A Multi-Year Phenomenon
The News Journal reports from Delaware. “It wasn’t so long ago that retirement meant a well-earned ticket to Easy Street. Today, that’s nothing more than fantasy for tens of millions of Americans. More than half of all U.S. households hadn’t saved a penny in their 401(k) retirement accounts and the median 401(k) balance was just $34,000, Pew Charitable Trusts found in 2004. And that was before the recession devastated investments, housing values and net worth.”
“Don Rosado retired after 27 years at the refinery near Delaware City.Rosado said he has some savings and $600,000 in a 401(k) account, which puts him way ahead of most people today. He said he needed surgery to address a foot problem and his wife, Margaret, needed care for a heart ailment. They’re trying to sell their vacation house at the beach, and Margaret, 61, has begun looking for work.”
“‘Now, I’m only on Social Security and my 401(k). I’m starting on that this month to pay the bills,’ he said.”
“Homeownership, once the bedrock ‘nest egg’ for millions, has been undermined by the real estate collapse. Many families won’t have their homes fully paid off by the time they retire. In 2007, 32 percent of households headed by someone age 65 to 74 were carrying home mortgage debt, and nearly 19 percent of households headed by those 75 and older had a mortgage, according to the Federal Reserve Survey of Consumer Finances.”
The Gazette in Maryland. “Like many real estate brokers, AJ Khetarpal, CEO of Maxxum Realtors & Associates in Rockville, knows that the days of the quick, easy home sale — with buyers in a bidding war the minute the home goes on the market — are, for the most part, not going to return for a while, and likely for a long while. ‘So far this year, about 86 percent of my sales have been short sales. The rest have been foreclosures,’ he said. ‘I don’t see a lot of regular sales.’”
“‘We will not have a full recovery until the economy improves overall,’ said Linda Simpson, with Weichert Realtors in Rockville. ‘Some buyers still do not grasp the idea that it is a buyers’ market and still a good time to purchase.’”
The Star Democrat in Maryland. “The sluggish economic growth experienced so far this year is expected to continue throughout the rest of 2011 and into 2012, according to two economists who presented their forecasts Sept. 15. After predicting last year that the economy would modestly move forward in 2011, as it did in 2010, Gary Keith, VP in the commercial banking division of M&T Bank, said he’s not as optimistic this year, given what actually has occurred to date in 2011.”
“‘We’re in a much deeper hole than we originally thought,’ he said.”
“With no short-term fix in sight, though, Keith said the jobless numbers most likely will be ’sticking stubborn,’ as the economy isn’t expected to grow fast enough over the next year to bring those numbers down. Couple that with a still-struggling housing market and the near gridlock in Washington, D.C., on important economic issues, and meager growth can be expected for the foreseeable future, Keith said.”
“‘This is not just a one- to two-quarter event,’ he said. ‘This will be a multi-year phenomenon.’”
The Greenville News in South Carolina. “Greenwood County, hit hard by the double whammy of recession and decline in the textile industry, had the highest increase in poverty of any county in the nation with a population above 60,000, according to Census figures. ‘It is very tough times here,’ Greenwood County Councilman Mark Allison said.”
“Allison, a Realtor, said he ran for the council seat to try to help bring jobs to Greenwood. Since taking office in January, though, he’s seen a continued downturn, particularly in housing sales. ‘One of our big issues is foreclosures. The housing market has just plummeted,’ he said. ‘It’s a national issue. It’s not just Greenwood.’”
The Star News in North Carolina. “The company that owns the sprawling Sea Trail Golf Resort and Convention Center in Sunset Beach filed Tuesday for Chapter 11 bankruptcy protection. In the filing, Sea Trail Corp. listed assets of more than $34 million – most of that in real property. The company owns parcels within the Sea Trail community. The resort is connected to the Sea Trail Plantation residential community, which is not affected by Tuesday’s filing.”
“Sunset Beach Mayor Ronald Klein lives in Sea Trail Plantation, which uses the resort’s facilities. ‘Having the golf course in good condition and good operating order means quite a bit to the people here,’ Klein said Tuesday, and for people ‘to get full value out of their houses if they should decide to move on.’”
