Underwater In A Way We Have Never Seen
The Denver Post reports from Colorado. “David Craig knows how draining it can be to make payments on a home that is worth less than the mortgage debt on it. The Brighton-area resident and his wife have struggled the past two years to carry not one, but two, homes valued at less than what’s owed on them. ‘You hear about how bad the economy is,’ said Craig, a truck driver. ‘Until my housing situation stabilizes, there is no way I’m going to spend a lot of money on the house.’”
“Denver ranked 41st out of 163 metro markets for its percentage of homes with negative equity, said Zillow spokeswoman Amy Bohutinski. Of the 425,000 homes purchased in the past five years in the metro area, 144,000 are underwater. The problem is a result of overbuilding in a superheated housing market as easy mortgage money was extended, beginning around 2003, to people unable to repay over the long term.”
“‘This housing market is underwater in a way we have never seen, not even in the 1980s and 1960s,’ said Jim Spray, a licensed Arvada mortgage broker who specializes in difficult home financing situations.”
The Post Independent from Colorado. “The Garfield County commissioners on Monday signed off on a request to allow the developers behind a 48 townhome-lot subdivision in Spring Valley to delay moving forward with their project for up to one year. The people behind Eagle Ridge Townhomes, slated for construction near Colorado Mountain College, sought the extension ‘due to the current economic conditions, which have affected potential marketing and financing opportunities,’ wrote David McConaughy, a Glenwood Springs attorney representing the developers of the project.”
“In July, the developers behind the 577-housing-unit Spring Valley Ranch development, southwest of Glenwood Springs, sought and received a one-year extension on their preliminary plan from the county commissioners. A few months later, the commissioners approved a request to delay a preliminary plan for the Lexie Meadows Estates subdivision, a 37-lot project west of Silt. In an October letter seeking the delay, a planner for the subdivision wrote that ‘market conditions have changed substantially in recent months and the housing market has essentially dried up.’”
The Arizona Daily Star. “The Barrios de Marana was supposed to be a new town core, mixing and matching residential and retail development on 38 acres in the heart of Marana’s rural landscape. But like many planned developments during these turbulent economic times, Barrios de Marana has been put on hold. The development group behind the plan filed for Chapter 11 bankruptcy Sunday.”
“Jack Neubeck, a member of the limited-liability company, said that while the Marana Town Council had given the project the green light, his group simply couldn’t get financing. Despite the bankruptcy filing and credit crunch, Neubeck said he is confident the development will go ahead once the housing market stabilizes.”
“‘It’s possible,’ he said. But ‘right now, boy, it’s tough.’”
The Arizona Republic. “On two parallel streets in south Tolleson, residents are struggling to hang on to their homes. Others are stuck, unable to sell because they owe more than their home is worth. The same story is playing out across the Valley today. So far this year, about 35,000 homes have been lost to foreclosure. Thousands more are headed in that direction.”
“Gloria Sanchez is among those stuck. She and her husband bought their house last year from the builder for $255,000, paying less than some of their neighbors who bought before them. The couple made a down payment of $50,000, money from the sale of their last home. ‘I’ve already lost the $50,000 I put down,’ she said.”
“Rocio Monteil lost her job as a secretary a few years ago but didn’t worry about their $1,800 monthly mortgage payment. Her husband’s wages as a plumber could pay the bills. But now his hours have been cut, so Rocio is looking for a job. So far, she hasn’t had any luck. Their adjustable-rate mortgage payment is about to climb, too.”
“The Monteils bought their home from the builder for $244,000 two years ago. Rocio Monteil thinks it’s worth about $140,000 now. The couple are among nearly one-third of Arizonans who now owe more on their mortgage than their house is worth.”
“‘We can’t afford to keep this house,’ she said. ‘We don’t have equity.’”
“Real-estate agent Sheri McBroom is trying to sell a house in the neighborhood for a couple hoping to avoid foreclosure. The owners of the home paid about $300,000 in 2006, put 20 percent down and paid to have the yard landscaped. The house is listed for $155,000, and still other homes in the neighborhood are selling for less.”
