Foreclosures, Permits At Record Levels
The Boston Globe reports from Massachusetts. “Mortgage lenders submitted a record 19,487 foreclosure filings in Massachusetts last year, leaving more homeowners in danger of losing their homes than at any time since the real estate recession of the 1990s.”
“Filings in Barnstable County rose 91 percent, to 934 in 2006, according to ForeclosuresMass.com. But the greatest number of filings was in Worcester County, 2,987, up 76 percent, followed by Middlesex County. Statewide, filings rose nearly 70 percent, from 11,493 in 2005, with the pace quickening at year end.”
“Kevin Cuff, executive director of the Massachusetts Mortgage Bankers Association, said yesterday in a statement that homeownership has increased, due to the greater availability of mortgages. ‘2003 through 2005 were historic years for [mortgage] production in Massachusetts,’ his statement said, ‘and it would correlate to the increased foreclosure results for 2006.’”
The Boston Herald. “Among communities recording 100 or more foreclosures in 2006, filings increased most sharply in Everett (up 159.6 percent), Lowell (146.4 percent) and Mashpee (121.7 percent). Boston fared little better: Hub foreclosures rose 85 percent.”
“‘(Last year) was a terrible year for thousands of Massachusetts homeowners,’ ForeclosuresMass.com President Jeremy Shapiro said. ‘More families faced foreclosure than at any other time in our history.’”
“Shapiro attributed 2006’s sharp spike in foreclosures to a ‘perfect storm’ of problems for homeowners, ranging from a soft housing market to increased use of risky ‘exotic’ mortgages. ‘All indications are that this trend will not abate, which means trouble for tens of thousands of additional homeowners in 2007,’ he said.”
“Mortgage foreclosures more than doubled in Everett, Lowell and five other Massachusetts locales during 2006.”
“Foreclosures increased statewide by 69.56% over 2005 levels (19,487 v. 11,493). Foreclosures have more than doubled since 2004, increasing by 124.27% (19,487 v. 8,689). More foreclosures were filed in Q4 of 2006 (6,525) than any previous quarter since ForeclosuresMass.com began tracking data in 2003. Foreclosure filings in Q4 jumped a staggering 33% above Q3 of 2006.”
“Filings during Q4 of 2006 were 112% above Q4 of 2005 (3,071). December 2006 had 114.74% more foreclosure filings than December 2005 (2,156 v. 1,004).”
“In communities with 10 to 49 foreclosure filings in 2006, the largest increases were in Bernardston (1000% increase, 11 in 2006 v. 1 in 2005), Lancaster (540% increase, 32 v. 5), Orleans (400% increase, 15 v. 3), Eastham (333% increase, 13 v. 3), and Granby (333% increase, 13 v. 3).”
From New York Business. “Despite a significant slowdown elsewhere, residential construction in New York City continued at a torrid pace in 2006, according to newly released figures from the U.S. Census Bureau.”
“The year saw the second highest number of building permits for privately owned residential units since 1972. Jason Bram, an economist at the Federal Reserve Bank of New York, points out that the 30,927 units that received permits in 2006 in New York City exceeds the total issued in the six-year period from 1990 through 1995.”
“In addition, last year’s figure includes only new construction and does not include units in office buildings or hotels being converted to residential use, or the units re-built in dilapidated buildings, Mr. Bram says.”
“Seventy-two percent of the permits issued in 2006 were for units in the Bronx, Brooklyn, Queens and Staten Island. Manhattan accounted for 28% of the units.”
The New York Post. “There were more residential building permits issued in Brooklyn last year than at any time since modern record-keeping began in 1965, according to figures released yesterday.”
“Manhattan’s stratospheric real-estate market undoubtedly was also a factor. ‘The high prices in Manhattan are pushing people over the bridges,’ observed Mark Kessler, president of the Brooklyn Chamber of Commerce.”
“Bronx Borough President Adolfo Carrión noted that property values in his borough spurted 75 percent in five years. ‘It’s a little scary,’ he said. But he added: ‘The positives far outweigh the negatives.’”
“During the recession of 1991, The Bronx recorded just 22 residential housing permits. Last year, it registered more than 200 times as many. ‘There is construction everywhere,’ said Carrion.”
