Free-Flowing Financing, Greed And Unrealistic Demand
The Advertiser reports from Louisiana. “Two real estate agents, Terrica Smith and Stacey Arceneaux believe that today’s market in Louisiana benefits neither party. ‘It’s not a buyers or sellers market, it is a stabilized market,’ Smith said. ‘Buyers market doesn’t mean you can go out and buy a $200,000 house for $150,000 and sellers aren’t selling homes in 24 hours. The low interest rates make it a good time to buy, but overall the market is stable.’”
“Stable, however, is a relative term. Two homeowners, Melissa Clements and Zonghuaun “Bradley” Wu, haven’t had such luck in selling their homes and as a result have seen their property remain unsold for more than 10 months. Clements, whose home is located in Youngsville, is asking for $159,000. She and her husband were so excited about the potential buyer they went out and purchased land to prepare to start building their new home.”
“‘We thought we had it sold and two weeks before the closing they backed out,’ Clements said. ‘We had started packing everything, purchased the land and they backed out. So now not only are we paying a mortgage, but now we are paying a note for the land. Right now we are having to live month-to-month.’”
“Wu, who followed his career to California, is in a similar situation with his five bedroom, three bath home located on Broadmoor Boulevard. He’s asking for $220,000. ‘Of course I’m frustrated,’ Wu said. ‘Definitely. We want to sell so that we don’t have to worry about it financially and we haven’t been able to achieve that so far.’”
“Arceneaux and Smith said there are other reasons besides the economy as to why homeowners are finding it difficult. ‘The number one reason why someone’s home is on the market for a long time is because of the price,’ Arceneaux said. “If a house is on the market for six to eight months the first thought of a buyer is ‘What is wrong with it?’ In most cases nothing is wrong with the house, it is just priced too high.’”
The Express News in Texas. “In recent years, San Antonio real estate agent Richard Zepeda has seen prospective homebuyers do something they didn’t used to do. In the morning, they’ll go to a home they’re considering purchasing, and from there, they’ll drive to work and time how long it takes. Then, during afternoon rush hour, they’ll time their drive back to the home. Buyers aren’t just worried about traffic anymore, Zepeda says, they’re worried about gasoline costs.”
“Builder David Anderson of David Anderson Homes said some areas that used to be mainstays of his business have dried up, and gas prices are partly to blame. Agents said gas was especially a consideration for first-time homebuyers. Some of them, Anderson said, ‘can’t get loans qualified because they’re spending $200 a month on fuel costs.’”
“Anderson said that although many buyers are feeling the pressure of higher prices, he acknowledged it was just one facet of a range of considerations that can sway buyer decisions. ‘I think there are several factors playing,’ he said, ‘and the biggest is fear.’”
The Houston Chronicle in Texas. “Demand for apartments and single-family rental homes has been on the rise as tough lending standards mean fewer Houstonians can qualify for mortgages. Some would-be buyers aren’t purchasing homes because they’re trying to sell their existing properties here or in other markets. The number of proposed apartment projects is rising.”
“When it comes to the condo market, Houston is no South Florida. But lately we’ve been getting our share of distressed sales of waterfront properties. The latest is at Endeavour, the luxury high-rise built on the Clear Lake shore before the housing slump. The developer filed for bankruptcy protection in 2009.”
“An auction will be held next month to unload 21 of the two- and three-bedroom condos that range from 1,650 to 5,533 square feet. Starting bids will begin at $165,000 on units previously priced from $640,000 to $2 million , according to Kennedy Wilson, which is conducting the July 17 auction. Bidding on a five-bedroom, 5½ -bath penthouse will start at $490,000.”
The Kingswood Observer in Texas. “It didn’t take the latest real estate numbers for Liz Frazier, of Spring, to realize selling a house was no longer the simple proposition it was a few years ago. ‘We had several showings by Realtors and some drive-by interest from the sign out front,’ the former Realtor said. ‘As far as sticking points on the sale went, we hadn’t gotten far enough along to see what the problem was.’”
“Just days before new Houston Association of Realtors data showed area home sales had taken another tumble in month-over-month comparisons for May — falling 11.9 percent this time — Frazier awaited the closing on her four-bedroom house, which sold for $189,900. She considered herself fortunate that the right buyer came along at the right time. After ‘only months’ on the market, she said, a deal was struck with well-to-do parents who wanted to give the house to their newlywed child as a gift. ‘Cash buyers have always been very welcome,’ she said.”
