A Period Of Epic Abnormality
The News Journal reports from Delaware. “Milton Delgado put a down payment on his dream three years ago: a three-bedroom 1,715-square-foot condominium at The Promenade in Middletown. Delgado was one of dozens who laid out thousands of dollars after seeing glossy brochures showing a deluxe housing complex complemented by movie theaters and upscale shops. But Delgado has watched his dream fade, along with the prospect of recovering his money. He has been trying to get his $16,711 deposit back for more than a year.”
“‘Every day I was driving by, saying, ‘I can’t wait to see a hole. I can’t wait to see a hole,’ Delgado said. ‘And I never saw a hole. The only hole was in my wallet.’”
“Delgado recently obtained his Ph.D. in education from Wilmington University. ‘I didn’t just go in blindly and plop down money on a pretty little dollhouse,’ Delgado said. ‘I’m supposed to be educated, among the top of the people around, and I got pulled in just like everyone else.’”
The Virginian Pilot. “Dan Bassett lost more than $50,000 when he sold his Chesapeake home in August. The enlisted analyst had to move after the Air Force reassigned him to Florida, but he thought he would qualify for a new government program designed to help service members recoup losses from such home sales. His application was denied.”
“The database used by the Corps of Engineers to determine eligibility showed that few cities in Hampton Roads qualified - either because home values in the past three years had fallen less than 10 percent or in some cases had risen, said Don Chapman, who manages the Homeowners Assistance Program for the corps. That differs from figures tracked by the Virginia Beach-based multiple listing service, which shows median prices for existing homes in the region have declined about 10 percent since 2006.”
“Bassett, 36, purchased his Western Branch home in June 2006 for $332,900. He put his home up for sale in May and eventually sold it for $299,610 - a loss of $33,290, not including the closing costs and fees, which added up to more than $20,000. Bassett began working with his real estate agent to compile home sales data from his neighborhood to show the corps that he shouldn’t be disqualified. Eventually, the corps relented and now won’t disqualify service members just because they live in Chesapeake. Other cities in Hampton Roads are now eligible as well.”
“‘You have to be persistent,’ Bassett said. ‘My beacon of hope was that the government would at least help me out with Realtor fees and closing costs.’”
The County Times in Pensylvania. “It’s been over a year since Madeline Gilford, the actress, producer, and unapologetic social activist, died suddenly at age 84, in April of 2008. Like so many Americans, Madeline borrowed against her home during the real estate boom, refinancing more than once, and now the foreclosed home is worth less than the mortgage that Washington Mutual (now JPMorgan Chase) holds.”
“Lisa Gilford lives in Denver now, but she tried to keep up the home in Bethlehem for a while after her mother died, paying the mortgage for a couple of months, she said, but she just couldn’t afford the extra expense long term. Ms. Gilford said she had hoped that the home would sell quickly in foreclosure, but the couple of people who were interested in proposing a ’short sale’ to WaMu got nowhere.”
“That the bank would not respond to inquiries about a short sale on the house makes Lisa Gilford’s blood boil. ‘Why would a mortgage company allow a place to blight like that in a neighborhood like that?’ she asked. ‘They absolutely shut us out. It may not be illegal, but it’s immoral,’ she added.”
The Worcester Business Journal in Massachusetts. “At least for many types of real estate, prices aren’t ready to rebound, according to real estate investor Russ Haims. But whether the lack of a rebound is a bad thing depends on where you’re standing. Haims said the federal tax credit for first time homebuyers, which has been extended through April 2010, has bumped up demand, but only temporarily.”
“‘I see more factors that indicate a downward trend than anything encouraging to bring it up,’ he said. It doesn’t help, Haims said, that foreclosures are continuing to stack up on the market. ‘The banks presently are overwhelmed with what they have already in their delinquency pipeline,’ he said. ‘There’s still going to be a lot of cheap inventory that banks are going to be looking to sell.’”
