The Bubble Was Bound To Break
WCSH 6 reports from Maine. “2008 was a difficult year for real estate on many fronts. But 2009 is a new year, with new opportunities and challenges — both for those looking to buy and sell. In Maine the number of housing units sold fell 21% from 2007 to 2008…. and those that did sell, sold for 9% less. Sue Spann, the owner of Remax Riverside, said, ‘I believe it is a correction but there are a lot of different components, a lot of different layers to this correction. There is a correction in prices, there is a correction in the stock market, the whole economic correction we’re experiencing right now and I think to a certain level there is a mindset correction as well, a whole lifestyle correction.’”
The Union Leader from New Hampshire. “Friday was motions day in Judge J. Michael Deasy’s courtroom, and the docket was full. The federal judge would work through 31 cases — before lunch. Welcome to bankruptcy court, after the mortgage meltdown.”
“In the end, there’s no good answer when folks don’t earn enough to meet their monthly expenses, the judge said. Chapter 13 bankruptcy, he said, ‘will help you keep your house if the reason you got behind is something that’s now been resolved. But if the problem is your mortgage went up to more than you can afford, (Chapter) 13 can’t solve that for you.’”
“A Derry carpenter fell behind on his payments after he was laid off; his adjustable-rate mortgage payments ballooned to $3,200 a month. ‘The government bailed out the bankers, they bailed out the car companies; who’s bailing me out?’ he wonders aloud. ‘Nobody.’”
“A Manchester woman who owns a courier business got into debt after her gas expenses spiked to $1,500 a week last summer, just as many customers started falling behind on their payments. She’s hoping to save her home through Chapter 7. At 61, the Manchester courier business owner said she should have some sort of nest egg set aside for retirement. Instead, she faces personal bankruptcy.”
“‘It’s one of the hardest decisions I ever had to make,’ she said. ‘I feel like a failure.’”
“It’s no secret that home sales are down. Several Concord developments that have gone up in recent months have empty lots waiting for buildings. Others have houses ready to be occupied. ‘This is going to turn around,’ said Yves Tanguay, who built Abbott Village on North State Street. ‘We just have to wait it out. I don’t think there’s any choices out there. Everyone’s in the same boat. We’re all trying to survive.’”
“His plan is to build 80 luxury condominiums. Prices range from $350,000 to $500,000. Originally, the project was restricted to residents 55 and older. It featured three-story condominiums with features such as elevators, fireplaces, a community center with a tennis court and putting green, a wireless entrance gate, and options for granite countertops and hardwood flooring.”
“Tanguay received certificates of occupancy for his first buildings in February 2007. He sold the first home a year later. So far, Tanguay has built 18 units, but just four are occupied. After the slow start, Tanguay removed the age restriction. Three of the four occupants are under 55. For a time, he tried dropping the price to $299,000 and reducing the square footage from 2,100 square feet to 1,500 square feet, with single-story living. ‘We didn’t get any calls,’ he said.”
The Register Citizen from Connecticut. “The President of a local building company recently lobbied in Washington on behalf of an economic stimulus package that would hopefully stabilize the housing market. Less than 24 hours after members of the 111th Congress were sworn into office, the National Association of Home Builders (NAHB) launched an all-out effort to make housing a centerpiece of the massive economic stimulus package that lawmakers are expected to complete by mid-February.”
“‘Once prices are stabilized we hope to entice new buyers into the market with some tax credit and interest rate buy downs,’ said Greg Ugalde, President and Chief Legal Officer for Torrington-based T&M Building and state representative for NAHB for the past 20 years.”
“Ugalde said stabilizing the housing market with help the overall economy. ‘When you know your home is maintaining its value or increasing in value,’ Ugalde said, you’re much more apt to go out and spend money on other purchases. People don’t realize the power the home building industry has on the economy.’”
The Boston Herald from Massachusetts. “Judge Christine McEvoy sentenced Nicole Lyder to two years in prison and three years’ probation after the woman pleaded guilty to 21 counts of larceny and other charges related to mortgage scams. Interviews and a review of records indicate that Lyder is apparently the first person jailed in Massachusetts over the subprime-mortgage fiasco.”
