March 9, 2009

Bits Bucket For March 10, 2009

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This Whole Mess Started In The Housing World

The Union Leader reports from New Hampshire. “About 300 investors, prospective first-time buyers and merely curious onlookers, all gathered for an auction of more than 200 foreclosed properties in New Hampshire and Massachusetts. The auction took place in Boston, with a simulcast feed to the Wayfarer Convention Center. During a fast-paced day of transactions, homes once valued at figures ranging from less than $100,000 to nearly $1 million went for as little as 15 percent of their former values.”

“Chander and Rosy Gandhi were among the investors. The Mont Vernon couple — he works for a paper manufacturer; she’s a high school science teacher — came prepared to buy two or three homes from a selection of about 10 they’d selected from the auction catalogue. They wound up purchasing just one, a Hillsborough home previously valued at $159,500, for $52,500. The home, he said, is an investment toward college tuition for their two children.”

“‘Since I haven’t seen this one, I don’t dare buy another one,’ Chander Gandhi said.”

From Seacoast Online. “What is not known is how many…mortgage holders in New Hampshire and Maine will benefit from the two programs in the Make Home Affordable plan, which was crafted to help two different groups of struggling homeowners. Supporters of the plan hope it will help lead to a floor in the housing market. ‘The core of our economic problems is primarily due to a drop in the value of real estate,’ said Sen. Judd Gregg, R-N.H. Despite it’s hefty price tag, Gregg supports the Obama administration’s ‘aggressive plan’ because ’stabilizing the housing market is crucial’ to helping stop the economic slide.”

“‘It is imperative that we continue to move with speed to help make housing more affordable and help arrest the damaging spiral in our housing markets,’ said Treasury Secretary Timothy Geithner in announcing the guidelines for the plans.”

The Providence Journal from Rhode Island. “Industry experts say the program will not reach tens of thousands of Rhode Islanders who now owe more on their mortgages than their homes are worth. Borrowers who owe more than 105 percent of their home’s current value do not qualify for refinancing under the administration’s Making Home Affordable program. And loan modifications are also unlikely for these severely ‘underwater’ borrowers. In Rhode Island, 25 percent of all borrowers — nearly 43,400 homeowners — owe more on their mortgage than their home’s value, according to a new report by Moody’s Economy.com and Equifax.”

“‘You have to demonstrate a hardship and you have to demonstrate your ability to pay,’ said Nicolas P. Retsinas, director of the Joint Center for Housing Studies at Harvard University. ‘It is intended for people who are struggling, but not people without means.’”

“‘The fact of the matter is, there is a large–– extremely large –– percentage of homeowners nationally and in Rhode Island who simply cannot afford to be homeowners,’ said Chris Lefebvre, a bankruptcy lawyer in Pawtucket. While the program has ‘good intentions,’ he said, it will not help those people who bought houses during the boom years with zero-down loans and have no equity in their houses.”

“‘I’d say almost all of those [homeowners] are underwater by 10, 20, 30 percent,’ said Kenneth Cesaro, sales branch manager of the New England Regional Mortgage Corp., in Warwick.”

“The program is so new that many people in the industry –– including the mortgage lenders –– are still trying to figure it out. ‘I called Fannie Mae with questions and they didn’t have any answer for me yet,’ said Paul J. Cappello, senior vice president of lending at the Pawtucket Credit Union.”

The Advocate from Connecticut. “At times the meeting seemed like a wake, but there were no occasional gentle jokes to ease the sadness. The 60 residents, many of them facing foreclosure or in danger of it, never managed a smile. They just stared straight ahead, their ears pricked for any advice. Some jotted notes and phone numbers. One woman cried.”

“At the front of the room was a seven-member panel of housing experts assembled by U.S. Rep. Jim Himes, D-Greenwich, who had hosted a similar meeting earlier in the day in Bridgeport. ‘We could see 8,000 foreclosures in this congressional district in the next four years,’ Himes said, ‘and that is not acceptable. This whole economic mess started in the housing world,’ he said. ‘The good news is that lots of efforts are being made in Washington and Hartford.’”

“A woman named Rose stood up and burst into tears, saying that her $500,000 home, on which she owes $360,000, would be auctioned in May. In the current economic climate, she said, she can’t make her monthly $4,002 payments, and she can’t sell her home. ‘All they want to do is take my house, and I’ll be on the street,’ said Rose, adding that she had lost her job and her husband’s business is not doing well.”