The Poughkeepsie Journal from New York. “A slowdown in the housing market is delaying construction of a 199-unit subdivision off Beekman and Greenhaven roads. ‘They are in a wait-and-see mode right now,’ Town of Beekman Planner Neal Townsend said.”
“Sharbell Development Corp. of Robbinsville, N.J. is holding off on building the subdivision due to a ‘nose dive’ in the sale of new homes across the region, said Sharbell senior vice president Thomas Troy. ‘We’re hoping there will be a thaw in the market in the year ahead,’ he said.”
“Sharbell is planning on building single-family homes with three and four bedrooms and ranging in size from 2,400 to 3,600 square feet. Sale prices are expected to be $500,000 and up.”
“Tim Gunther, who sells real estate part time, said with about 200 upscale homes for sale in the towns of Beekman and Fishkill alone, he can see why Sharbell is holding off on sinking millions of dollars into construction of the Springs homes.”
“‘Since you have 200 homes on the market which aren’t selling, what makes you think these 200 are going to sell?’ he said.”
Hey, the first to post is always fun.
anyhow, yesterday was such a successful beating up Gary Watt day and so much fun. i laughed for an hour. some of the postings were just freaking funny. the wife thought i was going insane. let”s do some more today.
Here you go then. The official National Association of Realtors training video was leaked on the web today. Now you too can be just like David Lereah. Scary how much of this stuff is repeated verbatim by the media.
Check it out. (Only slightly NSFW)
The dramatic increase in foreclosures seems to point out a few things: many FB’s are going down with the ship and this bust will probably be faster than expected.
Read yesterday the number of homes ‘under construction’ stood at 1.2 mil in December. Add those to the spring season and I’m guessing the bell tolls about May. Heading down at a 45, both engines out, and chanting ’soft landing, soft landing’. Probability isn’t very high, but it could work.
Yep.
Still on the timeline where Joe Sixpack knows that prices are going down by June. Sub-primes imploding. The MBS bond market is getting “picky.” And that lovely inventory. Lots of it. (Yea, we had an “end of the month dip” in my area, but its getting back up there.)
I can’t wait until spring 2008 when all of the sellers who pulled their properties “to wait a year for the market to recover” *need* to sell.
Alligators bite hard, don’t they?
Got popcorn?
Neil
Yes I agree. Foreclosures are the catalyst which will pop the current bubble. If it were up to solvent sellers to just hold out as long as they wanted to to force their price things might be different, but that is not the case. The key, and I think it is lost on many of us here is that things seem to be moving slowly and we are not seeing big price decreases that one might expect, but this is because people losing their homes go through a process of credit card advances, depletion of savings, borrowing from relatives and friends etc, and many stave off the inevitable for a considerable amount of time. That said, with $4000 / Mo mortgage payments “normal” on the East and West Coasts I doubt many will find friends and relatives as receptive …
A second snowless winter is wreaking economic havoc on northern New England’s tourist based economy.
Having one spouse in a government job with the health care bennies is the only thing keeping the region alive.
New England is in a total death spiral.
““During the recession of 1991, The Bronx recorded just 22 residential housing permits. Last year, it registered more than 200 times as many. ‘There is construction everywhere,’ said Carrion.””
How can there be so much building? I thought that they “weren’t making any more land”?
Oh yea, you can build UP. And build. And build. And build. And build.
They’re addicted to building. And they haven’t gone to their first meeting of Overbuilders Anonymous yet.
they are building in every little corner they can find and I think most of it is junk. my inlaws live in brooklyn and it looks like most of it is small time independent guys who want to strike it rich. they overpay for land, build some crappy condos in places where no sane person will want to buy and then try to sell them for the price of a real house. since they are small fry they have a higher cost structure and have to charge more for less profit.
the bigg project is on the waterfront in brooklyn along with a bunch of condos in DUMBO and Williamsburgh. The Williamsburgh ones are OK since they are like 2 blocks from the train and 15 minutes into Union Square. DUMBO you have to walk to the train somewhere.
Queens the main building is in long island city on the water and 1 stop from manhattan. i work close by and the target market is corporate executive apartments and young execs who work 18 hour days and want a nice place to live along with Fresh Direct service. Citibank is moving it’s global HQ here and they are building apartments for the visiting execs to save money on hotels. they are also building a temporary UN while the main one gets renovated.
