Just Not Upside Up Enough
It’s Friday desk clearing time for this blogger. “The Wichita area appears to be losing ground in the foreclosure epidemic. ‘For us, it’s directly tied to our employment situation,’ said Stan Longhofer, director of the Center for Real Estate at Wichita State University. ‘This is about the time when people who got layoff notices are starting to get hit with foreclosures.’”
“He said that the easy financing may not have led to a large housing bubble, but it did leave quite a few people with little equity when it comes time to try to sell the house. The homes haven’t lost value, but laid-off workers may discover that their homes haven’t appreciated much in recent years. So, he said, instead they may let the house go into foreclosure. ‘They’re not really upside down,’ he said, ‘just not upside up enough.’”
“Earlier this year in Los Angeles, Goldman Sachs took possession of the home of Gladys Aguirre, a housecleaner who’s married to a construction worker. Together, the couple listed monthly earnings of $7,480, including $3,480 from a job she’d held for two months. Aguirre originally took a $444,000 subprime mortgage on Sept. 1, 2005, from a subsidiary of big subprime lender Ameriquest Mortgage Co., which shut down in 2007. The adjustable interest rate sent her monthly payments zooming to $3,800 from $2,479, and Aguirre couldn’t keep pace on that loan or a $119,000 second mortgage. She filed for bankruptcy protection.”
“Aguirre’s Los Angeles lawyer, Eber Bayona, declined to discuss her case, but said that subprime loans amounted to ’setting up the person for failure’ because interest rate adjustments hit borrowers with ’shock payments.’ For example, he said, loan agents promised applicants that they could buy a $600,000 house for payments of $1,200 a month, and the buyers ‘never read the fine print … (and) didn’t know their interest would increase and that eventually they would lose their house and their money.’”
“The foreclosure crisis started with sub-prime borrowers, but in the last six months, it has increasingly reached unemployed homeowners like Cesar Hernandez. Four years ago, the construction worker put in 50 hours a week. He bought a three bedroom house in Palmdale for his wife and daughter. But he hasn’t worked now for eight months, and he can’t make his mortgage payments. He has two weeks to get out of the house.”
“‘I don’t know what I’m gonna do,’ Hernandez said, nearly breaking down into tears. ‘I just really don’t have a place to go.’”
“About 19 miles east of Lodi, you’ll reach a 505-acre piece of property known as Higgins Ranch. Until the economy took a nosedive, this was the future site of a 600-house development. It was going to change the town of Wallace. Then the market dropped.”
“The two developers who owned the property each filed for bankruptcy in 2008, with one of them reportedly owing various banks more than $972 million. Now Higgins Ranch is up for auction, with a minimum price of $750,000. It’s a far cry from the $3.2 million the developers had briefly sought when they placed it on the market. The amount is also less than the reserve in a spring auction, when nobody bought it for the minimum price of a little less than $1.2 million.”
“‘Higgins Ranch would best be described as a gleam in someone’s eye,’ said Chuck Cantoni, a long-time member of the Wallace Community Services District.”
“If you’re listing your house in Utah County, be ready to slash your price. According to data released by the Utah Association of Realtors and the Salt Lake Board of Realtors…the average price dropped from $229,900 in the third quarter of 2008 to $215,000 in the third quarter of 2009. Bruce Arnett wanted to move his family into a larger home so his father, who has multiple sclerosis, could move in. He took the plunge and moved from his house in Eagle Mountain to Traverse Mountain in Lehi about two weeks ago. He decided to rent out his Eagle Mountain home.”
“‘We knew the prices were going to be the lowest that they’ll be for several years,’ he said of his newly purchased Traverse Mountain home.”
“Lindsay Jones is hoping the third time’s the charm. The aspiring first-time homebuyer has fallen out of escrow twice, and is waiting to find out if her offer on a third property will result in the actual purchase of a residence. She started looking seriously in the spring, wooed by tax incentives and her conviction that home prices were at or near the bottom. Jones hoped to take advantage of an $8,000 federal tax credit for first time homebuyers that will end in November.”