“Meanwhile, in the Heights, Deborah Jeans, who has been trying to sell her $332,000 home for more than a year, hopes she starts hearing from some of those who will be filling some of the area’s new jobs but also want to live closer to the city of Houston itself. ‘I’ve been hearing from people who like my house but are not really in the market,’ she said. ‘Most people are looking to move into town, then go, ‘Gosh, for that much, I could get a really big house out where I live.’”
The Oklahoman. “Sales didn’t reflect the spring boom Realtors were hoping for, and the jump in average price had to do with the mix of properties that sold, not property values in general, Realtors said. So, what explains the hike in average sales prices here in May? After months of lingering on the market, upscale houses are starting to sell again, said Ryan Hukill, a Realtor with Paradigm AdvantEdge Real Estate.”
“Hukill said the homes he sells average between $225,000 and $240,000, which means he sells quite a few at $350,000 and above, which has been sluggish. ‘Fall and winter were dismal. The past two months have started to pop,’ he said.”
“Hukill also noted that the wave of first-time buyers drawn to purchasing by last year’s unprecedented federal tax credits left something of a void of first-timers that is showing up in the statistics — which also is pushing the average sales price up. ‘We’ve taken the little buyer out of the market,’ with increased credit and down-payment requirements, said Steve Mann, president of the Oklahoma City Metro Association of Realtors.”
“But ‘perfect’ credit isn’t required to buy a house, said Scott Senner, a mortgage banker with First Commercial Bank in Edmond. ‘There is a perception among the general public, and real estate community, that a buyer or homeowner needs to have ‘perfect’ credit and a down payment to purchase or refinance a home. That is absolutely not the case,’ Senner said.”
KFOR in Oklahoma. “Over the past couple of years the housing market has been inundated with foreclosures. While it seems to have leveled off in some areas, there are many people still struggling to pay for their homes. Now, the federal government is stepping in to help some of those in trouble.”
“Janice Cantrell is one of thousands of Americans facing foreclosure. She lost her job in January of 2009 and has been struggling since then. She now works two jobs, but it’s still not enough to cover her mortgage and back payments. She says, ‘It’s just been a trial I don’t ever want to go through again.’”
“Roland Chupik, with Oklahoma City’s Neighborhood Housing Services, says, ‘We know folks who are in this situation; they can’t sleep at night, particularly if they’re unemployed.’ Chupik says helping Janice and others is why he’s excited about a brand new, forgivable loan being offered through the U.S. Department of Housing and Urban Development.”
“More than 300 qualified Oklahoma families will be randomly selected to receive the assistance. Chupik says, ‘This is an incredible opportunity for them to correct a huge problem, to keep a roof over their head.’”
The Kansas City Star. “Homeowners have to brace for yesteryear values on their property. The fat times are gone and aren’t likely to return, Jackson County officials said, when we talked after homeowners got reassessment notices. ‘We went through 10 years where property values were going up like crazy,’ Jackson County Director of Assessment Curtis L. Koons said. ‘It’s done a complete 180 on what they were.’”
“Before 2006, foreclosure sales weren’t considered when the county staff reassessed the value of thousands of parcels of property. They were excluded in market value calculations of property because they weren’t considered transactions between willing and able buyers and sellers. But in the real estate bust period, foreclosures couldn’t be ignored. ‘It got to the point where those sales do affect the market,’ Koons said.”
“Foreclosures and ’short sales,’ in which the seller settles on getting a lot less for a property, now make up the majority of real estate transactions. ‘About anyone buying a house today is in a short sale,’ Koons said.”
“Jackson County isn’t alone. Hard hit areas include Florida, Nevada, California and Arizona. Easy credit unhinged the real estate market from traditional loan practices based on the actual value of homes. Mountains of free-flowing financing, greed and unrealistic demand helped create the bubble that burst, resulting in foreclosures, stalled sales and plunging real estate prices.”
“The equity growth of 10 percent to 15 percent that homeowners experienced in the mid-1990s to 2006 is gone. Today owners can expect 1960s, 1970s and 1980s increases of about 1.5 percent. It is a saner approach compared to the wild ride we’ve been on.”
