Changing Long-Held Perceptions
The Greenville News reports from South Carolina. “Unemployment, job security, and the inability to obtain financing for a mortgage are some of the factors that weighed down statewide home sales in May. Local real estate professionals say one of the biggest hindrances to the housing market throughout the state is unemployment. ‘We need more jobs. We need free flow of financing again, and I’m not talking about when banks were giving money to anybody that could fog a mirror. I’m talking about financially, reasonable, sound financing and streamlining the short sale foreclosure process,’ said Nick Kremydas, CEO of the South Carolina Association of Realtors.”
“Condos, he said, have had some of the biggest price drops, creating a lot of movement with cash buyers coming in to take advantage of the inventory. Much like the national figures, the local statistics are being compared to those months in 2010 when there was an ‘artificial’ increase in sales activity because of the tax credit, Kremydas said. ‘I think a real test for our numbers is going to be in July and August and how we compare to last year and the year before when there was no tax credit,’ he said.”
The Atlanta Journal Constitution in Georgia. “Metro Atlanta’s already distressed housing market now must absorb a new blow: the closing of one southside military base and deep cutbacks at another, adding thousands more homes for sale as families move. It’s clear that hundreds of families are trying to sell quickly in a market where homes languish. Those able to sell are taking heavy losses, even with the federal government’s Housing Assistance Program, or HAP, set up specifically to help military families by covering the expected financial shortfalls they incur from home sales.”
“The Army Times recently reported that, according to an internal audit by the Army Corps of Engineers, nine out of 10 military homeowners affected by base closings and realignments most likely do not qualify for HAP.”
“Reservists Nicole and Edward Hill have tried to sell their Locust Grove home since 2009. They’re not directly affected by the BRAC, but they want to sell because they know they won’t be in the Atlanta area more than another year or so. They recently took the home off the market after learning HAP had run out of money for the remainder of its fiscal year, which ends in September. They plan to try again in the fall.”
“‘It’s frustrating,’ said Nicole Hill. The subdivision where they live with their three children had homes whose values ranged from $200,000 to more than $1 million about five years ago. ‘Houses on the golf course were selling for half a million when we bought our house in 2005. Now, many are in foreclosure and selling in the $200,000 range,’ Hill said. ‘It’s disappointing that the market has gotten so low and there’s no outlet for it to rebound anytime soon. We’re just sitting on toxic property.’”
The Birmingham News in Alabama. “Owning a home has long been the American dream, but for many in today’s sour economy and slumping real estate market, that dream has lost part of its luster. Meanwhile, more and more home owners who are looking to sell are finding the rental market a viable alternative.”
“Pat Snow, a self-employed artist who recently moved from Birmingham to Austin, Texas, decided to rent out his North Crestwood home instead of putting it up for sale. ‘In two or three years, if the market rebounds, I can probably sell it and make more money,’ he said.”
“The crisis of confidence in real estate is changing long-held perceptions, said Howard Finch, dean of the Brock School of Business at Samford University. ‘The entire adult generation that’s 30-plus has been raised with the idea that real estate prices almost always go up and real estate is a sound investment,’ he said. ‘But the last few years have significantly damaged confidence in residential real estate as an investment, and for that reason, a lot of people are more inclined to rent and put those marginal dollars in some other type of investment than their primary residence.’”
“A true real estate recovery won’t happen until there is meaningful job creation, said Tommy Brigham, chairman of Birmingham’s Ark Real Estate Strategies, adding that the longtime mantra of ‘location, location, location,’ has been replaced by ‘jobs, jobs, jobs.’”
“In the meantime, people hanging on to their homes because they’re afraid of losing money in a sale should consider the options they’ll have if they do sell, he said. ‘They might get out by selling low, but look at what they get by buying low,’ he said. ‘They’re really getting a much better bargain in the end.’”
The Bradenton Herald in Florida. “Sales of existing homes and condos were up in Manatee and Sarasota in May while pricing was down. Angie Cegnar, current president of Manatee Association of Realtors, said she has been involved in real estate for 37 years, and the current marketplace reminds her of the 1970s. ‘There are great, huge deals in condos right now,’ she said. Some waterfront units that were selling for $450,000 have dropped to $190,000.”
