The Consumer Rules
It’s Friday desk clearing time for this blogger. “All 40 Murano units were sold yesterday, as well as two more units, in a span of just under two hours - a clear signal that there is a demand for condos in Center City, albeit at much lower prices, according to experts. The lowest winning bid was $335,000 - for a one-bedroom, one-bath unit - and the highest, for a two-bedroom, two-bath unit, was $796,000, according to Accelerated Marketing Partners, which auctioned the units on behalf of the developer. Jon Gollinger, CEOof Accelerated Marketing, said the auction once again proved who was king. ‘This is a watershed event for the Philadelphia condo market, pure and simple,’ he said. “All people have to do is analyze this building in relation to what the consumers paid, and then really extrapolate from that to determine what their properties are worth in the eyes of the consumer. The consumer rules.’”
“Wharton economist Kevin Gillen…said the people who would likely be most upset are those that bought at the Murano recently. ‘When that many units change hands at a significant discount, it sets the market,’ he said. ‘Recent buyers could see paper losses on their purchase of $100,000 or more. For many, that could be enough to put them upside-down on their purchase.’”
“Values are falling broadly in Manhattan for the first time in the almost four-year U.S. housing recession, with declines now seen in co-operatives and condominiums of every size and price. James Rosenthal and his Upper West Side neighbo put their adjacent apartments up for sale in February 2008 for $6 million, hoping to lure a buyer that wanted to maximize the 3,800-square feet of combined space.”
“‘As the seller you don’t control the market,’ said Rosenthal, who is a senior VP at New York real estate brokerage Brown Harris Stevens. ‘The buyers control the market.’”
“The median price for a Manhattan apartment fell 19 percent over the last year to $795,000, its lowest level since the second quarter of 2007, according to a report. Luxury homes suffered the most. When Lehman Brothers filed for bankruptcy on Sept. 15, what was once a subprime housing problem exploded into a global financial crisis. Suddenly, multi-million-dollar Wall Street workers were out of jobs, out of savings or in fear for their livelihoods.”
“‘That’s really when New York got hit,’ said Diane M. Ramirez, president of Halstead Property. ‘We fell off the cliff like everybody else.’”
“Florida’s real estate market continued on a warming trend in May, according to statistics released by the Florida Association of Realtors. ‘Condo sales are not dropping as drastically as they previously did,’ explained ECAR past president Cliff Chaplin, the current VP of FAR’s District 9.”
“Chaplin and other real estate professionals advise that it’s important for buyers, sellers and renters to ‘rely on a Realtor’ for all of their market needs. Realtors are familiar with the local market as well as the many special programs and incentives currently available, and are upheld to a strict code of ethics implemented by the NAR.”
“The paved drive turns off Colbert Road–its surface unblemished by any cracks, its curbs as pale and pristine as the day a hot Florida sun dried the cement. Elaborate landscaping–albeit somewhat overgrown–frames the entrance to a short bridge embellished with decorative siderails designed to resemble hand-forged wrought-iron latticework. Crossing over the drainage culvert leads to…nothing.”
“In a surreal tableau of arrested development, the neighborhood has gently winding paved lanes, road signs, water meters, power boxes, designated parking areas–but no houses, people, or cars. The driveways lead nowhere. The “children at play” notices seemingly refer to someone’s imaginary friends. Abandoned developments-in-progress pepper the landscape in Flagler County, Florida, where the nationwide housing boom more resembled an euphoric frenzy before its even more dramatic fall.”
“From 2003 to mid-2006, the pace of new construction could barely keep up with demand. ‘It was like the gold rush,’ says Bradley Duhamel, a now-unemployed construction worker. ‘Realtors, mortgage brokers, contractors, architects, electricians, plumbers, carpenters, people who bought and flipped properties–everyone was making money. For awhile, it was like you couldn’t NOT make money here. Then everything just stopped.’”
