The Promise Of Home Sweet Home Turned Sour
The Rocky Mountain News reports from Colorado. “It appears to be the worst November on record, said Gary Bauer, an independent broker who has Metrolist data on home sales going back almost 30 years. ‘Until a couple of days ago, I thought we were at the bottom or close to the bottom,’ he said. ‘But now I think we might be a few months away from nearing the bottom.’”
“Chris Mygatt, president of Coldwell Banker Colorado, said the sales of homes at $1 million or more have almost come to a halt. ‘That market is paralyzed right now,’ Mygatt said.”
“Cody Lowderman started the bidding at $100,000 for the two-story penthouse in foreclosure at the edge of downtown Denver. Within two minutes the bidding was at $750,000. After a 5 percent fee to cover its expenses and any brokerage commissions, it brings the total purchase price to about $850,000. The previous sale price, however, was $1.9 million, according to public records. The condo had a mortgage of about $1.33 million before it went into foreclosure.”
“‘I think I got a good deal,’ said Jimmy Do.”
“Denver developer Nick Mystrom, who attended the auction in late November, said he hopes someone like Do buys the two luxury homes he is auctioning Monday. Mystrom described his two homes being auctioned as ‘unbelievable value plays.’ ‘I fully expect the winning bidders to end up with beautiful homes in beautiful neighborhoods with a savings of hundreds of thousands of dollars,’ he said. ‘Unfortunately, their gain is my loss. But, given everything that’s going on, I’ll take my medicine and move on.’”
The East Valley Tribune from Arizona. “The number of new-home construction permits issued across the Valley took a shocking downturn last month, plummeting to the lowest level in at least 25 years, according to the latest Phoenix Housing Market Letter by analyst RL Brown. Only 295 permits were reported in November, compared with 517 in October, 697 in September and 1,299 in November 2007. Permit activity has fallen steadily from a high of 6,608 in July 2004, and the downturn has accelerated since August.”
“‘November absolutely was a shock,’ Brown said. ‘Obviously somewhere back in the past there was a number that low, but not since modern-day record keeping, and we’re 25 years into it.’”
“Permit activity is expected to remain just as low this month and into early next year, and builders across the Valley already have had to cut back drastically to survive, he said. ‘We can’t lose sight of the fact that population growth has not stopped, even though job growth has basically stopped and unemployment is (rising). There are still people moving to this town, and they have to have a place to live,’ he said.”
The Arizona Republic. “Just three months ago, Rosario Araujo and her husband, José Zavala, were still living comfortably, though illegally, as migrant workers in Gilbert. He hung drywall for $10 an hour, and she cleaned houses. But when work dried up in the economic crisis, they were forced to head south. The family is part of a small but growing number of Mexican migrants who are heading home because of the U.S. recession and finding Mexico is barely prepared to receive them.”
“The local government is bringing in psychologists from a university to help migrant children fit in at school, said Guadalupe Chipole Ibañez, director of Mexico City’s Center for Migrants. Many of the new arrivals have trouble in grammar and literature classes, she said.”
“‘There are children who speak and understand well in both Spanish and English, but many of them only write in English, and that is causing them a lot of problems in school,’ Chipole Ibañez told a news conference.”
“Arizona’s population is expanding at the slowest rate since the last real-estate-led recession in 1990, new figures show. University of Arizona economist Marshall Vest and others say the new population figures are conservative estimates, unlike the ones released a few years ago by the Arizona Department of Economic Security. The agency accidentally overstated the number of residents by tracking new-home permits.”
“At that time, Arizona’s housing economy was booming. Big growth rates were a predictor of good times for the state’s biggest industry: Past studies have shown one in every three dollars spent in the state was linked to the housing industry.”
“When Arizona began growing rapidly in the 1950s, Census population counts and estimates done every 10 years couldn’t keep up. Arizona’s Department of Economic Security began tracking the state’s population growth in the 1960s by using a model that included home-building figures. The state’s system worked well until the housing boom, when tens of thousands of homes were built and purchased by speculators. No one ever moved into them, skewing the results.”
“‘People are still moving to Arizona, but at a much slower rate,’ Vest said. ‘More would likely move to Arizona if they could sell houses in other parts of the country with deeper economic problems.’”
The Daily Herald from Utah. “A Lindon real estate auctioneer is putting up for sale 42 bank-owned and foreclosed Utah properties and lots tonight….many of which are in Utah County. Bargain hunters can find a mix of starter homes, luxury custom-built homes, condos and lots along the Wasatch Front selling at discounts between 25 percent and 50 percent of their appraisal values at the auction, said Kevin Gallagher, broker-auctioneer.”
“Only three properties — two Belle Monet condos in Pleasant Grove and one home in Saratoga Springs — are being sold at absolute auction, where the property sells to the highest bidder, with no minimum bid or reserve price. ‘Absolute auctions take out the risk of underpricing or overpricing in a volatile market,’ Gallagher said. ‘No one really knows the true value of properties today.’”
“Utah Real Estate Auctions garnered about $3 million from sales of 57 properties — valued between $15 million and $20 million — held in October in Pleasant Grove. While the homes sold between $150,000 and $900,000, the lots sold for $30,000 to $100,000.”
“‘There were a lot of lots for sale. And lots are less appealing to buyers now because not as many people want to build when they can buy a finished home for less than what it will cost them to build,’ Gallagher said.”
National Public Radio on Nevada. “For many years, Las Vegas’ population was increasing at a rate of more than 5,000 people a month. Two years ago, buyers were so eager to buy homes here they lined up and camped out in front of sales offices. To manage demand, builders meted out their homes, and there were lotteries to select bidders. ‘It was ridiculous,’ says Brian Burns, who found himself priced out of the market for several years, and then bought a home in 2005 in the Henderson suburb for $304,000…which he was told recently would sell for $145,000.”
