July 24, 2013

It’s Nearly Too Late For The Theoretical Wealth Creation

The Kitsap Sun reports from Washington. “Some 40,000 property owners got change-of-value notices in the mail Saturday, compliments of the Kitsap County assessor who says plummeting home values finally appear to be leveling off. The 40,000 notices that went out are fewer than half the amount sent out in recent distressed years. The slow market didn’t stop local real estate agent Penny McLaughlin of Penny’s Team of Poulsbo from sounding the alarm on the buyer’s market. ‘Lack of inventory of homes for sale, plus interest rates on the rise means it is nearly too late,’ she warned.”

The Columbian in Washington. “Clark County’s housing rebound continued in the second quarter, with all indicators showing improvement over the same period last year, Portland-based RMLS reported. The number of homes sold as foreclosures also increased dramatically in the second quarter. Mike Lamb, a Vancouver broker with Windermere Real Estate/Stellar Group, attributed the surge to more foreclosures being sold off by banks that were stalled by a multistate, $25 billion settlement negotiated in 2012 with the nation’s top mortgage companies. Lamb said banks likely will recover more losses by having waited to sell off the foreclosure assets, also called real-estate-owned.”

“‘This is an opportune time for the banks to unload some of that inventory because the values have come up and the demand is strong,’ he said.”

From KPLU in Washington. “The number of foreclosures in Washington state has jumped so far this year compared with last year. Bank repossessions climbed 78 percent in the first half of this year, according to RealtyTrac. New foreclosure filings have risen as well. Real estate economist Matthew Gardner says it’s not because all of a sudden a lot more people can’t pay their mortgages. He says lawsuits in Washington state artificially suppressed the number of foreclosures in 2011 and part of last year. ‘It’s not going to be the cure-all to the housing shortage, but flushing these homes through the system is amazingly important,’ Gardner said.”

“Gardner says the reason why it’s not a cure-all is that there are still a lot of people underwater on their mortgages, meaning they owe more than their houses are worth. He says they’re waiting for home prices to keep rising before they list their homes.”

CNBC on Oregon. “David and Heather Littlejohn are one of about 10 million underwater borrowers in the U.S. Millions more don’t have enough equity to afford a move up. The Littlejohns would love to sell the Oregon home they built as newlyweds in 2005 and move to a larger one, but that would mean paying into their mortgage. ‘Everybody else seems to be getting out OK on this one, and here we are just the perfect timing and circumstance to be on the outside looking in,’ said David. ‘There’s this theoretical wealth creation all around us, and yet we’re not participating in it.’”

The Oregonian. “A Washington County jury rebuked JPMorgan Chase’s handling of a foreclosure case, ruling the nation’s second largest bank likely had broken promises it made to borrowers Bela and Eva Lengyel, resulting in the seizure of their home. The jury awarded $10,850 in damages, and presiding Judge Don Letourneau will rule later on whether the Lengyels may remain in the home.”

“The Lengyels had refinanced their Bethany home in 2007, borrowing against it to build a $1 million house in Happy Valley. They planned to sell that home, but that dream collapsed with the housing market. ‘He took a gamble, and he lost big, and he went underwater,’ said Chase’s attorney, Philip Rush. Rush had on Wednesday presented evidence that Lengyel had reported income and losses from gambling at casinos during years he was fighting the foreclosure.”

The Missoulian in Montana. “Building permits across Missoula continue to increase, and new housing starts are on the rise, but those in the business aren’t calling it a boom, as the market remains well below its pre-recession level. Alrick Hale, VP of Knife River’s mountain states division, said building activity across western Montana remains painfully slow. ‘Our general feel for the market is that it’s as bad as we’ve ever seen it,’ Hale said. ‘Our industry is as bad right now as it was when the recession hit in 2008. It’s slow in the housing market, and it’s slow in new subdivisions.’”

“Hale’s employees continue to struggle for work, and the company has consolidated its Missoula and Kalispell offices in an effort to reduce costs. ‘The other thing we’re not seeing – there are very few commercial projects,’ Hale said. ‘The commercial projects are most of what keeps our people employed. The economy in western Montana is the worst we’ve seen it yet.’”

The Daily Inter Lake on Montana. “Mark Campbell, developer of The Landing at Somers Bay, said he would love to have year-round residents of the Flathead Valley living in his new subdivision. However, he said with southern exposure lake access on around 400 feet of sandy Flathead Lake beach, chances are good the houses will be snapped up for seasonal vacation homes. Campbell, who lives in Santa Barbara, Calif., found the site on which his new 12-home subdivision will sit a few years ago. The previous developer and the bank financing the project had both gone out of business long before building could begin, so the assets had been transferred out of state.”

“The cottage-style homes will vary from 1,500 to 2,500 square feet, with separate garages that will have a usable room over the garage space. Though only four homes will be directly on the lake, all 12 will have lake access plus their own boat slips. The eight homes in the four lots to the back will be the smaller units, with two on each lot connected by adjoining roof lines and covered walkways.”

“He said the smaller houses also allow him to deliver new construction with unique architecture to the marketplace at competitive price points. Campbell estimates that the eight homes off the water will sell from $699,000 to $999,000, with those on the shore going from $1.2 million to $1.4 million. ‘It’s probably half of what the original developer was thinking in terms of price points,’ he said.’

“Most of his real estate investments have been in waterfront. ‘Waterfront property has always done well for me,’ he said. ‘I’ve been scared to invest in property off the lake. There are so many failed subdivisions.’”

Bits Bucket for July 24, 2013

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