The Boston Globe from Massachusetts. “With the birth of twin sons, Andy Gatchell and his wife, Mandy Neff, thought about buying a home, but money was short and prices were soaring. Five years later, they’ve got the down payment, they’re preapproved for a mortgage, and prices seem affordable - yet they’re still renting.”

“‘It’s a pretty big decision, and my company’s not growing as fast as it was,’ said Gatchell, a senior financial analyst for a Woburn manufacturer. ‘I doubt anything would go horribly wrong, but it seems more possible that it could.’”

“In January, 70 percent of US households said it was a good time to buy, up from 61 percent a year earlier, according to the Reuters/University of Michigan Survey of Consumers. But home sales fell 9 percent over the year, according to the realtors association. ‘The problem of affordability has been overtaken by the problem of unwillingness,’ said Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies.”

“Mel Martocchia of Martocchia Realtors in Waltham said he recently held an open house for two town houses at a Watertown complex, each priced at about $400,000. A year ago, he might have attracted five people to the properties; this year, at least 15 took a look. But he’s still waiting for an offer. ‘We know there’s people out there, but they are still hesitant to pull the trigger,’ said Martocchia. ‘They’re hesitant because of the economy, and they’re waiting for prices to go down.’”

“Andrew Foland of Cambridge…and his wife, who live in an apartment with their two children, started looking at Cambridge condominiums last fall. They had the credit, income, and 20 percent down payment needed to get a mortgage, but steadily declining prices persuaded them to wait. Foland estimates prices in Greater Boston have been falling about 1 percent a month. So each month they wait, they save thousands of dollars.”

“‘It’s very hard to time the bottom, but once the bottom is reached, it’s going to take a while to go back up,’ he said. ‘We’re happy to keep renting.’”

NECN on Massachusetts. “Hundreds of houses in Massachusetts and New Hampshire were up for auction on Saturday. All of the properties have been vacant for at least six months, but as much as 90 percent of the homes were expected to be sold buy the auction’s end. Still, first time home buyers were weary of taking the plunge, especially on a property sold at auction.”

“‘Some of them are really, really good deals — some of them not so much,’ Jennifer Magazzu said. ‘I hope they know what they’re getting.’”

The Associated Press on New York. “Hundreds of houses — some with starting bids as low as $1,000 — were sold to the highest bidders Sunday in a rare auction of foreclosed properties in the New York metropolitan area, the company running the sale said. Tami Burgess, who paid $340,000 for a Yonkers home that she’d been eyeing since October, said she was excited but had ‘a lot of work to do on the house.’”

“The sale was protested by a handful of picketers who chanted: ‘Evictions are a crime! It could be your house next!’ One of the protesters, Sharon Black, said she was in bankruptcy and hoping to save her Baltimore home. ‘These folks are profiting off the people’s misery,’ she said.”

“Ed Bates paid $115,000 for a house in Nyack and said he had no qualms about buying a foreclosed home. ‘It’s really not taking someone’s home for the simple reason that it’s vacant,’ he said. ‘If somebody was in there and I had to get them out, chances are I wouldn’t have purchased the house. I feel sad for them, but still, that’s the way the world is.’”

The New York Post. “In a deal that gives a whole new meaning to ‘home free,’ a tidy, three-bedroom brick home got snapped off a city auction block yesterday for a mere $12,500. That’s less than $6 a square foot for the roomy 2,092-square-foot house in Weedsport, in the Finger Lakes region upstate.”

“‘I’m sure my wife made a really good deal. She knows to stay away from bad plumbing and vandalism,’ said a smiling Marc Ettrick, the Long Island lawyer whose wife, Annie, called out the $12,500 bid for the Weedsport steal. That property had been sold to its previous owner for $95,000 before ending up in foreclosure - meaning the Ettricks got it at an 87 percent discount.”

“The couple plans to rent out the six-room home, which was built in 1861, has aluminum siding and sits on 1.31 acres of land a 30-minute drive from Syracuse. The Ettricks laid out the cash for the home without having ever seen it in person. A photo of the property was flashed on the wall during the bidding. ‘We have no idea where it is,’ Marc said.”

