Holding The Bag With Thousands Of Vacant Homes
The Ouray News reports from Colorado. “County Treasurer Jeanne Casolari told county commissioners that the number of homes in foreclosure, as of January, has already matched the number of foreclosures for the entire year of 2008. Commissioner Keith Meinert asked whether the homes were in the ‘high end’ category. Casolari said the trend is broader. ‘They’re all over the place,’ she said. ‘Some are for a couple hundred thousand; all but one are residential.’”
“In the past, Casolari said, three to six foreclosures in a year was a lot. In fact, she conducted just two foreclosure sales in 2008. But come October, the national sickness hit home. ‘What started as a slow year all of a sudden magnified,’ she said. ‘All of a sudden, I was getting three foreclosures in a week.’”
“‘Another sad thing – certain individuals went into foreclosure on more than one property,’ Casolari noted. ‘With some of these loans, it’s just amazing anyone would have signed on the dotted line, with the kind of interest that’s accumulating,’ she said.”
The Arizona Republic. “Just four years ago, jobs were plentiful, credit was easy and housing values were skyrocketing. Back then, when people wondered how much their homes were worth, it was often a precursor to pulling out equity to finance a lavish lifestyle. Now the answer to the same question could indicate how underwater you might be on your mortgage.”
“Steve and Jennifer Maize of Chandler found themselves with between $25,000 and $30,000 in credit-card and student loan debt, a rising interest rate on their mortgage and a cut in pay when Jennifer quit her teaching job to have a baby, then switched to working in child care at a lower income. ‘The biggest factor was the ARM that adjusted on our house,’ said Steve. ‘That brought a big spike in our mortgage bill of $700 a month.’”
“Michael Sullivan, director of education at (a) Phoenix debt-counseling firm, said several factors can frustrate a mortgage modification, from lender policies to borrowers who are too far gone to help. ‘If it takes 70 percent of a borrower’s income to meet even a diminished payment, the lender will probably figure the person won’t make it,’ he said.”
“Joann Hauger, executive director of a non-profit organization that provides one-on-one mortgage default and pre-purchase counseling, said that the homeowner bailout plan will be a challenge in Arizona because of the large number of lost jobs on top of the significant drop in home values - 34 percent in the fourth quarter alone, according to the Case-Shiller Home Price Index. ‘There is a tremendous amount of consumer debt that could leave people unable to make payments even at a lower amount,’ she said. ‘In reality, there are an awful lot of people that no matter what, their homes won’t be saved.’”
“The Obama administration is staking a claim that most homeowners facing foreclosure should be able to pay 31 percent of their gross income for a mortgage. Not 50 percent or not 60 percent, as is the case with many strapped homeowners. But 31 percent of income still is a hefty number.”
“With car payments, credit-card debt and everyday expenses, Phoenix-area mortgage brokers, bankers and others say that 31 percent still is too high for many homeowners. ‘They would wind right back in default,’ said Paul Klimke, president of the Central Arizona chapter of the Arizona Association of Mortgage Brokers.”
“Librada Martinez hopes the mortgage relief promised by the Obama administration will help her. She makes $40,000 per year and has a $200,000 mortgage on a two-bedroom southwest Phoenix home that she bought for $180,000 in 2005. Her $1,400 mortgage payment is 47 percent of her gross income and 60 percent of her take-home pay. She was able to make the payments until an illness created unexpected medical bills.”
“‘I tried to sell the house or get a roommate,’ she said, adding that she finally just stopped making payments. Martinez is hopeful she will be able to restructure her loan under the Obama plan but is concerned that homes in her neighborhood similar to hers now are selling for $70,000.”
“‘I want to stay in my home - it’s perfect for me,’ Martinez said. ‘But I don’t want to make payments on a $200,000 loan when my house is worth $70,000.’”
