July 11, 2011

The Opposite Of The American Dream

The Aspen Times reports from Colorado. “The highest of the high in the Aspen-area real estate market is recovering the quickest. There have already been 14 sales of homes priced in excess of $10 million, and another three houses at that price level are under contract, according to Craig Morris, a partner in Morris & Fyrwald Real Estate. That’s only one sale off the record for a year — and there’s still half of 2011 remaining. Morris said Aspen is attractive to foreign buyers because of favorable exchange rates and because real estate prices were adjusted during the recession.”

“While it might be difficult for most folks to image that homes selling for $10 million or more come with discounts, that’s what’s happening. Mason Morse Real Estate President Bob Starodoj said ‘deep discounts’ are being made in the 20 percent range, while more common discounts are 10 to 15 percent.”

“Morris said the sellers who are moving their property realize they must price for today’s market. They cannot ask for the prices common before the recession hit. ‘Prices for ‘04, 5 and 6 don’t really have any relevance to prices today,’ Morris said.”

From Vail Daily in Colorado. “There’s a question that’s been asked almost since people moved out of caves: Should I rent or buy? Like just about any open-ended question, the answer depends on everything from the condition of the local market to an individual’s credit rating and risk tolerance. After reading a Wall Street Journal analysis of the question, the Eagle County Economic Council did some research on the local market. The report the group issued isn’t pretty.”

‘As of last year, Eagle County’s foreclosure filing rate was 3.1 percent, above the national average. The county’s ‘completed’ foreclosure rate —meaning cases in which owners lost their homes — also was above the state average. The report also notes that the county has lost about 6,000 jobs since the national recession hit locally in 2008.”

“Kevin Brubeck, a financial adviser with Edward Jones Investments in Eagle, said in retrospect, some of the people now renting probably would have been better off not buying homes in the first place. ‘Over the last decade, renting was a better bargain than owning,’ Brubeck said.”

“‘The tax benefits are a real consideration,’ said local mortgage broker Chris Neuswanger. ‘And it’s a shame to put off buying when you think about what it costs now at 4.5 percent versus what it will cost at 6 or 7 percent. If you can qualify, there are still places in this valley that are a steal. Some places downvalley are down about 50 percent from where they were.’”

The Daily Sentinel in Colorado. “Like many areas across the Grand Valley, the Redlands has experienced a slowdown in residential building and commercial activity in the last few years. At least one expert thinks the recession has taken a bigger toll on the Redlands, at least in terms of housing values.”

“‘The drop in the higher end properties is probably more significant there than anywhere else in the valley,’ said Toni Heiden, owner of Heiden Homes Realty, who said that some high-end Redlands properties are selling lower than she’s ever seen them. ‘Values in the Redlands used to be higher than elsewhere,’ Heiden said.”

“After a few years of stagnation, homes are beginning to sell again in the Redlands Mesa Golf Course Community. The estate lots at Redlands Mesa Golf Course start at $700,000. Craig Huckaby, broker associate with Bray Real Estate said he’s seen more of an interest in higher priced homes in the Redlands. Currently, he has a listing in the Sanctuary for $895,000 and has had 15 or 16 showings.”

“‘There’s about a three-year supply of homes between $700,000 and $900,000,’ said Huckaby, who feels optimistic that 15 or 16 showings in 80 days indicate the house is priced correctly and will sell in a timely manner.”

The Arizona Republic. “What was once the priciest home on the market in Ahwatukee Foothills has finally been sold for $1.8 million - less than half the original asking price of $4.2 million. ‘It was quite a big loss to take,’ said Brian Patterson, who built the 10,000-square-foot Tuscan-style mansion in a gated community called Summerhill and had lived there with his wife and kids since 2008. ‘We spent more than $3 million to build it.’”

“Patterson, who holds an MBA and a real-estate license, had built the seven-bedroom mountainside house for his family to live in until his children graduated from Desert Vista High School, then planned to sell it and make a profit. Instead, the real-estate bubble popped right at the time Patterson lost his business and primary income, he said.”

