Time To Sweep Up The Confetti
The Journal Gazette reports from Indiana. “National housing experts believe the party’s over now that the homebuyer tax credits have expired. Fort Wayne real estate officials also say it may be time to sweep up the confetti. ‘I can’t imagine that (home purchases) would continue at the same pace,’ said Jim Torres, president of the Fort Wayne Area Association of Realtors. ‘We’ll have a better indication in the next few months.’”
The Courier Journal on Indiana. “House prices in the 13-county Louisville-Southern Indiana metro area are down 2.67 percent from a year ago, according to the latest data from the Federal Housing Finance Agency. They are down almost everywhere else, too. Only nine metro areas of 299 registered increases. Indiana University Southeast business professor Uric Dufrene notes this is the fourth straight quarter that Louisville prices have declined, and that’s never happened before. In fact, until the current downturn Louisville had never registered even two consecutive declines, according to figures going back to 1977.’
“Dufrene also noted that the 2.67 percent decline is Louisville’s biggest since 1983, when prices fell 3.54 percent in the January-March period. ‘What is alarming about this is that the price index was declining in the presence of the ($8,000) government tax credit and historically low mortgage rates,’ he wrote in an e-mail.”
WSTB on Indiana. “A report from the Indiana Association of Realtors shows that compared to last year, home sales statewide were up 28 percent in April. And prices went up 13 percent. Some say this is not a sign of recovery. In fact, this month numbers are already starting to plummet. ‘We are still mired in a very sluggish, slow market,’ said South Bend/Mishawaka MLS president and realtor Jim Dunfee.”
“Dunfee said homes selling now are selling for more than last year, because most of the homes sold in 2009 were foreclosures. He says when the home buyer credit stimulated activity, normal homes began selling again at normal prices. ‘They weren’t appreciated prices,’ he said. ‘In fact, many of them had depreciated. But it made that number of average sale prices go up, which has made civilians go, ‘Oh yeah, prices are going up again,’ but they are not.’”
“And he’s noticed something else since the home buyer credit expired. About 430 homes sold in this area in April, but this month only 155 have sold. ‘Since they were getting $8,000 or $6,500 to get a house, that brought people out to do it. Without that we have fallen right back where we were,’ Dunfee said.”
“‘We are cautioning homeowners to be very aggressive on their pricing, and not speculate,’ Dunfee said. ‘That is hard for them to accept when they read the national headlines about how things have turned around in April. But we are seeing, in this market, flat appreciation or slight depreciation over prices from the 2006 - 2005 market.’”
“Ben Simon’s last home took two years to sell, but he is hoping for better luck this time around. His house went on the market 10 days ago — two weeks after the expiration of the home buyer tax credit. ‘We put our house on the market right as that ended,’ said Simon. ‘So we missed the window of opportunity to jump into that whole scene of things, but it is cyclical. The people who sold their homes in that time period are now looking for places to live, so hopefully they will look this way.’”
The Dayton Daily News in Ohio. “A year has gone by and close to 90,000 foreclosures have been filed statewide since the Democratic-controlled Ohio House passed two measures by state Rep. Mike Foley aimed at helping beleaguered homeowners and renters. The Republican-controlled Senate has yet to take action on either of Foley’s bills or another sponsored by state Sen. Shannon Jones, R-Springboro.”
“The problem isn’t going away, pointed out Bill Faith, executive director of the Coalition on Homelessness and Housing in Ohio. Almost 25,000 foreclosures were filed in the state during the first three months of 2010, according to the Ohio Supreme Court report. In addition, Faith said, a Mortgage Bankers Association report found that one in 10 mortgages nationwide was either in foreclosure or 90 days delinquent.”
“‘This could be a real record-breaker of a year,’ he said.”
The Cincinnati Enquirer in Ohio. “Foreclosures shot up 13.5 percent in Greater Cincinnati and Northern Kentucky during the first three months of 2010. The region’s foreclosure growth outpaced Ohio’s 8.8 percent increased caseload but lagged Kentucky’s 28.3 percent climb. More ominously, the region’s latest casualties in the real estate crisis grew at more than twice the more moderate 5.5 percent increase during all of 2009.”
“Sister Barbara Busch, executive director of regional housing advocates Working in Neighborhoods, said through the end of 2008 unemployment or underemployment used to be a factor in about a third of counseling cases the agency handled. Since then, reduced income due to fewer hours or losing ones job accounts for nearly 70 percent of its caseload. ‘We’re seeing a lot more (cases) due to unemployment,’ she said.”
