The Market Struggles To Find Its Reality
The Denver Post reports from Colorado. “Denver heavyweight commercial-real-estate honcho Andrew Klein’s Cherry Hills mansion fell into foreclosure this year. According to public records, the Buell Mansion neighborhood home had an outstanding principal balance of $6.998 million on an original balance of $7 million. According to the property listing for the home, the asking price is $8.95 million for the 21,193- square-foot property, which was built in 2007. The home has eight bedrooms, nine bathrooms, a nine-car garage, five fireplaces, a professional-style home theater, an outside kitchen and dining area, a 2,500-bottle wine cellar and a separate wing with a boxing ring, a gym and a guest apartment.”
“‘It’s been a hard three years,’ Klein said. ‘I’m trying to work something out with the bank.’”
From KWGN in Colorado. “Bank of America held an outreach event at the Colorado Convention Center for customers on the verge of foreclosure. It invited 6,300 homeowners in default of their loans in metro Denver, but only about 400 showed up. ‘It’s embarrassing,’ says one woman from Colorado Springs who didn’t want to give her name. She remains hopeful. But says reality always sets in. ‘If they can’t help you with your mortgage, where are you going to live? I thought about, do I live in my car, do I live at a homeless shelter?’”
The Deseret News in Utah. “The National Association of Home Builders recently reported that Salt Lake City reached a seven-year high for home affordability. In the Salt Lake area, 79 percent of homes sold in the second quarter of this year were within reach to families that make median area wages. About two weeks ago, Kristen Nelson, 27, and her husband, Tyler, 23, and their two children moved into their house on Ogden’s east bench.”
“The Nelsons were able to purchase their 1,800 square foot three-bedroom, two-bath property for $150,000 through a short sale after looking at more than 500 properties online and at least 50 homes in-person. ‘I’m pretty picky,’ she said. ‘We came from 900 square feet and wanted something where we could open the fridge and open the dishwasher at the same time and not have the person sitting at the dining room table not have to ’suck it in.’”
“Veteran Realtor David Seiler with ReMax Associates said prices will likely continue to fall as ‘the market struggles to find its reality’ from the artificially high prices of a few years ago.”
From KTVN Channel 2 in Nevada. “Have a spare million? Realtor Donna Spear with Chase International has a house for you. We found her singing the praises of Reno’s ‘Holly House.’ The Holly House is southwest Reno history. But even for this classic, selling in Reno is still a challenge. New numbers show our foreclosure frustrations are far from over. Notices of default went up more than 50% last month. Another 641 Washoe County homeowners in August could not pay their mortgage, up from 427 in July. It’s the highest level of defaults in a year.”
“Donna says, ‘More sellers are realizing that they have to compete with bank-owned and short sales, and so they’re adjusting their prices accordingly if they want to sell.’”
“For a house you love, the time is now. As the co-owner of the Holly House, Larry Johnston told us, ‘The time to buy is when there’s blood in the streets, and nobody’s going to raise a red flag and say this is the absolute bottom. But I can assure you, if it’s not the low, it’s darn close.’”
The Arizona Daily Star. “When Caylin Barter, a second-year law student at the University of Arizona, talks to homeowners saddled with high mortgage payments, she has an idea about what they’re going through. Barter bought a home in Reno, Nev., in August 2005. She then watched as the market crumbled and the value of her house evaporated. In the end, she got rid of her house in a short sale, where a bank agrees to sell the property for less than is owed on the mortgage.”
“‘It was bewildering for me and I feel like I’m a relatively savvy buyer and a relatively savvy negotiator,’ she said.”
“Barter and other UA law students are participating in a new program that aims to help homeowners facing foreclosure. The students spend 12 hours a week providing assistance at Southern Arizona Legal Aid’s mortgage clinic. Andrew Vanell, another second-year law student, worked in bank training loan offices in the years leading up to the mortgage crisis. He said he clearly remembers the financial climate - where borrowers were encouraged to consolidate debt using the equity in their homes - that got many people into their current situation.”
“‘Everybody was sort of caught up in the moment,’ he said.”
The Tucson Citizen in Arizona. “During the 1992 presidential election, James Carville coined the now-cliched phrase ‘It’s the economy, stupid’ to sum up what the election was all about. This go round, the phrase is back, though it’s been modified to ‘It’s about jobs, stupid.”
“But high unemployment and a sputtering economy are not what it’s all about. It’s about homes, stupid.”
“The burst housing bubble is what got us into this mess and it will be the recovery of the housing market that gets us out. America has a consumer-driven economy and the engine powering that car is the housing market. And for the past four years, the engine has been out of gas.”
“We have more wealth in our homes than in any other sector of the economy. At the height of the hyper-inflated housing bubble in 2007 American homes were worth an estimated $66 trillion. Two years later, they were worth $49 trillion (It’s back up to about $56 trillion now). That $17 trillion kick to the groin is what doubled over the American economy. And as any man can tell you, if you take a shot to the nards, it takes a while to recover.”
“The question for the President and the Congress is: Can they do anything to help speed the recovery?”
From InMaricopa in Arizona. “Last month I spent some time talking about the three ‘Game Changers” for Pinal County. Here are some more thoughts on one of those projects — Union Pacific Railroad’s Classification Yard proposal for the Red Rock area. The site they would like to acquire from the Arizona State Land Department (ASLD) is a little under 1,000 acres. As I said last month, Union Pacific has been working with ASLD staff since 2007 to acquire this site.”
‘ASLD holds the land in trust for public education and is required see that any sales of those lands (through a public auction process) go for ‘highest and best uses’ — presumably meaning residential rooftops. In light of today’s surplus supply of housing units, I personally think ‘highest and best use’ means bringing jobs to Arizona so folks can afford to buy some of those empty houses.”
“In the midst of the hyper-growth of the last decade or in a ‘normal’ economy that rooftop market goal probably made sense. But in today’s recessionary economy, we desperately need jobs, jobs, jobs to grow our way back to prosperity. So here we have a major employer with a sizeable budgeted sum of money to purchase land, a construction estimate for the project in the hundreds of millions of dollars, the very real prospect of a couple of hundred new Arizona jobs, and empirical evidence pointing to the ripple effect a yard like this has as a catalyst for transportation-related businesses.”
“Where do we go from here? You tell me. The challenge seems to be how to provide ASLD with enough information so they can see their way clear to letting the market speak by putting the land up for public auction as required by law.”
