This Time, There Is No Place To Hide
The Bozeman Daily Chronicle reports from Montana. “So far this year, 101 single-family homes in the Bozeman area have sold, compared to 502 in all of 2008 and a peak of 816 in 2005, according to the Gallatin Association of Realtors’ MLS. The median price of a home here fell 18 percent, from a peak of $341,851 in 2006 to $280,000. It’s frustrating for sellers to discover that their home is no longer worth what they paid for it, or even what it was worth a couple years ago.”
“Jake Lucas and his fiancee, for example, are trying to sell their west Bozeman home before they move to Florida. They put their 2,000-square-foot home on the market for $319,000 about a month ago. They haven’t gotten any offers, Lucas said. So they are weighing their options. If they can’t get their asking price, they are considering renting it out until the market improves.”
“‘We kind of don’t have to sell,’ said Lucas, 30. ‘Personally, I’m not willing to lose $20,000 or $30,000 so that I can not worry about it. Renting it out for a year or two until the market gets better, that’s worth it.’”
“As of mid-May, the Gallatin County Clerk and Recorder’s Office had received 231 foreclosure notices, compared to 100 in 2008. lerk and Recorder’s Office had received 231 foreclosure notices, compared to 100 in 2008. Those numbers don’t include the 75 homeowners this year and 33 last year who made good on their missed payments or settled their foreclosures by other means. One way to prevent a foreclosure is a short sale. ‘There are a lot of short sales going on right now,’ said Paul Dueringer, real estate broker in Bozeman. ‘There’s a lot more than we’ve seen in a long, long time.’”
“As for land, just 13 lots have sold around Bozeman this year, compared to 127 in 2008. None have sold in the Manhattan and Three Forks areas. ‘Lots are real slow,’ Dueringer said. ‘Lots that maybe cost $120,000 before are down to $75,000. … We have a glut of lots on the market right now.’”
From USA Today. “A year ago, the folks in Billings, Mont., thought their housing market was recession-proof. It had been sheltered from the past two economic recessions. ‘They just blew right over us,’ says Twyla Best, president of the Billings Association of Realtors.”
“But in July, economic woes hit Billings, the largest city in the Big Sky State. ‘This time, there is no place to hide,’ says Patrick Barkey, director of the University of Montana Bureau of Business and Economic Research. ‘The recession is here, and it’s not over.’”
The Idaho Statesman. “The median assessed value for residential real estate in Ada County as of Jan. 1, 2009, was $187,500 - down 12 percent from $212,800 a year ago, according to the assessor’s report. Countywide assessments have fallen the past two years. ‘They (home values) are tanking, aren’t they?’ said Assessor Bob McQuade.”
“McQuade said people who purchased their homes in 2005 and 2006 were able to take advantage of skyrocketing home values during the housing boom. Those who purchased in 2007 or 2008 have seen their equity drop and now may owe more than the house is worth, which means they can’t refinance or sell the home without taking a loss, he said.”
“‘They’re trapped,’ he said.”
Idaho News Now. “Many local homeowners are trying the short sale option as a means of steering clear of the more credit damaging foreclosure. But as many real estate agents told us - that system is not working.”
“Lisa Funkhouser is a veteran Treasure Valley realtor who came out of a short sale scenario that had her on the verge of doing what so many agents have done since the housing bubble burst – getting out of the business. One client of Funkhouser, a Nampa homeowner, had to leave the state and asked Lisa to manage a short sale on their one time home. That home was originally valued at $500,000.”
“For 18 months, Funkhouser tried to sell the house. She even mowed the lawn, did landscaping, and made repairs. The work finally paid off: she received an offer for $345,000. But the bank had to give their OK on the offer – and they took months to respond. The bank said the property was worth $365,000. Comparable properties in the area were selling for much less. ‘They wanted more money,’ Funkhouser said.”
“With no agreement in place: the bank brought the foreclosure hammer down. Three weeks later, Wells Fargo Home Mortgage put the home on the auction block. Opening bid? $310,250 – just $250 more than Funkhouser had negotiated in the short sale. ‘And my heart sunk,’ Funkhouser said.”
“Wells Fargo didn’t get any takers in the auction – so the home went back on the market. But Funkhouser was no longer in the loop. ‘I felt very bad for her. It was totally unfair,’ buyer Wendy Crownover said. ‘She spent a year and a half taking care of the property. She got absolutely nothing - she was in tears.’”
“Funkhouser said, despite her bad experience, she isn’t going to stop working on short sales. ‘Nope that’s where the market is,’ she said. ‘With probably close to 70 percent of the market being short sales right now - if you don’t do ‘em you’re out of the business.’”
The Oregonian. “The spring buying season has started, and the numbers - surprise - don’t reveal many sunny story lines. The Portland-area median home price in April was $249,900, down 17 percent from the bubble-era peak. The number of closed sales through April was down 30 percent from a year ago. Anyone who bought after January 2006 has seen his home lose value.”
“The trouble is most acute among downtown condo towers and luxury homes. Sales of homes above $1 million are off nearly two-thirds from last year. It doesn’t look as if things will get better soon. In the Portland area, foreclosures and short sales accounted for nearly one in five of the 14,300 listings in the regional listing service last week.”