The Telegraph. “The long decline of the car industry and all its spin-off business has been exacerbated by the collapse of a housing market that has left prices close to what they were 50 years ago, when lifestyle magazines featured Detroit as the most desirable city in the United States. Decent three-bedroom homes can be bought for $10,000, but no one wants to buy.”
“Tired of Detroit’s status as the symbol of everything wrong with urban America, its new mayor has come up with a radical solution: to bulldoze the city. By reducing the amount of the space the city serves, millions of dollars would be saved, said Charles Pugh, president of the city council, and other areas improved. ‘We have to police property, put out fires, light the streets, pump water and shovel snow for all these sparsely populated areas where people really shouldn’t be living,’ said Mr Pugh, who revealed shortly before his election last year that his own home had gone into foreclosure.’”
“The plans are being watched by influential figures who believe other cities – including Philadelphia, Pittsburgh, Baltimore and Memphis – could follow suit.”
The Appleton Post Cresent in Wisconsin. ” A flurry of condominium sales has brightened the outlook for Richmond Terrace, the 147-unit mixed residential/commercial development downtown that has struggled financially and has yet to land tenants for its retail/commercial space. The sale of residential units has picked up after asking prices for condominiums were slashed, an across-the-board cut that averaged 40 percent.”
“Joyce Bytof, CEO of Coldwell Banker The Real Estate Group, said she assembled a team of three that brainstormed and took specific steps to make unsold units more attractive to the market. ‘We knew we had to price it right,’ she said.”
Chicago Now in Illinois. “Earlier this week Crain’s reported that Shelbourne Development Group, the developer of The Chicago Spire, has closed their sales center in The NBC Tower and will now be selling units in their own offices on Wacker Drive. It seems that Shelbourne owed their landlord about $316,000 in back rent and the landlord filed an eviction notice a while back. The Chicago Sun Times also reported that key staff members have left the developer’s operation.”
“Shelbourne…even got so desperate that they tried to convince union pension funds to invest in the project under the premise that it would create union jobs. Fortunately, the unions…recognize that Chicago needs another condo development like we need a hole in the ground (uhhh, wait…..we have one of those). The unsold condos in the Spire represent about 20% of the total downtown unsold condo inventory.”
“Speaking of the hole…The Chicago Architectural Club announced a winner to their contest for ideas on what to do with the hole. The winning idea involved transforming the area around the hole into a beach and launching a yellow hot air balloon (representing the sun) that would carry a circular swimming pool. That idea probably has a better chance of coming to fruition than the original plan and is far more practical.”
“My timing was awful. Housing prices in Chicago plummeted as soon as I finished signing my name on our closing documents. That was back in 2006, when my wife and I purchased our home in suburban Chicago. We managed the neat trick of buying when housing prices in the city and suburbs were at their highest point.”
“The housing market today is a lot different. Like so many others across the area, our home has lost value. I’d guess that I’m one of the nearly 25 percent of homeowners today who is underwater. This means that I owe more on my mortgage loan than what my house is worth. How much more? I’m not sure; I don’t want to pay for the appraisal that’d give me the bad news.”
The Irish Independent. “Limerick-based Chieftain Construction group has surrendered its landmark Chicago €75m apartment tower to (a) private-equity venture. Chieftain had raised more than €8m from 47 Irish investors and $84m (€69m) from US-based Corus Bank in 2006 to finance the construction of the 35-storey Lexington Park condominium tower near Chicago’s main street, Michigan Avenue. Now the 333-unit apartment tower has a new claim to fame as the city’s ‘biggest condo tower to be taken over by its lender in the current housing crisis,’ according to the reputable local business magazine, ‘Crain’.”
“Chieftain CEO Sean O’Sullivan said that some Irish buyers were among those who had paid deposits on about 180 of the units and who had not closed their sales because construction work was not completed. Sales had been completed on only three units.”
The Chicago Tribune In Illinois. “At $169,000, it’s a lot of house for the money, and John Wozniak, co-owner of J. Lawrence Homes LLC, isn’t interested in going a penny lower. During the boom times that made Will County a real estate hot spot, the three-bedroom single-family houses for sale in his Silver Leaf community would have commanded an additional $50,000, he said.”