“‘Values have dropped so drastically,’ McBroom said. ‘I think it’s all about the timing of the homes being built at the peak of the market.’”
“The National Bureau of Economic Research on Monday reported it had determined the United States officially entered a recession last December. Scottsdale-based economist Elliott Pollack said Arizona still suffers from problems that are going to take years to resolve.”
“‘People have too much debt. They don’t have enough savings. Their asset values in their stock portfolios and the house are way down, so they feel poorer and will spend accordingly,’ he said. ‘The international economy is weakening, so exports aren’t going to be as strong. Industrial markets will be weak. And the housing market again is still in decline because of all the foreclosures and the excess supply. So, there are a lot of things that have to be corrected.’”
The Herald Journal from Utah. “Cache County homebuilders are feeling the impact of what the U.S. Department of Commerce has reported is the lowest level of construction of new homes nationally in about 50 years. ‘It’s down more than half for us,’ said Mike Carlson, president of Mendon-based Brent Carlson Construction. ‘We’re trying different advertisement methods — magazines, the Internet, bigger ads in phone books, but right now people don’t want to spend money.’”
“Carlson said his perception is that for most restrictions have returned to what they used to be 10 to 15 years ago. ‘My first loan I had to have a certain amount of equity down. I had to have so much money up front, had to have a job that was bringing in income,’ he said. ‘That’s what they’re going back to.’”
“That doesn’t mean people shouldn’t build, he said. It just makes sure those who do will be able to pay it back.”
In Business Las Vegas from Nevada. “What’s the good news about the housing market these days? At least it’s not commercial real estate. That’s the sentiment expressed by Tim Sullivan, president of San Diego–based Sullivan Group Real Estate Advisors. While experts on retail, office, industrial and other commercial development lament the state of their industry on panels he has appeared on recently, Sullivan says he has the best news to deliver.
“‘We were the deepest into it, and we will be the first out of it, but the commercial guys … we have retailers who are going out of business, and people not renewing leases. (They) are feeling contraction. As for residential, we have been going through that for two or three years,’ he said.”
“Sullivan characterizes the housing market as hitting the bottom, but there are plenty of issues to overcome before there is a recovery. The challenge at this time is to get prices to stop eroding, but foreclosures are contributing to that problem, he says. For the market to turn around, there needs to be fewer foreclosures, less home inventory, more job creation, more liquidity in the market, increased consumer confidence and less debt.’
“‘We have the fundamentals in place. Will they happen, and will they march us into a recovery the first quarter of next year? No, but we have Southern California next to us with 25 (million) or 26 million people. It is a feeder market and still higher priced. It’s relatively affordable here compared to the rest of the Southwest,’ Sullivan said.’”
“New home prices can’t fall any lower because they are below their replacement cost, Sullivan say. He says he sees builders constructing even smaller homes of 1,000 to 1,800 square feet and not the 3,000 to 4,000 square feet built in the past.”
“Dennis Smith, president of Home Builders Research, reports 842 new–home sales in October to bring the yearly total to 9,134, a decline of 7,758 or 46 percent. There were only 19 high–rise closings in October to bring the yearly total to 1,044 or a drop of 1,342 or 56 percent, Smith says.”
“Smith even took a veiled shot at Las Vegas housing analyst Steve Bottfeld. ‘It is pretty obvious how the change in the credit markets have devastated the high–rise industry,’ Smith says. ‘It seems like only a short time ago, there was a story in the local paper that an expert predicted the death of the local single–family (home) segment. That was a good one.’”
“Falling home prices and economic turmoil have softened demand for new homes, so it’s fortunate that Coyote Springs won’t see its first residents until at least the end of 2010. A year ago, the planned city-from-scratch in the middle of the Mojave Desert, 55 miles north of Las Vegas, was expected to welcome its first residents by the end of this year or first half of 2009.”
