July 29, 2015

Gaming The Market

The Denver Post reports from Colorado. “Lauren Frommer, 28, socked away a fifth of every paycheck and last month purchased a Cherry Creek condo, renting out two of the three rooms to friends who help her cover the mortgage. Frommer previously worked in the natural resources industry before becoming a jewelry designer and said the industry’s instability motivated her to lock in a home. ‘It feels like when you are renting, you are throwing away money,’ Frommer said.”

“But Frommer’s view doesn’t appear to be the most common one among her peers, the millennials born between 1980 and 1997. Her roommate Kate Braden, also 28, said she prefers the freedom that renting provides, and even Frommer concedes locking in a mortgage seemed frightening at first. ‘I’ll start to look at houses when I am ready to settle down,’ said Braden, who estimates it will be another five years before she purchases a home.”

The Atlanta Journal Constitution in Georgia. “Metro Atlanta home prices continued to rise late into the spring, although the pace was slower than usual and the number of homes for sale remained lower than normal. Luis Gaud, 27, took the leap this spring, buying his first home, a one-bedroom condo in the Poncey Highland area of the city of Atlanta. The customs officer said he wanted to act while he could afford what he wanted and buy something he’d be able to sell in a few years. ‘I figured it was time to buy,’ he said. ‘And the way things are going, I think the value will go up.’”

The Seattle Times in Washington. “Home prices in the Seattle metro area hit a wall in May, traditionally one of the year’s busiest shopping periods, posting weaker than expected gains, according to the S&P/Case Shiller index. ‘It’s been a slow, languid summer for home values, with annual growth rates having pretty much leveled off over the past few months,’ said Zillow Chief Economist Stan Humphries in a statement. ‘But consistent slowing in the rate of seasonally adjusted month-over-month growth in the Case-Shiller indices will eventually be reflected as slowdowns in year-over-year appreciation, too.”

“Zillow’s Humphries said mortgage rates won’t be in a holding pattern much longer and will put downward pressure on home value appreciation as soon as they begin rising. ‘Enjoy summer while it lasts, because in just a few months, things could start getting interesting again,’ he said.”

The Dickinson Press in North Dakota. “Buying a home in Dickinson is cheaper and less stressful than it was only a year ago, two of the city’s top Realtors said. ‘They (prices) have definitely softened and buyers are now more cautious, so there’s more on the market,’ said Ninetta Wandler, a longtime Dickinson Realtor. ‘But they’re not forced to buy yesterday. Before, if you had three houses to look at, you were lucky — and you didn’t have time to think about it.’”

“About one-third of the homes listed in Dickinson so far this year started at more than $300,000. To put the rise of Dickinson’s home prices into perspective, Wandler said a house selling for $350,000 today would have probably gone for as low as $230,000 five to 10 years ago. ‘That was a really nice house,’ she said.”

The South Jersey Times in New Jersey. “Of all the American homes currently in the foreclosure process, one in four were vacated by homeowners prior to a bank repossessing the property, according to RealtyTrac. These houses sit abandoned, with the homeowners gone and the bank not yet in possession of the properties. New Jersey has the highest rate of foreclosures — and zombie foreclosures — in the nation.”

“It’s not only a matter of the state’s lengthy mortgage foreclosure process that leaves these houses in limbo, though. Banks are keeping many properties out of circulation, hoping that if they don’t flood the market with foreclosures they can getter a better price later as the market continues to improve, explained Realtor Nancy Kowalik, of Keller Williams Realty. She described situations in which she has interested buyers for such homes but cannot even get a returned phone call from these institutions. ‘They don’t want to sell,’ she said. ‘They are gaming the market.’”

From Marketplace. “JoAnn Henderson bought her house New Carrollton, Maryland, in 2001. She refinanced a few years later for a higher amount. Shortly before she retired from her teaching job, she started having trouble with the steep payments. Henderson got a loan modification, which dropped her interest rate to 3 percent. Now she’s even got a rainy day fund. ‘A tiny one,’ she says, laughing. ‘Not a big rain. A small rain.’”

“What would really help Henderson is if the amount of her loan could be reduced in what’s called a principal reduction. Henderson owes more than $450,000 on her house, which is only worth $212,000, according to Zillow. She’s underwater, owing more on her home than it’s worth. Mel Watt will be making the decision on principal reduction. He’s head of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac.”

“Watt is caught between homeowner advocates like Wilson, and people like Tim Rood, chairman of the Collingwood Group of financial advisers. Rood wonders where the money for principal reduction would come from. ‘This money doesn’t come out of thin air,’ he says. ‘So, it’s going to have to come from investors or from taxpayers.’”

Bits Bucket for July 29, 2015

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