“The Chapter 11 will have some impact on the development’s condominiums, said Mary Ann Bechtel of Mary Ann Bechtel Real Estate in Ocean Isle Beach. ‘The biggest thing is that it is in a state of flux,’ she said.”
From Nooga.com in Tennessee. Chattanooga remains a relatively stable real estate market because of steady economic growth, Anne-Marie Wheelock, affiliate broker with ReMax Renaissance, said. Wheelock weighed in on the slight uptick in foreclosures and said she isn’t significantly concerned with those numbers. ‘When banks release foreclosures, it is important that they not flood the market and dilute the value properties,’ she said. ‘An increase in foreclosures could be the result of lenders finalizing backed-up foreclosure paperwork that had been put on hold during the robo-signing controversy last year,’ she also said.”
“Dwayne McMillen, a real estate broker with Crye-Leike Realtors in Hixson, said that—overall—he is positive about the future of his business. Although he said foreclosures are always a concern, the biggest issue is the national economy. ‘There is this shadow inventory that is still going to hit the market,’ he said. ‘That has been a concern. We obviously don’t have a real clue on how many of these units will be local, how many nationwide.’”
The Tennessean. “In an interview with The Tennessean before addressing area real estate professionals at a luncheon, Frank Nothaft, VP and chief economist at mortgage giant Freddie Mac said he expects local home prices and sales to pick up steam by next year, though gains will be modest. Q: Can you talk about Middle Tennessee’s housing recovery? Have home prices here finally hit bottom?”
“A: ‘In Nashville, prices in relationship to income have come back in balance. If Nashville is not at bottom, it’s very well close to the bottom,’ Nothaft said. ‘I’d be surprised if there was a further slip in prices.’”
“Q: Many reports note how tight lending remains in the aftermath of the credit crisis. How would you evaluate it? A: ‘We don’t want to compare lending to the standards of five years ago. Underwriting standards have swung away from high-risk lending. Lenders are no longer dealing with borrowers with low credit scores with subprime ratings, and they’re not doing, what we call, ‘no-doc’ lending anymore,’ Nothaft said, referring to loans made with little or no documentation of employment, income and other key data.”
“‘In the primary market, the emphasis is now on full documentation. We verify income, verify jobs, and verify other assets and other liquidity in case of a rainy day. We’ve gone back to the underwriting fundamentals of the 1990s.’”
“Q: Why wasn’t this the case in the run-up to the housing boom? A: ‘I think some of the challenges we faced at the time when the subprime market was beginning to collapse, in the early part of 2007, was that we still felt the responsibility to provide stability and liquidity to the home mortgage market, and at the time, we lowered some of our internal standards for mortgages,’ he said.”
“‘We underestimated the risks in the marketplace at the time. We had the mistaken view that ‘no-doc’ loans would be of lower risk. In retrospect, those were not good decisions because those loans performed poorly.’”
The Suffolk Herald in Virginia. “In case there was any question about it, the effects of the recession, of the failed housing market and of the nation’s banking debacle continue to linger — even in Virginia and even right here at home in Suffolk.”
“When state regulators showed up at Bank of the Commonwealth locations around Hampton Roads on Friday to take the keys to the doors and the combinations to the safes, they put an end to a long, painful process that had cost the bank’s investors millions of dollars and — if not for the Federal Deposit Insurance Corp. — could have cost depositors even more. As with so many of the bank failures the nation has seen in recent years, the culprit was bad loans.”
“But looking even deeper, one must consider that someone had to approve those bad loans, despite the likely evidence that they were risky at the time of that approval. And, as we’ve seen in other cases in the ‘too-big-to-fail’ banking industry, there likely was a corporate philosophy of unchecked greed that encouraged approving even the riskiest of loans. As it turns out, Bank of the Commonwealth was not too big to fail.”
“The good news is that depositors were protected from the results of the failure. The FDIC did its job, and when all is said and done this failure will have cost American taxpayers very little, compared to the bailouts and stimulus programs that have been designed to save some of the nation’s biggest institutions during the past few years.’
“But Friday’s surprise announcement by the State Corporation Commission that the bank’s assets had been seized — including a branch right here in Suffolk — was a grim reminder that even here we are not isolated from the most extreme examples of the economic uncertainty that pervades our nation.”