US census says NYC population is growing and the estimate is another million people over the next 20-25 years. that’s around 25,000 units of housing needed per year just to keep up.
if it happens, great. so far we have had 16 years of good leadership here after the dinkins fiasco. this year we are even getting a tax break including a 5% rebate on property taxes. can’t say the same thing for the burbs around here.
“‘Since you have 200 homes on the market which aren’t selling, what makes you think these 200 are going to sell?’ he said.”
is he socrates?
Don’t forget what happened to the original Socrates.
Maybe that’s why they weren’t called Hemlock Estates?
The Massachusetts foreclosures have been a real disappointment so far. Rates have doubled, but there were so few to begin with it does not mean much yet. People who made money the last time around were buying REO and RTC properties… I guess there will be at least another year before we see that.
Be patient, it’s just picking up steam now. The foreclosure rate is accelerating.
I have a question on REOs…
If the mortgage has been sold to investors (pension funds, China), and the house gets foreclosed, but not sold at auction, who ends up selling the REO’s house? Does it belong to the investors? If so, who determines the price? Does the bank have a ’service contract’ to sell the house for the investors?
Point being, who determines the selling price of a house when the mortgage is owned by investors?
Change “REO’s” to “REO’d”.
I imagine whoever is servicing the loan will need to arrange for the disposition of the underlying asset and recover whatever there is to salvage of the principal.
we have discussed this before I think. The ans was the loan servicing company will it for the bag holders for fee.
The bag holders could be CHina, Pension funds etc.
When it is one and twos, there will not be much reduction in price for the same reason. Out of 10000 loans one or two going bad will not put pressure on the bag holders
Also there is question of those wholding first and those holding second. THose holding second may be in a hurry to initiate foreclosure to get those holding the first to buy out .
well some other experts might have a more details to add
RE: Bag-holders…
I saw one VA foreclosure in which somebody forgot to order a winterization for the the property
The HWBB pipes burst and flooded the carpeted finished basement.
Asset disposition took so long, the entire interior was consumed by mold by the time the VA sent me over for an inspection.
Cost to cure was like $100k.
Your federal tax money in action.
we have discussed this before I think. The ans was the loan servicing company will it for the bag holders for fee.
The bag holders could be CHina, Pension funds etc.
When it is one and twos, there will not be much reduction in price for the same reason. Out of 10000 loans one or two going bad will not put pressure on the bag holders
Also there is question of those wholding first and those holding second. THose holding second may be in a hurry to initiate foreclosure to get those holding the first to buy out .
well some other exports might have a more details to add
Your question only appears simple. First, bids at foreclosures can be and are assigned all the time. Whoever actually bid the note in might not be the person who actually takes the title back. There are actually two basic outcomes where a lender gets no other bidders at a sale: 1) The lender takes the property back themselves for whatever they bid, thereby crediting that amount against the note owed by the borrower and gaining title, or 2) the lender cuts a deal or has a pre-existing arrangement with a third party, who strokes a check to the lender, gets an assignment of the bid and walks away with the title to the property. Only the first situation seems relevant to your question.
A foreclosure changes the nature of the asset from a negotiable instrument (note secured by mortgage) into owned real estate. Any deficiency between what was owed on the note and what was bid for the property at the sale can be sued for (in most states) and that deficiency is converted into a judgment lien against other assets owned by the former borrower. All of these issues are separate from the REO calculations.
As far as the REO department is concerned, none of the foregoing matters at all. Sure, they’d like to maximize the recovery on the property, but it’s not really their problem if the property is worth $100,000.00 less than the original mortgage (that was an underwriting problem at the time the loan was issued). Their only task in REO is to liquidate the real estate asset and to get the best price they can within whatever timelines their lender requires.
Whether investors get a say in this type of matter depends heavily on the nature of their investment. If they are a shareholder of a corporation or LLC, they might launch a shareholder derivative lawsuit if they feel that assets are being wasted or sacrificed improperly. People who simply bought into loan pools as investors might not get any say at all or they might have voting rights. Managers of funds or pools can direct the general terms and conditions for REO sales and can put floors or percentage requirements in play if they so choose, but this is not generally done. The market is what it is, the best price possible under the circumstances tends to be what it is, and everyone moves on.
the investors own a security that is traded like a stock or another bond and there is a cash flow element where the servicing company pays them the interest and principal it collects while keeping the fee. each MBS is a separate legal entity.
my guess is if there is a foreclosure, the value of the MBS drops by whatever amount and the proceeds from the sale are given to the investors of the MBS
Blog Jargon - I can usually puzzle out the acronyms, but could somebody help me out with REO?
