July 10, 2013

Plenty Of Empty Houses

The Denver Post reports from Colorado. “A report issued Wednesday by the metro area’s Multiple Listing Service, characterized the market as ‘cooling,’ but economists were careful to note that the market is still experiencing strong demand. ‘When they say ‘cooling,’ what that means is that things just aren’t skyrocketing as fast as they were earlier in the spring,’ said Ryan McMaken, an economist with the Colorado Division of Housing. McMaken believes mortgage rates will have an effect if they continue to increase. ‘If they head up, we are set to see buying taper off a bit, but that is different from an actual decline,’ McMaken said.”

“Broomfield economist Gary Horvath said if the mortgage rates go up slightly, the effect may be small. But if prices of homes go up by $20,000 and interest rates go up substantially, ‘that can price someone out of a home,’ Horvath said. ‘The combination of increased rates and increased prices will cause a cooling.’”

KTAR in Arizona. “A new report by the W. P. Carey School of Business at Arizona State University says that the housing market has hit ‘normal and historical’ levels after a troublesome foreclosure crisis. The report says that median single-family home prices reached $185,000 in May, up 26 percent from last year. Not everything is good news, though. The report also reveals that investors are losing interest in the city of Phoenix, with total home and condo sales down almost 40 percent from July of last year to May of this year.”

The Phoenix Business Journal on Arizona. “The latest Metro Monitor Report from the Brookings Institute shows strong economic growth for Phoenix. Phoenix saw 0.6 percent job growth over the quarter, which is higher than the national average of 0.4 percent. However, the employment rate is still 7.2 percent below its pre-recession peak despite consecutive quarters of above-average growth. Kenan Fikri, Brookings policy analyst and co-author of the report, said Phoenix may never reach pre-recession peaks in the housing market because a significant percent of its pre-recession economy was based on the housing bubble.”

“Despite the positive recovery performance in Phoenix, the report also said the city has a long way to go to reach pre-recession levels of employment and output. ‘Phoenix has a strong recovery,’ Fikri said. ‘But it’s still lagging behind national progress in really achieving full recovery because it was hit so hard by the recession.’”

News 8 Now in Nevada. “The sound of construction can once again be heard in the Las Vegas valley after being silent for the past five years. Lennar homes is one of the largest builders in Las Vegas. It has been sitting on parcels of vacant land for years waiting for the housing market to come back to life. The company has already sold 300 homes this year. Lennar is seeing fewer investors buying homes and more families looking to make a commitment to a house. To attract families, builders are thinking outside the four-walled box and throwing in lots of extras.’

“‘Washers, dryers, blinds, refrigerators, appliances,’ said Jeremy Parness, the president of Lennar Las Vegas.”

“Kristopher Milicevic, who is shopping to buy his first home, has been looking since the beginning of the year. ‘I talked to the seller, they agreed to sell, I went and met with everybody, high fives, cheers and that type of stuff and all of a sudden he calls me and says nope she backed out. She doesn’t want to sell right now, she thinks she can get a better price,’ Milicevic said.”

“He hopes to land a house soon because he’s noticed it’s been harder and harder to buy homes over the past few months. ‘It’s a long-term investment for myself and also for my city. I grew up here, I’m a native. I want to see Las Vegas succeed and that’s one of the reasons I want to invest in this economy at this point.’”

The Wall Street Journal on Nevada. “In a city dotted with tens of thousands of vacant houses, Jericho Guarin figured it would be effortless to buy his 1st home. But nearly a year after beginning a search late last summer, he has come up dry. ‘It has-been a nightmare,’ says the - 37-year-old U.S. Air Force officer. ‘There are plenty of empty houses, yet they’re just not for sale.’”

“Many real-estate agents, home builders & consumer advocates argue that the law, intended to remedy foreclosure-processing abuses, has backfired. Some owners who are behind on payments aren’t maintaining their homes as banks refrain from eviction proceedings. The perverse outcome: Inventory shortages have spurred new developments despite a glut of properties stuck in foreclosure limbo.”

“‘The people injure most by this law are the middle class,’ says Steve Hawks, a real-estate agent in Henderson, Nev. He refers to the phenomenon wrought by the foreclosure measure, Assembly Bill 284, as the ‘A.B. 284 bubble.’”

“The inventory shortages, meanwhile, have been a boon for some—especially builders. ‘A.B. 284 has been great for us. It darn near eliminated the constant inflow of foreclosures on the resale market,’ says Robert Beville, president of Harmony Homes, a local home builder. Mr. Beville says Harmony has sold 57 homes this year to cash buyers, compared to 70 in all of 2012. Realtors say investors are planning to flip the homes to a new buyer on the bet that prices will have jumped even more by the time the homes are built.”

“The foreclosure delays have helped distressed homeowners like Scott Chatley, who went 54 months without making a mortgage payment. That gave him enough time to pay off debts, repair his credit, and begin saving for a down payment on his next home. Mr. Chatley, who bought a home here in 2005 for $495,000 with no money down, stopped making his $4,000 monthly mortgage payments in mid-2008 when he lost his job as a software engineer.”

“Mr. Chatley says he delayed foreclosure first by seeking loan modifications and then by filing for bankruptcy. His mortgage company last fall approved a short sale of his home for $169,000 to an investor. Though he moved out in September, Mr. Chatley says he probably could have stayed longer because the bank hadn’t been actively moving along the foreclosure. Recently, he was prequalified by a credit union for a new mortgage and hopes to buy a new place later this year or early next.”

“Nearly 45,000 loans are either 90 days or more past due or in foreclosure. Local electric-utility data showed nearly 64,000 vacant homes at the end of last September, according to a tally by analysts at the University of Nevada-Las Vegas. Fewer than 8,000 of those units were listed for sale.”

“Xenophon Peters, an lawyer who represents clients facing foreclosure, sees little to celebrate. Even though A.B. 284 has benefited his clients, ‘there has to be turnover in the housing market for it to recover,’ he says. ‘It’s caused another bubble to erupt. We saw the same thing eight years ago. We know it’s unsustainable.’”

Bits Bucket for July 10, 2013

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