The Decade That Wasn’t
The Day in Connecticut. “The good news for the region: Foreclosure filings last year fell 12 percent in New London County compared to the year before. The bad news: They’re still pretty high. The numbers are up more than 55 percent from where they were in 2007. And they are six times the level of foreclosures reached in 2006. Over the past year, said real estate experts, a good number of distressed properties have been sold, many of the transactions spurred by a first-time homebuyers tax credit.”
“‘A lot of it’s been absorbed,’ said John Bolduc, CEO of the Eastern Connecticut Association of Realtors,. ‘But there’s more to come. It’ll last probably another two years.’”
The New York Times. “As of the end of November, 22,200 single-family homes had sold statewide in 2009, a decline of 4 percent from the same period in 2008. The median price slid by 11 percent statewide — more like 15 to 20 percent in hard-hit Fairfield County. Builders all but stopped building in 2009. The number of permits issued had not broken 3,000 as of the end of November, a ‘pretty terrible’ tally compared with the more ‘normal’ level of 11,000 to 12,000 permits a year, said Peter M. Gioia, the economist for the Connecticut Business and Industry Association.”
“Sales in New Canaan…picked up at the end of the year…according to Denise Gannalo, an agent with William Raveis. Among those sales was a bank-owned property she originally listed for $3.9 million. The six-bedroom property finally sold for $1.9 million. While encouraged by rising sales, Ms. Gannalo sees trouble ahead for some who bought in 2005, the height of the market. This year alone, the average selling price in New Canaan fell by 21 percent, which may mean that some highly leveraged homeowners now owe more than their house is worth, she said.”
“Russell Pruner, an owner of Shore & Country Properties, said he thought that 2009 would ‘end up the worst year in the history of Greenwich real estate.’ Home values in town have dropped 25 to 33 percent over the past two years, and houses priced accordingly are drawing buyer interest, Mr. Pruner said. Mr. Pruner isn’t ready to declare that the Greenwich-area market has hit bottom. But he thinks the market may have fallen far enough to entice the renters waiting in the wings.”
“‘We truly have pent-up demand,’ he said. ‘We’ve got 100-plus people in rentals paying $10,000, $15,000 a month. That was a smart move in 2009, but will they pony up again for 2010? I don’t think they will.’”
The Stamford Advocate in Connecticut. “Simple economics can explain the plummeting home values in Darien, Greenwich and New Canaan — fewer Wall Street jobs and bonuses leaves fewer people able to buy mansions, right? Sure, say the experts, slack in demand explains some of it. But those double-digit house value declines in wealthy towns are also part of a larger story about an epidemic of debt addiction that has left a trail of misery from Bridgeport’s East Side to backcountry in Greenwich.”
“Lynn Padell, a Realtor with William Raveis Westport said the real pain in the wealthier communities has come in the $1 million to $2 million range, which was occupied by a lot of middle managers in the finance world. She said people don’t want to buy a house because the idea that it’s going to go up in value every year, and therefore worth taking on a jumbo loan of more than $750,000 has been shattered, Padell said. And that’s another thing, ‘People were getting in over their heads,’ she said.”
“Gillian Anderson, of Westport-based Anderson Wealth Management, said the era of easy credit took in everyone, noting the term ‘million dollar no-brainer,’ isn’t necessarily complimentary. She said many people used Wall Street bonuses to buy homes or at least make down payments. The truth is that many people in these income brackets were living beyond their means like people in the lower tax brackets.”
“‘If you make seven figures one year, you expect to make it the next,’ she said, explaining the mindset wasn’t any different on Wall Street than Main Street.”
The Associated Press on Maine. “Maine is partially out of the recession but has a long way to go, said Charles Colgan of the University of Southern Maine’s Muskie School of Public Service. ‘Recessions have two elements to them: One is the fall in output and the other is the fall in employment,’ Colgan said. ‘We have reversed the fall in output but not yet the fall in employment.’”
“A year ago, Colgan predicted the number of jobs in Maine would fall by about 20,000 to a low of 600,000. But the recession has been more severe than anticipated, and Maine’s job count fell to 588,000 in November, according to the Maine Department of Labor. The housing market remains bleak, he said.”
“He expects about 2,000 new homes to be built in 2010, down from 9,000 at the peak of the housing expansion in 2005. ‘The housing market that got us into this mess will not be what gets us out of this mess,’ he said.”
“Looking back, Colgan said the past decade was dismal. Maine’s job count rose 10 percent in the 1970s, 28 percent in the 1980s and 13 percent in the 1990s, but declined 1 percent in this latest decade, he said. Wages fell and the stock market declined, and government revenues are now at the same level they were in 2004, he said. ‘That was the decade that wasn’t,’ he said.”