“Pardee Homes is the master developer for the project’s single-family and multifamily homes. The first phase of the plan calls for about 10,000 homes, with other phases adding to the total of 160,000 units on 43,000 acres - eventually making it one of the largest cities in Nevada.”
“Coyote Springs developer Harvey Whittemore…said he was unconcerned about falling home prices, saying the numbers released by research firms are misleading and don’t tell the story about the housing market. If most of the homes selling are at the lower end of the scale, that’s going to drive down that median price, Whittemore said.”
“Coyote Springs is well positioned to be affordable by land prices that are $500,000 an acre below prices paid in the valley, he said. Homes are expected to cost $200,000 to $400,000 in the first phase, Whittemore said. ‘If you take nothing but the average of Volkswagens selling, you are going to get a lower price,’ Whittemore said. ‘The bulk of the homes $500,000 and above are not going down by 35 percent to 40 percent.’”
The ee from Nevada. “Jeremy Aguero, a principal in Las Vegas research firm Applied Analysis, pegged the start of Nevada’s economic shrinkage to 2007’s fourth quarter, right before the nation’s slump began. Nevada beat the nation to recession because of its reliance on retail and home-building — the two key sectors that drove the country into its tailspin.”
“‘Our economy was uniquely positioned to take advantage of the run-up in consumer spending and construction activity between 2003 and 2007, and now, it’s uniquely positioned to get hit by the downturn in those areas,’ Aguero said.”
“Nevada suffers along with other high housing flyers of the last half a decade, most notably California, Arizona and Florida.”
“Joe Hules and his daughter-in-law, Cathy Hules, co-own SavvyLux Furniture and Design. The family owned two local Thomasville Furniture stores until earlier this year, when both locations closed. Cathy Hules said the family noticed a slowdown in traffic and sales as far back as September 2006. The Huleses have been using the ‘R’ word for months, she added.”
“‘You only have to go up and down the street to see the vacancies, not only in the homes, but in the businesses that have closed up,’ Joe Hules said. ‘I would say people weren’t paying attention if they couldn’t see it (the local recession).’”
The Reno Gazette Journal from Nevada. “In the past nine months, Sam Patel has seen obvious signs of the slow housing market and economy from behind the counter of his convenience store in Cold Springs. ‘As soon as you see people coming in and paying with change, you know they’re getting their piggy banks out,’ said Patel, owner of the Spring Mart for two years.”
“The slow real estate market and large number of home foreclosures has hurt local businesses throughout Nevada and the Cold Springs area, about 15 miles north of Reno, is a prime example. Dozens of bank-owned or real-estate owned homes are on the market, and while sales have increased since June 1 compared to the first six months of this year, the average sale price has gone down.”
“That could be a good thing for people who are looking to buy, but not so good for sellers. ‘When we say the sellers, we’re talking about the banks and REOs (real estate owned),’ said Dickson Realty agent Michael Mentaberry, a 24-year real estate professional. ‘A significant number of these (North Valleys) properties that are for sale are these types of properties.’”
“Three years into the collapse of the housing market, the sight of foreclosure and for sale signs isn’t exactly shocking for people in Washoe County. But even the most jaded resident would likely be surprised to witness five such signs in just one block. Take a walk down Stead resident Adam Cobert’s street and that’s exactly what you will see.”
“Since moving into his neighborhood two years ago, the next-door houses have been like a virtual revolving door, the 26-year-old said. ‘That house has been empty for about a year,’ said Cobert while looking at one of the nearby homes. ‘That other one, I don’t know if it was a rental property but people were just coming and going. (The last residents) were just there one day and gone the next. It’s been empty for at least six months.’”
“Even as he maintained that everything will eventually work out, Cobert said it would be nice to see people moving into his neighborhood again largely because of what it means in the big picture. ‘I’d like to see all these houses fill up,’ Cobert said. ‘That means people can afford things again. It means we’re finally getting out of this crisis.’”
