It Never Comes Down
It’s Friday desk clearing time for this blogger. “Instead of ‘bleeding dry,’ it may be time to stop making mortgage payments and face foreclosure head on. Many homeowners are spending every penny they have to pay their mortgage while they wait five or six months to hear back from their bank on loan modifications. By that time, the homeowner doesn’t have funds left to hire an attorney to fight the bank, said David Hicks, head of the Sarasota-based Alliance Legal Group, who was the keynote speaker for a foreclosure workshop. Hicks estimated that over 100,000 homeowners are in default in Florida. This high rate of default and Florida’s rate of unemployment, which is higher than the national average, don’t bode well for Florida’s future.”
“‘Were in for at least five more years of this,’ Hicks said. ‘It’s going to get worse before it gets better.’”
“The number of foreclosure actions moving through the court system in Southwest Florida spiked in June, a possible sign that the nine-month logjam caused by the robo-signing crisis is beginning to break. ‘This could be the beginning of a new surge,’ said Judge Lee Haworth, who just stepped down as chief judge of the 12th Circuit Court after overseeing response to the flood of foreclosures in the region. ‘The winds are definitely starting to blow a little harder.’”
“Foreclosure filings across the nation in the first half of 2011 are down 29 percent from the same period last year. Lenders have slowed foreclosures because of legal problems with incomplete paperwork. Tom Smith, an assistant professor of finance at Emory University, said banks may also be slowing foreclosures because they don’t want the inventory on their books at at time when many of them are already wobbly.”
“‘A lot of banks found that they foreclosed, then had these properties on their balance sheets and couldn’t do anything with them. They short sell them or get rid of them in bunches. From a bank’s perspective, a lot of this stuff really hurts the balance sheets,’ Smith said.”
“Stephanie Herrod, president of the Westover Property Owners Association in Gwinnett County, said she has seen homes in her neighborhood sit untended for months after foreclosures. The association often gets stuck with mowing grass or maintaining properties during the limbo period when no one takes control of a home. ‘We are really getting hit by distressed properties,’ she said.”
“Smith said uncertainty about inventory and price direction affects the consumer psyche. Potential buyers are not getting into the market because they are waiting for the prices to drop even further. ‘Deflation is a signal to people to stop consumption and wait. If people believe for whatever reason the price of housing will continue to fall then it will continue to fall…because demand for housing will drop,’ he said.”
“North Texas home foreclosure postings fell 14 percent for August auctions, marking the sixth consecutive month of declines, according to the Foreclosure Listing Service. George Roddy Sr., president of the listing service, said that the decline in postings is welcome news, but that the slowdown ‘is just prolonging the suffering.’ He thinks it’s related more to the actions of mortgage processors than real improvement in the home market.”
“‘Statistically, the decline in same-month activity over the past year reflects a rebound in the foreclosure market,’ Roddy said. ‘I believe the catalyst behind this slowdown is simply the fact that lenders are taking more time processing distressed properties scheduled for foreclosure and that they are trying to be more careful with paperwork.’”
“In Ventura County, Sabrina Simpson, a Realtor with the ‘certified distressed property expert’ designation in Moorpark, said her biggest issue is she has interested buyers and not enough desirable homes for sale. Simpson said she doesn’t see the housing market recovering soon and people who owe more than their homes are worth will have to decide whether they want to sell soon or stay in their homes for a long time. ‘By the middle of next year, we’re going to see a lot more inventory on the market,’ she said.”
“Marshall County has not been immune to the effects of the housing bubble burst of August 2008. Nearly three years later, foreclosures are dominating the housing market and lowering property values, officials said. ‘We just had two up for foreclosure in our neighborhood, and it’s a scary thought.’ said Laura D. Givens, a Guntersville attorney who deals with foreclosure cases. ‘Having foreclosures in your neighborhood decreases your property values when yards are not mowed and shrubbery is not cut.’”
“Many homeowners have decided to walk away from their mortgages and abandon their houses when the mountain of debt seems too high to climb. ‘I see people dealing with the emotional side of it, but I think that’s a business decision,’ Givens said. ‘If they’re truly upside-down $20,000 or $30,000 and they cannot pay their mortgage, they may consider walking away. Me personally, I wouldn’t walk away from that, but if I was $200,000 upside-down, I’d have to really think about it.’”