REO = Real Estate Owned, the term for real estate that has gone back to the bank after no one picks it up at the foreclosure auction.
much appreciated - I thought it was something like that, but my editor’s brain wanted some othe noun in there somewhere.
much appreciated - I thought it was something like that, but my editor’s brain wanted some other noun in there somewhere.
Be patient. Look at some of the numbers in the 3rd article. Foreclosures in Q4: 6,525 (annual rate of 26,100).
% Increase in foreclosures from Q3 to Q4: 33%
Now, the numbers we need to see are those for foreclosures that end up at auction. I don’t see those in these articles, but those are the important ones. However, it looks like MA is on the same path as CA, and the numbers in CA are rising dramatically (both NODs and actual foreclosures, with the percentage of NODs ending in foreclosure up very significantly).
This will take some time, as the foreclosure process is pretty slow, but it will happen. It is inevitable, as the neg am, I/O and other loans were taken out and are starting to reset. Many more resets are coming in 2007, so there’s no reason to suspect that the foreclosure numbers will not keep rising significantly.
The foreclosures won’t have any significant effect on values, though, until they hit a critical mass. Usually, that critical mass is determined by a particular lender having too many REOs and getting pressured by the regulators to get them off the books. This will happen, the only question is when. Personally, I think that it will START to happen by summer of this year, but prices will move unevenly for quite awhile and it will take a couple of years (from the time the REOs start to exert significant price pressure) to reach near the bottom (where the actual bottom is will be anyone’s guess). I acknowledge that I could be off on the timing, and I’m just giving my two cents. But the moral of the story is, be patient - foreclosures are picking up rapidly and will continue to do so, and they will start to have a significant effect on prices later this year.
The builders are one-trick ponies. They don’t do anything other than… build. It’s not like they’re part-time realtors with other jobs. They can’t let their crews go work for other builders, they can’t suddenly tell their lenders or creditors that they’re suspending their operations, they literally must keep building. They’ve gotten on a rocket and they’re riding it to the end.
Maybe that’s why they call them “builders”?
Kia,
understood, but can’t they cut back to just skeleton crews, and use the few guys they keep to maintain unsold inventory? After all, there’s probably only a few crew guys with real skills, the rest are illegals. And none of them are going to work for the comptitiion since the competition is in the same bind. I can understand the creditors and lenders getting antsy, but what’s the alternative–if they keep building, they’ll end up with more REOs on their hands, driving down the prices of the rest of the unsold inventory.
I understand the theory, but the reality as I understand it is this: you can’t take your roofers, your plumbers, your drywallers, your electricians, and your siding crews and tell them all to start cutting the grass and maintaining the subdivision they just built for minimum wage. They won’t do it - or at least they won’t do it for less than their normal wages as skilled professionals. They will go find other work or take a holiday first.
Plus, who wants thousands of illegals wandering around looking for work or, eventually, desperate for food?
No, as long as the credit lines hold out and the stock prices stay pay, the management isn’t going to do anything other than keep on building. It’s the same thing with China. Hundreds, no, thousands of factories all making the same shirts, shoes, etc., etc. and none of them changing to do anything else. Net result? Flooded textile and clothing sectors with depressed prices such that nobody gets a decent profit anymore. This, too, shall come to pass in the housing sector. Bonus: consumers love it!
They’ve gotten on a rocket and they’re riding it to the end.
Last housing recession, these guys got their clocks cleaned by the score.
This bust will be infinitely worse, because the lack of other decent paying of jobs caused thousand to flood into the biz.
If it’s such a horrible year for mass then why do homes still sell a good 70 percent more than just a few years ago? The foreclosure numbers sound bad but compare it ot the large mass population and the mumbers aren’t so impressive. Maybe the worse will come but there ain’t any panic and crash underway. Nothing even close to the late 80’s crash.
Nothing even close to the late 80’s crash.
