HBB On The Road To Maryland/DC/Virginia
This thread will be forwarded during my trip through Maryland, Virginia and DC for the purpose of communicating with local bloggers, posting observations and photos. Let’s call this the Shadow Inventory Tour. Pics will be posted on Picasa.
The Baltimore Business Journal in Maryland. “Barbara Hughes can breathe a little easier these days, but the shock of what she has been through will not so easily fade from her memory. Bank of America has agreed to reduce her monthly mortgage payments and allow her and her sister’s four children to stay in their Baltimore County home. Rick Davis, a housing counselor at the Eastside Community Development Corp. Davis was able to connect Hughes with an official at the bank who was willing to call off a planned foreclosure of her home. But like many of the homeowners he counsels, Davis feels under water these days. His ability to help others is far outweighed by the amount of need for his aid. For every Barbara Hughes he encounters, there are many more who either won’t seek help or just can’t be helped.”
“Joseph T. Landers III, executive vice president of the Greater Baltimore Board of Realtors said he is deeply concerned about the ’shadow inventory’ in Greater Baltimore’s housing market, those properties that are at risk of foreclosure or have been seized by banks but are being withheld from the market for a future date. When those properties start to come back onto the market, they will likely be resold for far less than previously. That means a home that sold two years ago for $400,000 might only fetch $200,000. That reduction means even more people will be under water, owing more on their mortgages than their properties are worth.”
“Maryland ranked as the 10th worst housing market in the nation for foreclosure events in May, according to RealtyTrac. There were 5,852 properties facing or in foreclosure in May, 65 percent more than in May 2009. What’s more, RealtyTrac researcher Daren Blomquist said that there could now be a second wave of foreclosures as the housing market shows signs of improvement. About 2,400 homes sold in Greater Baltimore in May, up nearly 26 percent from May 2009, according to Metropolitan Regional Information Systems Inc. of Rockville. As activity picks up, Blomquist said, banks are more inclined to foreclose on a property because they have a better chance of being able to resell it.”
“‘You’re definitely not out of the woods yet,’ Blomquist said.”
The Frederick News Post in Maryland. “Montgomery County had 467 foreclosures in May, and Washington County 163. The highest in Maryland in May was Prince George’s County with more than 1,700 foreclosures, followed by Baltimore city with 847. ‘The increase in foreclosures from last year will have the effect of lowering property values because the banks are interested in a quick sale and getting these foreclosure properties off of their books and are substantially discounting their foreclosure resale homes for sale,’ said Patrick F. McLister, a partner in the law firm of Salisbury & McLister.”
‘Without the tax credit, it remains to be seen whether the real estate market will now be able to absorb the number of foreclosure resales coming on the market without negatively affecting the typical non-foreclosure sellers during this prime selling season,’ McLister said.”
“Carlton Boujai, treasurer of the Maryland Association of Realtors and an agent with Exit Realty Prosperity Group in Frederick , said he sees some positive indicators, but is cautious. ‘Foreclosures are down, short sales are down, properties are spending less days on the market,’ Boujai said. ‘But economists are saying there could be another wave of foreclosures.’”
The Daily Press in Virginia. “Marshá Smith thinks she can afford a home priced at up to $150,000. ‘If I don’t qualify for how much I want, I’ll keep pursuing it, maybe getting rid of some debt that I have that will eliminate extra money that I’m spending out,’ the 36-year-old Hampton resident said. ‘But I’m not going to let it defer me from my dream.’”
“Only about 18 percent of the homes for sale in Hampton Roads fall below $150,000. In fact, nearly two-thirds of the homes currently listed for sale are priced at more than what the median household income in the region can comfortably afford. James V. Koch, economist and president emeritus of Old Dominion University, said those income and home price numbers mean that it’s a good time to think about buying. The percentage of median household income used to pay for a median resale home has fallen every year since 2006, according to the Old Dominion University’s Economic Forecasting Project. It’s estimated to drop to 23.2 percent in 2010, from the recent high of 33 percent in 2006.”
“‘The problem is people don’t have jobs or they’re scared,’ Koch said. ‘They’re reluctant to buy a house, or banks are reluctant to lend.’”
“Or they don’t qualify for a loan. ‘Underwriters and investors are looking harder at loans than ever in the past,’ said Robert Runnells, production manager of Old Point Mortgage. ‘They’re more restrictive. They’re just more guarded and, with all the foreclosures, rightly so. Consumers have to jump through more hoops than they used to. We see a lot of people now with a higher debt load and less assets than we’ve ever seen.’”
“Smith has always wanted a walk-in closet, and thinks it would be nice to have side-by-side Jacuzzi tub and shower. Her first home probably won’t have all that, but there’s hope, she said. She’s just ready have a home to call her own. ‘Paying rent each month is a waste,’ Smith said. ‘It’s just throwing your money anyway and never really owning anything for yourself.’”