“Lyder admitted in court to inflating consumers’ finances on subprime-mortgage applications in 2005 and 2006 to get clients’ loans approved. Although state officials have issued fines, lawsuits and license revokations against alleged loan scammers, Massachusetts criminal law doesn’t specifically cover mortgage schemes.”
“‘We don’t have a criminal mortgage-fraud statute in Massachusetts, so we have to find other laws that we can apply to (subprime-loan scams),’ said Emily LaGrassa, spokeswoman for state Attorney General Martha Coakley.”
The Framingham Tab from Massachusetts. “There is a lot of misinformation surrounding the origins and consequences of the current financial crisis, warns Tab Finchum, a financial adviser with Edward Jones. During the positive economic times of the 1990s, real estate sales went through the roof. ‘Another thing that happened in this time frame, and a lot of people are making this one of the evil culprits of our situation, but it was a good idea, is that the government said that home ownership is a good idea…’ he said. ‘Home ownership was one of the biggest links to get people off of welfare and to get their kids to become good members of society.’”
“Finchum said that because of this program, even with its good intentions, people were helped in getting homes for which they had no way to pay. That worked well for a while.”
“Investors were getting a good deal, Finchum said, because they were investing in something that tended to be very secure, and they could make a lot of money with relatively little risk. Wall Street was making money, as well.”
“Finchum said real estate prices continued to rise. Houses that, a few years before, weren’t worth more than $100,000, were going for two or three times that much.”
“‘We had this perfect storm of factors. We had the Wall Street breed jumping in there, and these guys were coming in because there was a lot of money in this business. You had the mortgage brokers in there, who now were unregulated, and those guys pretty much would tell you whatever they want to tell you. Once that loan is approved, there was little to no recourse,’ he said.”
“Finchum said that people weren’t able to keep up with the mortgages that they received for houses that were too expensive. And it was only a short matter of time, as he said, that ‘the bubble was bound to break.’”
The Press & Sun Bulletin from New York. “The region could see an influx of income and jobs by welcoming new housing construction, economist Elliot Eisenberg said Tuesday at the Greater Binghamton Chamber of Commerce’s annual Economic Forecast Breakfast. Eisenberg, senior economist of the National Association of Home Builders in Washington, D.C., spoke of the local economy and how it relates to the national economy.”
“The area missed the building boom, the astronomical increases in property values and the eventual bust of the housing market, he said. In addition, the area has local banks that were not involved in exotic mortgages.”
“Greater Binghamton is in prime shape to grow by ramping up new home construction, Eisenberg said. The average price of a house constructed in Tioga and Broome counties is $400,000, he said. By comparison, the average median price of existing homes is around $110,000. The homes being constructed are largely for those new to the area who have high incomes and occupations such as engineer, lawyer and doctor, he said.”
“‘This is bizarre,’ Eisenberg said. ‘I have never, ever seen it.’”
The Pittsburg Business Times from Pennsylvania. “Pittsburgh’s housing market, often assumed to be shielded from national ups and downs, has begun to show signs of strain amid the downturn. The most sluggish national housing market in decades has helped push down the number of high-end home sales in Allegheny County, according to a Business Times analysis of all residential transactions of $200,000 or more through November.”
“While the number of homes sold in this category peaked in 2007, sales have fallen since then — in some cases dramatically. ‘I would say this fall was probably one of the worst markets I have experienced,’ said Cuppy Kraft, an agent who has sold real estate in the region since 1971. ‘I think everyone would agree that we have seen a slowdown, even in Pittsburgh.’”
“While residential projects in the city have fared better, even there sales have come slowly, said Roslyn Neiman, an agent with O’Hara-based Howard Hanna Real Estate Services Inc. Neiman is working to sell the last 10 units at the The Metropolitan, a luxury condominium project in Shadyside that started selling units a year and a half ago.”
“‘I think they would have been sold out, had the economy not slowed down,’ Neiman said of The Metropolitan, where prices range from $600,000 to $1.2 million for the remaining units. ‘I do have a lot of people looking and dancing around. I don’t know what they are waiting for.’”