“Former Trail Blazer Rasheed Wallace has been trying to sell his 9,900-square-foot mansion in the exclusive Dunthorpe area since February 2006. He first listed it for $5.5 million and has since dropped it to $4.9 million. There are 55 homes on the market in Dunthorpe, enough inventory to last 3 1/2 years. Steve Kaer, Wallace’s real estate broker, said he has had one accepted offer that fell through. ‘People right now are being cautious,’ Kaer said.”
“The condo trouble is most clear among the downtown Portland towers that rose in the boom time. ‘The condos are still as dead as a doorknob,’ said Jerry Johnson, a Portland housing consultant to homebuilders and cities.”
“Demand was high for the futuristic John Ross tower when sales opened in 2005. A fifth-floor condo sold for $233,700 when the building was finished two years later. The buyer tried to flip the condo for a quick $25,000 profit less then two months later. The 638-square-foot studio sat on the market. And sat. And sat. Now, it’s in a short sale for $170,000 - a $63,000 loss.”
Oregon Public Broadcasting. “Bend and central Oregon real estate brokers and developers have already dealt with a double whammy: a collapsed housing market and a slowdown in new home construction. Housing prices are back where they were a decade ago. And the city of Bend says permits to build just 8 new homes were filed in April. That number was above 800 in August of 2006.”
“Darren Powderly is a broker at Compass Commercial. He says everyone’s been talking about the slowdown in commercial real estate as ‘the next shoe to drop.’”
‘Darren Powderly: ‘Along with ‘another shoe to drop’, another cliché is ‘the bigger the party the bigger the hangover.’ Central Oregon was one of the best real estate success stories in the country, and in some respects this is uncharted waters. But real estate is a cyclical business, so this will work itself out.’”
The Kitsap Sun in Washington. “Contractor Jerry Becker of Bremerton is $1.5 million in debt and close to ruin. He blames Westsound Bank for much of his misery. Over the years, he borrowed money to construct homes, develop land and build his business. But when the bank began its dive, and with suspicious regulators closely watching its every move, it stopped giving Becker draws on his loans.”
“Suddenly, he couldn’t pay his subcontractors or complete his projects. His livelihood screeched to a halt. His loans fells in arrears. He said he tried repeatedly to work with Westsound — he felt they could work it out as they always had — but the spigot was shut tight. ‘They didn’t care. They didn’t want to talk with me,’ Becker said. ‘I have no option but to go bankrupt.’”
“With home-appreciation rates rising 20 percent year after year, there seemed no end to the party. Westsound became a go-to bank for many local contractors like Becker. Many were overextended, but they were confident the economy would continue strong. ‘They would loan money to anybody,’ Becker said.”
“Becker’s son-in-law, Matt Templeton, said he was able to get $1.3 million in loans from Westsound when he was only making $35,000 a year.”
“And then there are the investors who lost their money. Westsound investor Rod Rodriguez of Chico lost several thousand dollars. He feels betrayed. Investment promoters led him to believe there was little risk, he said. He believed them, and admits he didn’t watch the falling stock price as closely as he might have.”
“‘It’s not investing anymore; it’s gambling,’ he said.”
The Calgary Herald in Canada. “Residents of a north Edmonton condominium learned last week it will cost $8 million to repair mould and rot in their six-year-old building. Patricia Lo, who sits on the board of the 200-unit condo, said residents don’t know how they will be able to pay their share of the repairs. Lo said she doesn’t know where she will find $45,000 to pay for her share. She was one of the last people to move into the complex, purchasing a $150,000 condo in January 2004.”
“‘We just feel so ripped off,’ she said. ‘We bought this condo. It was supposed to be built properly and it wasn’t. We just feel really helpless.’”
“Sandi Cooper, a spokeswoman for the Edmonton branch of the Canadian Condominium Institute, said people sitting on condo boards are struggling to deal with having to raise funds through special assessments to pay for repairs to new buildings. ‘It will be very prevalent for the next little while because during the building boom phase, qualified contract people were hard to find,’ she said.”
“Journeyman carpenter Ian Parker said he just went shopping for a new home and spotted deficiencies in many of the homes he saw, even the one he decided to buy. ‘They don’t even come close to building code, which is the minimum,’ he said. ‘There are a lot of fellows claiming to be carpenters who are ripping off the general public.’”
The Vancouver Sun. “A real-estate developer is suing 24 would-be buyers for a total of $1.9-million after they backed out of a Leduc condominium development, which has lost value since it was first sold to buyers during the housing boom two years ago. Urbia Homes Ltd. is suing buyers who walked away from sales for the diminished value of the units and other costs, claiming $75,000 in damages in most of the lawsuits.”
“Edmonton real-estate lawyers say they are seeing such cases with increasing frequency, two years after the housing market was sizzling and buyers were sometimes paying more than the listed price for homes that hadn’t yet been built.”
“Don Kramer, a lawyer who represents condo corporations, said this type of lawsuit is fallout from a housing bubble 18 months ago. ‘I think that companies are saying, ‘I wouldn’t have built this if you weren’t prepared to buy it. You said you’d buy it. I built it. Here it is. Please pay me,’ Kramer said.”
“‘Maybe I walked into this a little too fast, but they should have been looking after me,’ said one buyer. ‘I’m still interested in the place, but I want a fair deal.’”
