The Disconnect In The Home Business
A report from CNN. “It’s been a long and uneven road to revival for the housing market. But things have been heating up for the last few years. Home prices took off in 2012 and went on a tear in 2013. And some local markets are on fire, with bidding wars and offers above asking price becoming common. If prices continue to outpace inflation and income in these areas, that can eventually become a problem. ‘Price increases — even in the most desirable places — can’t continue to outstrip income growth forever,’ said Keith Gumbinger, vice president of HSH.com. ‘At some point, no one will be able to afford a home.’”
“But current homeowners aren’t flooding the market with ‘For Sale’ signs. Some are worried they won’t be able to find a new house or they’re still waiting to recoup their home’s value lost in the crash. ‘Homeowners who would be considering selling could still be underwater or still in too low of an equity position,’ said Gumbinger.”
The Press Telegram in California. “In Long Beach, that white picket fence costs a lot more than it did in the days of ‘Leave It to Beaver.’ How much? Try nearly four times more. The income of a Long Beach family in 1960, adjusted to today’s dollars via the Bureau of Labor Statistics, was $52,099, while the median house value was the equivalent of $112,603 now. In 2013, the median household income was $52,711, and the median house value was $417,600, according to the U.S. Census Bureau. Why have home values almost quadrupled in a time when income has been stagnant at best?”
“Mary and Brian Harte would lead to one of the milestones of what it has historically meant to be middle class in this country: buying their first home. Mary said her family immigrated to the United States from the Netherlands in the 1960s, and her grandfather was able to support a family and buy his own home while working in the produce department of a grocery store. With starter homes they think are suitable to begin a family topping $400,000, or even reaching $500,000, it’s a stretch for their finances. ‘I feel like we are honest, hardworking people,’ Mary said. ‘We started from the bottom of our careers and we’re working our way up. Who are the people who are buying a home if we can’t do it?’”
The Herald Tribune in Florida. “Southwest Florida’s burgeoning new home construction industry has taken a modest step back as developers grapple with rising costs and shrinking demand from young families. After more than two years of steady gains, home builders throughout the region are pulling fewer building permits to start 2015. The lull follows a lackluster fourth quarter, with six months of diminishing construction activity. Builders cite fewer land opportunities and rising costs, which are squeezing out first-time buyers.”
“Deals are evaporating from first-timers and move-up homeowners, including many who remain underwater on a boom-time buy, said Pat Neal, who runs Lakewood Ranch-based Neal Communities. He now sells the vast majority of his homes to adults no longer raising children. The longtime regional builder attributes that to a lack of income for younger workers, less confidence in the long-term value of homes, fewer new household formations and other debts, such as student loans, that young families cannot overcome.”
“It is one of the reasons the home ownership rate among Americans fell to 63.7 percent during the first quarter. That was the lowest rate in more than 20 years, according to the U.S. Census Bureau. ‘Retirement buyers are still very strong, primarily because they can sell their homes in Ohio,’ Neal said. ‘The disconnect in the home business has been the first-time buyers. That’s a problem, and it will continue to be a drag on housing during the next two years. It’s true across the U.S.’”
The Lansing State Journal in Michigan. “Lansing’s residential market continues to recover from the housing crisis of the late 2000s. Sales and prices, generally, are improving. These days, the market is turning in favor of sellers because there simply aren’t enough turnkey-ready homes for sale to keep up with buyers’ demand. As a result, real estate agents say, it’s not unusual for homes to receive multiple bids and full-price offers, provided the price is right.”
“Lansing Realtor Peter MacIntyre, who handled many short sales during the recession, said the number of cases where lenders take a loss to enable a sale has declined by about half over the past two years for him. Even so, he’s handled 15 to 20 short sales already this year, he said. ‘I’m still walking into the homes of people who owe more than what their home is worth,’ he said. MacIntrye said he has what was once a $600,000 home in Okemos listed for $400,000 and ‘can’t get anybody to bite on it.’”
“Lisa Nowak bought her home south of downtown Lansing for $129,000 in 2006. After the market crashed in 2008, ‘we lost half the value,’ Nowak said. She said the home would sell for about $80,000 today. Last August, she cut her losses. A new mother, she moved with her family to a larger home in Williamston and put their Lansing home up for rent. She and her husband are paying two mortgages, but are recouping some money through rental income. ‘We’re just way upside down,’ Nowak said. ‘It’s better for me to rent at a loss than it is for me to sell and lose tens of thousands of dollars.’”
The Bronx Times in New York. “State leaders are trying to halt the rise of ‘zombie homes’ through the recently proposed Abandoned Property Neighborhood Relief Act. Senator Jeff Klein, state Attorney General Eric Schneiderman and Assemblywoman Helene Weinstein announced the introduction of legislation which, if passed, would reduce the problem of abandoned foreclosed homes across the state.”
“In Harding Park, a handful of abandoned homes is having a big impact on the small community, said homeowners association president Elbin Mena. One property on Harding Park Avenue has been empty for almost five years, to the dismay of neighbors, who’s property values have been affected. ‘You see a house like this, are you going to buy a house next to it?’ Mena asked. ‘No way.’”
