Still More An Art Than A Science
A report from the Oregonian. “Time ran out for the Bali family Thursday morning when a Clark County sheriff’s deputy arrived in an unmarked car. Krishneel Bali’s parents hadn’t told him they were losing the house to foreclosure, he said later. Now, as a truck backed into the driveway, he had 30 minutes to vacate. County records show the Balis bought the 1,436-square-foot house for $180,900 in 2005 as the housing market boomed. The latest financial company to own the house after foreclosure paid $158,400 in September as prices plunged.”
“Krish Bali said his grandmother’s house was too full to take in the family. So he would probably go one place, his sister another and his parents somewhere else. ‘I didn’t see this coming,’ he said. ‘We’re just kind of stuck.’”
The Sandy Post from Oregon. “Looking around Sandy, it is easy to see the construction industry is at a virtual standstill. The city has issued from zero to three building permits a month for the past four or five months. That’s a historic low. Tracy Brown, planning director for Sandy, says there are about four subdivisions that have gone through some level of development (prior to construction) before coming to a standstill.”
“‘A couple of (the subdivisions) are just waiting,’ Brown said. ‘One of them is essentially done. But (the developer) hasn’t recorded a final plat, and I don’t know why, unless it’s the economy that’s not doing well.’”
“Even though Tom Orth of Orth Construction is putting the final touches on a subdivision near Dodge Park Road and 302nd Avenue, he is virtually unemployed. ‘My Ten Eyck Rim project has been approved by the city,’ Orth said, ‘but I don’t think I am going to move forward on it at this time. I would like to build $200,000 homes there, but I’m just not getting any response from the market now. The economy is too shaky, and I don’t want to put more capital into it.’”
“Real estate agents and mortgage brokers are a little more positive about the market’s condition. There are plenty of safe home-loan options available for buying or refinancing, according to Kurt Nilsen, a mortgage broker who works mainly in Sandy. Nilsen says loans are not difficult to obtain. ‘There seems to be a misconception that home loans are difficult or impossible to get,’ he said. ‘This just isn’t accurate. Yes, home lenders have returned to requiring borrowers to fully document their income – a practice they never should have deviated from.’”
The Bellingham Herald from Washington. “January was a slow month for local home sales, with drops in prices and volume continuing the trend from last year. Setting a price that’s too high can really hurt the home seller, too.”
“Gragg Miller of Coldwell Banker Miller-Arnason wanted to show his agents the importance of pricing a home to reflect current market conditions, so he did some research about what happens when a seller is forced to reduce the original price. He suspected that it would take longer to sell the home, but he was still surprised by how much.”
“Miller did this research because he expects this year to be a very challenging in terms of figuring out the right price for a house, particularly in the high-end market, which has dropped off dramatically in recent months. ‘It is very difficult to figure out the value of anything above $500,000 right now,’ Miller said. ‘We don’t have people moving into the area looking at that price range like we once did. It’s also difficult to tell someone the price of a house might not be what they think it is, but more sellers are being flexible. They read the news and see what’s happening in the market.’”
“In trying to price a home correctly, Miller said the key is looking at the most recent sales and comparing similar homes. Six months - before the financial meltdown - won’t work. It needs to be sales within the past 60 days. ‘Even with comparables, pricing a home is still more an art than a science,’ Miller said.”
The Olympian from Washington. “A group of mostly couples in their 20s took the first steps toward buying a house Saturday by participating in a five-hour class to learn more about the homebuying process. The class, sponsored by the state Housing Finance Commission, is required by the state agency if prospective homeowners plan to use one of its programs, such as borrowing money for a down payment on a new house.”
“Prospective homeowners can prepare themselves for a higher monthly mortgage payment as renters, said Eagle Home Mortgage senior home loan consultant Nona Woodard. If monthly rent is $800 a month and a mortgage is $1,200 a month, renters should pay rent, then set aside an additional $400 to see if they can afford the higher payment, she said. ‘We don’t want you go to into payment shock,’ Woodard said.”
“Matt and Audrie Shellhart of Olympia attended Saturday’s class as longtime renters looking to buy a house for their growing family. Audrie said she and her husband have been careful with their money and think they could afford a monthly mortgage of $1,100, up from the $640 they pay in rent.”
“The good news is that the current South Sound housing market for the Shellharts and others is a buyer’s market, said real estate agent Shelly Field. An agent might show prospective buyers a house that appears to be beyond their budget only because they know ‘you can make a lower offer,’ she said.”
“Brian and Leslie Thompson of Tumwater joined the class because they said they were tired of being renters after six years of renting a condo, paying $950 a month. Leslie…seeks a house in a rural area that will offer more privacy. Brian’s wish list was shorter: ‘I just want a garage,’ he said.”
“In the year-over-year period ending in January, Thurston County median prices for single-family residences and condos fell 8.59 percent to $239,950 from $262,500, according to Northwest MLS data.”
The KOMO News from Washington. “An attorney has filed six lawsuits against the developer of a luxury condominium as well as JP Morgan Chase Bank for allegedly defrauding non-English speaking immigrants through predatory lending. Bellevue Towers boasts luxury living at its finest. The units feature a state-of-the-art kitchen and floor-to-ceiling windows. Attorney Jim Robinson said his clients, Daniel Kasimov and his wife, thought they’d sealed the deal on a $1.5 million unit in the complex.”
