The Situation Is Deja Vu To The Early 2000’s
The Boston Globe reports from Massachusetts. “After renting for four years, Maggie Crowley is about to join the ranks of Boston homeowners. Her new digs: a snug 297-square-foot studio in the Back Bay. The price: a hefty $366,000. Crowley hopes to live in the condominium for a few years, renovate, and eventually rent it out or sell for a profit. ‘It’s a place for right now and an investment.’”
“It’s unclear how high the demand will be when more of these teeny units hit the market, said Timothy M. Warren Jr., the chief executive at Warren Group, a real estate information service. ‘These things are a different ballgame,’ he said. ‘There’s some market. I don’t know if you can sell 1,000 a year.’”
The Mercury News in California. “The Bay Area’s real estate market soared in June, setting some new records for sales and prices as homebuyers scrambled to act before mortgage rates climb and the new school year begins. Saratoga-based Alain Pinel agent Mark Wong said, ‘over asking’ bids are not as extreme as they were a few months ago, when buyers typically would throw an extra $400,000 or $500,000 into the mix to make their offer more attractive. The sellers’ market is at ‘a point of leveling off right now.’ Walnut Creek-based agent Michele Manzone, of J. Rockliff Realtors, has observed a similar abating of multiple offers: ‘I think some of the buyers have backed out of the marketplace because of frustration,’ he said.”
The Miami Herald in Florida. “The future is in question for at least a dozen new condo projects that were originally proposed to be developed east of Interstate 95. A growingly bearish sentiment for South Florida’s previously booming preconstruction condo market has emerged since the last winter tourism season ended. More and more developers are opting to revise their original plans for preconstruction condo projects or even attempting to sell off their development sites. The series of changes is not a surprise to industry watchers given the loss of buying power for international investors combined with a surge in the number of newly proposed projects in South Florida.”
“The latest count of new South Florida condo projects for this cycle stands at more than 355 towers with nearly 43,000 units even when excluding the projects in question, according to the preconstruction condo projects website CraneSpotters.com.”
The News Press in Florida. “Community Homes LLC, a custom home builder in Cape Coral, has run into trouble – leaving the city with partially completed houses whose owners are getting tagged with liens by unpaid subcontractors. The situation is deja vu to the early 2000s when builders often overextended their finances in trying to keep up with the growth boom. Many of Community’s customers are German or Swiss, most of whom did not use a bank to finance their purchases, said Darrin Schutt, a Cape-based attorney who’s representing some of the people with unfinished houses.”
“Lee Building Industry Association president Victor DuPont wasn’t familiar with Community’s plight but said that generally builders get in trouble when they try to use money paid by recent customers to help pay off older jobs on which the builder lost money. ‘You kind of get ahead of yourself,” said duPont. ‘Our business is a cash-flow business, obviously,’ he said. ‘What I’ve seen happen is basically the old thing of robbing Peter to pay Paul, and eventually when there’s no more Peter to pay Paul, that’s it.’”
The Midland Reporter Telegram in Texas. “The sharp downturn in crude oil prices and the impact on oil and gas activity is increasingly being seen in Midland-Odessa’s overall economy. The downturn in the area’s oil and gas industry ‘is starting to get a foothold at this point,’ said Karr Ingham, the Amarillo economist who prepares the Midland-Odessa Regional Economic Index. Consumer spending and employment are what Ingham describes as the last dominos to fall. Housing prices remain high, averaging $260,564, up 10 percent from $236,885 last May. Prices for the year are averaging $238,292, up 1.1 percent from $235,618 last year. ‘At some point housing prices will have to fall as demand weakens,’ Ingham said.”
The Connecticut Post. “Years after the end of a recession characterized by a housing-market crash, the crisis has yet to abate in Connecticut’s largest city. It’s the continuation of a years’-long trend that has seen lis pendens filings in Bridgeport far surpass anywhere else in Connecticut. ‘I would love to say it’s slowing down, but it really hasn’t,’ said Doris Latorre, director of foreclosure prevention at Bridgeport Neighborhood Trust. ‘We continue to have new people walking in the door and we really see haven’t see a slowdown.’”
“Some temporary programs have expired, she said. ‘We are seeing waves of people coming in the second time around,’ she said. ‘It’s not because they don’t know how to manage their financing, but what they got was not a permanent fix, and they haven’t been able to secure themselves financially in that time.’”
The Record in New Jersey. “The number of New Jersey home repossessions by lenders has soared in the past two years and is on track to increase again in 2015. Eric, a software engineer who wanted to be identified only by his first name, was moving with his spouse last month into an apartment in Hackensack after losing the 2½-bedroom house he had lived in for nearly 30 years in Englewood. He said the house is now worth $350,000 because of a big drop in real estate values since 2008, but the lender has insisted that he repay $550,000, which includes penalties and fees added on while his attempts to get the bank to lower the principal amount failed.”
“The house went to a sheriff’s auction in May. Then last month, the new owner stuck a notice with black electric tape to his front door, saying eviction proceedings would begin in five days, signaling the end of a six-year ordeal, during which time Eric had made no mortgage payments. ‘My friends think I was living rent-free, but you are not really living. You don’t know if you’re leaving next year or next month,’ he said. Eric said he had gotten into financial trouble after losing his job at an Internet company in 2008.”
“There were nearly 49,000 new foreclosure complaints filed statewide last year, the most since 2010, according to data from the Office of Foreclosure. ‘It’s a difficult situation,’ said Michael Affuso, director of government relations for the New Jersey Bankers Association. ‘We are closer to the next recession than we are from the last recession and there are still about 85,000 properties in foreclosure, and probably 40 percent are older than 2013.’”
