Prices That Once Would Have Encouraged Optimism
The Belmontonian reports from Massachusetts. “A million dollar house on Rutledge? Of course! How about in the shadow of the Temple on Amherst Road? You bet. Even along School Street, where the production of ‘This Old House’ came to visit, makes sense to see a price tag for a cool million. But Watson Road? The road off of Washington below the Presidential neighborhood is typical of many Belmont side-streets, one of homes built in the same style as their neighbors; sturdy but far from fancy. And 140 Watson is just that: the town rates it as a B grade house – heated by oil with an unfinished attic – with its last significant renovation was the installation of replacement windows a decade ago.”
“The town’s assessors did bump up its assessed value in the past year, to a whopping $784,000. Somehow, this ‘average’ house oversold its assessed value by nearly a quarter of a million dollars! Maybe the buyers misheard an important fact: it’s heating is oil not that there is oil in the basement, a la ‘The Beverly Hillbillies.’ The fact that an average house could sell for a fat premium should give people pause, during which time they can recall the last few housing financial ‘bubbles’ and their impact on the community and town finances.”
The New York Times on Colorado. “Janet L. Yellen, the Fed’s chairwoman, and her colleagues have concluded that the economy is finally strong enough to grow with a little less help from the central bank. The first rate increase will be small, then the Fed expects to raise rates about one percentage point a year for the next few years. There are new skyscrapers downtown and new subdivisions in every direction. Yet the local mood is fragile. Housing prices have climbed 24 percent above the precrisis peak, but whereas that once would have encouraged economic optimism, now people fret that home prices are due for a fall.”
“Mitchell Goldman, the owner of Apex Homes, said customers rushed to buy houses in recent years because they worried prices would climb. Now people are holding back, wondering if prices will fall. ‘I’ve been getting asked the question a lot, ‘Should we wait?’”
The San Francisco Chronicle in California. “Remember no-money-down mortgages from the last housing bubble? They’re back. San Francisco Federal Credit Union this week introduced a loan program that will allow Bay Area buyers to finance their homes up to $2 million, with no down payment and no requirement for mortgage insurance, according to HousingWire. ‘Too many of our members have given up hope of buying a home because of escalating home prices and the required down payment,’ said Rebecca Reynolds Lytle, chief lending officer. ‘However, these same families are paying more than a mortgage payment for monthly rent.’”
“Another sign of a peak? This Telegraph Hill tenant in common is listed for $425,000.”
Vegas Inc in Nevada. “Homebuilder Don Boettcher recently spoke with VEGAS INC about Century’s developments and the valley’s housing market, including the go-go years last decade and the wide price-gap between new homes and resales. In Southern Nevada, the median sales price for new homes is around $316,800, according to Home Builders Research. That’s more than 40 percent above the median price of resales, $220,000, according to the Greater Las Vegas Association of Realtors.”
“Q: What does that do to builders when you’ve got so many rental homes out there and a big inventory of unsold existing homes? A: Those are housing alternatives for somebody. There’s also a big price difference between new homes and resales. But that gap needs to be narrower. Historically, it’s always been a 15 percent spread. Q: I assume you’d prefer resale prices to come up rather than new-home prices to come down. A: Absolutely. The free marketplace will get things right, but it’s all going to take some time.”
“Q: What are the weaknesses you see in the homebuilding market? Las Vegas still has a lot of foreclosures, underwater borrowers, and residents with spotty finances. A: For single-family resales, we still have a disproportionate amount of distressed properties. We also have an excess amount of rental properties in our single-family inventory.”
The Daily Herald in Illinois. “The real estate market in Kane, McHenry and DeKalb counties is improving at a fast clip, said Lora Mahnke, manager of the Huntley office of Century 21 New Heritage. The presence of short sales and foreclosures on the market is no longer having a huge negative effect on traditional sales prices. Appraisers are now able to find enough traditional sales to use as comparable prices when they are judging the worth of a home, Mahnke said. ‘And when there is a question, real estate agents often meet the property appraisers to show them the comparable properties that they used to arrive at a price. And if there were multiple offers that drove up the price, they show the underwriters the competing offers, too. That is what happens when there is so much more demand than supply.’”
“‘The amount of foreclosures and short sales on the market has fallen again, she said. ‘Banks are no longer holding on to a shadow inventory of homes and releasing them slowly over time. There is really little or no lag time from when the bank gets a home to when they put it on the market.’”
From New Jersey.com. “Claiming that there are more than 100 abandoned homes in the township, a gathering of residents, local housing and real estate experts plan to meet with town council during a special hearing on Monday. In a news release distributed by the Keller Williams Realty group, those organizing the effort to get issue addressed claim nothing is being done to clean up the houses. Letters from unnamed ‘concerned’ residents included in the news release make additional claims of the vacancies prompting even more people to move out of the township.”
“‘In Riverside Park alone we have at least eight abandoned homes. These homes have been neglected by the bank and homeowners for years,’ the a life-long resident wrote, adding that they are ‘fearful to even walk my granddaughter past these houses these days.’ A resident who identified themselves as a Tenby Chase townhomes resident since 2008 said that the abandoned homes are both ‘eyesores’ and ‘dangerous.’ ‘These vacant buildings are easy targets for scrappers who break in and steal copper piping which in turn makes them even harder to sell later on down the line and puts everyone else at risk,’ the resident said, adding that more people are moving out because they don’t want to live near abandoned properties.”
The Ann Arbor News in Michigan. “The vacant, foreclosed home that once stood at 210 S. Mansfield St. in Ypsilanti Township seemed to defy physics in not collapsing on itself. But equally alarming is what building officials investigating the wobbly home in 2014 discovered inside. Multiple memos written by property maintenance companies hired by its owner, CitiMortgage, clearly documented the decay. The paperwork was hard evidence that Citi knew of the home’s precarious state, but did nothing.”
“And Citi’s South Mansfield property isn’t an isolated case. Of the 512 vacant houses Ypsilanti Township inspected over the last 18 months, it identified over 350 as bank walkaways, and it has another 500 abandoned buildings to check on. In other words, if one spots a vacant house in Ypsilanti Township, then the odds are good that it’s owned by a lending institution.”
“The argument for abandoning hundreds of homes in a community comes down to money and globalization, bank officials say. Mark Rodgers, Citi’s director of public affairs, says the company couldn’t address the Mansfield property for three years because it wasn’t able to get approval from the investors who bought the mortgage. Michigan Bankers Association Vice President John Llewellyn says the situation is the same across the board. ‘A lot of things have become internationalized…No one on the other side of the world has a legal obligation to fix these homes,’ Llewellyn said. ‘Do they have a moral obligation to repair property on the other side of the world? We threw those morals away a long time ago.’”
“The situation is especially galling after taxpayers bailed out the banking industry in 2008, said Ypsilanti Township Attorney Doug Winters. He called banks pushing their business losses on taxpayers a case of ‘Heads I win, tails you lose.’ ‘Banks don’t have the right, legally or morally, from my point of view, to take TARP and bailout money from us taxpayers, then say, ‘Well, it costs us too much to rehab these homes or put them up for sale, so we’re going to let it sit there and rot,’ Winters said.”
“The state and federal governments have been little help. While settlement money from piecemeal lawsuits against banking institutions was supposed to help with cleanup, there has been no coordinated distribution effort and minimal monitoring of the funds. And that’s frustrating to Winters, who says the problem in a nutshell is simple: ‘The banks are too big to care.’”
