Beyond A Normal Even In A ‘New Normal’
The Philadelphia Inquirer reports from Pennsylvania. “During the boom years, market observers said, too many buyers saw their houses as investments rather than shelter, and believed that whatever they paid would be returned, and then some. Now, everyone wants a bargain, and many sellers won’t budge on price. The more open-minded ‘will listen to the marketing plan, bite the bullet and move forward,’ said Noelle Barbone, who manages the Weichert Realtors office in Media.”
“Without a doubt, this is the biggest housing bust since the 1930s, said Joel L. Naroff, of Naroff Economic Advisers in Holland, Bucks County. ‘Housing starts are at their lowest levels since 1959 and have remained there well beyond what would be considered a normal even in a ‘new normal’ environment - typically, home construction picks up early in the recovery,’ Naroff said. ‘This is also the largest price decline in 50 years.’”
The Pittsburg Post Gazette. “Jayson Schott, in a complaint filed in U.S. District Court, said he got a $97,500 adjustable rate mortgage from America’s Wholesale Lender in 2004. The rate went up, and he went into default. Bank of America, which bought America’s Wholesale Lender, filed for foreclosure in 2008. In the meantime, though, Mr. Schott’s mortgage was ’securitized’ into an investment vehicle called a Real Estate Mortgage Investment Conduit, by which it was converted into a tax-exempt investment. Thousands of shareholders bought stakes in the REMIC, according to the lawsuit by Durham, N.C., attorney Luke Lucas.”
“The mortgage thus became a stock, Mr. Lucas wrote. Because mortgages and stocks are entirely separate under U.S. law, it ceased to become a loan secured by a house, according to the lawsuit. When it went into default, the investors got a tax credit from the IRS, further nixing the note, according to Mr. Lucas’ thinking. ‘You can’t make oranges out of orange juice, and once the note is securitized, it is orange juice,’ Mr. Lucas said in a phone interview.”
“Mr. Lucas said he has filed several dozen similar lawsuits nationally, though this is the first in Western Pennsylvania.”
The News Journal in Delaware. “New Castle County Council is deliberating whether to rezone the Barley Mill Plaza office park with a hammer over its head. Stoltz Real Estate Partners has repeatedly threatened to build a 2.8 million-square-foot mixed-use development as big as the King of Prussia Mall if the smaller plan that is now before council isn’t approved. The original plan includes 700 residential units in nine-story-tall condominium towers.”
“Some council members and residents say the bigger plan is a ruse. Historically, the Wilmington area has been a challenging market for large-scale condominium projects. One of the initial developers of the Brandywine Park Condominiums said getting the buying public in Wilmington to try condo living was like getting ‘children to eat fruitcake.’”
The Gazette in Maryland. “Maryland’s only ski resort has fallen victim to the collapse of the real estate market, as its owners filed for bankruptcy on Saturday after defaulting on a $23.5 million loan. The vacation home market in Garrett County has been off significantly for the past few years, said Patrick Kane, co-owner of Coldwell Banker Deep Creek Realty in McHenry. He said the middle-range market, with homes priced from $300,000 to $800,000, has taken a particular hit.”
“Karen F. Myers, an executive with Wisp Resort Development, wrote in an affidavit with the filing, ‘Like most in real estate development, [our companies] suffered losses as the decline in the market continued.’”
“Myers is a prominent businesswoman in the state; last year, the Maryland Chamber of Commerce inducted her into its Business Hall of Fame.”
The Free Lance Star in Virginia. “Brian Whetzel, manager of the C&F Mortgage branch in Fredericksburg, and his assistant, Tracy Bray, were the guests this week on Money Talk$, the online chat, and said they were surprised by how many were from people upside down on their mortgages who wanted to know if they could refinance their loans. A sampling of some of the questions and answers follows:”
“I have excellent credit and have never made a late payment. I have about $206,000 owed on a 6.25 percent conventional 30-year loan with an $18,000 second at 7.25 percent, 15-year conventional. I paid $265,000 in 2005 and my current appraised value is about $200,000 even after I built a 300-square-foot addition and a 24-by-32 detached garage. I put 20 percent down when I bought to avoid mortgage insurance.”
