Dreams Don’t Always Match With Reality
The News Journal reports from Delaware. “Whether you’re a home builder or a home buyer, these are times when dreams don’t always match with reality. At the luxury beach community The Peninsula on the Indian River Bay, the tide of recession-driven frugality has pushed one builder toward a less-opulent vision. Faced with the reality that luxury homes aren’t the hot properties they once were, Virginia-based builder Miller & Smith has decided to clear the slate with a May auction, with opening bids at $200,000 for houses that once listed for $890,000 — a 71 percent difference.”
“People attracted to the auction have plenty of chances to find a real deal, said four-year resident Marcy Koppenheffer. After buying their $800,000-plus villa at the height of the market, she and husband Jeff know it has lost some value, but also sense it will bounce back when the economy does. ‘The atmosphere within the community is spectacular,’ she said. ‘It’s our heaven. When we enter the gates, we enter heaven.’”
“Part-time resident JoAnn Schmura, also from Berks County…and husband Barry bought their condo for $472,000, and are seeing comparable properties go for $50,000 less in today’s market. ‘We bought at the top of the markets, but I’ll tell you, we still got a bargain,’ said Schmura, who is a veteran real-estate agent and thoroughly confident people will again scramble for Peninsula properties. ‘Every market is like this. I’ve been in real estate 20 years. It’ll adjust. It’ll flatten.’”
“‘In the first year, we had such demand that people would come days before the property came on the market and they would sleep in their cars. It was crazy,’ said Sandi Bisgood-Woodell, an agent who has listed The Peninsula properties for years.”
“Once its inventory of houses in the 750-acre development is cleared, the builder will continue its efforts there — but with a mind toward a more-affordable experience. ‘It will probably be a little lower price point. We will probably scale down the square footage a bit,’ said Rhonda Ellisor, VP of sales and marketing, about any future building.”
The Washington Post. “Anxious to meet the bank’s demands for quick action, Andrew Garcia and his fiancée, BethAnne Hoffmann, rushed to find financing to buy a foreclosed-on house in a lovely tree-lined Baltimore neighborhood. That was in January.”
“A month later, the bank that’s selling the house broke its own closing deadline. The couple have been in limbo since. In frustration, they turned to their congressman’s office for help. Only then did they receive an apologetic call and a new proposed closing date of April 24 – but still no signed paperwork.”
“”It’s unbelievable. With all we hear about all the homes out there that need to be sold, I have to call my congressman in order to purchase a house,’ Garcia said. ‘If that’s the process, there’s no way we’re going to clear all these foreclosures.’”
The Baltimore Sun in Maryland. “After requesting $4.4 million, Howard County is to get $750,000 in federal foreclosure relief funds from the state to buy, fix and resell bank-owned vacant homes. That would be enough for ‘2.5 homes,’ the county’s housing director, Stacy L. Spann, said recently, though he added that Howard might get a second crack at more money if some funds are left unspent.”
“The other frustration is that the money can’t be used to prevent foreclosures, only to recycle homes already owned by banks, Spann said. ‘It’s not proactive, and there’s no flexibility,’ Spann told county Housing Commission and Housing and Community Development board members recently. ‘It’s a real challenge when you can’t prevent foreclosures.’”
“Nervous consumers have been offered free suits,plane ticket refunds and the chance to return new cars if they lose a job after making a purchase. Now builders and real estate companies are rolling out incentives to pay a laid-off homebuyer’s monthly mortgage in hopes of jump-starting the weak housing market.”
“Long & Foster Real Estate Inc. started a program Wednesday offering insurance that helps pay a buyer’s mortgage for up to six months. With sellers slashing prices and mortgage rates at historic lows, ‘we know there are homebuyers out there that would like to take advantage of buying a home in this market but don’t quite have the confidence to do so,’ said Glen Phillips, chief risk officer at Chantilly, Va.-based Long & Foster, which is one of the largest real estate companies in the Baltimore area.”
The Frederick News Post from Maryland. “Job loss and economic uncertainty continue to plague the housing industry, professionals in the field say. The latest foreclosure figures for Frederick County show the number for March — 188 — up 7 percent from February.”
“More may be on the way. ‘I expect some people have been hanging on,” said Hugh Gordon, branch manager for First Home Mortgage in Frederick. ‘People have been using credit cards, robbing Peter to pay Paul, and that’s running out. They are hoping for a time when the money will come back up, but that’s not happening.’”
“Denise Jacoby, executive director of the Frederick County Builders Association, agreed that job loss is the biggest factor in foreclosure. ‘It is the highest in 25 years,’ she said of the unemployment rate. ‘We need to get people back to work.’”
The Virginian Pilot. “Real Estate Information Network Inc. reported that 799 homes sold last month, up 38 percent from February but 10 percent below the number sold in March 2008. The Virginia Beach-based multiple listing service also reported the median sale price in March was $214,000, up 7 percent from $200,000 in February but down 4.3 percent from $223,600 a year earlier.”