“‘I really can’t believe it. I’m still shaking,’ said Carlo Solano, a 30-year-old construction worker from Brewster whose bid of $350,000 for a three-bed, three-bath home in Port Chester, Westchester County, bested a bidder over the Web yesterday. The home’s prior owner had paid $740,000 before falling behind on mortgage payments.”

“Muhammad Ali, a real-estate investor from The Bronx, said, ‘I could really feel the blood pumping,’ as he bid on a four-bedroom house on Taylor Avenue in the same borough - whose prior sale price was $450,000. His winning offer of $275,000 was ‘a little higher than I would have liked,’ Ali admitted. ‘But I didn’t want to wake up tomorrow knowing that I had lost it.’”

“Another investor, Peter Persaud of South Ozone Park, Queens, said, ‘Anybody who has money right now would be foolish not to look into the home market for investments. I wasn’t born yesterday, and I know real-estate prices will eventually go up.’”

CNN on New York. “Victor Guevares rented apartments and saved money for 12 years, hoping eventually to buy a home for his family. Now, the foreclosure market might make the New York man’s dream come true. Banks and other lenders were unloading foreclosed houses, and they were selling at 50 percent to 60 percent below their highest values. Guevares figured it was now or never for his family of four.”

“It was a madhouse at the convention center, where speakers blasted bids throughout the room. Finally, after more than four hours, Guevares’ dream house came up for bids. An auctioneer barked out bids and tuxedoed assistants ran up and down the aisle. Guevares made the opening bid, but in a heartbeat, at least two other competitors jumped in. The bids climbed. They went past $100,000, and eventually $200,000. Guevares looked shell-shocked, but he ended up with the winning bid: $230,000.”

“Although he put down about $12,000 in cash, he’s not the home’s proud owner just yet. He might have to bring the house up to code before he can apply for a loan. He has 30 days to seal the deal, and the clock is ticking. Still, he said he can ’see the light at the end of the tunnel.’ ‘It’s just wonderful. I feel I’m a part of the American experience now,’ Guevares said.”

“‘I just have a feeling that in six to nine months, we’re going to start to see a resurgence in the market. So, I think now is the time for us to get into it, if we can,’ he told CNN.”

“Before the auction, his 8-year-old son, Devon, had a chance to look over his possible new home and what would be his second floor bedroom and his own back yard. ‘It would be nice,’ he said. ‘You won’t need to pay rent.’”

NBC New York. “USHomeAuction says the homes are discounted by a minimum of 70 percent from their previous valued price. For example, a 2,500 square foot house in Jamaica, Queens valued at $555,000 has a starting bid of $69,000 and sold at Sunday’s auction for $165,000!!!! In Mount Vernon, N.Y., a home valued at $340,000 sold for $135,000. In Newburgh, a home valued at $125,000 sold for $60,000.”

“‘They’re not the nicest properties, but people can get a great bargain, especially if you’re handy,’ said (spokesman) Rick Weinberg.”

“Gary Demaris, of Montgomery, N.Y., wasn’t shy about looking for a home to flip ‘its time to take advantage of the deals.’”

The New York Times. “With sales prices of Manhattan apartments having tumbled by perhaps a quarter in just the past few months, pinpointing the bottom has become a top priority for anyone eager to buy, sell or broker a deal on a home in New York. Some industry observers foresee market drops of 40 percent, while others think that is too extreme and suggest that price reductions of 25 percent will more be likely the new norm.”

“There’s no question, though, that the boom-or-bust experience has arrived in Manhattan, which had seemed to be avoiding the fate of Las Vegas and Florida. ‘It’s almost surreal,’ said Dottie Herman, the president of Prudential Douglas Elliman, referring to the abrupt turnabout after the collapse of Lehman Brothers last fall. Until then, prices had been marching upward, with the median price of an apartment more than tripling in a decade.”

“Others are more optimistic. ‘I’m not disagreeing with you that values are coming down,’ said Pamela Liebman, the president of the Corcoran Group. But, she said, ‘there’s no way the Manhattan market is dropping to those levels that are being talked about. Certain apartments might, but as a whole it will not happen.’”

“Ms. Liebman…like many brokers manages to see the positive in any environment that comes along. ‘Why should an average one-bedroom with nothing special to offer cost well over a million? The market got ahead of itself, and this correction is good for New York because it brings the affordability back in line.’”




Bits Bucket For March 9, 2009

Please visit the HBB Forum. Post off-topic ideas, links and Craigslist finds here.