“A Lot Of Homes For Sale And Not Many Buyers”
The Capital Times reports from Wisconsin. “Fleming Development is seeking city approval for a 12-story condominium tower at the corner of West Johnson and Bassett streets that would include 197 housing units. Prices are expected to start in the $200,000 range.”
“Developer Dan Fleming said he was not concerned about the current glut of new condominiums on the local housing market. There are more than 2,400 unsold condos in Dane County, up from 867 just two years ago. ‘That’s mostly in the upper prices ranges,’ he said. ‘We’ve got a different target market.’”
The Daily Herald from Illinois. “The question in 2007 is whether the housing market will return to historical norms or continue its 2006 sales recession. According to figures released Thursday, the Chicago area was hit harder than the nation at large.”
“Except for DeKalb County, each of the counties surrounding Chicago showed double-digit declines in the number of homes sold, according to the Illinois Association of Realtors. December home sales in Chicago fell even more, plunging 21.5 percent, to 9,600 homes sold.”
“Steve Hovany, president of Schaumburg-based housing research firm Strategy Planning Associates Inc., said there’s a general rule about home prices these days. ‘The basic wisdom is you have to bring your price down to last year’s level to sell it,’ Hovany said. ‘But many people tend to want to wait it out to get their price.’”
The Indianapolis Star. “Metropolitan Indianapolis’ sky-high pace of home foreclosures continued last year as lenders took back about 27,500 houses, almost 36 percent more than in 2005.”
“Many homeowners get trapped by bankruptcy, high medical bills, fraudulent real estate deals and adjustable-rate mortgages. And aggressive lenders and builders can saddle buyers with higher-than-expected payments, particularly in new subdivisions.”
“As heavy as the pace of foreclosures is in the metro area, it is surging even more heavily across the state. Foreclosures in the 83 counties outside the metro area numbered 19,952, a 96 percent gain over 2005.”
“Even so, metro Indy accounted for 58 percent of the 47,550 foreclosures recorded last year throughout the state, although the metro area contains only about 32 percent of the state’s households.”
The Daily Press from Michigan. “Local realtors are saying low prices have been the norm this year. ‘We have a lot of homes for sale and not too many buyers,’ said (realtor) George McLaughlin in Escanaba. It’s part of a nation-wide slowing in real estate sales, which drives down the amount sellers can get for their home.”
“‘People are always reluctant to go with that because they feel like they’re losing equity, and of course they are,’ McLaughlin said. ‘If they want to move their homes, they have to be flexible on the price.’”
“The slow sales can be a good thing for those wanting to buy a home. Jason Gasperich moved to Escanaba in December with his wife. ‘There were plenty of houses to choose from,’ he said.”
The Business Review. “The concentration of residential real estate loans on the books of Michigan banks fell by more than 7 percent in the third quarter, signaling a tightening of underwriting standards - as foreclosures climbed.”
“Michigan banks had residential loans valued at a median 251.6 percent of their tier-one capital, common stock and retained earnings that support lending, in the third quarter. That’s down from 271.9 percent in third-quarter 2005, according to the Federal Deposit Insurance Corp.”
“Michigan banks are in the middle of the pack, Illinois and Wisconsin banks have fewer residential real estate loans as a percentage of tier-one capital while Ohio and Indiana each top 300 percent.”
“The numbers still are worrisome because lenders, stuck with homes that have seen a drop in market value, often are forced to sell such properties at a higher discount so they can limit their losses. Foreclosures in the third quarter for Oakland, Macomb and Wayne counties numbered nearly 15,000.”
“That has a trickle-down effect in that it lowers property values in affected neighborhoods. ‘All banks are experiencing some level of increased foreclosures and it is having an effect,’ said Bruce Balmas, senior VP in charge of mortgage for all of Southeast Michigan at Fifth Third Bank. ‘We will take a foreclosed house and sell it at the current market rate and those levels are down as much as 15 to 20 percent.’”
“‘For years, mortgage fraud was ignored as interest rates fell and the mortgage bankers were making money,’ said Martin Frankel, a (lawyer) specializing in mortgage and construction litigation. ‘But now it is having a significant bottom-line impact.’”
The Detroit Free Press. “Home foreclosure filings surged to record levels across metro Detroit in 2006. In Macomb County, the number of foreclosure filings nearly tripled, from 2,755 in 2005 to 8,192 last year, translating to one home for every 39 in the county.”