The Press of Atlantic City in New Jersey. “At Fischer Woods in Linwood, while there certainly has been an impact on home values, the spectre of foreclosures appears to have been averted, according to brokers. At the peak of the bubble in mid-decade, one house in the exclusive neighborhood sold for $1.7 million, according to Lisa Alper-Russo, of Coldwell Baker Casa Bella Realtors in Linwood.”
“Last month, meanwhile, a home that Realtor Sam Cohen said would have been worth about $500,000 at the height of the market was sold for $299,000. ‘My client sat on his property for a couple of years,’Cohen said of the home, ‘and basically gave it away at the end. It needed a little work that my client wasn’t willing to do, and he got a cash offer and decided to take it. … I believe my client could have gotten more for it. But while he could have argubly gotten $350,000 or $400,000, he certainly wasn’t going to get $500,000.’”
“Anthony D’Alicandro, owner and licensed broker at Coldwell Banker Casa Bella Realtors, said there are several reasons for the ‘pretty sharp adjustments’ in home prices over the past year. First, construction of new homes reached inflated levels nationwide in the early part of the past decade — although not so much in southern New Jersey, he said.”
“‘The Borgata opened up in 2003 (for example), and there was a lot of job growth in the early 2000s.’ Eventually, he said, ‘Those demands started to subside. It got to the point that home values, in 2006 and 2007, didn’t make sense. The median home sale value didn’t mesh with the median income in the area. Prices just had to be adjusted.’”
“Second, D’Alicandro said, the various ‘crazy mortgage programs’ have mostly been eliminated, meaning that people are again buying homes and mortgages within their means. ‘That alone causes an adjustment in prices,’ he said. ‘The affordability factor is more realistic than it’s ever been.’”
“D’Alicandro, who signed a two-year contract with the New Jersey Housing and Mortgage Finance Agency to sell foreclosures in the state, said, ‘I have been more busy at the default end of the business over the last two months than the entire year leading up to it.’”
“‘There’s definitely been a slowdown (in foreclosures) this year,’ he said, citing efforts by the federal government to place moratoriums on bank takeovers of properties. ‘Now, all of a sudden you’re seeing some of those hit the market.’”
“Even when a home is for sale in Fischer Woods, said resident Patty Cofer, the neighborhood has chipped in to maintain vacant properties. One house that was recently on the market, Cofer said, was ‘a beautiful home. It’s just too big.’”
The Record in New Jersey. “Condo developers are doing more than crossing their fingers in hopes that their investments will grow in this economy. They have come up with recipes for success — like giving renters the opportunity to lease a luxury condo or auctioning condos off to buyers. Randy Lyn Ketive, president of Prominent Properties Sotheby’s International Realty in Fort Lee, says condos purchased as investments have long been available to rent. They are also available to renters when owners cannot get their desired selling price.”
“Right now, 30 condos are available for rent and as many for sale, with prices for one-bedroom units starting at $345,000 for purchase and $2,500 monthly for rent. ‘If someone comes in for a rental, we find out about their financial situation,’ says Angela Ferrara, vice president of sales. If they can make the down payment of about 20 percent, they will find that low interest rates, reduced home prices and a first-time-buyer’s credit make purchasing the unit a smart move, she says. If someone just wants to rent, that’s OK, too, she says.”
“Developers have also turned to auctions to sell their condos. ‘Our company’s been in business for over 40 years and seen all different [real estate] markets,’ says Max Spann Jr., president of Max Spann Real Estate & Auction Co. in Annandale. ‘Every time there’s a correction, you have to look at what the options are.’”
The Fosters Daily Democrat in New Hampshire. “Beginning in 2005, homes sales in Rockingham County began to drop, along with home values. Four years ago, activity in Strafford County also slowed, with an 18 percent drop in sales recorded from 2005 to 2006. But never mind that today, Realtors say.”
“Statewide last year, 10,832 home sales registered a 6 percent uptick over 2008, marking the first time in five years that activity ended a year with a cumulative increase. NHAR President Monika McGillicuddy credited the action to the first-time homebuyers’ tax credit, low interest rates and ‘competitive’ prices.”
“Joanna Rousseau, president of the Seacoast Board of Realtors, said falling prices contributed as much if not more to the increased demand. A majority of first-time buyers took advantage of the $8,000 credit but it wasn’t the primary incentive compared to prices, she said. The median sales price in Strafford County was $195,000 last year, down from $219,000 in 2008 and $250,000 in 2005, the apex of the cost summit. In Rockingham County, the median price was $257,900, down from $285,000 in 2008 and $337,000 in 2005.”