“The Silver Leaf housing development is a long ride from downtown Chicago, and, as Wozniak can attest, sales in the area have been slow. His Wheaton-based company operates a half-dozen communities, and during the fat years sales of 20 or more houses monthly would have been a reasonable tally. By 2009, however, sales had dwindled to one or two a month.”
“To shoppers waiting for home prices to fall further, Wozniak offers this advice: Don’t. ‘This adjustment we’ve made over the past three years is really all we can do,’ he said. ‘I don’t think we can go any lower than we are right now. I really believe that.’”
Sun Times Media in Illinois. “Many have called it the great housing bubble — a period during the early to mid-2000s when there seemed to be no end to the rise in home values. But as is the nature of any bubble, it burst — and with it came a wave of foreclosures that swept through the country. According to an April foreclosure report prepared by RealtyTrac, Illinois ranked eighth in the U.S. among states with the fastest rate of new foreclosure filings — one for every 280 homes, a 38 percent rise compared to April 2009.”
“Another leading factor for the current wave, according to Geoff Smith, senior vice president for the Woodstock Institute, a Chicago-based, nonprofit research and policy organization, is the increased number of ‘under water’ homeowners. New filings aside, what is of greater concern for Smith has been the increased number of individuals who have gone through the entire foreclosure process, which he estimated to have risen by as much as 56 percent during the first three months of 2010 compared to the same time last year.”
“‘In 95 percent of those cases, you’re seeing the properties becoming bank-owned,’ he said.”
The Pioneer Press in Minnesota. “Gary Benson is the perfect renter. He’s never been late on a payment. He keeps his St. Paul house and yard clean. He spends his own money making repairs. But perfect isn’t good enough. His family soon will be forced to move out — not for anything he did wrong, but because his landlord didn’t pay the mortgage. The house must be sold, and real estate agents say it’s easier to sell rental property if all tenants are gone.”
“‘There is no sense in kicking us out. This would be another abandoned house,’ said Benson, standing amid cardboard boxes in his living room. ‘If we left, you would have meth heads breaking in and stealing copper pipes. That is the last thing St. Paul needs.’”
“Gary and Cynthia Benson already had been hit by the more familiar type of foreclosure — they lost the home they had owned for eight years. Gary Benson filed for bankruptcy in 2008.”
“The couple never has missed a rent payment. Their problem is with the new owner — Freddie Mac, the federally sponsored agency that buys and sells mortgages. Benson wants to keep renting the house, then buy it when he qualifies for a mortgage in November. In good times, banks might be patient — but not now. Real estate agent Randy Burg, who is trying to sell the Benson house, said the bank could wait, only to find out that Benson didn’t qualify for a mortgage. Better to get the family to leave soon, Burg said, to sell to the first qualified buyer.”
“Last week, the exasperated couple stood in the house that never quite became a home. ‘I am not perfect. I am not sitting here shining up my halo,’ said Gary Benson. ‘But people like us are getting dogged for other people’s greed.’”
“The most recent data from the SP Case-Shiller survey of housing prices…indicated Minneapolis-St. Paul area, which includes Pierce and St. Croix counties in Wisconsin, showed the second-worst drop at 2.7 percent for the month. This is the sixth consecutive month in which the index showed some drop for our metro area.”
“Prices for a composite of the 20 metro areas included in the survey also edged down for the sixth month but remained slightly above where they were a year ago. The overall conclusion is that while housing prices recovered somewhat in mid-2009, they are eroding again.”
“Yes, ‘cash for clunkers’ gave a temporary boost to auto sales. A large tax credit and the Federal Reserve buying more than $1 trillion worth of mortgage securities to keep home loan interest rates at historic lows gave some temporary support to housing sales and prices. The Fed’s general flooding of the economy with new money has made stock markets look healthier than underlying conditions warrant.”
“But…any withdrawal of government stimulus seems to make the economy sputter. The U.S. economy absorbed problems over six years rather than six months. They include a massively unsustainable run-up in housing construction and prices, a banking sector that is riddled with bad loans from top to bottom and a decade of large federal deficits.”
“There is no simple fix for the U.S. economy. The hangover of excessive money growth, overbuilding, inflated real estate and financial asset prices, bad investments and an inflation-adjusted doubling of the national debt between 2001 and 2010 is one that cannot be cured with aspirin or a can of gas treatment. It simply will take time, years rather than months.”