“Ah, South Florida: Where the women are strong, the men are pretty, and all the foreclosures are ‘friendly.’ The planned 321 North comes to us courtesy of a Chinese Investment Group: 35 acres, reconstruction of the 650,000-square-foot mall; 613,000 square feet of office space; 590 new residential units. The company mission? ‘To identify and reposition underperforming or distressed properties in advantageous locations.’”
“Distressed: You betcha. Advantageous: Well, one out of two ain’t bad.”
“Lt. Gov. Gary Herbert said Tuesday he is considering a second round of state stimulus to the housing market, similar to the $6,000 Home Run Grant incentive to homebuyers that helped generate $376.7 million in home sales in the past three months. ‘Housing led us into the recession and housing will lead us out,’” Herbert, a past president of the Utah Association of Realtors, said in a statement.”
“Twenty-one-year-old Brandon Taggart was renting an apartment in Layton but wasn’t seriously considering buying a home until he realized that the state grant could make it affordable. Earlier this month, he closed on a townhome in the Daybreak development. ‘The grant was pretty much what made me decide to even purchase a home,’ Taggart said. ‘With the grants available, the home was in a price range [I could afford].’”
“U.S. Housing and Urban Development Secretary Shaun Donovan stood Thursday in front of two foreclosed houses here to reiterate plans to offer more help to distressed homeowners. The loan-to-home-value ratio had been set at 105 percent. It’s now 125 percent, which Donovan said will increase the number of people eligible in California by 60 percent.”
“The change should allow more valley residents to qualify for the program, though it’s likely people who bought at the peak of the housing market still won’t be helped. One house was sold April 12, 2006, for $340,000. It’s being sold to a first-time home buyer and was listed at $83,500. There’s another foreclosed house next door with weeds all over the property. The housing secretary toured Merced at the request of Rep. Dennis Cardoza, D-Merced. ‘This is a cancer all over the country,’ Cardoza said. ‘We’re just more affected by it.’”
“A few residents in southwest and southeast Merced were surprised and confused Thursday to see their neighborhoods filled with a gaggle of suits looking at vacant homes. U.S. Housing and Urban Development Secretary Shaun Donovan was strolling around with Cardoza, who asked that he see the area’s devastation firsthand.”
“One man asked if something bad had happened. Well, that depends if he bought his home in 1996 or 2006.”
“Sales prices of Seattle-area homes edged up in April from the previous month, the first rise in the closely watched Standard & Poor’s/Case-Shiller home-price index in a year. But April’s 0.23 percent rise, while indicative of the Seattle market’s relative resilience, doesn’t signal that the long real-estate slide is at or near a bottom. Seasonal factors most likely accounted for the April rise in Seattle and the seven other cities, said Patrick Newport, an economist with IHS Global Insight.”
“Efforts to modify home loans have been slow and easily outpaced by the number of new delinquencies. In the first quarter, loan companies modified 185,156 mortgages, up 55 percent from the previous quarter. But the number of foreclosures in process increased to 844,389, up 22 percent. And nearly one in four borrowers who received a mortgage payment reduction fell behind again within six months, the report found.”
“‘So far (the modification program) isn’t showing large numbers, which tells me that it’s not working and that’s a problem,’ said economist Newport.”
“A state program that started Wednesday promises to advance up to $8,000 to first-time home buyers. But the program has plenty of roadblocks ahead. The cash isn’t there to make loans to home buyers, procedures to implement the program are not in place and purchasers may have to race to meet a federal tax deadline of Dec. 1. ‘I don’t know of a single jurisdiction in the state that is ready to go at this point, even if they had the money,’ said Wellington Meffert, general counsel for the Florida Housing Finance Corp., which is administering the program.”
“The city of Boca Raton’s allocation is just under $70,000. In the new home buyer program, after administrative costs are subtracted, that ‘is going to translate to [helping] about eight or nine home buyers,’ said Teresa McClurg, Boca’s community improvement administrator.”
““Bank Failure Friday” struck again last week, shuttering a financial institution with strong ties to Fayette County for the second week in a row.