The Yuma Sun from Arizona. “Homes in the Yuma area continue to decline in value, to the tune of about a 3 percent loss per quarter, totaling a 12 percent loss over the last year, the Yuma County assessor says. Assessor Joe Wehrle said ‘the bubble burst in Yuma County in the third quarter of 2007′ when home values went from $233,067 in the second quarter of 2007 to $205,812 in the third quarter of 2007.”
“Then, he said values rebounded in the fourth quarter of 2007 and in the first quarter of 2008, when home values rose to $217,673. From there, it’s been about a 3 percent loss per quarter, going as low as around $190,000 in the fourth quarter of 2008.”
The Salt Lake Tribune from Utah. “Utah’s home-price appreciation, among the highest in the country less than three years ago, now is 16th worst among all states. Some owners, such as Jeff Chatelain of Salt Lake City, are being cut off by worried lenders from their home equity line of credit. Chatelain said he’s also trying to sell a home he and a friend had built in hopes of selling at a profit. When it was finished early last year the property appraised at $1.2 million; today he thinks he’d probably get about $850,000 — if he found a buyer.”
“So he’s renting out the home, waiting for a recovery. ‘Maybe next year, things will be better.’”
“‘We know at some point home prices will stop falling, we just don’t know when,’ said Ryan Kirkham, president of the Salt Lake Board of Realtors. ‘At this point, we’re just hoping for the best.’”
The Reno Gazette Journal from Nevada. “Stimulus help can’t come soon enough for Washoe County’s housing market, housing experts said, as home values continued their downward slide in January, while the number of foreclosed homes jumped up from the same period last year.”
“Washoe County reported 221 foreclosed homes in January, up 25 percent from the previous year. Sales of foreclosed homes rose by more than 196 percent to 172 units compared to 58 units in January last year. New homes were hit especially hard last month, only managing 11 unit sales compared to 91 units in January 2008.”
“‘There is almost no market for new homes so long as foreclosures continue to flood the market,’ said Brian Kaiser, a housing and real estate analyst with the Center for Regional Studies.”
From Channel 2 News in Nevada. “There are options and avenues you can follow before you lose your home. The credit crisis, high unemployment numbers and the reduction in home values are leaving homeowners feeling helpless. But the Washoe County Senior Law Project is trying to help, by handing out free advice on foreclosure prevention.”
“‘Ease my burden. Like I said, I’m unemployed,’ says Washoe County homeowner, Bill Sickmiller.”
“Ben Alsasua is a housing counselor for the Washoe County Senior Law Project and is offering his knowledge to homeowners. Alsasua says those options vary from lender to lender and when it comes to advice for homeowners, workout options are availble on mortgages.”
“‘That’s probably what I’m going to do is loan modification. I don’t want to move out. But, the value of the house isn’t worth what it used to be. I owe more than the house is worth.’ says 20-year Sparks resident, Stephen Lord.”
The Las Vegas Sun from Nevada. “The steep drop in home prices and newly approved $8,000 tax credit for first-time homebuyers will help pave the way for a recovery of the Las Vegas housing market in 2010, according to the chief economist with the National Association of Realtors. Lawrence Yun said he expects that foreclosures will continue at their elevated levels in 2009, but is optimistic that inventory will be whittled down given the increase in existing home sales in Las Vegas over the past several months.”
“‘You have gone through some very tough times, but any further decline, if any, would be minimal,’ Yun said of median prices that have fallen $138,000 over the past two years to a price of $150,000 in January. ‘Given $150,000 is very affordable for such a dynamic metropolitan region, once the economy recovers, you are in good shape. But it is just getting over the short term.’”
The Review Journal from Nevada. “The long-term prospect for Las Vegas is bright because baby-boomers reaching retirement age are migrating to cities with warm climates and favorable tax structures, the economist said. The homebuyer tax credit accounts for less than $10 billion of new $787 billion stimulus package, a rather small amount, but nonetheless sufficient to help spark a comeback, he said.”
“‘I’m a little disappointed that it didn’t address as much as it could have, given the size of the bill,’ Yun said.”