“After he cut the price three times, an Ahwatukee couple with eight children offered $2.2 million. The deal was signed, Patterson said, but then an appraiser reported to the buyer’s mortgage lender that the property was worth only $1.8 million. The two families eventually agreed to the $1.8 million price, but Patterson is still frustrated that he has lost so much money on his home and investment.”

“‘The appraiser who came up with that number had never worked in this area before,’ he said.”

From 8 News Now in Nevada. “Almost every neighborhood has a foreclosed house that looks worn down, with weeds in the front yard, and a sickening green pool. But now, leaving a foreclosure in ruin will be a crime thanks to a new state law. ‘This is almost bordering on the program Hoarders,’ said realtor Amelia Keene as she shows a piece of property in disrepair.”

“The owners lived in the mess with no power and eviction looming for a year. Keene says the family was even offered cash to turn over their keys but refused. Keene says it was a year of drama and the family got resourceful by even carrying buckets of water into the home. ‘They start collecting water so that they can keep flushing the toilets. This is very common all over town.’”

“There were troubling signs scribbled on the wall by the former occupants. Rants, proclamations and twisted axioms given the state of the house. One day everything will be good and we will all be happy is scrawled across one wall. ‘That one broke my heart when I saw that the other day,’ said Keene.”

From KTNV TV in Nevada. “The housing crunch is hitting military service members especially hard. Relocation is a way of life. They don’t have the luxury of riding out the economy, and any bad mark in their finances could jeopardize their careers. Colonel John Montgomery has moved 15 times, relocating for the military. But things are different this time. As he makes the move to Virginia, the financial burden of his North Las Vegas home will be coming with him. The house he purchased 4 years ago with much of his life savings, has lost so much in value it’s a struggle to figure out how best to cut his losses.”

“‘The house was $420,000 when we bought it. It got appraised for $180,000,’ he says. ‘That’s 42% of the original price, and that’s a pretty tough pill.’”

“Major John Royal and his family are being sent to Korea in November. His North Las Vegas house is now worth nearly 50% less than when he bought it in 2007. It’s currently on the market as a short sale. But if there are no takers, he says he’ll have no choice but to walk away. ‘It could have a significant impact on my security clearance,’ he worries. ‘I currently have top secret security clearance and if you have a foreclosure on your record it could impact it significantly.’”

“At least 32 airmen out of Nellis Air Force Base have already foreclosed on their homes. Many others may be struggling, and considering leaving their military careers because of the financial strain. After 25 years in the Air Force, Colonel Montgomery has decided his only option is to rent out his North Las Vegas home and cover a $1000 a month difference. He says it’s a price he’s willing to pay to continue to serve the country.”

“‘We felt we had one more, we had more to give to the Air Force so making the decision to stay with the air force took precedence over the money issue.’”

The Deseret News in Utah. “One of the most remarkable things about the recent housing crisis in the U.S. is Americans’ extraordinary and enduring faith in the importance of homeownership. Roughly 9 in 10 people continue to say homeownership is an important part of the American Dream, according to a recent New York Times/CBS News poll.”

“That isn’t to say they think it’s a good investment. The poll also finds that nearly half of Americans think buying a home is risky, and 74 percent think something else is a better investment. Time magazine explains this with the astute observation that perhaps the American Dream isn’t about profit or investment, but ‘maximum control over your own lifestyle, tax-advantaged. It’s about the prospect of one day owning where you live, free-and-clear.’”

“There is evidence, however, that overzealous efforts to increase homeownership contributed to the housing bust as purchasers and policymakers confused home financing with ownership. All this has forced Americans to ask whether homeownership is for everyone, and the answer seems to be that maybe it isn’t.”

“But it would be a mistake to assume that homeownership is simply for the rich and not for the poor. Rather, the dream of homeownership should be for the responsible — and not the irresponsible — at all reasonable income levels.”

“Lenders and buyers alike need to refocus on the ‘own’ in ‘home-ownership.’ Tremendous debt that can’t be paid off within a reasonable time frame is not the same thing as ownership — it’s being owned by a house rather than owning it. It’s the opposite of the American Dream.”

‘Homeownership may not be for everyone. But it can be for those who want it and are willing to save, to plan and to make a smart commitment to a reasonable home within their means.”




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