“In Oakland County, Michigan’s wealthiest county, the number jumped from 3,754 in 2005 to 7,282, meaning one of every 68 homes. In Wayne County, the number of filings more than doubled, from 18,176 to 40,220, translating to one of every 21 homes.”
“Oakland County’s number translates into an average of more than 100 homes per week going to auction, the largest number county officials ever have seen and more than twice the number in 2004.”
“‘There are a lot of different variables why,’ said Oakland County Sheriff’s Capt. Mike Johnson, who oversees the division responsible for handling foreclosures. ‘But I think a lot of these short-term mortgages, the adjustable rate mortgages, are blindsiding folks.’”
“In some cases, Johnson said, owners simply walk away from homes after overextending themselves. ‘This isn’t the orphan and widow being shoved out in the cold,’ he said.”
The Lansing State Journal from Michigan. “Any way you slice it, 2006 wasn’t a banner year in the local real estate market. In Ingham, Clinton and Eaton counties, sales of residential properties fell by nearly 15 percent compared with 2005. The average sale price fell also, by more than 2 percent.”
“Matt Bowler, president of the Greater Lansing Association of Realtors, noted that 2004 and 2005 were ‘record breaking years,’ which makes 2006 look pale in comparison.”
“(Broker) Dave Ledebuhr in East Lansing, said a combination of low interest rates and the sheer number of homes for sale in the Lansing area has created an almost ideal buyer’s market.”
“‘We kind of feel that, if buyers wait much longer, they’re going to miss this wonderful buying opportunity,’ he said. ‘Interest rates could go up, supply could go down, and prices will go up again. If they don’t buy now, when would they?’”
“He was echoing a new marketing campaign sponsored by The Greater Lansing Association of Realtors. Their slogan: ‘If not now, when?’”
“Roxanne Webster got the message without being told. She began looking for a house two weeks ago ‘because it’s a buyer’s market.’”
“On Friday morning, (realtor) Travis Conti was showing her a split-level home on Lansing’s south side. ‘He keeps surprising me,’ Webster said. ‘Every time I think that this may be the house, he keeps showing me more for the money.’”
“Except for DeKalb County, each of the counties surrounding Chicago showed double-digit declines in the number of homes sold, according to the Illinois Association of Realtors. December home sales in Chicago fell even more, plunging 21.5 percent, to 9,600 homes sold.”
Maybe I won’t feel like like Cassandra so much anymore. Trying to tell people here there is a bubble is like talking to a wall. Hopefully articles like this will speed up the process a bit.
However, some people haven’t gotten the message yet, though. I’m seeing prices raised on some listings that have been for sale over the winter. To catch that spring bounce, you know.
Kathy,
I actually think the Goldilocks forecast for housing that some talking heads are espousing for this spring will speed up the process. It will encourage the people would couldn’t sell last year (and there were a ton of them) to relist and those who were just thinking about listing for this year will dive in becuase of what the “experts” are telling them. That will swell inventory levels and cause the few serious buyers that are out there to negotiate much better discounts. The sellers who were pig headed last year about moving on price will have no chose and be forced to relent.
“The sellers who were pig headed last year about moving on price will have no chose and be forced to relent.”
That should be choice not chose, sorry.
They can always do a cashback fraud sale. The authorities don’t really care and won’t do anything about it until it’s too late.
“‘For years, mortgage fraud was ignored as interest rates fell and the mortgage bankers were making money,’ said Martin Frankel, a (lawyer) specializing in mortgage and construction litigation. ‘But now it is having a significant bottom-line impact.’”
A mortgage is typically a 30 year obligation. did these idiots not know there would be long term consequences of failure to properly qualify borrowers? I forgot prices only go up, so there was no risk.
“Roxanne Webster got the message without being told. She began looking for a house two weeks ago ‘because it’s a buyer’s market.’”
“On Friday morning, (realtor) Travis Conti was showing her a split-level home on Lansing’s south side. ‘He keeps surprising me,’ Webster said. ‘Every time I think that this may be the house, he keeps showing me more for the money.’”
But she isn’t wise enough to realize holidng off to buy would produce even better deals! In my region, homes are so far beyound salaries that we’ll have an exodus for years. It will be even more interesting as the realtor ™ commisions drop.
Right now realtor commissions are at 0.9% of GNP. Traditionally they peak at 0.6% and drop down to 0.3% in a recession. Could they perhaps drop more in this downturn?
