April 10, 2012

Real Estate Is Cheap, But None Of Us Can Afford It

The Durango Herald reports from Colorado. “A year has passed, but the message at the 12th annual Real Estate Forecast on Wednesday night was almost identical to 2011: It’s a buyer’s market out there. And just like last year, brokers are saying the best values won’t be around much longer. Demand is starting to balance out and even outweigh supply in Durango, said Bob Allen, owner of Allen & Associates – a real estate appraisal, consultant and research firm. Prices have yet to reflect that trend: median home prices in the city crept up only a few thousand dollars since last year, hovering around $350,000.”

“Homes between $200,000 and $400,000 are the most in-demand, but brokers also have seen a ‘firming up’ of the $500,000 to $700,000 market over the last year, Wells Group broker Rick Lorenz said. Meanwhile, the supply of homes priced above $1 million has fallen from 10 years to four years since 2009. ‘We’re starting to see signs of a bottom,’ Allen said. But it’s important to remember that it is ‘all so very slow compared to what it was,’ he said.”

The Aspen Times in Colorado. “The good news in the midvalley real estate market is the incredible amount of sales that already have occurred in 2012. The bad news is that the furious pace has been spurred by foreclosures and short sales, according to real estate agents. Farther downvalley, Lynn Kirchner, of Amore Real Estate, said recovery won’t come before 2013 in the Carbondale area. The high number of transactions is the result of low prices, she said, and the prices are low because there are so many foreclosures by banks and short sales by owners trying to avoid foreclosure. ‘That’s the only reason’ for the activity, Kirchner said.”

“Lenders are beginning to understand that they have a lot of assets on their hands and another round of foreclosures looming, she said. So they adjusted prices lower on the homes they already held in foreclosure. Kirchner said prices in general have fallen 20 percent since last year and higher in some cases. Kirchner said she suspects prices will continue to drop through this summer because of new foreclosures and short sales. She is playing the role of counselor in many cases for homeowners who don’t want to sell but have so few options because of their financial predicaments.”

“In many cases, the homeowners have struggled to hold on to their houses since the recession started, but circumstances such as lost or reduced income make it an uphill fight. Lots of people are still coming to her and asking, ‘What the hell do I do?’ she said.”

From KTAR in Arizona. “Linda Klinker, a former commercial real estate appraiser, and her husband are out looking at homes in the north valley. In 1990-1991, Klinker saw the market make a similar turn around, ‘I kept telling everyone, ‘This is the next L.A., buy! Buy!’”

“At the house in north Phoenix, KIinker is adding up the wear and tear on the 4,000 square foot home. ‘The orange tree needs to be brought up and the pool has some cracks in the fence back here,’ Klinker says. She admits this is normal, ‘Everybody’s been struggling for the last couple of years, so I think we’re going to see more of that.’ The bank is asking for $300,000 in a short sale. Her realtor estimates it’s overpriced by several thousand dollars.”

“In most cases, however, buyers are not in the position to low ball the listing price. ‘If their idea of a deal is getting it under the asking price, my answer would be currently, don’t waste your time,’ warns local realtor Russell Shaw. ‘Almost everything is going above the asking price, because prices are still way below where they ought to be.’”

The Arizona Republic. “The National Fair Housing Alliance investigated nine metro areas, including metro Phoenix, to determine if foreclosure properties in Black and Latino neighborhoods were being maintained and marketed by lenders as well as foreclosures in predominately White neighborhoods. In the Valley, the housing group compared fewer than 200 foreclosure homes in Glendale and Maryvale. The investigation found 40 percent of the bank-owned homes in Maryvale, which it considered predominately Latino, had broken doors. Only 6 percent of the bank-owned houses that the group checked out in the neighborhood in Glendale, which it considered predominately a White community, had broken doors.”

“About 73 percent of the foreclosure homes in the west Phoenix community didn’t have ‘for sale’ signs. And 11 percent of those Glendale foreclosure home were missing those signs.”

“Metro Phoenix’s median existing-home price is currently $124,500, about $20,000 below the area’s median in 2002 and well below the $267,000 from the height of the boom in summer 2006. Martin Dace has been shopping for a house in the southeast Valley for nine months. He has been outbid by both investors and regular buyers on foreclosures and short sales. Now he’s considering buying a new home in Gilbert, near his job. Though the new home will cost $25,000 more than a short-sale house of the same size, he won’t have to worry about being outbid.”

“‘I am ready to buy and move in,’ he said. ‘I am tired of losing out on bidding wars. And new homes’ prices are bound to go up, too, at some point.’”

“The uptick in prices is enticing more buyers who have been waiting for the market’s bottom to purchase a home and now have likely missed it. ‘Phoenix-area home prices are climbing so quickly in some areas now, due to such low inventory, it’s hard to keep up,’ said Tom Ruff, real-estate analyst.”

My Fox Tampa on Arizona. “Paradise Valley may look like paradise, but like much of the country, folks here are struggling with homes worth only half — or less — of their original value. Recent data shows that 23 percent of Americans owe more on their mortgage than their home is actually worth, and in Arizona that number doubles, with nearly 50 percent of residents underwater on their homes.”