“Housing is the source of the national recession, Yun said. The boom from 2000 to 2005 was an ‘artificial boost’ to home values and the general economy as well. Now, with declining home prices, consumers are more cautious about spending. The second part of that is the ‘bleeding’ of bank balance sheets, he said. Tightened credit flow is hampering the economy.”
“‘We have to go through recession to take exuberance out of artificial growth,’ Yun said. ‘Now I’m afraid the economic downturn could be snowballing and hard to stop without the stimulus package.’”
“ZIP code 89109, home to luxury high-rise Turnberry Place and its new sister property, Turnberry Towers, lost $185,000 on median prices. Another big loser was the inner-city 89101, where median prices dropped 57 percent, or $105,000. ‘My, my, how times have changed,’ said SalesTraq President Larry Murphy, who reported 40 percent and 50 percent ZIP code appreciation rates in 2004. That fell to 20 percent in 2005 and 4 percent in 2006, then turned negative in 2007, down 4 percent.”
“Just as homes in Las Vegas were overvalued a few years ago, Murphy thinks they’re equally undervalued now. ‘First of all, we recognize there’s no such thing as absolute value,’ he said. ‘However, regardless of what these homes are selling for, what is the replacement cost? I would say it’s undervalued when you can’t re-create it for that price. There are homes selling at less than it costs to build.’”
“Realtor Robin Camacho posts an online list of top 10 real estate values in Las Vegas and came up with a three-bedroom, 1,400-square-foot home near Boulder Highway and Sahara Avenue for $32,900. It last sold for $225,000 in 2005. She just added her No. 3 pick, a four-bedroom, 4,500-square-foot home in the southwest valley for $349,000. It has granite countertops, upgraded tile, cherry cabinets, a spacious loft and master suite with a Roman tub and custom shower, all on a huge lot, Camacho said. It sold new in 2007 for $1.2 million.”
“‘I showed a home that backed up to Desert Rose Golf Course … $59,900,’ she said. ‘It will go for about $75,000 and needs at least $30,000 in repairs to be a decent home, on a golf course on the east side, for $105,000.’”
In Business Las Vegas from Nevada. “Foreclosure filings in Nevada dipped in January, but no one should take that as a sign the housing market is closing in on a recovery. Nevada continues to hold the top spot in foreclosure filings. One in 76 Nevada homes faced a foreclosure filing in January. California was a distant second with one in every 173 homes; Arizona was third with one in every 182 homes.”
“‘At the current levels, I am convinced that there is little more that we can go to from a pricing standpoint (of lower-priced homes),’ says Bob Hamrick, chairman of Coldwell Bank Premiere Realty. ‘Some of those properties are priced lower than when I got into the business in 1980. Some of it to me is quite surprising. There is a debate whether some of the lenders are dumping properties below what they need to get them sold.’”
“Sales are up substantially (his firm’s sales rose 58 percent in 2008), dropping inventory from 28,000 to 20,000, Hamrick says. The reason is the affordability that prospective buyers are finding in the marketplace, Hamrick says. Someone buying a 1,535-square-foot home in 2006 - the median size of those bought - had a monthly payment of $1,606 if they put 10 percent down. Today, the monthly payment on a similar sized home, given price drops and better interest rates, is $852 a month.”
“‘If anything, 2008 showed us that housing markets are working with prices moving toward their long-term trends,’ Hamrick says.”
“A new report from Forbes found that for sheer volume of abandoned apartments and homes, Las Vegas beats all national comers. Detroit ranked second. Las Vegas also enjoyed some of the nation’s strongest housing demand and price increases in 2004 and 2005, said Brian Gordon, a principal in the economic-research firm Applied Analysis. The higher market peak meant a steeper tumble when the bubble finally burst, Gordon said.”
“‘If you look at the amount of housing demand that took place, we were constructing more homes than net population growth required,’ he said. ‘We were artificially inflating end-user demand, and today, that has us holding the bag with thousands of vacant homes.’”