Yet. Remember, housing is always sticky on the way down. You will never see a NASDAQ-style crash in RE because it’s a relatively opaque, illiquid market and because of long lag times and a snail-slow transaction process. Then factor in the large differentials in when FBs bought and what type of option-ARM used (2/30, 5/30, 7/30, 10/30, etc.) and you can see that they won’t all get hit with a reset notice at the same time.
Check back in 2010.
Agree and the recovery will be slow too as it is a much more illiquid market compared to stocks. Probably same prices levels 10 years from now.
‘Maybe the worse will come but there ain’t any panic and crash underway. Nothing even close to the late 80’s crash.’
‘Foreclosures increased statewide by 69.56% over 2005 levels (19,487 v. 11,493). Foreclosures have more than doubled since 2004, increasing by 124.27% (19,487 v. 8,689). More foreclosures were filed in Q4 of 2006 (6,525) than any previous quarter since ForeclosuresMass.com began tracking data in 2003. Foreclosure filings in Q4 jumped a staggering 33% above Q3 of 2006.’
One could argue this looks like a crash. I would prefer it if everyone just lowered their prices, but as we have seen, that isn’t how things usually work.
The problem is that there were nearly no foreclosures in 2003 - so much money sloshing around from the big dig and cheap loans (mostly 80/20s, few ARMs, and no interest-only at that point)that anyone could easily sell their house to avoid foreclosure.
I have asked all the old-timers about the ‘89-’93 period, and have heard of times when 20 (tabloid size) pages in the Boston Herald each day were filled with foreclosure notices (each foreclosure needing four advertisements minimum). 2003-2005 saw maybe 1 or 2 advertisements per issue. Now you maybe have a page full of seven or eight advertisements. That’s it.
A lot of smart-ass, knife-catching money is starting to bid in on these still low foreclosure numbers. There won’t be any deals until this last iteration of fools is tapped out.
Agreed. I just ran into another person yesterday who indicated that they wanted to get a property and flip it. I said “to who?” Perhaps the pool of greater fools is deeper than I though.
/ in which case, the pool definitely needs more chlorine
No one will voluntarily lower prices. It takes distress sales to accomplish this. Enough distressed properties on the market and we will start to see meaningful price reductions. In many areas prices went up 200 - 300% in just five years. A 5% reduction hardly seems like a drop in the bucket
300% is definitely NYC. That’s why I’m predicting -25 to -50 percent from 2005 by 2010.
As other’s have pointed out, RE is incredibly illiquid in a decline.
Borrowers have no incentive to try and sell at anything other than a number higher than their debt. If they can’t get it, they can’t get it. Consequently, from these sellers, no pricing decline will occur. When the lender decides to liquidate, rather than wait, then some momentum will begin but, even then, their urgency will be shaped by the same factors as other sellers, no?
Other sellers, however, have varying degrees of urgency to sell. The temptation will always be to wait longer. As we’ve seen here, there’s plenty of “expert” opinion that prices have only gone down a little and that they’ll soon “bottom”. Who’s a seller to believe? The optimist or the pessimist? Most, with so much on the line, will certainly lean towards the bias that suits their pocketbook. Realize as well, many of these decisions involve more than just one person. Spouses conflict over plenty of things, would they not easily conflict over the right pricing strategy, the right market outlook, for their largest “asset”?
A lot of people relate to anecdotes. In my area of Boston I can point to $100-$150k declines in asking prices on $700 to $500 homes. I can also point to a recent sale of a $700+ property virtually at asking price that, frankly, looks like a dump. So what’s the state of the market from an anecdotal perspective? Some properties are stagnant, others aren’t. So, why wouldn’t your property be among the winners who find dumb buyers?
The question that should always be asked is what might change that will fundamentally improve the direction of this market? Will interest rates fall? Will incomes or job growth in an area improve rapidly? Will population growth rapidly absorb the vacancies? Will loans be easier to get?
Name an area without significant vacancies (or more planned development). Name employers in those areas on the verge of explosive growth. Maybe they exist, I just don’t know of them either in the nation or in the New England area.
The reason you don’t “hear” or “see” panic yet is because very few people tell others of their financial difficulties. Everyone hopes something will “come up” or that they’ll win the lottery. As these stories emerge, however, it will gradually become “acceptible” to “share” your bad experience. Misery loves company, no? So they’ll begin to snowball and as that “reality” becomes accepted so will the fact that you’d better beat someone elses price if you ever hope to sell.