“Sotheby’s realtor Frank Aazami says that this neighborhood has had multiple properties on the market for more than 1,000 days — some closer to 2,000 days — and many have been on the market since 2006. He’s seen numerous people lose not only their homes, but the cash they had in it as well. We spoke to several residents — one couple with a $4 million home that’s currently on the market for $2.4 million, and another with a $6 million home worth only $2 million in the current market.”

“These luxury homeowners are doing everything from short sales, selling for a fraction of the home’s worth, to making improvements to increase the home’s value or renting while they wait for the market to pick back up. Some have had to foreclose. Many are riding it out and hoping for the best.”

The Deseret News in Utah. “The Utah Housing Corp. announced new mortgage loan programs that would target new and former home purchasers looking to get back into the ownership ranks. Established in 1975, UHC is an independent public corporation of the state focusing on creating affordable housing solutions for Utah residents. Currently, there is no limit on how many loans the agency can take on through the programs, said said Deon Spilker, UHC director of mortgage banking. Eligible buyers could earn up to $81,000 per year and could purchase a property with a maximum value of $320,000.”

“An eligible borrower can obtain a second mortgage for up to 6 percent of a HomeAgain Loan or 4 percent of a Score Loan to use for the down payment and closing costs needed to purchase a property. ‘Homebuyers who have a (credit) score of 620 deserve a home,’ she said.”

“Joy Wicks of Cottonwood Heights would seem to fit the mold of the type of potential buyer the programs are seeking to help. She and her new husband recently married, each after selling homes from previous marriages. ‘We’re somewhat struggling financially,’ Wicks said. ‘We have the money to pay the monthly mortgage payments. But saving up the seven or eight thousand dollars to put down on a house has been the struggle.’”

The Lahontan Valley News in Nevada. “For many Nevadans, buying a home of their own will no longer be wishful thinking. Nevada Rural Housing Authority has launched the Home at Last™ Advantage program providing qualified first-time homebuyers and Veterans with a generous 4 percent down payment in the form of a grant. A family buying a $150,000 home will get a free $6,000 cash down payment at a competitive mortgage rate and save up to $2,000 a year in federal income tax.”

“‘With falling home prices and NRHA’s exciting financing program, this may be the best time ever for first-time homebuyers and Veterans to purchase a home,’ said Gary Longaker, NRHA executive director. ‘Without a doubt, these programs provide Nevada buyers with incredible savings opportunities and there really is no limit to the number of hard working Nevadans who can purchase their first home with this program.’”

Vegas Inc in Nevada. “Glenn Schaeffer, a top Nevada casino executive in the mid-2000s, has been sued over allegations he failed to disclose all of his assets in a bank short-sale request. Bank of Nevada filed suit against Schaeffer on March 23 in Clark County District Court alleging intentional misrepresentation, fraud and other counts. The bank’s lawsuit said that, in 2006, it loaned Schaeffer $1.373 million in a mortgage deal backed by a condominium at Turnberry Place.”

“The lawsuit said that although Schaeffer provided a financial statement for an entity in which he is a principal, Constellation Partners, as well as a personal financial statement, it later discovered some substantial omissions.”

”’Defendant, in fact, owned, and now owns, significant assets located in New Zealand and elsewhere which were not included in any of defendant’s financial statements, and which were not otherwise disclosed to plaintiff,’ the lawsuit says. ‘Such assets include residential real property located in New Zealand, valued in excess of $1.5 million, as well as an interest in a New Zealand company known as ‘Woollaston Estates Holdings,’ which in turn owns significant real and personal property assets valued in excess of $6.787 million.’”

The Las Vegas Business Press in Nevada. “Not surprisingly, chief economist Lawrence Yun of the National Association of Realtors gave a piece of financial advice that would benefit his industry at 2012 Las Vegas Perspective. ‘Sell high on gold and buy low on real estate,’ Yun told about 300 business and community leaders attending the event.”

“It’s great that the nation is experiencing the best housing affordability conditions in years, but that has not translated into a meaningful pickup in home sales. ‘What the heck? National home prices have been stable for the past two years, but if you ask people on Main Street in Kansas City or Houston or Chicago, they will say prices are falling. Why? That’s the message they receive every day,’ Yun said.”

“U.S. housing starts are the lowest since World War II, and housing production in Las Vegas has been under 5,000 a year for the last three years. New-home inventory is at its lowest level in years, and yet housing starts are dead. ‘Strange world,’ Yun said.”

“According to the Las Vegas Perspective, 73.6 percent of Southern Nevada residents think it’s a good time to buy a house. Fifty-seven percent said there will not be a better time to buy a house in the next 12 months, and 26.8 percent think housing prices will increase in the next 12 months, compared with 23.9 percent who see them decreasing. ‘Real estate is cheap, but none of us can afford it,’ said Jeremy Aguero, principal of business advisory firm Applied Analysis.”

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