July 2, 2014

A Clogged Pipeline Opening Up

A report from Capital New York. “Condominium sale prices in Manhattan fell 1.4 percent from April to May, but still rose 10.7 percent from a year before, according to StreetEasy. StreetEasy said the declines are attributable to ‘gradual’ increase in inventory, the fifth month in a row that inventory grew. ‘There is no doubt that the condo market is still extremely expensive and in short supply,’ data analyst Alan Lightfeldt said in a statement. ‘Some would-be buyers are still reeling from the extraordinary rally in price appreciation in 2013, which was fueled in part by record-low levels of inventory. More units are coming back to the market, however, and prices responded in May.’”

The Journal News in New York. “In the exclusive Westchester County hamlet of Purchase, multimillion-dollar homes with elegant grounds are commonplace. Former NBA star Latrell Sprewell spent $2.3 million for an impressive brick mansion in 2000. But glory times are gone. The property went into foreclosure in 2010 and Sprewell has long since left town, leaving his Purchase estate basically abandoned. There are at least 1,100 ‘zombie’ properties in the Lower Hudson Valley, according to RealtyTrac. New York is among the top 10 states with ‘zombie’ properties with at least 15,000 statewide, says RealtyTrac, adding that one in five homes in the foreclosure process is vacant.”

“Jim Bergstraser of Remax Classic Realty in Yorktown, familiar with selling homes that have been part of a foreclosure scenario, said distressed properties ultimately sell for less than their neighbors’ well-maintained homes. ‘The asset of the property changes without a doubt,’ he said. ‘And my issue in selling these houses is there is very little financing available for properties that are not in good shape. There are a lot of reasons why people will walk away from these properties before a foreclosure and after one.’”

The Boston Globe in Massachusetts. “Borrowers once again are using their homes as a quick source of cash to pay for kitchen renovations, college educations, and cars — and even to gain a competitive edge when making offers on a new house. One customer, said Jane Lundquist, executive VP at Rockland Trust Bank, tapped the equity from his longtime home to make a cash offer on a new one, an advantage in today’s hypercompetitive housing market. He will pay off the home equity loan when he sells his old house.”

“Local banks say home equity borrowing has jumped as much as 40 percent from a year ago as customers. Massachusetts home values have risen about 17 percent over the past two years to a statewide median of $340,000 in May, just below the $352,00 reached in 2005, at the peak of the boom. ‘It’s a good loan if you borrow responsibly and know what you’re doing,’ said Polyana da Costa, a senior mortgage analyst with Bankrate.com.”

MassLive in Massachusetts. “Foreclosure petitions soared 92 percent in May in Springfield - and 131 percent in the state - compared to May 2013, The Warren Group, publisher of Banker & Tradesman, reported. ‘The increase in foreclosure starts is the result of a clogged pipeline opening up as lenders finally process petitions on homeowners who have been delinquent on their mortgages for months or years,’ the release said.”

“‘Many of these were delayed awaiting clarification on the proper way to proceed from regulators and judges,’ said Timothy M. Warren Jr., CEO of The Warren Group. ‘With the employment picture improving in Massachusetts and real estate values rising, the higher volume of foreclosure starts is not a warning sign of weakness in the market or another crash ahead,’ Warren said.”

The Providence Journal in Rhode Island. “The number of foreclosure deeds recorded in the state jumped by nearly 20 percent in the first quarter, compared with the same period in 2013, according to HousingWorks RI. HousingWorks also noted that Rhode Island is ‘currently first in New England and sixth in the nation for share of ‘underwater’ mortgages.’ The group has estimated that 18.3 percent of the state’s mortgages are still underwater.”

“‘I think what you’re really seeing is the system really flushing out all the bad loans from before,’ said Richard Godfrey, executive director of Rhode Island Housing. HousingWorks noted that the five-year term on many loan modifications completed under HAMP, the federally funded Home Affordable Modification Program established in 2009, is set to expire in 2014. This means that many homeowners enrolled in the program will see an increase in their monthly mortgage costs this year.”

“Jessica Cigna, research and policy director of HousingWorks, a group that advocates for affordable housing, said that 90 percent of the 4,258 Rhode Island homeowners with active HAMP permanent modifications as of Nov. 30, 2013, are scheduled to have mortgage interest rate and payment increases. ‘We know that many mortgaged homeowners are still struggling with high housing cost burdens, and unfortunately, some programs previously available to help these homeowners are expiring.,’ Cigna said.”

The Press Herald in Maine. “While Maine home sales increased in May compared with a year earlier, median prices continued a three-month decline from 2013 prices, the Maine Association of Realtors reported. ‘With summer finally here, and tourists entering the buying market, we are seeing (sales) volume increases,’ said association President Angelia Levesque. ‘High inventory levels in some areas of the state are keeping prices down, and the market is adjusting. When you combine that information with low interest rates, it indicates a great time to buy.’”

“Levesque, of Better Homes and Gardens / The Masiello Group in Bangor, said inventory is up in her area partly because of foreclosure homes coming on the market, which often are purchased by investors for cash. Cumberland County also has seen a boost in housing inventory, which tends to drive down prices, according to Michael Sosnowski, owner of Maine Home Connection in Portland.”

“Homes at all price levels, from starter homes to seaside mansions, were selling for less than they were a year earlier, Sosnowski said. ‘In May, inventory in Cumberland County was at its highest level since May 2010,’ he said. ‘Obviously buyers have a lot of choice in terms of what property they want.’”

Bits Bucket for July 2, 2014

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