The St Petersburg Times in Florida. “Despite repeated efforts, real estate agent Colleen Tuttle had no luck swinging a short sale on behalf of a client who offered the bank $800,000 in cash for an Apollo Beach home with a stunning view of Tampa Bay. So Tuttle was frustrated and angry that an investor group got title to the house for just $10,010 in February after the homeowners association foreclosed. ‘It may not be illegal, but it’s immoral,’ she said.”
“State Sen. Michael Fasano said he plans to propose legislation that would require homeowners associations to notify lenders when they start to foreclose, thereby giving the bank a chance to pay the delinquent fees or kick-start its own foreclosure action.”
“Bush Ross, a Tampa law firm that represents Andalucia Master, said associations are moving against delinquent homeowners because banks are taking so long to foreclose.”
“Eric Appleton, a lawyer with the firm, said associations can’t notify the banks when they start foreclosing because that would violate federal law barring communication with a non-party about a debt. Because the bank doesn’t owe the assessments, it’s not a party to the association’s foreclosure action. One solution, Appleton said, would be to make banks responsible for delinquent fees. ‘At the end of the day,’ he said, ‘banks are the ultimate beneficiaries of associations and their efforts to maintain the common areas and amenities.”’
The Palm Beach Post in Florida. “Tom and Patrice Sherhag’s foreclosure began with a missed quarterly HOA payment of $75 in October. The assessment due to the Palmetto Pines Homeowners Association in unincorporated Boca Raton grew to $318 by the end of November. In January, the association filed a lien for the original $75 on the Sherhags’ home and despite subsequent checks written for hundreds of dollars, snowballing court and attorneys costs have since upped the final bill to an estimated $4,605. The actual debt owed the association: $80.25.”
“The Sherhags, who bought their home nearly 15 years ago, are not in foreclosure with their bank. ‘This is a trap. Once you’re one month behind, it’s ‘I got you.’ said Andrew Smith, a Boca Raton attorney defending the Sherhags in the May foreclosure filed by the association. ‘Why target someone who is one month behind?’”
“The law allows associations to go after debtors with foreclosure actions that make them responsible for paying legal fees. For some associations, especially those with units abandoned by investors, a repossession can be an effective way to regain lost dues by allowing it to take over the home and rent it out until a bank’s more lengthy foreclosure process concludes.”
“Eric Glazer, an attorney who specializes in homeowner association law in Hollywood, said while it’s unusual to pursue a foreclosure for small debts, he understands why some associations do it. ‘The question becomes are you supposed to wait for two years of assessments to be late,’ Glazer said.”
“Still, he said there are alternatives, such as setting up payment plans. ‘If you go through the very expensive route of foreclosure, $75 becomes 20 times that overnight,’ Glazer said. ‘Associations need to realize that people have fallen on hard times and these aren’t just investors going delinquent.’”
The Herald Tribune in Florida. “The buzzword in the real estate industry these days is ‘inventories.’ In Sarasota County, inventories had fallen to a 5.8-month supply of homes and a 7.4-month supply of condos at the end of May from a 22.9-month supply of homes and 24.3-month supply of condos at the end of May 2008.”
“But while the drop in inventories has agents throughout the region cheering, there is reason to believe the trend will be short-lived: Piles of unprocessed foreclosures are stacking up inside and outside the court system, caused by delays from the robo-signing fiasco that began in September.”
“‘There are 330,000 open foreclosures in Florida right now and that number would be much higher if it were not for the temporary suspension caused by the foreclosure-processing mess,’ said Jack McCabe, a Deerfield Beach-based real estate consultant. ‘Foreclosures will definitely ramp up again later this summer and fall and we will see inventory numbers go up again.’”
“‘In a normal market, declining inventories would be a good sign, but this is not an normal market by any means,’ McCabe said. ‘Half of all sales in recent months have been distressed properties, and 50 percent have been cash deals because financing has been relatively unavailable. These are not symptoms of a healthy market.’”
“Many recent sales have involved investors, who will put the houses and condos back on the market in the next 12 to 18 months.”
“Real estate agents counter, but it is also possible that banks will not be able to ramp up their foreclosure processing as much as expected in the months ahead and consumer demand will rise enough to meet any increased supplies.”
“‘Most of the distressed properties that will come on the market will be priced at less than $350,000, and we already have a less than six-month supply in that category,’ said Stephen L. Lingley, an agent with Signature Sotheby’s in Venice. ‘I also believe that banks won’t be dumping 2,000 properties a month. They can’t process that many. The courts can’t process that many. We’re more likely to see a couple hundred a month.’”