“The realtors and mortgage officers NPR interviewed are all under water on their homes. Dave Shaffer runs Shaffer Realty in the shadow of the famed Las Vegas Strip. The condo where he lives is worth roughly one-third less than what he owes, he says. With prices so low, he and several partners decided to invest in a condo in September. They bought it for $105,000, which was about half what it sold for a couple years before. But in the two months since then, it’s lost another $20,000 of value.”
“On a block of one neighborhood in North Las Vegas, there are two foreclosed homes for sale right next to each other. Next to that, another home is also selling at a deep discount. ‘This is a brand new house. Never been lived in,’ Shaffer says, his voice echoing off the empty walls. ‘And this is a speculator who got 100 percent financing, so what investment did they have in the market? None.’”
“Shari Springer is also a longtime real estate agent and owns three homes she bought for $600,000 or more. She’d hoped to rent them for retirement income, but now pays more on the mortgages than she can make up in rent. ‘The banks are competing with each other,’ she says, and most homeowners can’t afford to sell at such a low price.”
“Virginia Cavallaro lives next to foreclosed homes. While everyone around her leaves or puts their homes up for sale, she’s stuck because she and her husband paid a lot of money down on their home. ‘It’s very difficult to live here,’ she says. In every direction around her, Cavallaro says, people are trying to jump ship.”
“Burns lost his job in May, as casino advertising fell. He fell behind on payments and tried unsuccessfully to get his lender to modify his loans so he could meet payments. So he’s selling many of his things, packing his car and letting his lenders figure out how they can recoup the most for their investment. With a perfect credit score three years ago, he was able to finance the entire house — so he has little to lose. The one thing he put money into was the backyard, which features a gas fireplace and a grill. But he says he’s even now.”
“‘I feel bad, kind of like I’m not pulling my weight in this crisis,’ Burns says. But the only move that makes sense, he says, is to move away.”
“Las Vegas residents Israel and Clantha Twillie say they haven’t been able to make sense of the many documents they’ve collected in the process of trying to work out the mortgage on their home. They retired and put $80,000 down on their home two years ago, only to have the value of the home drop by about half. To pay some bills and medical expenses, they took out a second loan, then when interest rates reset at a higher rate, they fell behind and never caught up.”
“One big problem is they don’t know what lender currently holds their loan. They’re hoping their lender — whether it’s Countrywide or another company — will agree to reduce the interest rate on their payments and keep their payments low enough that they can stay in their home. Otherwise, the Twillies say, they don’t know where they’ll go. Israel Twillie went back to work recently to increase their income. ‘Our home was supposed to be our nest egg,’ he says.”
In Business Las Vegas. “Bankers and Gov. Jim Gibbons gathered at the Sawyer State Office Building to discuss another round of potential foreclosures as changes for adjustable rate mortgages loom from 2010 to 2012. In Clark County, 31,666 - or 19 percent - of home loans were made to subprime borrowers, according to the Foreclosure Research Project and the Local Initiative Support Corp. Another 16,300 loans (9.7 percent) are overdue by at least 30 days.”
“From 2010 to 2012, 20 percent to 40 percent of adjustable rate mortgages are due to reset. ‘Just because the adjustable rate mortgages are coming due, the automatic assumption is that we’ve got another wave of bad loans,’ said Wells Fargo Nevada President Kirk Clausen. ‘Well, we could have, but those option adjustable rate mortgages may have been made to strong borrowers, too. I’m an optimist.’”
“In a stressful situation, bankers could end up getting back less money than what the loan is for, plus the carrying costs associated with the property. ‘Those things banks really don’t care for,’ Clausen said. ‘First and foremost, we don’t like getting property back. We lend money to people, in general, believing they can repay it and we’re not in the real estate business and we don’t expect to get (the property) back.’”
The Review Journal from Nevada. “Home foreclosures are expected to top 30,000 in Clark County this year, compared with 11,509 in 2007. Foreclosures.com counted 2,974 foreclosures in November, bringing the total for the year to 28,133. The monthly number is up from 2,653 in October and more than double the 1,407 Clark County foreclosures in November 2007.”
“‘Those things are going to be with us for a while,’ SalesTraq founder Larry Murphy said. ‘The first round of foreclosures was subprime borrowers who had no business buying a house anyway, but the second round is people who had a job and were doing OK.’”
“Troy Kearns of Gavish Real Estate said lenders seem more willing to deal on foreclosures. Kearns’ lowest listing — $37,500 for a house on Euclid Avenue — sold in one day. It was only 600 square feet and needed a little repair, he said. ‘You put a renter in there at $500 a month and you’re at 12 percent cash flow,’ Kearns said.”
Las Vegas Now from Nevada. “Las Vegas Housing prices have fallen to a point where they are nearly 19-percent below market fundamentals, according to a new report. In addition, foreclosures are expected to be at a record high. The promise of ‘Home Sweet Home’ turned sour for more than 28,000 homeowners in Clark County in 2008.”
“‘The banks have put them so ridiculously low, so it’s bringing down all the neighborhoods,’ said broker Ronda Matthews-Wolfe. ‘Why they really plummeted is because of the foreclosures, and the foreclosures have happened because people overpaid or got into these adjustables.’”
“‘The price isn’t all that bad either,’ said Bill Baldare, a home buyer. Many bank-owned homes are practical steals. Baldare is bidding on a foreclosed home listed at $32,000. The same home sold for $196,000 four years ago.”
“‘Trying to buy a house now is way out of reach for a lot of people, including myself, but this seems to be what I’ve been looking for,’ Baldare said.”