The Star Exponent in Virginia. “Foreclosures and other distressed properties continue to comprise the largest share of real estate transactions in Culpeper County, and the market, though not stagnant, is weaker than last year. From January to April, 112 properties – 75 houses and 37 house lots – went into foreclosure. In the first four months of last year, that number was 187, according to an analysis of county tax records. Like in past years, many of this year’s foreclosed homes occurred in the newer housing developments around town.”
“Last year, Sam Aitken, director of a homelessness intervention group that has also provided housing counseling said he spoke with probably 1,000 local clients in some sort of housing distress. Their top concern? ‘That the banks won’t work with them,’ he said, noting that most of the foreclosed properties in Culpeper were mortgaged through national banks and not local ones. ‘The incomes are way down,’ said Aitken, who’s worked in housing intervention in Culpeper for 20-plus years.”
“Culpeper Realtor Beverly Herdman with Keller Williams Realty said the first quarter of the year resulted in a “more balanced” market, with 118 homes sold in Culpeper. Of those, 39 percent were traditional sales, 35 percent were foreclosures and 26 percent were short sales. ‘That is great news, but we are not out of the woods yet,’ said Herdman. ‘If you look at the total of foreclosures and short sales, distressed properties are still making up 61 percent of the market sales for the first quarter.’”
“The first quarter of 2009 saw 136 home sales in Culpeper County, she said, noting 18 percent were traditional sales, 71 percent were foreclosure and 11 percent short sales. Typically, once a home goes into foreclosure the bank is not interested in negotiating further. Now is a great time to sell, according to Herdman, saying the housing inventory in Culpeper is way down. ‘With a lack of inventory and the homebuyers’ tax credit through the end of April, it created quite a frenzy with multiple offers and homes being over bid,’ she said.”
“Now that the tax credit deadline has expired things have cooled down. ‘We have noticed that there has not been much of an urgency with multiple offers,’ Herdman said. ‘Buyers are still frustrated with the lack of inventory. Now is definitely a great time – we need more inventory on the market.’”
The Washington Examiner. “It will take nearly three years for the Washington area’s pent-up delinquent and foreclosed properties to clear, according to a recent report, casting a pall over the region’s housing market. The area’s 34.2 months of inventory is in line with the national average, said the report from Standard & Poor’s. Analysts have kept a close eye on the so-called “shadow” housing market, which is comprised of homes that are delinquent or in foreclosure but have not been put on the market.If banks or lenders release them too soon, home prices could crash; if they hold on to them too long, supply could dry up. ‘The longer the overhang … the longer it is until the market returns’ to a healthy level, said Diane Westerback, managing director of Global Surveillance Analytics for Standard & Poor’s.”
“‘It’s hard to say exactly how these things get liquidated,’ she said. ‘Inevitably they’re going to get spread out a bit.’”
“David Dowies, principal broker at Portfolio Realty, a real estate firm based in Northern Virginia, said he has seen the properties ’starting to trickle out’ back onto the market. Lots of clients want to sell, he said, but short sales and foreclosures that have pushed prices down have given some of them pause. ‘There’s just a lot of people on the sidelines — sellers — that have been holding back,’ he said.”
The Washington Post. “After the bank foreclosed on Fernando Palacios’s Gainesville home in March, he thought he was done with what he described as the most stressful financial situation of his life. The bank sold the home for far less than Palacios owed on it, as often happens with foreclosures. What Palacios did not see coming was the letter from his lender demanding that he pay the shortfall: $148,064.02.”
“‘I really thought I was through with this house,’ said Palacios, who fell behind on payments when the economy soured and his cleaning business stumbled.”
“Palacios said he was committed to staying in his house, which he bought in 2005. He sunk $20,000 into improving it and hoped to raise his children there. But his lender refused to modify his loan, he said. To avoid personal liability for the deficiency, Palacios is filing for bankruptcy protection, as many people do who are in similar situations, said Nancy Ryan, his bankruptcy attorney.”
“‘I am definitely seeing more people come through my door who walked away from houses a year or two ago and thought they were as free as the dead,’ Ryan said. ‘They’re stunned when they realize they’re not.’”
“Gretchen Somers said she and her husband understood the risks last year when they completed a “short sale,” a transaction that allowed them to sell their Manassas home for about $150,000 less than they owed on it. But they felt they had no other options. In hindsight, Somers said she and her husband should have just walked away from the house.”
“‘We took care of the house because we wanted it to sell,’ Somers said. ‘If they were going to come after us anyway, we shouldn’t have done them the favor of making sure it looked good and cutting the grass even after we moved out, We should have mailed them the key and said: ‘Here you go.’”
