January 14, 2014

Flipping Broadly Drove Up Prices

A report from the Mississippi Business Journal. “The Mississippi Coast, especially the western portion, is seeing a boom in the second-home market. Some Realtors say the activity is a spillover from the red-hot housing market New Orleans is now enjoying. ‘Things are definitely coming back,’ said John Schaff, a Realtor/broker with Latter and Blum in New Orleans and Bay St. Louis. He said there is ‘a lot of new money in New Orleans and young entrepreneurs are moving in’ to the city in spite of high prices.”

“Realtor Amy Wood said the housing supply on the Coast has a range of prices, from the $100,000 fishing camp to million-dollar property on Scenic Drive in Pass Christian. ‘A lot of people think we are an undiscovered area,’ she said. ‘Prices are so much more affordable.’”

The Memphis Daily News in Tennessee. “Shelby County posted a five-year high in home sales and average sales prices in 2013, according to real estate information company Chandler Reports. The average home sales prices in Shelby County jumped 11 percent in 2013 to $138,072, up from $123,870 in 2012, and total sales volume for the year was $2.19 billion, up 19 percent from $1.85 billion in 2012.”

“Doug Collins of Prudential Collins-Maury Inc., said he believes the market has finally worked its way through a massive glut of foreclosed homes. As foreclosures continued to mount, the federal government and lenders stepped in and created programs to help people remain in their homes. Those efforts, combined with the sheer number of foreclosure sales that occurred over the last several years, finally started to have an impact on foreclosure inventory.”

“‘We had the financial collapse of 2008 and as a result of that we had an abnormally high number of foreclosures,’ Collins said. ‘I think we finally just stemmed the tide of foreclosures.’”

The Atlanta Journal Constitution in Georgia. “Metro Atlanta foreclosure notices are at their lowest level in a decade. There were 2,454 foreclosure notices filed in January, according to data from Equity Depot in Kennesaw. The last time the figures were this low was June 2003, when 2,393 foreclosure notices were filed. Barry Bramlett, whose Equity Depot compiles the numbers, said he thinks lenders are taking steps to avoid the stigma of foreclosures, but that some problems still persist.”

“‘It’s easier to say that things are improving,’ Bramlett said. But, he said, there’s a good chance that possible foreclosures are ‘being handled in a different way’ that makes the improvement seem better than it truly is.”

“John Hunt, a senior analyst with the real estate analysis firm Smart Numbers, said he doesn’t expect another shoe to drop. ‘We’re better,’ he said. ‘We’re constricting the pipeline for future foreclosures.’”

The International Business Times. ” A remarkable U.S. housing recovery in 2013, where home prices rose about 12 percent, may have been driven mostly by business-oriented investors who bought cheap foreclosed homes and quickly flipped them for profit, according to real estate experts. For firms that lend to small-time real estate investors, often wealthy individuals or small companies, business has boomed.”

“Regional lender Lima One Capital, active in Georgia and the Carolinas, doubled its loans from 2012 to 2013, with a 180 percent uptick in loan values. It plans to expand to eight new states in 2014, as it predicts real estate business investment will continue to flourish. Lima One’s loans averaged $166,000 in December 2013, including a $1.2 million loan in Atlanta’s upscale Buckhead neighborhood.”

“‘We anticipate the flipping market will increase,’ Lima One Capital CEO John Warren told IBTimes. He agreed that flipping broadly drove up home prices.”

WSB-TV in Georgia. “The Case-Shiller Home Price Index shows the rebound in metro Atlanta is outpacing the average big city by 50 percent. It shows Atlanta prices up 19 percent compared to the report from the same period in 2012. A $250,000 home then would go for $297,500 according to the latest index. To take advantage of the pent up demand, research firm Metrostudy of Decatur reported area housing starts are up 67 percent from 2012.”

“New home buyer Preston Wang is the first buyer in the Mabry Manor sub-division. He says if he didn’t pay the full asking price, someone else would have. ‘We didn’t ask to get a single penny discount,’ Wang said.”

The Island Packet in South Carolina. “A state lawmaker has announced plans to file a bill in response to escalating flood insurance rates for thousands of South Carolinians. State Rep. Leon Stavrinakis’ proposed legislation would change state foreclosure law to eliminate failing to pay for federal flood insurance as grounds for default, the Charleston Democrat said. ‘In our view, these are people already in their homes who used conditions as they existed to decide whether to buy their homes,’ he said. ‘Now, in effect, the federal government is going in and rewriting the terms of their mortgage.’”

“Stavrinakis, other state legislators, real estate agents and property owners say the measure squeezes some homeowners and makes other properties nearly impossible to sell, causing havoc in the housing market. Some who recently purchased property are seeing their rates increase tenfold when their policies are up for renewal, while rates for second homes or rental units are climbing nearly 20 percent a year, with more increases expected.”

“Lowcountry real estate agents say deals have fallen through after prospective buyers realized the cost of insurance, which can run more than $10,000 a year. ‘It makes certain properties, and by extension, certain areas unsellable,’ said Scott Bingham, a real estate agent with Ballenger Realty in Beaufort. He cited middle-class neighborhoods such as Mossy Oaks and Pleasant Point and high-end beachfront property as places that have become tough sells.”

“Lenders will see more properties go into foreclosure as rates climb, said Nick Kremydas, CEO of the SC Realtors trade group. ‘We’re going to have a very large inventory of properties that banks will inherit and be unable to dispose of,’ he said.”

Bits Bucket for January 14, 2014

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