“Jeff Hall, president of the Worcester Regional Association of Realtors, says..right now, many short sales fall through as lenders take as much as eight months to consider an offer. He said he thinks more than half of short sales end up not going through because buyers get frustrated with the process and move on. Hall said the market is still facing an inflow of foreclosures, but lenders are making a conscious effort not to let them disrupt price levels. Many are trying to use loan modifications to keep people in their homes, or at least help owners stay in their homes in the short term to minimize the amount of property sitting empty.”
“‘It won’t be like a flood,’ Hall said. ‘They will space it out over time so there is just kind of a regular flow of foreclosures into the market.’”
The Boston Globe in Massachusetts. “Federal tax breaks, historically low mortgage rates, and an improving economy sparked a record surge in Massachusetts home sales last month. Michael LeBlanc…just bought a three-bedroom ranch in Sherborn, said he and his wife, Jane, had been thinking about buying a home for about two years. While they qualified for the tax credit, it wasn’t the main factor driving their decision. A low mortgage interest rate, 4.875 percent, and a sharp drop in the price, to $450,000 from $529,000, made the home affordable. They also have a 9-month-old daughter.”
“‘I really wanted to be smart about it, and what was important to me is that we bought our house when we were ready,’ said LeBlanc, 33, who works at EMC Corp. in Hopkinton. ‘We were waiting for the right opportunity. We feel lucky.’”
From Inside Jersey. “Home prices look as if they’ve reached their lowest points, and people are starting to take deep breaths and buy again. It’s beneficial, too, that the federal government has helped keep mortgage rates down, in the 5 percent range, and Congress extended and expanded tax credits so they reach almost all potential buyers — not just first-timers anymore. Together, this means houses remain more affordable than they were for decades.”
“Overbuilt Hudson County will continue to struggle. Manhattan’s weak market is sapping demand from Hudson County, and deep South Jersey is hurt by being far from major job centers — Philadelphia and New York — and by Atlantic City’s losing streak.”
“New home builders had it rough last year, selling a third of what had been moving. Sales of new homes have been slower to pick up pace than existing homes. ‘We don’t really have a lot of down to go,’ says Joseph Riggs, group president in charge of New Jersey and other areas for K. Hovnanian Homes. ‘We think we really only have one way to go, and that’s up.’”
The Press of Atlantic City. “Egg Harbor Township wants to see the seedy strip of motels…replaced by a more upscale array of hotels, restaurants, stores and homes. The idea of fixing West Atlantic City is not new. Egg Harbor Township politicians and other residents have been pushing to redevelop West Atlantic City for at least two decades. ”
“The peak time for developing may have already come and gone, according to James Hughes, the dean of Rutgers University’s Edward J. Bloustein School of Planning and Public Policy. Atlantic City’s economy was ‘hot’ during the late 1990s boom and there was less competition from other casinos, Hughes said. Furthermore, the low credit rates, lax lending standards and American consumer overspending created ‘a period of epic abnormality’ for building projects from 2000 to 2006.”
“‘We had an economic wild party, and economic wild parties are often followed by economic wild hangovers,’ Hughes said. ‘We’re probably not at the mid-stage of the hangover yet.’”
From Marketplace. “New York City’s construction boom went bust so fast some of the condominium buildings are standing unfinished. But proposals to turn them into affordable housing units have been a tough sell. Alisa Roth reports.”
“Roth: ‘Queensboro Plaza is a just a couple of stops out of Manhattan. I come through on my way to work. The tracks are elevated here, so the platform looks out over the landscape, which is covered with construction sites and new condo buildings. Places like these popped up all over the city when credit was cheap and real estate was expensive.’”
“‘When the economy fell apart, so did a lot of these projects. In some cases, the developers couldn’t afford to finish them. And in others, buyers just weren’t interested anymore.’”
“Rafael Cestero (is) the commissioner of housing preservation and development in New York. He’s worried that these kinds of open construction sites and empty buildings could bring blight back to New York. Cestero: ‘We don’t want vacant buildings, buildings that are unable to sell, unable to rent up. We don’t want those buildings and the fact that they are vacant to further destabilize the markets in those neighborhoods.’”
