That Feeling Is Gone
The New Haven Register reports from Connecticut. “Sen. Christopher J. Dodd, D-Conn., met with state NAACP members Monday on the housing crisis, where he assured those in attendance he would seek greater ‘bottom-up’ assistance. Citing statistics showing African-Americans were targeted for subprime loans and were significantly more likely to enter into subprime loans, NAACP state conference President Scot X. Esdaile asked that lenders not be permitted to receive federal bailout funds until ending discriminatory lending practices.”
“‘My major concern is the ‘bottom-up.’ Main Street instead of Wall Street,’ he said.”
“Dodd acknowledged the abuse, but defended federal assistance to such institutions, equating the nation’s financial system to a blocked circulatory system in need of defibrillation. ‘Minority communities were abused disproportionately. No question,’ he said. But, ‘Your system has to be functioning. It’s not a bad idea to get equity to these institutions as long as you are also providing relief to the homeowners,’ Dodd said. ‘What’s been missing here, it’s been top-down, but there’s been no bottom-up.’”
The Wall Street Journal. “For years, immigrants to the U.S. have viewed buying a home as the ultimate benchmark of success. Between 2000 and 2007, as the Hispanic population increased, Hispanic homeownership grew even faster, increasing by 47%, to 6.1 million from 4.1 million, according to the U.S. Census Bureau. Over that same period, homeownership nationally grew by 8%. In 2005 alone, mortgages to Hispanics jumped by 29%, with expensive nonprime mortgages soaring 169%, according to the Federal Financial Institutions Examination Council.”
“An examination of that borrowing spree by The Wall Street Journal reveals that it wasn’t simply the mortgage market at work. It was fueled by a campaign by low-income housing groups, Hispanic lawmakers, a congressional Hispanic housing initiative, mortgage lenders and brokers, who all were pushing to increase homeownership among Latinos.”
“Gerardo Cadima, a Bolivian immigrant who works as an electrician, bought a home in suburban Virginia for $330,000, with no money down. ‘I said this is too good to be true,’ he recalls. ‘I’m 23 years old, with a family, buying my own house.’”
“When work slowed last year, Mr. Cadima ran into trouble on his adjustable-rate mortgage. ‘The payments were increasing, and the price of the house was starting to drop,’ he says. ‘I started to think, is this really worth it?’ He stopped making payments and his home was sold at auction for $180,000.”
“The National Association of Hispanic Real Estate Professionals…built a large membership to market loans to Latinos. By 2005, its ranks had grown to 16,000 agents and mortgage brokers. The association, called Nahrep, received funding from some of the same players that funded Hogar. Some 22 corporate sponsors, including Countrywide and Washington Mutual, together paid the association $2 million a year to attend conferences and forums where lenders could pitch their loan products to loan brokers.”
“While home prices were rising, the lending risk seemed minimal, says Tim Sandos, Narhep’s president. ‘We would say, ‘Is he breathing? OK, we’ll give him a mortgage,’ he recalls.”
The Daily Times from Delaware. “Given a constant tax rate, property taxes will drop for most of Ocean City’s property owners, as assessments mailed this week mirrored a statewide 3.4 percent decrease in property values from 2005, according to Worcester County assessment officials.”
“‘The market from 2001 to 2007 is gone,’ said Robert Smith, supervisor of assessments. ‘What we have to look at right now is not for the market to come back to 2003 or 2004, but to level off, to make sense of what’s going on.’”
“Smith noted that despite a three-year average drop, property values have nearly doubled over almost 20 years as the resort’s popularity has risen. From 1990-1992, property values spiked 40-42 percent. Prices then leveled off through 2001, when assessments jumped 60 percent during the housing bubble. Smith said for the sake of residents, he hopes home values will level off in the upcoming cycle and hold their value.”
“‘I wish I had a crystal ball to tell you how long that’s gong to last,’ he said. ‘Unfortunately, it doesn’t always work in 10-year cycles.’”
“Ocean City’s roughly 35,000 property owners — 91 percent of which don’t make their home here — comprises 53 percent of all Worcester County residences. Of those, approximately 23,000 are condominiums. In total, about 2,800 people make their principal residence in the resort. Most Maryland counties are 85-87 percent owner occupied, Smith said.”
The Gloucester County Times in New Jersey. “Even Gloucester County, which could tout having the ‘fastest-growing’ community in the Northeast earlier this decade, is hurting from the housing collapse. In late 2007, a new home in Gloucester County was selling for an average of $392,561. During the third quarter of 2008, that number plummeted to $334,617, a nearly 15 percent drop.”
“Woolwich, which was dubbed the fastest-growing municipality in the state and region earlier this decade, has seen a steady drop in new-home construction. ‘People will get to the very end, spending money to go through the planning process, and walk away from the project,’ said Woolwich Mayor Joe Chila. ‘They couldn’t afford to carry the development until the economy gets better.’”
The Star Ledger from New Jersey. “Reading about the economy these days is a lot like flipping through an old Batman comic book. You don’t have to go far before somebody takes a beating. Unemployment? Ka-Pow! At a 12-year high and climbing. Home prices? Thwack! Still dropping like a rock.”
“Housing prices, once a mighty economic engine, are likely to continue their free fall, at least through the middle of the year, said Jeffrey Otteau, president of Otteau Valuation Group in East Brunswick. Between September 2005 and September 2008, home prices fell about half a percent a month, or a total of 18 percent, Otteau said. Largely because of job losses and the fear of job losses, he said, that pace has since doubled to 1 percent a month, a trend Otteau said he expects to continue.”
“‘Ironically, the silver lining in all this is that it will get us to the point of housing affordability in New Jersey sooner than it would have occurred otherwise,’ he said.”
From CNN Money. “Home prices in Manhattan held up remarkably well in the fourth quarter, despite the economic crisis. Reports released Tuesday by four of the city’s biggest real estate agencies showed that the average price of condos and co-ops sold during the three months ended December 31 actually increased compared with a year ago.”
“But signs of weakness are beginning to emerge; sales volume was down a whopping 40% from the fourth quarter of 2008, according to New York brokerage the Corcoran Group. The median sale price of an apartment in Manhattan jumped 8% from a year ago, to $895,000, according to brokers Halstead and Brown Harris Stevens. Prudential Douglas Elliman pegged the increase at 5.9% to $900,000, while the Corcoran Group put it at 3%, to $937,000.”
“But according to Jonathan Miller, of Miller Samuels, which compiles the market analysis for Prudential Douglas Elliman, much of these increases reflected sales in new, high-priced developments. A more accurate gauge of the Manhattan real estate market’s health are sales of existing apartments. ‘The focus should be on resales,’ Miller said, ‘rather than new developments, which skewed the data higher.’”
“New York’s economy is still reasonably strong, according to Pam Liebman, CEO of the Corcoran Group. For example, although the city’s unemployment rate has increased to 6.3%, it’s still lower than the national rate of 6.5%. ‘Fundamentals haven’t changed that much, but the psychology has,’ she said. ‘There’s more fear now, of price drops, of job losses, of bonus cutbacks and of losing money in investments.’”
“Stagnant prices alone can alter market psychology. During the boom, rising prices gave potential buyers a sense of urgency and confidence that’s lacking in today’s market. ‘The feeling was ‘Buy today and it will appreciate tomorrow,’ said Liebman. ‘That feeling is gone.’”