“‘That was a huge factor,’ she said. ‘It figured into my purchase price, because it was part of my budget for making repairs. You walk into even the ones in nice areas and they’re seriously gutted. People got really upset and kicked holes in walls or left all their trash everywhere or took off with major appliances.’”
“The Obama administration endorsed plans to extend an $8,000 tax credit for first-time homebuyers, saying it is helping stabilize the nation’s housing market. The tax break has ‘brought new families into the housing market and contributed to three consecutive months of rising home prices,’ Treasury Secretary Timothy Geithner said.”
“Lawmakers also said they won’t extend the break beyond the new April 30 deadline. ‘The American people should understand this — and the affected industries — this is the last extension,’ said Senator Johnny Isakson, a Georgia Republican. ‘Tax credits like this only work by creating the sense of urgency to take advantage of them.’”
“A Senate committee reached a compromise yesterday to extend the $8,000 tax credit for first-time home buyers, a boost the housing industry expects will help it pull out of its two-year-old downturn. Lawmakers in Washington also added a $6,500 tax credit for other primary-home purchasers and raised the qualifying income limits to $125,000 for single taxpayers and $225,000 for joint taxpayers, housing-industry sources said.”
“The credit has helped, acknowledged Marshal Granor, a principal in Granor Price Homes, of Horsham. But he added, ‘I’d love for it to go away, for a month.’ ‘People who believe there is no rush aren’t buying, they are waiting for more bargains from more squeezed sellers,’ Granor said.”
“Exactly who made Bernadine Shimon think that she could buy a new house shortly after declaring bankruptcy and losing another home to foreclosure? The American taxpayer, that’s who. Without a Federal Housing Administration willing to guarantee a $125,000-plus mortgage, this Denver-area schoolteacher’s recurring ‘dream of homeownership’ could not come to pass. Shimon’s down payment was a tiny 3.5 percent. This single mother is so strapped that she had to cash in her retirement savings to come up with the 3.5 percent. Her case was cited in a New York Times article about, not surprisingly, the sad shape the FHA finds itself in.”
“Much of the blame for the housing bubble-then-bust goes to these government agencies. Kenneth Donohue, inspector general of the Housing and Urban Development Department, seemed to be shaking his head. ‘What does the FHA think it is doing by asking only 3.5 percent?’ he asked. (FHA is part of HUD.)”
“But committee Chairman Barney Frank of Massachusetts insists that these mortgages are needed to ‘keep prices from falling too fast.’ Thing is, we can’t support real-estate values with shabby lending practices. That’s what got us into trouble.”
“Florida’s economy remains in a downward spiral, according to sales tax statistics released this week by the Florida Office of Economic & Demographic Research. Consumer and business spending statewide fell 7.5 percent from August 2008 to August 2009. Spending in Palm Beach County dipped 7.4 percent, while Treasure Coast sales fell 4.2 percent from a year earlier.”
“Blame the real estate bubble of 2005 and 2006. Florida’s property frenzy sparked rapid rises in home prices, rampant overbuilding and record-low unemployment. Now, the state is suffering from the hangover created by the real estate party. ‘We’re coming out of a deeper hole than the nation at large,’ said University of Central Florida economist Sean Snaith.”
“When the Monterrey apartments in south Fort Myers sold for a record-breaking $79.6 million in March 2006, its buyers had high hopes of converting its 408 units into condominiums at a nice profit. But less than four years later, the luxury complex near HealthPark hospital is the subject of a $65.8 million foreclosure filed by the lender. Monterrey was never turned into condos and it remains a rental community.”
“As the residential real estate boom peaked in 2004 and 2005, there was heavy demand by investors and home buyers to get into the market and apartment complexes provided a quick solution when demand couldn’t be met by existing houses and new construction, said Michael Timmerman, a Naples-based senior associate with Fishkind & Associates. Developers bought large apartment complexes and sold the individual units as condos, creating what was almost ‘an infinite amount of product people could buy,’ he said.”