“I want to refi to cash in on the super-low rates but can’t because of loan-to-value issues. The bank doesn’t seem to mind me paying on an upside-down loan currently!!”
“Helping me get a more affordable payment would ensure that they continue to get paid. But perhaps they would rather foreclose on a well-maintained home since they have already made $80,000 off of me in interest. OK, so I’m done venting. Do you have any ideas and or suggestions?”
The Virginia Gazette. “Mary K. Jones is running for re-election in Berkeley District for the James City Board of Supervisors. Gazette publisher Bill O’Donovan interviewed her Oct. 3. Q: Let’s clear up your residency, once and for all. Do you live in Berkeley District? A: Yes. Q: Are you paying a mortgage? A: I still live in the same house that I lived in when I was elected.”
“Q: We understand that you’re suing your mortgage company to stall foreclosure. No? A: I still live in the same house I lived in when I was elected to the Board of Supervisors.”
Public News Service. “Foreclosures and vacant properties bring down real estate values in neighborhoods - and numbers from 2010 indicate there are more than 308,000 vacant housing units in The Commonwealth. According to a new report from Housing Opportunities Made Equal of Virginia (HOME), the state’s highest foreclosure rates are in urban areas, mainly from Hampton Roads through Richmond to Northern Virginia.”
“However, it is the rural areas that have the highest vacancy rates, says report coauthor Ali Faruk, director of the Center for Housing Leadership. ‘Those areas were losing jobs, losing population, and that area’s been hard-hit by commercial vacancies as well as residential vacancies, even before the start of the great recession. And then, once the housing crisis hit and the recession started, it got even worse.’”
“In terms of median home prices, the report says Northern Virginia has experienced the most significant decreases. In general, home sales have begun to stabilize, although Faruk adds they are nowhere near what they were before the housing collapse.”
The Virginian Pilot. “Condos in Westin Virginia Beach Town Center Residences, the tallest building in Virginia, sold strongly after it opened in 2007. By March 2009, the developer had sold 88 of the building’s 120 units. Since then, sales have stagnated, with just eight more units selling in the past two years. Armada Hoffler, the 38-story tower’s developer, has hired an auctioneer to sell 16 of the 24 unsold condos at the Westin residences in a bid to stir up interest and find buyers.”
“‘We’re under absolutely no pressure to sell units,’ said Lou Haddad, Armada Hoffler’s president and CEO. Upscale condos like those at the Westin have been hit hard in the real estate decline, Haddad said. ‘In this high-end condo market, people don’t really know what the fair market value really is,’ he said. ‘So that leads to inertia.’”
“The most recent asking prices for the 16 units range from $258,400 for a 750-square-foot, one-bedroom condo to $1.7 million for a 2,739-square-foot penthouse. Starting bids for those units will range from $140,000 to $795,000. Starting bids are set for roughly half of the most recent asking price, said Jon Gollinger, CEO of the Boston-based auction firm. Unlike some fire-sale auctions where a winning bidder must still negotiate a final price with the seller, he said the published minimums will be honored. ‘If someone buys at these minimums, it’s a one-in-a-lifetime value,’ Gollinger said. ‘It’s ridiculously below replacement cost.’”
“Stanley Waranch paid a little over $1 million in 2008 for his 32nd floor condo at the Westin. Waranch, a retired homebuilder and developer in his 80s, said he doesn’t blame the developer for wanting to “dump” the remaining units. ‘They’re interested in getting their money out of it,’ Waranch said. ‘I bought it at the top of the market, and I would hate to see the values go down. On the same token, Armada Hoffler is under no obligation to keep holding them.’”
“Haddad, who also owns a unit in the building, said the decline in values already has happened. ‘My home value recently appraised 60 percent of its value two years ago,’ he said. ‘Last time I checked, it was the same house. I don’t think anything is happening there that isn’t in every part of real estate.’”
