A Price War And A Beauty Contest
A report from the Capital. “In the past several years, the luster has been lost on the concept that real estate is a great way to make money. Once thought to be invulnerable to declines in value, real estate has now been brought down to earth. Nevertheless, there are some examples out there that show how a piece of property has the potential to appreciate in ways that would make getting in on the ground floor of Google or Apple pale in comparison.”
“For example, on the outskirts of Annapolis, there’s a beautiful waterfront community called Fishing Creek Farm. Last week, a new listing popped up in Fishing Creek. With an asking price of $15 million, it’s the second most expensive property currently on the market in all of Maryland. Just off the South River, you get a cozy 12,000 square-foot house on over six acres of primo waterfront, an eight-car garage for your land toys and a 196-foot pier with two boat barns.”
“We came across the original contract of sale for the land that ultimately became this enclave of exclusive homes, dated Aug. 13, 1941. So, in a place where you can now pay $15 million for a 6 acre estate, what did the whole 250 acre shootin’ match cost back in 1941? The contract sales price was $30,000!”
“Even though the housing market has taken its lumps in the last several years, real estate will always be a good long-term investment. Like they say, God ain’t makin’ no more dirt, and a couple hundred years from now, people will be saying, ‘Can you imagine that house in Fishing Creek was selling for only $15 million back in 2011?’”
From Consumer Affairs. “What’s most needed to get the economy moving again is consumer confidence, according to Mortgage Bankers Association President David Stevens, who blames the media for a relentless drumbeat of negative headlines. ‘You don’t see stories about good buying opportunities out there. You only see stories about foreclosures,’ Stevens said at a recent economic conference sponsored by the Northern Virginia Association of Realtors.”
“‘The Echo Boom, born from 1981 to 1991, is going to cause an extraordinary demand for homes. They will be more urban, more Latino and will marry later but it is a huge generation and its impact with be huge,’ Stevens predicted. Whether that generation winds up renting or buying will be a major factor in the nation’s future economic well-being, he said.”
“If government regulations or onerous lending standards result in homebuyers needing a 20% down payment, ‘That’s nothing more than saying you can buy a home if you’re rich. If you’re not, you’re going to (be) a renter for life,’ Stevens said.”
The Sun Gazette in Virginia. “Nearly one in four homes in Virginia with a mortgage attached to it is ‘under water.’ Virginia’s rate of 23.3 percent is nearly a full percentage point higher than the national average, according to new statistics released by CoreLogic. In addition to the homeowners in Virginia whose mortgages exceed the current value of their properties, an additional 6.1 percent are in the ‘near-negative’ category, where property values are within 5 percent of the amount owed on the mortgage. That rate, too, is higher than the national average.”
“The situation was worse in the Washington metropolitan area: Counting the District of Columbia and Maryland suburbs in addition to Northern Virginia, nearly 290,000 residential properties with a mortgage – 28.3 percent – were in a negative-equity condition in the second quarter, with an additional 5.5 percent approaching that situation.”
“In Virginia, homeowners with mortgages own a collective $426.8 billion in residential real estate, and owe just under $305 billion to lenders – a ratio of 71.7 percent. Nationally, the rate is 69.8 percent, representing $12.6 trillion in property value and $8.8 trillion in mortgage debt.”
The Virginian Pilot. “Alan Turissini of the Hampton Roads Real Estate Group of Keller Williams Elite Realtors has been listing bank-owned property for more than six years. Based on his research for broker price opinions, he said, the foreclosure rate in Hampton Roads ‘appears to have peaked, as there are less bank-owned listings in the last two months.’ Some areas, including downtown Newport News and Portsmouth, ‘were hit much harder by the foreclosure rate,’ Turissini said. Some local bank-owned houses have sold for less than $10,000.”
“Dirghayu Desai and his wife had searched for more than two years. He’d be hard-pressed to have found anything better than 6,300 square feet of brick-, mural- and granite-clad luxury within a budget that would have bought half the house only six years earlier. In fact, this home had been listed this year for $1.2 million - about $100,000 more than its 2004 purchase price. A bidding war ended at $625,000, a victory for the Desai family.”
“As a buyer, Desai recognizes his good fortune. As a seller, he realizes that his competition now includes banks. ‘So what I gain here I should be ready to lose’ on the other side, he noted.”
“Homes within the high-end market, priced at $800,000 and up, can take as long as 36 months to move, said Brenda Rawls, a Realtor with Rose & Womble Realty in Virginia Beach. She presents figures and facts, based on analysis of current absorption rates, and the seller must decide whether to price it to sell or to sit. ‘We are in a price war and a beauty contest,’ she opined.”
