliott Jr.”
“In a subdivison of more upscale houses, in nearby Gainesville, a spacious three-bedroom home looks nearly untouched by damage except for some stained carpeting. But the orange stickers noting that it’s been winterized are dated from December 2007, meaning the home has been vacant for nearly a year, despite its sales price of $270,900, well below its assessed value of $327,100.”
“Elliott said he’s not surprised. ‘There’s just a huge volume of houses like this all throughout Prince William County,’ he said.”