“If residential sales held a bright spot, condominium sales was a different story. They dropped by 0.2 percent statewide, 19.2 percent in Strafford County and 4.3 percent in Rockingham County — despite median sale prices dropping 13.3 percent and 9.3 percent, respectively. ‘Condo sales typically have their own mark compared to residential,’ said Ansel Crombleholme, president of the Strafford County Board of Realtors. But recently, with housing prices dropping, prospective buyers are bypassing condos in favor of homes, he said, giving them ‘more buying power.’”
The Concord Monitor in New Hampshire. “The state courts system has set up a new mediation program designed to give troubled homeowners and lenders a place to work out a solution when borrowers fall behind on mortgage payments. The new program comes as New Hampshire continues to deal with a historically high number of foreclosures stemming from the financial crisis. Through November 2009, the last month for which figures are available, more than 3,000 people had their homes foreclosed on last year. 452 foreclosures occurred across the state in 2005.”
“Gerald Little, president of the New Hampshire Bankers Association, said most New Hampshire banks monitor delinquency rates and try to reach out to borrowers who fall behind on their loan payments. ‘Sometimes banks have the problem that the borrower stops taking the phone call,’ Little said.”
The Nashua Telegraph on New Hampshire. “Little said he expects that most of the cases that go to mediation will already have been through the federal Making Homes Affordable program, which was also designed to encourage lenders to restructure loans to avert foreclosure. The program can only work for people who have some ability to pay back a loan. Borrowers who swam too far into the sea of debt may find themselves beyond rescue.”
“‘There are some people whom we are not going to be able to help,’ Borgstrom said. ‘You don’t want people to refinance or get into some other agreement and still not be able to pay. ‘The quality of the underwriting that went into many of those notes really almost doomed them from the start. For many of those folks, there is simply not much that can be done.’”
The New York Post. “President’s Obama’s $90 billion Wall Street tax plan could rain down pain on New York City while laying the groundwork for yet another economic bubble that could send the economy into a tailspin down the road, critics say. Critics of the tax said the fact that the Obama administration chose to call the tax the ‘Financial Crisis Responsibility Fee’ but failed to include those firms most responsible for Uncle Sam not recovering its TARP investment is laughable.”
“In his weekly radio and Internet address, Obama expressed confidence that lawmakers would approve the tax. ‘Like clockwork, the banks and politicians who curry their favor are already trying to stop this fee from going into effect. The very same firms reaping billions of dollars in profits, and reportedly handing out more money in bonuses and compensation than ever before in history, are now pleading poverty. It’s a sight to see.’”
“The tax comes after Wall Street banks are set to pay record bonuses after accepting billions in taxpayer help amid a still-shaky economy and 10 percent unemployment. One of the more vocal critics of the bank fee, JPMorgan Chase CEO Jamie Dimon, said the auto industry should clean up its own mess and slammed the president for forcing banks to dig into their wallets for more cash.”
“Meanwhile, New York City could be the biggest loser in the battle being waged between Wall Street and Washington, especially given that New York is the hub of finance with a slew of financial firms calling New York home. Sources told The Post that Mayor Bloomberg has been privately fuming since learning about the plan because it has the unintended consequence of cutting into bank earnings and as a result eats into the tax revenue that the city would see.”
“‘If you want to see what happens to a city when their major industry fails, just take a look at Detroit,’ said Bloomberg last week publicly about the bank proposal.”
The New York Times. “When an Israeli billionaire bought New York’s storied Plaza Hotel for $675 million, he envisioned turning the plucky grande dame with the globally recognized name into mainly a luxury condo tower that would cater to the world’s wealthiest buyers and offer stores to satisfy their every desire. The last 11 owners to sell their luxury condos at the Plaza Hotel sold them at a loss, including the owner of Apartment 409, which sold for $8.5 million less than it cost 16 months before.”
“Earl McEvoy, a mutual fund manager who paid $4.79 million for an apartment in October 2007, sold it last summer for $4 million. Guy Wildenstein, president of the Wildenstein & Company gallery on the Upper East Side and owner of a large private art collection, sold Apartment 409, and another unit he bought in August 2008 for $9.6 million went for $6 million 15 months later.”
“Then there was Oscar S. Schafer, a managing partner at the hedge fund O.S.S. Capital Management, who took a hit on No. 1709. He bought the three-bedroom unit for $14.6 million in May 2008 and sold it for $8.5 million in July 2009. And 9 of the 28 apartments in the building on the market have slashed their asking prices.”
“This spring, steps below where F. Scott Fitzgerald found his muse for ‘The Great Gatsby,’ the hotel is opening an upscale food court offering burgers and pizza. The Palm Court, the Plaza’s famous restaurant, has been closed. ‘It’s gone from being a landmark to being just a building,’ Clark Wolf, an independent restaurant consultant, said of the situation.”