From Reuters. “Boutique investment bank Westwood Capital, veteran apartment building owner and manager Gerald Guterman, and appraiser Jonathan Miller plan to buy $1 billion worth of new condominium buildings from struggling banks and convert them into rental apartments.”
“The boom of the past decade grew out of low interest rates that made loans easy to get. Abundant low-interest loans boosted condominium prices to the tune of an average of $1.5 million to $2 million for a New York condominium. ‘If you look at the window of the expansion of condominium development, it correlates with the credit boom, and now we’re past that,’ Miller said.”
“There is no shortage of inventory. In Manhattan alone, about 6,500 condo units completed or near completion but have not been listed for sale. Add to that new listings on the market, and that figure jumps to 8,500. In New York City there are about 22,000 condos completed or near completion, but not listed for sale. That’s more than 26,000, counting new units on the market.”
The Richmond Times Dispatch. “This month, Virginia saw its first bank go belly up since the financial markets turned upside down a year ago — and more failures are likely. Greater Atlantic Bank, a federally chartered thrift institution in Reston, was taken over by regulators Dec. 4 because of rising losses on commercial real estate loans, a scenario that could be replayed over and over this coming year.”
“‘It’s a tough time for all banks, some more than others,’ said Frank Bell III, CEO of Bank of Virginia. ‘At the end of the day, big or small, we all have the same objective and that is to maintain a sound banking system. In this environment, it sometimes feels like nailing Jell-O to the wall.’”
“T. Gaylon Layfield III, CEO of Xenith Corp. in Richmond (said) ‘Banking might seem to the average person like looking into a black box, but a sound and stable banking system is the bedrock of our economy, of our free-enterprise system.’”
“Bruce T. Whitehurst, CEO and president of the Virginia Bankers Association, said it remains to be seen how much damage will be caused by commercial real estate loans. ‘There has been an awful lot of speculation,’ he said.”
The Associated Press. “Hocking the house for quick cash is a lot harder than it used to be, and it’s causing headaches for homeowners, banks and the economy. Now, the days of tapping your house for easy money have gone the way of soaring home prices. A quarter of all homeowners are ineligible for home equity loans because they owe more on their mortgage than what the house is worth. Those who have equity in their homes are finding banks far more stingy. Many with home-equity loans are seeing their credit limits reduced dramatically.”
“At the peak of the housing boom in 2006, banks made $430 billion in home equity loans and lines of credit, according to the trade publication Inside Mortgage Finance. From 2002 to 2006, such lending was equal to 2.8 percent of the nation’s economic activity, according to a study by finance professors Atif Mian and Amir Sufi of the University of Chicago. For the first nine months of 2009, only $40 billion in new home equity loans were made. The impact on the economy: close to zero.”
“Holly Scribner, 34, and her husband took out a $20,000 home equity loan in mid-2007 — just as the housing market began its swoon. They used the money to replace sinks and faucets, paint, buy a snow blower and make other improvements to their home in Nashua, N.H.”
“The $200 monthly payment was easy until property taxes jumped $200 a month…and the family ran into other financial difficulties as the recession took hold. Their home’s value fell from $279,000 to $180,000. They could no longer afford to make payments on either their first $200,000 mortgage or the home equity loan. Scribner, who is a stay-at-home mom with three children, avoided foreclosure by striking a deal with the first mortgage lender, HSBC, which agreed to modify their loan and reduce payments from $1,900 a month to $1,100 a month. The home equity lender, Ditech, refused to negotiate. Scribner’s husband, Scott, works at an auto loan financing company but is looking for a second job to supplement the family’s income.”
“The family is still having trouble making regular payments on the home-equity loan. The latest was for $100 in November. ‘It was a huge mess. I ruined my credit,’ Holly Scribner says. ‘We did everything right, we thought, and we ended up in a bad situation.”’