“But as prices slid starting in early 2006, condos became less attractive and harder to rent out — now it’s often cheaper to buy or rent a house, Timmerman said.”
“One of the hardest hit is Renaissance, converted from apartments four years ago at the height of the boom. Foreclosure actions have been filed against the owners of 24 of the 112 units and Bill Davis, who’s on the condo board, said several units have substantial damage inside them from months of neglect. Still, he’s optimistic.”
“‘We’re getting more and more money coming in’ as banks take back the condos in foreclosure and sell them to new owners, Davis said. ‘The landscaping’s kept up, the pools are kept up and we actually have a balance in the bank account.’”
“The number of homes in foreclosure continued to rise in the Portland-Vancouver metro area, according to a third-quarter tally. There were 6,123 total housing units in foreclosure in the third quarter in the Portland-Vancouver area, up more than 78 percent from the 3,432 houses in foreclosure during the same period in 2008. ‘It wouldn’t shock me if it was at least two more years before we work our way through the troubled properties,’ said John Bruce, a mortgage banker with Lake Oswego-based Summit Funding Inc.”
“The local real estate market has lately been hampered by the high unemployment rate and a new wave of ‘option ARMs’ or adjustable rate mortgages, Bruce said. While the values of homes were rising, borrowers were happy with option ARMs, Bruce said. However, many of those loans have now reached a five-year ‘reset’ period in which loan amounts will reflect the true interest amount.”
“‘With the clarity of hindsight, there’s no way they can make those payments,’ Bruce said of home loan borrowers with option ARMs.”
“The foreclosure crisis has taken a turn in California’s wealthy Marin County, according to Miriam Alex-Lute at Rooflines. Marin residents waged a legal fight a few years back to keep out Habitat for Humanity, the charitable group that builds houses for low-income buyers. But now that abandoned, foreclosed houses are showing up in Marin, Lute reports the county is opening the door to Habitat, which will rehab one of the foreclosed properties.”
“Just three years ago, Marin county residents were busy raising money for a legal fight to stop Habitat for Humanity from building four homes affordable to families making under $56,000/year, saying it would ‘blight’ their exclusive neighborhood of million dollar plus houses. (The project is still being debated.)”
“But now they are being welcomed with open arms in another part of the county as they renovate one of the foreclosed homes that even Marin has acquired a passel of. Habitat bought the house, which needs extensive rehab, for $215,00. It doesn’t sound affordable exactly to those of us in more affordable parts of the country, but in a county where the median home price is $800,000, I guess it qualifies.”
“Nothing like a wave of foreclosures to change those ‘Not In My Backyard’ attitudes.”
“The economy is creeping out consumers this Halloween season. Sales of costumes, props and other accoutrements are trending lower this year — locally and nationally — as consumers opt for homemade outfits over elaborate store-bought or rented ensembles. ‘In the 31 years I’ve been in business, it’s the worst year ever,’ said Geraldine Alfieri, owner of Geraldine’s Costumes (in) Cathedral City.”
“Business is down 80 percent over last Halloween, largely because of a lack of conventions and corporate events, she said. ‘Corporate business is almost gone,’ she said.”
“Andy Allen, 86, of La Quinta is going as a hippie. He bought a vest, headband, round glasses and a peace-sign necklace. ‘It’s cheap,’ Allen said.”
“Bridgeport tops the list on a real estate Web site’s index of the best Chicago neighborhoods for trick-or-treating. Zillow compiled its Trick-or-Treat Housing Index, used its own home value index and statistics on density, walkability and crime to find out where kids are likely to get the most candy, with the least walking and the smallest safety risks.”
“Ranking fifth was the trendy Lakeview neighborhood a few miles to the south. Zillow said the ‘beautiful homes’ in the neighborhood could mean plenty of trick-or-treat candy and ‘real estate eye candy.’”
“The North Side’s Rogers Park neighborhood came in fourth, in part for the ’scary good real estate deals’ for adults with housing prices down 16 percent.”