“Home sellers and real estate agents alike hope this spring selling season marks the end of the local housing downturn. ‘Usually by May we know about how our year is going to go,’ said Ron Pearman, regional vice president of Long & Foster Real Estate in Virginia Beach. ‘If we’re going to make it at all this year, it’s going to be between now and September. We’re poised for substantial gains, but we just don’t know for sure.’”
“Pearman said foreclosures now make up about 15 percent of sales monthly. He said he expects home prices to stay below year-ago levels through the summer. ‘We still have way too much inventory right now,’ he said.”
“James Koch, an economist at Old Dominion University, said he expects prices to remain stable through summer, then drop again in the fall. ‘If spring and summer doesn’t bring a big bang, you’ll see the homeowners who have been reluctant to lower prices giving in,’ he said.”
The Charlottsville Daily Progress from Virginia. “During the third week of every month, Eddie Cox sits down with his files to review how much lumber he has on hand, how fast it’s selling and what it cost him. Cox, purchasing director at Roper Brothers Lumber Co. Inc. in Petersburg…spends half a day calculating what the lumber yard’s inventory is worth. His one-page report indicates if it is time to cut prices. It’s been saying for months now that it’s time to cut prices.”
“That trend is happening in lots of businesses - and a steady slide of tumbling prices is already translating into lost jobs and failing companies. Deflation is when prices fall, and keep falling, so that businesses’ revenue drops and owners start cutting operations and laying off people. Because falling prices still aren’t boosting sales, Weyerhaeuser Co. shut 12 Southern sawmills at the end of March. International Paper will close its lumber mill in Franklin at the end of May, idling 123 workers. Announcements of closings and cutbacks at Southern mills are routine these days, Cox said.”
“‘Mills that used to operate 24/7, three shifts, are now barely working one shift,’ he said. ‘It’s like a week doesn’t go by without some announcement a mill is shuttering.’”
“He said mills regularly call to tell him to cut prices to try to move more lumber. When consumers feel there is always a discount available, marking down prices won’t help much, said David J. Urban, a professor of marketing at Virginia Commonwealth University. When consumers ‘hear the same message over and over again, after a while, they begin to ask when is a sale a sale,’ he said.”
The Ashville Citizen Times from North Carolina. “When people of a certain income level consider moving to the Asheville area, they’re drawn to the mountains, the city’s cultural amenities — and high-end housing developments. During the first part of this decade, that segment of the real estate market — typically planned communities where homes start at $500,000 and run into the millions — was white hot.”
“But the downturn in the economy hit the upper end of the development industry hard last year. ‘Last year was a difficult year for master-planned communities and maybe for the real estate market in general,’ said Harry Redfearn, founder and president of Asheville-based Private Mountain Communities, which serves as a sort of real estate clearinghouse for people looking for homes or lots in upscale communities.”
“‘Most of our developer clients were off (in sales) 40-60 percent’ in 2008 compared with a year earlier, he said.”
“The tough times have caused significant problems for some projects: A development in Woodfin is in bankruptcy, and one in Lake Lure stopped sales. Kent Smith, whose company is developing the 127-home Thoms Estate subdivision in the Beaverdam area north of Asheville, knows all about sales and the credit market drying up. Only six lots have been sold so far. At another Beaverdam development, Bartram’s Walk, it appears from land records that developer Beaverdam Land Conservancy has sold only three of 74 lots in the project. The last recorded sale was in September.”
“Other observers, however, say the issues that have created problems for upscale communities are not going away soon. ‘Some of these folks who are superwealthy are superwealthy on paper,’ said local real estate analyst Don Davies. ‘They have assets, but to try to liquidate them (to buy a home in WNC) is difficult.’”
“Speculators have abandoned the market, resulting in an oversupply of product, he added. ‘We’ve got too many of these bigger places competing with each other, which have lots of vacant lots sitting inside of them,’ he said. Davies predicted ‘more Versants,’ a reference to a Woodfin development that is in Chapter 11 bankruptcy protection.”
“An analysis by local real estate agent Scott Raines in late March found that if current sales rates continued, it would take more than 10 years for the market to absorb the 272 existing homes priced at $1 million or more on the MLS for the Asheville area.”
“One might think Seven Falls’ developer Keith Vinson would like nothing more than a return to the burning hot market of a few years ago, but he says he just wants to see steady sales at reasonable prices. He likens the real estate bubble and the continually escalating prices to drug addiction: The economy, and Americans, don’t need to relive that experience.”
“‘Are we going to get back to where it was a few years ago? I sure as hell hope it never does,’ Vinson said. ‘It was exuberance, it was irresponsible. Nothing goes up that high that fast without coming down equally as fast and equally as far.’”
The Charlotte Observer from North Carolina. “Mecklenburg County government, like so many families, made big plans based on ample credit during good times. Now that the county’s income is dwindling, it’s time to scale back. The debt crunch will play out most dramatically in the school system, which traditionally takes the biggest bite out of the county’s capital budget.”
“To get land in the booming Ballantyne area of south suburban Charlotte, CMS agreed to buy 39 acres from a developer who already had it zoned for a small subdivision. The plan was for CMS to build roads and lay utility lines, get the lots ready for construction and sell them to a company that would build the houses. Ballantyne Elementary opened in August, and in September CMS staff told the school board there were interested buyers.”