The Georgia Department of Banking and Finance closed Newnan’s Neighborhood Community Bank June 26. The failure came exactly one week after Fayetteville’s Southern Community Bank was closed by state authorities. ‘Over the past 18 months we’ve seen quite a few bank closures in places like California, Florida, Georgia, Nevada and Arizona because those were the areas that experienced the most run-up in real estate prices during the housing boom,’ said FDIC spokesman David Barr.”
“A prominent Sherwood developer and his business partner, Precision Castparts’ former top executive, are facing foreclosure of part of their mixed-use project near Oregon 99W. Developer J. Patrick Lucas and William C. McCormick guaranteed the loan, according to court documents.”
“‘It sounds worse than it is,’ Lucas said this week.”
“As foreclosures batter the dense neighborhoods of urban New England, a regional emblem is under siege. Three-decker houses, which proliferated in cities like Boston, Providence and Worcester a century ago and remain fixtures of the landscape, are being foreclosed on at disproportionate rates, left to decay and even razed. In the boom years, three-deckers presented a different kind of opportunity. Out-of-town investors bought them, sometimes by the block, and rented them out without keeping them up.”
“‘For many people, they’re a form of business,’ said Timothy M. Warren Jr., CEO of the Warren Group in Boston. ‘There are absentee landlords, they take the risk, and if it doesn’t work, they walk.’”
“The latest round of census estimates pegs Bethel as the third-fastest growing municipality in Pennsylvania between July 1, 2000, and July 1, 2008. In that time, the township’s population grew by a whopping 75.3 percent from 6,421 to 11,255, according to census estimates. ‘I would say the big years were ’03, ’04 and ’05,’ said Thornbury Township Manager Jeffrey Seagraves. ‘That’s when three pretty large developments were built.’”
“‘Everything has leveled off recently,’ said Bethel Director of Operations L. Michael George. ‘but if you wanted to sell a house two or three years ago, you barely had to put up the sign before you found a buyer.’”
“California was the epicentre of the U.S. subprime mortgage industry, and the resultant collapse of the housing market, where prices are down more than 40 per cent from their peak, has slashed the revenue it collects from property taxes. The state’s credit rating is now the lowest in the country, and could fall to junk status soon, while unemployment has risen to 11.5 per cent.”
“Five years ago, when he took the stage at the Republican National Convention in New York, Arnold Schwarzenegger took a moment to chastise the pessimists who dared question America’s financial hegemony. ‘Don’t be economic girlie men’ the California Governor scolded, invoking his strongman past to peals of laughter.”
“But no one is laughing now, least of all Mr. Schwarzenegger.”
“Perplexed by the current San Diego County housing market? You’ve got company. Buyers, sellers, real estate agents, economists and bankers are all trying to get their heads around the question of where this market is going. ‘There’s a perception that ‘Oh, my God, we missed the boat’ — they have the perception sometimes, the misperception, if they wait another six months, it’ll go up another $50,000,’ said Yamila Ayad, owner of Mission Home Loans in San Marcos. ‘Myth, myth, myth.’”
“The shrunken number of homes on the market is temporary, said Seth Chalnick, a real estate broker in Cardiff-by-the-Sea. And that motivates buyers. ‘It creates a sense of scarcity,’ Chalnick said. ‘That does tap into our psychological sense of it must be valuable because it’s scarce.’”
“Growing trouble in the category of loans known as Alt-A in San Diego County has analysts concerned. A step above subprime, Alt-A consists of high-risk loans for good-credit borrowers who purchased more expensive homes, and the rate of such borrowers in default has soared over the past year. These potential future foreclosures might more dramatically affect higher-end neighborhoods where a lack of financing has hampered home sales.”
“Chalnick, the broker, said the $700,000-plus market has been especially hard-hit. He said he’s reticent to declare an end to the weakness in the market, at least on an aggregate, countywide level. ‘The idea of the real estate market being at the bottom when you lump the low end with the coastal high-end stuff — the only word that comes to mind is preposterous,’ Chalnick said. ‘People are saying, ‘It’s not as bad anymore; we’ve turned the corner!’ It hasn’t even started.’”