Maybe not… but it obvious there is only one direction for them to go on a national basis. 
I expect the screams of “its different here” to only get louder.
Sigh… no new fodder last night for the implode-o-meter.
Got popcorn?
Neil
I agree, realtor commisions will overshoot on the downtrend. Anyone for negative commisions?
where did you guys find the realtors commision % of GDP. That is super interesting.
Here is some implode-o-meter stuff for you, ocwen shut down their mortgage unit:
http://biz.yahoo.com/pz/070126/112531.html
I guess they’re just going to stick with servicing. Ocwen was very late to the lending party.
“Oakland County’s number translates into an average of more than 100 homes per week going to auction, the largest number county officials ever have seen and more than twice the number in 2004.”
Does anyone have good suggestions for obtaining auction sales results data from a public source? (I am thinking the county records office must track these figures, but not sure about how to go about obtaining them…)
Things are getting really bad here in metro Detroit. It has really become common knowledge that housing is currently a poor investment. People are depressed and ready to jump out of windows.
It looks like we are ahead of the national market by at least a year. Some people may still deny the bubble in California but almost everyone believes in it here. The change in psychology in the last six months has been astounding.
time for Window Watching to aire as new real life show. person who sticks the best landing wins.
Sort of wins… How do they collect?
Who cares?
By breaking legs ?
My home, wife and kids are still in South Lyon, I felt this coming on in our area for 2 years now. Last April starting working in San Jose, Ca and since that time here have seen a big difference in attitude .
When I first got out here, would tell about the horror story’s of RE losing value, wages crashing….. These people out here looked at me like I’m from the moon.
I found the attitude in CA is if there are states past NV, they are not important, And it is different here.
8 months later I can say they are starting to get it a little, IMO out here in CA.
I try to tell this to my sister and rest of family (I lived in the Bay Area 30 years; they remain) - they think I’m nuts too. My sister wants to buy an $800K “starter home”(how, I have no idea - they certainly don’t have the money).
And those quotes from Escanaba. Isn’t that in the UP? Are they hoping for boomer retirees up there now?
Yes, Escanaba is in the UP and much closer to Wisconsin than to the bridge to the LP. They shouldn’t feel the downturn in the auto industry so much. If they have a housing depression anyhow, it is, because it’s everywhere.
Simple rules of underwriting loans :
(1) Solid appraisals
(2) Buyer has to have some skin in the game
(3) Borrowers has to show ability to pay back loan on a long term basis
(4) If it’s a investment loan ,property must cash flow or neg. debt is counted against income qualifying .
(5) Investors or owner occupied borrowers should have reserves .
(6) Borrower need to be even more solid if they go on a low down loan that needs to be insured .
(7) 80/20 no down loans are risky therefore borrower needs to be solid gold to offset the risk ( loan needs to be insured )
(8) Low credit score buyers should put 25 to 30 % down so bank has margin when borrower defaults .Seller can take back paper if they want the risk .
(9) Don’t give a borrower more than one loan ,unless their assets warrent it ,but no more than 2 . Don’t give a borrower more than one loan in one given tract . If borrower has not sold their home yet make loan subject to their prior home selling or showing proof of renting at cash flow or minus neg debt from rental .
(10) Don’t loan in tracts were the speculator to owner occupied ratio is to high .
(11) Check for job stability or require more down to offset risk .
(12) Prior to funding check for other pending loans not disclosed on original loan application .
(13) Check for idenity of borrowers.
(14) Check purchase contract and escrow instructions for any concessions or kick-backs ,and adjust loan accordingly . Make borrowers and realtors/escrow officers sign a paper under penalty of perjury stating that no funds are being dispersed out side of escrow and all concessions or kickbacks have been disclosed and buyer/seller/realtor will not receive additional funds . (Arms length transaction )
Have seller sign disclosure that listing price was not raised at the request of the realtor/buyer and seller did not agree to rebate funds to buyer after close of escrow etc.
I can go on and on but this would cut loan volume down alot .
But what has the loan volume been for a number of years now ? The loan volume has been speculators , unqualified buyer who are now foreclosure bound ,crooks taking the money and running etc., faulty projects that were catering to flippers and speculators that didn’t really meet with local demand .
Actually the cow is out of the barn already, but I see no reason why the mistakes of this easy money lending should continue .