“Since then, the housing market has plummeted even further. The potential buyers lost interest, says Associate Superintendent Guy Chamberlain, the administrator in charge of construction. Mecklenburg County now has a two- to three-year backlog of developed lots, he said. That means for the foreseeable future, the school will continue to nestle among empty roads bearing such names as Knowledge Circle and Great Future Drive.”
“School board member Larry Gauvreau and county commissioner Bill James say the district’s plan to do roughly $250 million a year worth of building and renovations was unrealistic and wasteful. They call the cutbacks a much-needed reality check. ‘Patronage is easy to dole out when there is no limit,’ James said in an e-mail.”
“Two years ago, James and Cynthia Kwolyk put their Connecticut home on the market. Their goal: Move to Charlotte with its milder weather and nearby relatives. Then their house sat, waiting for a buyer. The family still moved – even though the house didn’t sell for 11/2 years, and they had to drop the price $100,000.”
“Charlotte owes much of its prosperity to newcomers willing to pull up stakes and gamble on opportunity here. But today’s newcomers face a new economic reality. Many can’t find jobs. They’re renting, not buying, expensive homes. They’re adding to the demand on public services, including schools, that are struggling with budget cuts. In a city that prides itself on being a destination – but is now beset by recession – have newcomers become a drag?”
“The Charlotte metro area added 55,368 people for the year ending July 1, 2008 – 3.4 percent more than the previous year. Experts say newcomers have helped boost the local unemployment rate to a record high of 11.7 percent in February, more than double the 5.4 percent a year earlier and the highest figure since modern records have been kept. Local companies are adding jobs, but not enough to offset the growing number of job-seekers and newly laid-off employees.”
“It’s an issue that other growing cities, including Austin, Texas, and Portland, Ore., also face. Portland’s unemployment rate hit 10.7 in February, double the previous year’s. Portland State University economist Mary King attributes the increase not to new arrivals but to the thousands of people who’d settled in the area years ago. Once, she said, Portland was seen as the last affordable city on the West Coast, drawing families in search of relatively low housing prices.”
“Tony Crumbley, of the Charlotte Chamber, said the county’s record-high unemployment rate paints a bleaker jobs picture than he believes exists. He pointed to cities, such as Buffalo, with 9 percent unemployment in January. Buffalo lost 2,200 people last year, while Charlotte’s population soared. ‘There’s nobody left to be unemployed,’ he said. ‘They’ve all moved to Charlotte.’”
The Sun News from South Carolina. “Twenty-two high-end condos at The Pointe development in Myrtle Beach will go on the auction block next month. The listing price for the units was originally $1.5 million to $2 million apiece, but will be discounted by about 69 percent on average, starting in the high $400,000s at the auction, said Craig King, president of the real estate auction marketing firm handling the auction.”
“The developer, Drake Development, has been involved in many projects on the Grand Strand. The Pointe condos to be auctioned were completed in 2008. ‘The developers are down to their last units,’ King said. ‘This’ll be a developer close-out.’”
“King also handled an auction at Broadway Station in September, where 65 condos were auctioned off for a total of $4.7 million.”
From The State in South Carolina. “Home sales in the Columbia area are improving each month as the spring selling season approaches, but sales are still down 28 percent for the first quarter over last year, according to industry data released Monday. Median price was down 6.3 percent for the quarter to $134,000 in Columbia.”
“Statewide, home sales were down 30 percent for the quarter and the median price was down 8 percent to $135,000, the S.C. Realtors trade group reported. Sales in most regions in the state were down between 20 percent and 40 percent.”
“Agents hope more people will follow the lead of people like Kim Cox and her husband, Zach, who weren’t in the market for a new home but decided to buy because of interest rates at historic lows. They bought their first house, which has 1,500 square feet, in Rosewood just two years ago. But with interest rates so low, they decided they could probably get a bigger house now than if they wait two years to buy, Kim Cox said.”
“They locked in a fixed rate of 4.375 percent for 30 years on a 2,500-square-foot house in Saluda River Club in Lexington. Meanwhile, they are renting their Rosewood home and considering refinancing their 5.75 percent rate on it. ‘It’s a scary time to be doing this kind of thing,’ Cox said. But, ‘it was a really good opportunity to take a shot at it.’”
“Prices also are down because the market is correcting for slight overinflation during the boom of 2005 and 2006, said David Patterson, an agent in Columbia. He said he is working some short sales where homes were appraised at 10 percent to 12 percent more than the market would bear. ‘Prices are adjusting to more reasonable levels,’ he said.”
“Patterson said he looks for sales and prices to stabilize or possibly even swing positive by the third quarter. But the biggest factor will be bringing down South Carolina’s third-highest-in-the-nation jobless rate, he said. ‘If the job market is not restored, then we’re still going to have a lot of pent-up demand.’”
“Margaret-Ann Ashburn, broker-in-charge of Russell & Jeffcoat’s Forest Acres office, said it is mainly the upper-end market over $500,000 that is suffering right now. ‘There are some people who are taking big hits on their houses now,’ she said. ‘There are some deals out there.’”
