Accelerating The Market’s Race To The Bottom
Newsworks reports from Delaware. “Down-payment and settlement assistance loans are among the incentives of a new program in northern Delaware designed to boost the sales of vacant homes. Lenders and housing counselors on hand for the presentation said potential buyers should not be scared off by the term ‘vacant property.’ ‘Properties that are vacant, right now in this housing market, there’s not a lot wrong with them,’ Lanora DiStasio of Allied Mortgage said. ‘A vacant home just means that someone could not possibly pay the mortgage anymore.’”
The Gazette in Maryland. “Montgomery County is easing its tax laws to spur economic growth. In legislation adopted Tuesday, the collection of some taxes assessed on new residential and commercial construction will be delayed until those buildings are occupied. Council Vice President Roger Berliner said delaying the collection of impact taxes will make Montgomery more competitive with jurisdictions in Virginia, which already delay the collection — without a sunset provision.”
“‘In the real world, this proposal is revenue-neutral,’ he said, adding that it also could encourage development that otherwise might not occur. ‘Make it easier for people to build. I think that’s what we ought to do.’”
The Washington Post. “Babur Lateef., a Democrat running against Corey Stewart for a spot on the Prince William County Board of Supervisors, has given his campaign $27,750, according to the latest campaign filing reports. Many candidates keep campaign coffers flush with donations from their personal bank accounts. But both Stewart and John S. Gray, an independent candidate also challenging Stewart, have raised questions about Lateef’s finances because of the situation surrounding his home foreclosure last year.”
“Gray and Stewart have said it looked like a strategic default. In 2010, Lateef’s house, which he bought for $1.2 million several years before, went into foreclosure. His sister-in-law bought the house at auction for $616,000, and the family is renting it back to Lateef and his wife while he rebuilds his business. Lateef said that the focus on his personal finances is beside the point.”
“Lateef has proposed lengthening the time from notification of potential foreclosures to the actual bank foreclosure. Banks should be required to take steps to avoid foreclosure, such as considering mortgage modifications, he said. ‘There are a lot of pressing issues in this county,’ Lateef said. The foreclosure issue is one, and Lateef has argued that he is in a unique position to propose solutions. Prince William has been ravaged by rampant foreclosures, and just under half of all homes are ‘underwater,’ meaning homeowners owe more than their homes are worth due to the drop off in the housing market.”
From NPR. “Manassas, Va., has 6,000 families behind on mortgage payments, and three counselors. Mickey Rhoades is one of them. ‘A half-hour into my day and all the peace is gone,’ she says. She gets 60 calls a week. It takes as long as four hours to process each client’s application. ‘You do the math,’ Rhoades says.”
“Before the housing market crashed, banks paid local nonprofit counselors to help families purchase homes. After the crash, the need switched from pre-purchase counseling to foreclosure prevention. But the money hasn’t followed. Counselors are losing jobs while the need for their services surges. ‘You have to have a ground force,’ says Frank McMillan of Virginians Organized for Interfaith Community Engagement. ‘Otherwise these programs don’t result in the intended consequences.’”
The Progress Index in Virginia. “In a report prepared for the Realtors association, the George Mason University GMU Center for Regional Analysis noted that ‘While there was a slowdown in the number of new foreclosures this year, banks have returned to processing foreclosures and there will be an uptick in the last half of the year.”
“Kathy Diradour, 2011 president of the Southside Virginia Association of Realtors noted that federal tax credits boosted home sales in the first half of 2010 and that there were no equivalent incentives to shore up demand this year. ‘But savvy buyers know this is a great time to buy and they’re doing so,’ she said. ‘While sellers may not be getting the price they want on the sale of their home, they’re more than making up that difference when they go to buy their next home.’”
The Charleston Daily Mail in West Virginia. “Low- and medium-income families in West Virginia are now eligible for a 30-year home loan at something that was unimaginable just two decades ago: an interest rate below 3 percent. The West Virginia Housing Development Fund announced Monday it can now offer a 30-year fixed rate loan to qualifying buyers at a new 2.99 percent rate — well below where officials were projecting just six weeks ago.”
“The better interest rate did not have an effect on the income caps that have been set to qualify for the housing fund’s loans. In Logan County, a one- or two-person household with less than $58,560 in income can qualify to purchase a $298,155 house under the loan program.”
The News & Observer in North Carolina. “To say it has been a rough couple of years for the downtown Raleigh condominium market would be, well, a considerable understatement. Two downtown projects, West and the Quorum Center, were forced to resort to auctions to reduce inventory, while a third, Bloomsbury Estates, was sold on the cheap to a Florida company that promptly slashed prices so low that the remaining units sold out in a matter of months.”
“While these events inflicted plenty of pain on both developers and anyone who bought a condo before 2009, they also had the effect of accelerating the market’s race to the bottom. One Bloomsbury unit sold two weeks ago for $166,000, or about $189 a square foot. That’s more than $100 per square foot less than the first Bloomsbury buyer paid a little less than two years ago.”
“‘They’re all gone, thank heavens,’ said Ted Reynolds, who developed the Quorum Center along with his son, David. ‘They sure gutted the market over there.’”
The Tennessean. “For some of the 67,000 homeowners in Middle Tennessee whose properties are financially underwater or near it, partial relief could be close at hand, thanks to a retooled federal program affecting droves of Fannie Mae and Freddie Mac loans. Nationwide, nearly 1 in 4 of the country’s homeowners are underwater, according to CoreLogic. That’s roughly 11 million borrowers.”
“In the Nashville area, 13 percent of all homeowners, about 42,000 borrowers, are underwater, and an additional 25,000 people are on the cusp, owing more than their home’s value, according to the firm. ‘Most people I see who are underwater are in a crisis mode. They haven’t been current for months,’ said Ron Williams, senior housing counselor for the Woodbine Community Organization. ‘I think it will help a handful of people, but every federal program I’ve seen so far has failed to live up to expectations.’”
“‘For some people, it’s just putting off the inevitable,’ said Ross Kinney, Pinnacle’s residential and mortgage manager, suggesting that borrowers who do qualify may end up in foreclosure on their homes anyway.”
“Twenty-five confirmed buyers walked away with rock-bottom deals on Fifth and Main condominiums after a Saturday afternoon auction. ‘The market has spoken,’ said David Lang, a principal with Chicago-based ACG Equities, an investor with the development. ‘We consider the auction a success, but are we happy with the values? No, we’re not. But there is a silver lining. We’ll have 40 residents in the building after the new year.’”
“To keep the sales momentum going, Lang said, prices on the building’s remaining 89 units will be kept at auction value until the end of the year. ‘We hope we won’t have any left by January, but if we do, we’ll have to discuss pricing at that point,’ he said.”
“Christina Coleman watched the flurry of activity with keen interest. She has lived at Fifth and Main for about two months and said she came to the auction to assess market prices for units comparable to her one- bedroom, 1½-bath condo. She declined to disclose how much she paid. ‘I’m planning to contact the building owners,’ she said. ‘I think there’s some room for negotiation now.’”
