The Fast-Moving Gravy Train Is Drying Up
Bloomberg reports on Massachusetts. “Developers rushed to build multifamily buildings to capitalize on the demand, spurring a surge in supply that’s now keeping a lid on rents. More than 77,000 apartment units were added across the country in the past three years, according to Axiometrics Inc., a rental-data company. Nationally, Household growth and rental demand will be greater in the urban core than in the suburbs over the next year, said said Sean Breslin, chief operating officer of Arlington, Virginia-based AvalonBay Communities Inc., the second-largest publicly traded landlord in the U.S.”
“Yet that demand will be overshadowed by the high volume of supply coming to markets such as Boston, where rent growth in the city proper averaged 0.3 percent last year, making it among the weakest urban areas in the country, according to Axiometrics. In January, average rents in the city fell 2.4 percent from a year earlier. ‘Even though there’s more demand there, supply is sort of swamping it at the moment,’ Breslin said.”
InForum on North Dakota. “The sharp decline in crude oil prices was unexpected, but as with any quick change in a marketplace, there can be good news for some residents of North Dakota’s oil country. Renters, who were subjected to some of the highest rental costs in the nation during the oil boom, are getting a break. Rents are down as demand for housing slides. The owners of rental properties, who have been riding a fast-moving gravy train, are seeing the gravy dry up.”
“The collapse of oil prices from over $100 a barrel to below $50 was not expected. No one saw it coming. The experts were caught off guard. So was the housing industry in oil country. Now there’s a mini-scramble underway to keep those thousands of new rental units filled as oil employment numbers sag. The rental shoe, so to speak, is on the other foot, and it’s pinching a little. At the risk of mixing metaphors: What goes around comes around …”
From CNBC. “For the first time in more than two years, the number of repeat foreclosures took a U-turn and was higher in January compared to a year ago. Repeat foreclosures are when a home has been in the foreclosure process once, was somehow saved by either a loan modification or payment program, but then goes back into foreclosure. This can happen when the borrower either can’t or won’t keep up with the new payments. New repeat foreclosures rose 11 percent in January from December and accounted for more than half of all new foreclosures, according to Black Knight Financial Services.”
“‘It’s not surprising because so much tinkering was done with defaulted borrowers over the last five or six years. It’s not surprising they’re running into problems again,’ said Guy Cecala, CEO and publisher of Inside Mortgage Finance.”
The Worchester Business Journal in Massachusetts. “Foreclosure deeds in Massachusetts fell sharply in January to their lowest level in six months, but foreclosure petitions, which launch the process of taking over properties whose owners have failed to keep up with mortgage payments, increased, according to The Warren Group. The firm said deeds fell more than 27 percent in January, but lenders filed 618 petitions, up 70 percent from 364 petitions filed in January 2014.”
“In Worcester County, deeds fell 18 percent from January 2014 while petitions jumped 82 percent and auctions 258 percent. In Middlesex County, deeds plunged 84 percent (only 8 deeds were processed) while the number of petitions rose 44 percent and auctions soared 400 percent, from 15 to 75. Meanwhile, the number of auction announcements tracked by The Warren Group jumped 250 percent in January, with 575 announcements compared with 165 in January 2014. That marked the highest percentage increase since April 2007, when announcements climbed almost 340 percent year over year.”
“And there could be more, according to Timothy M. Warren Jr., CEO of The Warren Group. ‘What is happening in Massachusetts with increased foreclosure activity is happening nationwide, as lenders continue to wade through a backlog of delinquent mortgages that have yet to be addressed,’ he said in a statement. ‘We will continue to see petitions increase as long-time delinquent mortgages continue to be processed.’”
The Press of Atlantic City in New Jersey. “Sheriff’s sales are occurring throughout South Jersey in increasing numbers. Atlantic County had nearly double the sales listed in January than a year earlier. They are a combination of the region’s economic struggles and the gradual unclogging of New Jersey’s foreclosure process that had halted for several years just after the recession over concerns of improper lender foreclosures, experts said.”
“But as of yet, they do not reflect thousands of job losses tied to Atlantic City casino closings last year, real estate professionals and officials involved with sheriff’s sales said. ‘We don’t anticipate seeing them in a year or more. … These (properties now) are things that are a year and a half, two, three years old,’ Sheriff Frank Balles said.”
PBS NewsHour on Florida. “This is economics correspondent Paul Solman reporting for the PBS NewsHour from a truck stop in Fort Myers, Florida. ‘Despite what you may have heard, the foreclosure crisis is far from over, especially in Florida, which leads the nation, more than 300,000 cases still pending, another half-a-million homeowners delinquent, hundreds of thousands of modified loans about to balloon in payments.’”
“Marc Joseph, Real Estate Agent: ‘There is still a lot of what they called shadow inventory that nobody wants to talk about, it’s not there. It’s still there.’ Solman: ‘The foreclosures that are going to happen, but haven’t happened yet.’ Joseph: ‘They’re going to happen, because people did loan modifications, which was only a Band-Aid on the problem. So guess who I’m out doing foreclosures on now? The people that did the loan modifications, and now they’re being reset back to their old payments.’”
“Solman: ‘And that’s the shadow inventory that’s out there and could flood the market?’ Joseph: ‘This is a whole new wave of what I see coming.’”
