May 28, 2014

A Pent-Up Inventory Of Distress

The Sentinel & Enterprise reports from Massachusetts. “Realtor confidence declined on a year-over-year basis for the sixth consecutive month in Massachusetts, as officials say longawaited increases in inventory may be crimped by prospective buyer’s ability to get financing. In addition, the Realtor Price Confidence Index registered an April reading of 77.8, down 5 percent from the year ago score of 81.5 and down 2 percent from the March reading of 79.7. April marked the first year-over-year decline in the price index in more than two years.”

“‘A drop in price confidence could indicate that the inventory of homes for sale is starting to move in a positive direction for homebuyers,’ said 2014 MAR President Peter Ruffini. ‘However, if financing continues to be difficult for buyers to obtain, an increase in inventory may not result in an increase in sales.’”

The Boston Globe in Massachusetts. “In contrast to the red-hot housing market that’s now spreading through Boston and close-in municipalities, there are still bargains to be had on Cape Cod and the Islands. Theresa Sammon and Brett Risser of Medford steeled themselves for an arduous search when they decided to look for a vacation property on Cape Cod, well aware of the bidding wars, escalating prices, and tight inventories in the Boston area’s frenzied real estate market.”

“But the married couple quickly found a two-bedroom cottage in Dennis Port, made an offer — without competition from other buyers — and bought it for $10,000 below the asking price of $265,000. ‘We were pleasantly surprised,’ said Sammon, the mother of two children and the owner of a pet spa in Somerville. ‘You could never touch a home like this for $255,000 in Medford or Somerville. No way.’”

Press of Atlantic City in New Jersey. “New Jersey now leads the nation with the highest percentage of loans in foreclosure, the Mortgage Bankers Association says. South Jersey is also mired in the problem. Sheriff’s sales on mortgage foreclosures in Atlantic County have nearly doubled from a year ago, said Pam Hoerter, a fiscal officer for the Sheriff’s Office. ‘There are more. A lot more,’ she said.”

“James Schroeder, a local attorney specializing in short sales, said the process is still very slow and cumbersome among lenders. A sale can take months after a contract comes in. Meanwhile, he said, lenders have been ramping up foreclosure departments in New Jersey, and Schroeder expects foreclosures to happen faster than they did in the previous five years. ‘The days of waiting two or three years and living without paying a mortgage are over,’ said Schroeder.”

The Times Herald Record in New York. “Vacant homes dot neighborhoods throughout this former railroad city. There are 155 vacant houses in the city, or roughly one in every 15 homes, according to city officials. Most of those are in foreclosure. Mayor Kelly Decker knows firsthand the destabilizing effect of these vacancies. He and his wife, Jill, have lived for the past 20 years on Ferguson Avenue. Five houses sit vacant out of 33 on Ferguson Avenue, including the one next door to the mayor’s. ‘I can tell you because I live right next door that no one’s ever come here’ to tend to the property, he said.”

27 East in New York. “A house is in foreclosure at 80 Further Lane in East Hampton—right next door to a residential property at 60, 62 and 64 Further Lane that reportedly sold for a record-breaking $147 million. Yet there are more foreclosures in the Hamptons—even on expensive homes like those on Further Lane—than one might imagine. A few years back, Kristopher Pilles of East End Luxury Ltd., a Riverhead-based real estate brokerage that specializes in distressed properties in the Hamptons, counted 14,000 active foreclosures in Suffolk County, with 1,000 homes in the Hamptons with mortgages of more than $1 million in some form of default.”

“Thanks to a backlogged court system in New York State, some properties whose owners failed to make payments during the recession years are only now facing foreclosure, which can take as long as four years, Mr. Pilles said. ‘There is such a pent-up inventory of distress,’ also called ’shadow inventory,’ he said. ‘Chances are, if you’re on a street with more than 10 houses, you probably have somebody on your street not paying their mortgage. At this point, we’re very busy, and there’s no indication it’s going to slow anytime soon.’”

The Connecticut Post. “Diana Byrd finds herself underwater after fighting a tide of job downsizing and devalued housing. But the Bridgeport woman said that she wants to stay in the condo she bought in the North End eight years ago, even though it has lost half its value. “Byrd’s situation is common in Bridgeport, where 42 percent of mortgagees owe more than their home is worth, according to a survey. That puts Bridgeport in 10th place nationally for the percentage of mortgaged homes ‘underwater.’ Hartford leads the nation with 56 percent.”

“‘I love my apartment, but I’m paying $1,600 a month for a mortgage, and there are common charges on top of that,’ said Byrd, a part-time computer sciences instructor. ‘I bought it for $160,000 in 2006, at the height of the bubble, and it is listed for $98,000 now.’”

Bits Bucket for May 28, 2014

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