The Gazette in Maryland. “Existing-home sales rose last month by 4 percent in Maryland, as the median price declined by 6 percent to $241,564. Baltimore and Prince George’s counties saw the biggest jumps of 106 and 43 more sales, respectively. In Prince George’s, where sales rose by 6.4 percent over August 2010, the median sales price last month was $160,000, down 14 percent from a year ago. The median price in Baltimore County declined by 3 percent to $210,000, while sales jumped by 21.5 percent.”
“‘It’s a good time to buy with the low interest rates and prices,’ said Joanne Darling, president of the Prince George’s County Association of Realtors. ‘Many counties around us are seeing prices rise, while they continue to go down in Prince George’s. We are seeing a lot more buyers than a year ago, and ultimately that competition will drive prices higher.’”
From WBTV in North Carolina. “Tensions boiled over at homeowner’s association meeting in one east Charlotte neighborhood Tuesday night, prompting the president to quit mid-meeting. Neighbors gathered in the Boulder Creek community to angrily express their frustration over having to pay extra HOA fees to make up for a budget shortfall.”
“The board’s president came under fire repeatedly and at one point in the meeting he angrily said, ‘I’ve given up so much of my life to this HOA and all you people are looking at me like I’m the devil.’”
“After the outburst, he walked away fuming but eventually came back and continued the meeting. Boulder Creek’s board has been under fire for sending out a letter requiring homeowners to pay an extra $100 dollars in addition to the annual $230 annual HOA fee. The added assessment is to cover the thousands of dollars the budget is in the red over because dozens of homeowners are behind on their fees.”
“Several residents questioned why they had to pay extra. ‘I don’t have it,’ said one homeowner. ‘And that’s the bottom line.’ Wanda Hampton, another homeowner agreed and said, ‘I don’t owe y’all nothing and you will not get it.’”
“Fairness aside, the Boulder Creek HOA has the law on its side. North Carolina law gives HOA wide latitude allowing them to take the necessary steps to collect the fees — even threatening foreclosure. But Hampton said she isn’t backing down. ‘Like I told them, I’m not paying mine so they do whatever they have to do,’ she said. ‘Because I paid my $230 already and I refuse to pay another $100 for somebody else’s mistakes.’”
The Gaston Gazette in North Carolina. “Community One Bank foreclosed this month on every unsold home and piece of land in Gastonia’s Village at the Mountain subdivision. The neighborhood is home to upscale townhomes, which I understand developers wanted to call unpaired villas.”
“County records show homes in the area sold for as much as $285,000 in 2007. The most recent townhome – or villa – to sell went for $215,000 in August 2009. The last land to sell was a 0.09-acre parcel that went for $29,000 in December.”
The Charlotte Observer in North Carolina. “A former loan officer at the troubled Beazer Homes USA Inc. has agreed to plead guilty to criminal fraud charges filed Monday in federal court, the U.S. Attorney’s Office said. Authorities charged Janette Parker, who oversaw Beazer Mortgage Corp. branches in the Carolinas and Tennessee, with three counts of mortgage fraud.”
“Court documents say she inflated the price of Beazer homes to account for buyers’ down-payment assistance - justifying the increases through false ‘upgrades’ and revised sales contracts - causing the properties to be overvalued when submitted to the Federal Housing Administration for insurance.”
“She will appear in court to enter her guilty plea and faces a maximum sentence of two years in prison for each charge, plus a fine of up to $250,000. ‘The prosecution of Ms. Parker turns the page on another chapter in the Beazer investigation,’ said U.S. Attorney David Brown of the Western District of North Carolina. ‘Ms. Parker is taking responsibility for her part in the mortgage fraud scandal caused in this district by the illegal business practices of some former Beazer Mortgage employees.’”
“The charges are the latest in a string of civil and criminal actions against the Atlanta homebuilder and its employees. The investigations followed a 2007 Observer series that found that Beazer, then a major Charlotte-area homebuilder, arranged larger loans than some customers could afford and violated federal lending rules.”
“According to court filings, Parker - who served as branch manager in Charlotte and Columbia, S.C., and later oversaw mortgage offices in Raleigh and Nashville, Tenn. - communicated with appraisers to influence them to report increased values for some homes. Parker also had Beazer sales agents add false upgrades to justify price increases, and revised sales contracts to increase sales prices and loan amounts to account for down-payment assistance, the court filing said.”
