This All Sounds Quite Familiar
It’s Friday desk clearing time for this blogger. “Builders broke ground on more Clark County homes in July than during the same month in any of the last four years. Builders throughout Clark County say they are selling more houses this year to buyers enticed by historically low mortgage interest rates, a dwindling supply of existing homes listed for sale and the feeling that home prices are about to head higher soon. ‘That’s what’s pushing the urgency,’ said Matt Lewis, a spokesman for Pacific Lifestyle Homes.”
“Last month, property sales in Metro Vancouver fell to a 10-year low, and parts of the Tri-Cities were in the same basement. One financial expert believes Lower Mainland real estate has reached a turning point. Andrey Pavlov, a professor of finance with Simon Fraser University, noted prices in Vancouver have rocketed past those in places like New York and San Francisco. Pavlov argued home prices rose dramatically in the Lower Mainland, not out of income or general economic growth, but rather debt accumulation.”
“With low interest rates and easy qualification terms, people have been taking on more and more debt. ‘I think this engine of real estate price growth is now done,’ Pavlov told The NOW in an e-mail. ‘So I don’t see where the future support for real estate can come from.’”
“In 2007 Kate Thompson was WA mortgage broker of the year. Now she is facing fraud charges. It is alleged Mortgage Miracles, in Canning Vale in Western Australia, obtained investment loans for customers by using falsely inflated earnings and assets. Ms Thompson admits that is exactly what she did. ‘I received 4,000 emails, and in those emails from the banks to the brokers you’d see clearly bank officers instructing the brokers how to have no-loan mortgage insurance, no income necessary, no assets and liability, virtually just get a signature on a document, send it in and we’ll give this person, no matter what their income or affordability criteria is, give them a $500,000 loan,’ Ms Brailey said.”
“Michelle Matheson, a single mother of three contacted a local business that said it could help people manage their money. The adviser who saw her was in fact a mortgage broker. She says she was told to buy a home, despite at the time being a single parent, working part-time, and earning around $24,000 a year. The loan application, which she only received recently, said Ms Matheson was a self-employed professional and grossly overstated her income. ‘I’ve taken on two to three jobs at a time, I work up to 90-hour weeks. I’ve sold everything to make mortgage payments,’ she said. ‘I’ve got credit card debt of close to $30,000 because I’ve had to put mortgage repayments on that.’”
“‘Property investors who purchased homes after 2009 will suffer a loss of more than 30 percent if they want to sell their properties now,’ said Ding Yi, a developer of luxury homes in Wenzhou. Businessmen from the city, one of China’s wealthiest, are well-known for their speculative activities in various sectors, especially the property market. Staying calm and waiting for the property market to recover is the best option for investors at the moment.”
“‘I bought most of my properties before 2010, when the restrictions were imposed, and I am waiting for the housing market to recover, which will happen sooner or later,’ said Zhuang Chen, an investor from Wenzhou who owns 30 properties.”
“‘I haven’t seen a single investor in the past half year coming to me for new luxurious apartments, which are mostly empty for the moment,’ said Zheng Jian, a salesman at a property agency in Wenzhou.”
“Dana Dudley, with Fitzgerald Financial Group in Frederick, said she is seeing homebuying at her office. ‘Some of the homes are even getting multiple offers,’ Dudley said.”
“But Maryland, with nearly 1,600 foreclosures in July, had the highest rate of new foreclosures, according to the Maryland Bankers Association’s website. ‘There is a huge amount of people teetering on the edge,’ said Hugh Gordon, branch manager for Prospect Mortgage’s Frederick office. Many come to his office hoping to refinance loans, Gordon said, but they are too ‘underwater’ to do so — not enough equity in the house, or other reasons. ‘They are just getting by on the skin of their teeth.’”
“They’re on almost every Grand Strand street: foreclosed properties. But dozens of these homes are collecting dust for years because they aren’t listed on the real estate market. ‘I’ve seen several vacant,’ said Ryan Brennan, a homeowner in The Orchards. ‘The home on the corner has been empty for two years.’”
“Many condos and townhomes in The Orchards neighborhood in Carolina Forest are listed as vacant, fliers posted on the front doors point potential homebuyers towards the Bank of America foreclosure department, but a visit to their website shows not a single property is listed in the Myrtle Beach area. ‘There are hundreds of thousands of properties that are sitting there,’ said realtor Blake Sloan. ‘They’re an asset, but they aren’t getting any payments.’”