In addition , I believe that lenders should try to rewrite some of these loans and wave pre-payment penalty if it can save a owner occupied homeowner from defaulting . Nobody in their right mind would of gone on a adjustable with a pre-payment penalty .
“(8) Low credit score buyers should put 25 to 30 % down so bank has margin when borrower defaults .”
man, would that would be the ultimate dagger in this bubble.
Oh ,I forgot one . Lenders cap loans at no more than 8% of prior years appreciation .
This little rule is to weed out the fraud as well as put the risk of back to buyers and sellers for a while if their transaction exceed more normal appreciation numbers . No reason to cater to a speculation driven market . Let the seller take back paper or the buyer but more down ,rahter than the bank funding false markets .
risk back to buyers
put not but
rather not rahter
i should not try to type fast , I can’t even type slow very well. Sorry .
In China, anyone and everyone has to put down a minimum 20% soon to be 30% down on a RE purchase….and no such thing as a 30 year fixed rate.
HW posts “Simple rules of underwriting loans”
I hope you can get a job in a few years, working in the Prison System teaching this subject!
““The concentration of residential real estate loans on the books of Michigan banks fell by more than 7 percent in the third quarter, signaling a tightening of underwriting standards - as foreclosures climbed.”
Signaling tighter standards? Sure. It’s certainly not about fewer FB’s wanting loans, is it?
I used to own but cashed out and downsized from a home to renting in a 28 story Chicago North Shore high rise and have constantly had fingers wagged at me for “throwing my money away” in rent payments. Well, one year ago there was only 4 units in the entire building for sale at a time with no listing less than 500,000. Last night I looked up my address and there were 29 listings with over half below 400,000! I may have to start wagging my finger and if this keeps up.
I’m with you Morgan. Been watching Craigslist rentals and the number of “new construction” rentals is increasing dramatically
There are still plenty of disbelievers among home sellers.
I have a friend, who against my arguments, put a bid on a small (11000 square feet) piece of land in Rio Dell, California (near Eureka in Humboldt county).
Asking price for the land: $185K.
She offered $165K.
Counteroffer came back as $190K!
People still don’t get it…and there are still plenty of GFs to buy.
Scotia, next door to Rio Dell is a company owned town up for sale. Rio Dell will soon be next door to a ghost town.
These builders keep putting up condos which really take a hit when times get bad - like a recession or a property bust. One which has started (property bust) and the other which could well appear this year (recession).
It seems the President G.W Bush disease (denial) has spread to the condo builders.
Denying, lying, corrupting, stealing, killing, screwing, fabricating….. etc…..
“‘We kind of feel that, if buyers wait much longer, they’re going to miss this wonderful buying opportunity,’ he said. ‘Interest rates could go up, supply could go down, and prices will go up again. If they don’t buy now, when would they?’”
So much material there. Almost like 50lbs. of clay.
If rates go up, how could prices also go up? That would make homes even more unaffordable. The FB’s would be even more F’d
Rates could go up or down, supply WILL go up, prices WILL go down, if they don’t buy now, when would they? Next year! Time2Wait.
“‘We kind of feel that, if buyers wait much longer, they’re going to miss this wonderful buying opportunity,’ he said. ‘Interest rates could go up, supply could go down, and prices will go up again. If they don’t buy now, when would they?’”
What a line of crap. If interest rates go up, you will have even less buyers. And prices won’t be going up in that situation. And that means more supply, not less.
What a line of crap.
We kind of feel that, if buyers don’t wait, they will be catching a falling knife, and will regret their decision for years to come. Better to wait another year or two, The largest percentage of the price drop should be over by then.
Local realtor offering chance to win $5000 if you give her a lead and they end up buying a home. A ‘chance’ to win $5000 - your name goes in the lottery, along with all the other folks who submitted names that ended up buying. May not be such a bad deal, your chances at the end of 2007 may be, what, 1 in 1? LOL
I like my friends too much to do that to them. Now, my enemies . . lol.
Although I’m sure minor, I believe there is a bit of a Super Bowl effect here in Chicago keeping some people on the side lines. Some agents were even scheduling open houses and showings around the playoff games. I personally can tell you that even though I am very busy with buyers I didn’t show one property on playoff Sundays and it wasn’t do to steering the showing that way… I’ve heard Chicagoland Realtors saying that the Chicago “Spring Market” starts the day after the Super Bowl…
Brian Nygard
RE/MAX