On The Wrong Side Of The Housing Bubble
It’s Friday desk clearing time for this blogger. “Although I wanted to retire in my contemporary Florida home, I am not going to miss out on the latest housing bubble as I did 7 years ago. At this time, homes that are comparable to our home are selling for about $200,000, which is twice as much as our home was worth just two years ago. Since we bought our home for $183,000 and upgraded the floors and landscaping, we would break even if we sold now. In order for us to sell, we would want to get at least $300,000 for our home. We plan to ride out this current housing bubble until it peaks.”
“Because we bought during the peak of the first housing bubble, it only seems right that we should sell during the top of the second housing bubble. Having been on the wrong side of the housing bubble, we know the signs.”
“Sales in Sacramento now are off by more than 25 percent from a year ago and, while inventory remains tight, the supply of homes on the market has almost doubled, according to real estate agent Erin Stumpf. ‘Several homes I drive by on my way to work have had for-sale signs up for a couple months, while before, they’d be gone within a week,’ said Imgarten. Stumpf said demand slowed because institutional investors bid up prices and then pulled away. For traditional buyers, ‘affordability just got snapped’ with the jump in mortgage rates, she said.”
“‘Six months ago, if I listed a property under $400,000, I would expect multiple offers within a few days,’ Stumpf said. ‘Now, I might get one offer within the first couple weeks.’”
“The drop off in heated areas such as Phoenix is far greater than expected, Michael Orr, director of the Center for Real Estate Theory and Practice at Arizona State University, said. ‘We have buyers, but they’re on strike,’ Orr said. ‘This caught everybody by surprise, including me. The suddenness has made a lot of Realtors uneasy.’”
“A western Pennsylvania legislator met with local anti-poverty advocates Wednesday to hear about the issues facing Monroe County and some of their best solutions. Pocono Area Transitional Housing’s Sharon Taylor said she envisions turning some of the area’s many foreclosed homes into multi-unit affordable housing. ‘These giant homes are sitting empty, but there’s a deficiency of houses at the affordable level,’ said Michael Tukeva, executive director of Pocono Alliance.”
“Joseph W. Brady, president of The Bradco Companies brokerage firm in Victorville, said with over 5 million homeowners still underwater, the banks are still in control and smartly regulating many of their own home prices. ‘At the end of the day, it’s all about supply and demand nationally,’ Brady said.”
“Oregon is expected to experience a rising backlog of foreclosures, as more homes with delinquent mortgages get tangled up in the system, said Kevin Gillette, executive director of the Community Housing Resource Center in Vancouver, one of the area’s only centers that offers foreclosure counseling. ‘There’s a bubble there (in Oregon) that’s just starting to move through the system,’ he said.”
“The small, well-kept home in Lakemore fell into foreclosure in May 2004. And then again in August 2006. And yet again in October 2010. Each time, a separate homeowner failed to pay the mortgage, was hauled into court by a lender and lost the property. A Beacon Journal investigation has found that 1,026 properties in Summit County have been foreclosed more than once in the past 10 years. Ray Maynard, 50, said he bought his first investment home after high school. He estimated that he had more than 90 properties in his heyday as a landlord. ‘I made it all the way until May of 2010,’ he said.”
“Maynard said he watched as some investors started buying up homes thinking they would fix them and flip them for a profit. ‘These guys thought they could drive around in a Cadillac and thought they could make all this money,’ he said. ‘They thought they could come in and get rich quick, and then it didn’t work out that way.’”
“Frustrated condo buyers near the Olympic Village are complaining that crime and ugly behaviours are spilling over into their neighbourhood. People who have bought expensive new condos in the area say yelling, fighting, open drug use and harassment from intoxicated Marguerite Ford Apartments tenants and visitors is too much to take. ‘There are tons of police visits, tons of crap flying out of the (Ford) building,’ said Vic Gentile, manager of Korva World Class Collision, located beside the problem building. ‘I feel sorry for the people in the condos.’”
“Andrew Hou, 23, knew before he graduated from the University of Washington that he was ready to put down real roots in Seattle. He managed to save $50,000 by the time he started house hunting in August. At last, a seller accepted his bid on a $475,000 2,060 square-foot, three-bedroom, two-bath home. He secured a 30-year fixed-rate loan from his credit union, which allowed him to put down just 10%. To sweeten the deal, his brother was willing to move in as a renter, which would take the edge off a monthly mortgage payment. ‘I can mount new cabinets, repaint anything I want, have dance parties, and cook smelly food,’ he says. ‘Given the way the housing market in Seattle is looking right now, I only see myself coming out on top with my investment.’”
“Josh Patterson was barely out of high school when he decided to take advantage of the housing crash in 2007 and snap up a cheap foreclosure. ‘The amount I could make reselling the house after the market recovered, combined with the first time home buyer tax credit, made it a very easy decision,’ says Patterson, who was 19 at the time.”
“Patterson, now 26, took out a few thousand dollars from his savings and sold his car to put down a deposit on a $67,000 vacant home in McDonough, Ga. It was a fixer-upper (looters had made off with the A/C/heating system), but an FHA Rehab loan gave Patterson some wiggle room for repairs. In all, he wound up getting an $82,000 loan and paying $600 in monthly mortgage payments. It was a smart investment on its face. He paid less than most renters did in his area and Patterson hoped the property’s value would double when the market turned around. In the meantime, he had a great place to live. But within a year, he started to feel the pangs of regret.”
“‘One year after purchasing the house I spent three months in Maine and three years after purchasing the house I moved to Phoenix [for work],’ he says. ‘All would have been less stressful on my mind and budget had I been a renter instead of an owner.’ Today, he rents an apartment in Phoenix while still paying his mortgage in Georgia. He says he’d like to eventually sell, but the value hasn’t increased enough to be worth the trouble. ‘After seeing both sides of the coin, I think I prefer renting to owning,’ he says. ‘If I could do it all over again, I probably wouldn’t.’”
“Home values continued to fall across the Buckeye State after the recession and a greater share of Ohioans are living in rental housing rather than owning the roof over their heads, according to the U.S. Census Bureau. ‘The American dream is a bit of a nightmare,’ said Robert Simons, an expert on housing policy and urban development professor at Cleveland State University.”
“Don Haurin, an economics professor at The Ohio State University who focuses on housing issues, said there has been a movement away from the idea of universal homeownership, a cornerstone of the ‘American dream.’ ‘If you go from the 1920s up to maybe 2006 you could consistently hear from any type of (federal) administration that homeownership was good for America — Republicans and Democrats all embraced it,’ he said. ‘Then when we had the big decline in 2008 they started to back off that.’”
“Zahi Ben-David, a finance professor at OSU, said while some people were locked out of owning their own home because of a credit score decimated by a foreclosure others ‘understood that home ownership is not necessarily the key for wealth.’”