“It’s a growing problem in our Valley. Homes that remain abandoned and thieves that continue to target them. It’s happening on one East Las Vegas community. Neighbors want to know why more can’t be done to hold the homeowner of this eyesore next door responsible. ‘It’s just a game of cat and mouse you board it up and a few days later they take it down and get back in,’ explained John Bisci.”
“John loves living in his Sahara Sunrise neighborhood but he can’t stand this house down the street near Sahara and Treeline. He says it was abandoned several years ago. ‘The lock on the back gate was cut again. There’s fresh graffiti all over the back wall,’ said John.”
“According to Clark County’s Assessor’s web site Lori Marks has owned the House since 2001. The phone number listed on the paperwork when she bought the house is disconnected. So the signs on the garage door keep piling up. ‘Short of putting up barbed wire and landmines I don’t know what to do anymore,’ said John.”
“John hopes once the home is officially foreclosed on someone will buy it and put it back on the market. ‘Best case scenario the house would be cleaned out sold and somebody who wants to live here, can live here,’ said John.”
“The average time to process a foreclosure — from the initial notice to the final sheriff’s or trustee’s sale — rose to 318 days in the second quarter, up nearly 7% from 298 in the first quarter and 15% year-over-year, according to RealtyTrac. In New York, the process now takes an average of 966 days — or more than two and half years. In New Jersey, it’s 944; and in Florida, 676. Ultimately, the artificial foreclosure delays are prolonging the housing market’s ills, said Arnold Kling, an economist with the Mercatus Center at George Mason University and formerly with Freddie Mac.”
“‘The government should be trying to speed foreclosures, not stop them,’ he said. ‘Postponing foreclosures may simply be putting off the inevitable market bottom. We need to remove barriers to foreclosures.’”
“In fact, he believes the litany of government foreclosure prevention programs are doing more harm than good. ‘Instead of housing returning to somewhat normal condition by 2014, we’re looking at 2015 or even 2016,’ he said.”
“With C$500,000 ($515,464) fixer-upper homes out of reach for many Vancouver and Toronto home buyers, condos also remain their only route to property ownership. ‘I get asked with all those cranes in the sky, is there going to be a glut of supply? But if you look at the city planners’ projections for demand versus projects on stream, we still don’t have enough condominium projects underway in our big cities,’ said Phil Soper, chief executive of Royal LePage, one of the country’s biggest real estate brokerages.”
“BMO Capital Markets recently noted inventory of completed but unoccupied multi-dwelling units at 12,672 units in May, around historical highs, compared to 4,757 for single-family homes. Analysts attribute part of the condo boom in Vancouver and Toronto to physical and regulatory land restraints, which have changed the mix of housing to more stacked high-density communities from the traditional single-family home.”
“‘It has shift over the last several years. Now it’s about 50/50, which some people are concerned about. I can’t say I am,’ said Robert Hogue, senior economist at Royal Bank of Canada. ‘I just see this as a reflection of where our major cities are at in their own life cycle.’”
“Investors in China are not sure what to worry about most, but the message from many analysts is a simple one: focus your attention on the risks of a bubble in what has been described as the ‘most important sector in the universe’ – Chinese property. Economists have now put a number on the size of that bubble: it was 25% in 2009, having grown from 20% the year earlier, and worse in some boom towns, according to an economic study.”
“It points to several indications that China’s property market might have overheated in recent years: in some cities, buyers are picked up by the seller in a lottery; some real-estate developers have started hoarding houses by delaying their sales hoping for higher profits.”
“Housing investment accounts for 10% of gross domestic product (GDP), and is crucial for economic growth, the report’s authors say. ‘Because of the integration of China into the world economy, a bursting bubble can cause negative spillovers to other countries, particularly in the Asian region.’”
“Some residential land in Adelaide has become dearer than that in Sydney, figures released by the Housing Industry Association (HIA) show. As a result, land sales in the South Australian capital have slipped 37 per cent over the past 12 months. With a median-sized housing block priced at $487 a square metre, Adelaide was now more costly than Sydney at $480 a square metre, but still behind Perth at $532.”
“HIA South Australian executive director Robert Harding said the price of land in Adelaide was a reflection of limited supply in recent years, which was a direct result of state government policies. ‘That pushed up the price of land and, as we know, the price of land is a bit like the price of beer, it never comes down,’ Mr Harding said.”
“Mr Harding said the HIA expected house prices in Adelaide to level off, hopefully leading to an increase in construction activity. ‘The problem at the moment is we’re having a real struggle getting any contracts at all,’ he said. ‘If activity were to remain like that, the industry would be in real strife.’”