“The National Association of Realtors has issued a formal recommendation to several national banks, asking to halt foreclosure proceedings until the current number of homes can be processed. ‘They said ‘Let’s clear some of this backlog,’ Sloan said. ‘Then we can get to the true value of these homes, because you’ve still got a lot of buyers on the sidelines.’”
“Auctions of foreclosed homes in the Chicago area more than doubled during the first half of the year. An overall uptick in foreclosure activity has increased the average amount of time it takes a home in the Chicago area to make its way through Illinois courts. In Kane County, lenders seeking to schedule an auction are getting dates in early January, despite the fact the sheriff has been asked by the court to increase to 130, from 100, the number of weekly auctions. ‘If it keeps going like it is the last month, we might break that record,’ said civil courts Lt. Thomas Bumgarner. ‘Every week, we’re getting 100 to 150 new ones.’”
“One suggestion under discussion would be to require that foreclosure auctions take place within 45 days of the end of the redemption period. ‘I’m really conflicted about it,’ said Steven Bashaw, a Lisle attorney who represents homeowners in foreclosure. ‘There are people who would say that anything that delays this process is good. But that’s pretty shortsighted. I say while that’s true, what the defendant really wants more than another six-month rent-free in their house is some certainty.’”
“California’s Homeowner Bill of Rights, which takes effect Jan. 1 and applies to all lenders in the state, will implement some of the $25 billion robosigning settlement’s provisions for how banks assist distressed borrowers, such as requiring a single point of contact and banning dual tracking. But it does not have a way to motivate banks to give principal reductions or lower monthly payments. For homeowners such as Rosa and Michael Pacheco of Castro Valley, that could prove a difficult reality.”
“The couple, who have four children younger than 9, including two with developmental disabilities, have seen their variable-rate mortgage soar from $2,800 a month to $4,800. Although Michael Pacheco makes a decent income, they just can’t afford that. Their mortgage servicer told them to short-sell the house at $410,000, way below the $692,000 that they owe. Rosa Pacheco said if they could get their mortgage reduced to the short-sale price, they could stay, but the bank has refused their requests for a loan modification.”
“‘My husband is working full time, and we can pay (a revised, lower) mortgage,’ she said. ‘I don’t understand why they want to put my family out on the street and sell the house to someone else for a cheap price.’”
“King County home sales and prices continued to rise in the second quarter, pushing down affordability, according to a new report. The biggest potential cloud for the area’s housing market is the same one that’s been lingering for a while now — homes in or under threat of foreclosure. The Mortgage Bankers Association reported Thursday that 6.9 percent of Washington mortgages were at least 90 days past due or in the foreclosure process in the second quarter. That’s nearly 80,000 loans.”
“This ‘points to the biggest challenges that we have,’ said Glenn Crellin, Associate Director at Runstad Center for Real Estate Studies at the University of Washington. ‘I had hoped that their data was going to show a decline in the delinquent inventory because of the strength in the market, and it didn’t.’”
“One reason this hasn’t happened much this year is that the actual number of foreclosures ‘really has fallen off,’ Crellin said. ‘We’ve got a significant amount of properties out there that are still in that foreclosure limbo. Something has to happen to them. The rat isn’t moving through the snake as rapidly as I expected it to.’”
“Q: How important is housing to the big picture in the overall economy? Hank Fishkind: Well, it’s a modest piece of the total gross domestic product of the country, but it’s a very dynamic piece. And typically housing leads the economy out of recessions. But, of course, that didn’t happen this time because housing caused the recession.”
“Q: It’s somewhat ironic that the housing industry, which contributed to a great extent to crashing the economy this time, might be the sector of the economy that pulls us out of this recession. But for anyone acquainted with Florida’s economic history, this all sounds quite familiar. The housing boom of the 1920s was followed by the Great Depression. The post-war housing boom was followed by the bottom falling out of the industry again in the early 1970s. Will Florida ever see an end of this boom-and-bust cycle?”
“Fishkind: Probably not. I think it’s inherent in Florida almost that we’ve had these cycles. Almost the whole nation had the boom-and-bust cycle. Of course, it’s more dramatic in Florida because we’re more prone to it. Our economy has been based, in part, upon real estate development, and I don’t think that’s going to go away any time soon.”
