December 15, 2014

Selling An Obsolete Version Of The American Dream

The Sun Sentinel reports from Florida. “Real estate agent Susan Gauthier isn’t getting paid any more than her standard 3 percent commission to camp out in the cold. It’s just part of the job this week. Gauthier, representing a New York couple, has stood in line since Thursday morning to reserve a unit at Minto Communities’ Villas By The Sea condominium, planned in Lauderdale-by-the-Sea. By midday Friday, four other buyers were parked outside Minto’s sales office on Commercial Boulevard. Prices for the 51 units range from the $500,000s to more than $1 million. During the housing boom of 2000 to 2005, buyers routinely camped out overnight for homes. The practice is slowly returning as the market strengthens.”

“‘I’m a native Floridian, and this is not my kind of weather,’ Gauthier said. ‘We’re not even on the sunny side of the street.’”

The Orange County Register in California. “Many sellers take their homes off the market or stop looking between Thanksgiving and Jan. 1. But some real estate agents say that’s a mistake. Some economic and global factors suggest there could be especially good reasons to accelerate plans to purchase or sell homes this winter instead of waiting until the traditionally busier spring and summer homebuying seasons. With little price appreciation these days from month to month, waiting to sell until this spring is ‘fruitless,’ said Steven Thomas, who analyzes the Orange County housing market. ‘It may be the busiest time of the year where demand peaks, but it is also a time where the potential of too many homeowners opting to place their homes on the market and at unrealistic prices could lead to a major buildup in the inventory,’ he said in his most recent report.”

The Reporter Herald in Colorado. “Colorado State University’s Everitt Real Estate Center director Eric Holsapple told the real estate professionals to expect continued ‘good, steady growth in home prices’ in Loveland. ‘Loveland’s home prices are rivaling Fort Collins’, which wasn’t the case a few years ago,’ Holsapple said. In the Fort Collins-Timnath market, the median price this year was $287,500, he said, and next year it could reach $300,000.”

“Loveland had 597 housing starts this year but 409 closings on new homes. ‘It could be that home prices have gone up on the new-home side pretty drastically over the last 24 months,’ said John Covert, regional director of Metrostudy. ‘Maybe we’re hitting this price ceiling,’ and people who want to buy a new home are waiting to see if a new housing development will offer more affordable prices. Covert said partly as a result of national homebuilders’ move back into Northern Colorado, the market now has a number of ’spec homes’ that were built without buyers on the hook. He said he expects to see incentives and discounts spiking at the end of the year as those publicly traded homebuilders work to clear out some of their inventory.”

The Idaho Statesman. “Seven years after crews working for the Knife River Corp. paved roads for a housing development in western Canyon County, the company still has not been paid. The developer, Eagle-based Union Land Co., had run out of money. Its failure was one among many in the downturn that popped the housing sector’s bubble in 2007 in the Treasure Valley and elsewhere. Five years after the recession ended, good times are returning, but new-home construction has yet to recover. The Intermountain MLS says 36 newly built homes sold in Canyon County in October, compared with 131 in the same month in 2006, when the local market’s descent had just begun.”

“Union Land, owned by Kerry Randall Angelos, was developing projects in several Western states during the early 2000s. Bankruptcy court records listed more than 14 developments that Union Land was involved with before going under. Union Land’s failure was not the first for Angelos, whose website says he moved to Boise from Portland in the late 1990s. According to court records, Angelos had filed for bankruptcy in Oregon in 1989. Angelos and his wife, Jacqueline Lee Angelos, filed for bankruptcy in April 2011. They listed zero income and $176.6 million in debts. The couple said they were ‘completely wiped out by the national collapse in the real estate market beginning in 2007.’”

From NBC 40 in New Jersey. “It would take 29 months to sell all the homes that are currently on the market, and that’s just in Atlantic City, according to Cindy Marsh-Tichy, president of New Jersey Realtors. ‘So that’s a lot of inventory to be sitting there that’s not moving and they’re not moving because there’s a lot of short sales and foreclosures unfortunately,’ said Marsh-Tichy. ‘Atlantic County is number one in the state for foreclosures,’ said Sheriff Frank Balles. ‘With so many layoffs we’ve seen here in Atlantic County, we’re projecting that this time next year our foreclosure, our foreclosures here in Atlantic County are extremely high.’”

From CNBC. “In an effort to accelerate lending to lower- and middle-income borrowers, mortgage giants Fannie Mae and Freddie Mac are launching programs that will guarantee loans with down payments of as little as 3 percent. Economist Robert Shiller cast doubt on whether that would be the best course of action. ‘Because it’s only a 3 percent margin, if somebody defaults and they have to sell the house, they might not get all the money back.’ ‘In a sense, it’s a good investment because it’s only one a lot of people make. So somehow they’re motivated to do it.’”

“However, there’s a caveat. ‘Historically, houses have not done well as investments. They haven’t really gone up much in value in the last 100 years. And on top of that, they’re a nuisance,’ he said. ‘You have to take care of them.’”

The Chicago Tribune. “Fannie Mae and Freddie Mac insist that they will limit the mortgages to creditworthy borrowers who can be expected to make their payments. But the new rules ensure the proliferation of loans that will not be repaid. Arnold Kling, a former Freddie Mac economist now at the Mercatus Center at George Mason University, says that under this new policy, the mortgage giants ‘are setting people up to fail.’”

“What we should have learned from the vast trauma we endured is that the federal government should stop trying so hard to enable Americans to buy homes. By luring many of them back to betting their savings on the housing market, the mortgage firms are selling them an obsolete version of the American dream that puts us all at risk of another debacle. After the last mortgage binge, we woke up in the gutter. Isn’t once enough?”

Bits Bucket for December 15, 2014

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