Once Red-Hot Is Quickly Turning To A Fizzle
The Folsom Telegraph reports from California. “Luxury home sales in the greater Sacramento area soared more than 47 percent in the second quarter of 2015 from the same period a year ago. Meanwhile, the median sale price of a luxury property in the second quarter was $900,000, down 1.9 percent from a year ago but up 3.9 percent from the previous quarter, when the median stood at $866,150. ‘The Sacramento area’s luxury housing market closed the spring home buying season with very strong numbers,’ said Kris Vogt, president of Coldwell Banker Residential Brokerage. ‘The good news for buyers, though, is that prices remain attractive and inventory is starting to bubble up a little, giving buyers more opportunities to get into a home as we make our way through summer.’”
WVVA in West Virginia. “Raleigh County’s once red-hot housing market is quickly turning to a fizzle for potential sellers. Real estate broker Tim Berry said a rising number of properties for sale are driving down prices across the region. ‘Anytime you have the supply up that high, it tends to drive the prices down and the buyers, they enjoy nice savings.’ Berry believes there are other cost effective ways to break free from the pack. ‘Number one, you gotta clean your house. Give it a good smell. When most buyers walk through the door, they make an immediate opinion of the interior,’ Berry recommends.”
From MarketWatch. “According to CoreLogic, prices in the Baltimore-Columbia-Towson metro area were down 8% in the year ending June, the worst showing of the 100 biggest metro areas. What’s driven that is a huge rise in foreclosure sales. Maryland, despite being a so-called nonjudicial state where judges do not have to approve foreclosures, had a program that delayed foreclosures to give homeowners more a chance to fight them.”
“Other metro areas where prices have declined include Boston (-4.4%), Hartford (-0.1%), New Haven, Conn. (-1.8%) and Worcester, Mass. (-7%). Sam Khater, deputy chief economist at CoreLogic, said that’s more a reflection of the languid economy in New England.”
The Boston Globe in Massachusetts. “Massachusetts foreclosure filings shot up 81 percent in June compared to the year before, continuing a rise in foreclosure activity that began early last year. ‘The increases in foreclosure starts that we have been seeing steadily for months now are likely to continue through the second half of the year,’ said Tim Warren, the chief executive of The Warren Group. ‘Some lenders had let a lot of delinquent mortgages accumulate in the pipeline over the past few years. Now that the market has improved and buyers are eager for affordable homes to purchase, the backlog is getting pushed through the system.’”
Tucson News Now in Arizona. “Residents of several neighborhoods have reached out to Tucson News Now, claiming abandoned and foreclosed properties are creating an eyesore and blight in their neighborhood. Some are still owned by banks. ‘In a lot of these cases, the homes were lost by the owner in the recession. We’ve actually had homes where the ownership of the property, just as we’re trying to track down the owner, changed hands four to five times in a matter of months,’ said Michael Wyneken, the interim code enforcement administrator for the City of Tucson.”
“Many of these properties have been sitting empty for years. He added that the banks own many of these properties, and are not stepping up to their responsibilities. ‘The banks have done a masterful job across the country of making it very difficult to pin them down to make repairs or keep these places up,’ he said.”
The New Jersey Spotlight. “A new report finds foreclosures and housing vacancies continue to destabilize Newark. ‘This is a problem that kind of spreads out throughout the city,” said Christopher Niedt, an associate professor of sociology at Hofstra University and a co-author of the study. Onerous mortgage terms, disconnected from market values, are ‘one of the biggest culprits’ in Newark’s ongoing foreclosure crisis, according to Niedt. At least 1,151 underwater mortgages in the city have been traced to securities sold off by the original lenders to private investors, he said.”
“Because the mortgage-backed securities are often divided among many investors and administered by real-estate trusts, it is often difficult to impossible to negotiate with anyone to modify them to reflect the actual value of homes, Niedt said. The gap can be significant, Meyer said. For 125 Newark mortgages purchased by NJCC, ‘the average amount of the loan was $325,000, but the average value of the property was $175,000,’ he said.”
“Moreover, while banks often refuse mortgage modifications to individual borrowers, ‘they have no problem selling a mortgage at a discount to large private equity firms,’ he said.”
The Tampa Bay Times in Florida. “Jay Magner was watching the noon news one day when he heard that real estate tycoon Donald Trump and a group of local developers were planning a 52-story condo tower on the river in downtown Tampa. ‘It changed the course of my life, literally,’ says Magner, who at the time owned a dollar store. ‘I thought, ‘Oh my God, I could finagle that and live there.’ ”
“Magner put down a deposit, joining dozens of other buyers eager to own part of what Trump called a property ’so spectacular that it will redefine both Tampa’s skyline and the market’s expectations of luxury.’ Magner often walks or cycles by the acre and a half site, still weedy and empty. ‘I lost $130,000,’ he says. ‘I didn’t know people could take your money and not build the building.’”
“Despite the hoopla, signs of trouble soon emerged. At the same time, Florida’s condo craze had started to cool. Even as the developers held a ceremonial ground-breaking in 2006, they had yet to obtain financing. In 2006, the licensing agreement was modified to increase Trump’s fees to $4 million in exchange for a concession in the amount of money he would get from condo sales. Nonetheless, SimDag stopped paying and in May 2007 Trump sued, claiming he was owed $1.03 million in licensing fees. That was the first time most people — including the now-frantic buyers — realized Trump was part of the tower in name only.”
“Lawyer Mary Ann Stiles sold another condo she owned to put down $400,000 on a unit in Trump Tower. Stiles is out $200,000. She acknowledges she should have read the sales agreement more closely but remains convinced the project would have succeeded if the economy hadn’t tanked. ‘Everything in 2005 and ‘06 was going great guns,’ she said. ‘I didn’t think the bottom would fall like it did.’”