“But Kasimov only makes minimum wage, earning $20,000 per year. ‘He was told, ‘Don’t worry about that. The bank would never loan you money that you couldn’t afford to pay back,’ Robinson said.”
“Robinson represents six clients, all immigrants and many who can’t speak English. He claims they’ve all fallen victim to predatory lending. Robinson said his clients lost hundreds of thousands of dollars in earnest money, which is now sitting in escrow. Kasimov borrowed $75,000 to put down as earnest money.”
“Robinson alleges JP Morgan Chase overstated Kasimov’s annual income in order to pre-approve him for the loan. The pre-approval, however, never led to an actual loan and Kasimov lost his earnest money, Robinson said. ‘I can’t understand why they haven’t given him the money back,’ he said. ‘It’s come to this. I mean, this would not have been a lawsuit if they would’ve just given him the money back.’”
The Vancouver Sun from Canada. “The luxurious Ritz-Carlton hotel and condominium project in downtown Vancouver will not be completed as planned, the developer said. Holborn Group president Joo Kim Tiah said buyers of all pre-sold condo units will get their money back, but he refused to say the more than $500-million project is dead.”
“Tiah said Tuesday the project was ‘put on hold’ because they had not achieved the sales that they wanted. Only 62 of the 123 condos in the tower had been sold, not enough for the developer to move ahead and complete the project by 2011, he said.”
“What happened to the Ritz-Carlton could be the beginning of a wave of failures for other condo projects in Metro Vancouver, said Trevor Boddy, an architecture critic and consultant for urban design in Vancouver. ‘The failure of the Ritz-Carlton is the tip of the iceberg. It’s the first very large tree to fall downtown, and there will be a number of others,’ Boddy said.”
“Bob Rennie, a marketer for the project, said the global economic downturn has affected the luxury housing market. Rennie said property development projects will go ahead, but developers will have to refocus on what’s important to homebuyers in future. ‘What’s going to bring us out of this new economy? Is it affordability or is it luxury? I think there is really going to be a focus on affordability,’ he said.”
The Canadian Press. “‘It would be really foolish for us to go ahead with the project,’ said Tiah. The development would have been the second-tallest building in the city and was scheduled to be completed in 2011. Prices ranged from between $2.5 million and $10 million, with the penthouse set at $28 million.”
“The cancellation is the latest in a string of troubled developments in Canada’s most expensive real estate market which experts say is in a serious slump. ‘Vancouver’s market is already crashing, it’s no longer a question,’ said Brian Ripley, CEO of consulting group Oakes Ripley & Associates Inc. ‘Developers knew the top was in last year, it is not a mystery.’”
“Some condo developers are giving away cars and cutting prices by up to 40 per cent to try to unload unsold units. There are also lawsuits flying between developers and buyers attempting to walk away from pre-sale contracts. Another high-end development in Vancouver - the 61-storey, 191-unit Shangri-La that is the city’s tallest building - was completed earlier this year. Many of its units are currently being posted for sale and rent on local websites at prices considered cheap by Vancouver standard.”
“January saw Metro Vancouver builders start work on fewer than half the number of new homes they started in January 2008, a sign of things to come in 2009, according to Canada Mortgage and Housing Corp. ‘We were kind of expecting [a significant drop],’ Robyn Adamache, a Canada Mortgage and Housing analyst said in an interview. ‘I don’t know if we expected it to be this big.’”
“Adamache said inventories of unsold new homes built up over 2008 to double the number unsold at the end of 2007 (and) that with a record number of condominium units under construction — in the order of 18,000 units — she expected the inventory of unsold new homes could increase further over the next couple of years.”
The Edmonton Journal from Canada. “It was last August when real estate author and consultant Don Campbell crowned Edmonton the best place in North America to invest in residential real estate. Since then, the price of oil has plunged, the Alberta government has predicted a billion-dollar deficit and the city’s housing market has seen starts, prices and sales fall.”
“So is Edmonton still the best place to invest in residential real estate? ‘Absolutely, it is,’ he said during a visit to Edmonton from Vancouver. ‘There’s no way the world can continue to afford $30 and $40 oil. … Eventually, within 18 or 24 months, we’re going to see the market come back to something that’s more normal.’”
“Campbell is author of Real Estate Investing in Canada 2.0 and president of a business that offers training to its members on real estate investing. Last summer, a REIN report ranked Edmonton as the best place to invest in residential real estate, followed by Calgary, Red Deer, St. Albert and Grande Prairie. ‘That being said, we were so superhot here that the pendulum moved so quickly and has gone too far the other way. Like all economic pendulums, it comes back towards the norm and we’ll start to see that pendulum start to swing a little bit more for Edmonton’s sake. Right now, if you’re focusing on yields, it’s still the best place,’ he said.”
“In a note of caution, Campbell said condo buyers should be wary of rushing to buy a piece of undeveloped property. ‘We need to be cognizant that there are an awful lot of new condos coming onto the market, not just in Edmonton, but in Calgary and Vancouver. Please don’t line up to buy a piece of property,’ Campbell said.”