Very well said all the way down the line
“The reason you don’t “hear” or “see” panic yet is because very few people tell others of their financial difficulties.”
Great point. For a society obsessed with money, money remains the ultimate taboo subject.
Has anyone ever snagged a glimpse of a coworker’s or friend’s pay stub? Have you ever been surprised on the upside? I haven’t - not even once.
So, why wouldn’t your property be among the winners who find dumb buyers?
No mortgage fraud scammers came along.
Gospel. Your last paragraph reminded me of this article I read…
http://www.nytimes.com/2007/02/03/business/03shortcuts.html?pagewanted=1&_r=2&adxnnl=0&ref=business&adxnnlx=1170518881-Fqg7ult0YCKKOIZrrAJtRw
Thing is, the houses and condos (especially condos) are *not* selling. The prices are simply too high, and the entry-level buyers are not there, so the move-up buyers can’t sell their first homes and move up.
Anecdotally there are houses all over my neighborhood that have been for sale for months or even over a year, houses taken off the market and relisted, etc. This is a “move-up” neighborhood in a town with great schools, with prices starting at about $550K for a 20-40 year old 3 to 4BR house, $700K for a non-new McMansion, $800K for a new McMansion. And I am just not seeing the “SOLD!” signs at all.
But it’s different in the Hamptons. Not.
According to Saatchi, business started picking up in earnest in November. Rentals, in particular, flew off the market. Many of the most sought-after spots — including ocean- and pond-front homes in the blue-chip neighborhoods — are already gone, Saatchi said. One recent listing in Bridgehampton, asking $175,000 for the month of August, was snatched up the same weekend it was listed, she said.
http://www.therealdeal.net/issues/FEBRUARY_2007/1170198319.php
Actually, the reason rentals are hot is people are NOT buying. Anyone with any sense of Long Island RE knows prices out there are going to come way down.
There are 6M people in Mass. So 20K foreclosures is probably about 1% of the houses, maybe 1.5%.
You need much higher than that to really crater things, IMO.
Wouldn’t you want to compare foreclosures to annual sales or something to guage the magnitude of foreclosures? The entire housing stock is not the market; only what transacts is the market.
I thought the same thing, why would you factor in ALL of the poputlation? I dont think Shamequa and her seven illigetimate children are in the pool of home buyers. Nor, all the retired folk wasting away anticipating god’s chalet in the sky.
MD: I think that for the last couple of years it has precisely been Shamequa, their 7 illegtimate children, and fathers the ones doing most of the buying…. After all, it is their shot at the american dream, just plunk down 500K on a nice suburban house, get 100K cash back at closing, and have a nice 12 months with a 1% teaser rate (that is 5K a year, or 1/2 of their old rent) living the american dream… Never worry about that scary monster in the closet called ARM reset, and Negative amortization, because what the hell is that.
The BK court would look something like: Sorry your honor, this bad Mortgage broker lied to me, and told me that the rate was for 30 years, and that I could make my money up in appreciation…. No your honor, I do not have a stable job, and I have 7 kids to feed, you see, and I do not know who the father of anyone of them is….
No, your honor, I have never held a job for more than a couple fo weeks, because I have a bad stress condition. It stresses me to see people better off than me, even though I never graduated from HS. What do you mean that I have to pay all that back by WORKING!!! How long will that take me at 5.25 per hour? Ohhh. That is too long…
Don’t compare the number of foreclosures to the number of homes, compare it to the inventory of homes for sale. That’s the relevant number here
But that number represents on average 20/25% of all homes sold in a typical year, say 5% of total stock. That kind of sales displacement will greatly affect prices at the margin, where all such effects occur.
Yes, that’s a good point.
If 10% of houses sell yearly then it’s 10-15% added to supply which must be sold at any price.
I think the population is actualy declining in Mass. So how did house prices ever get that expensive? The state should be priced like western NY, at least western Mass.
Like a lot of the country, the wealthy are doing quite well in Massachusetts. There are also a lot of well-educated professional who are credit-worthy and able to reach to purchase otherwise overpriced homes. There also is a secret people here do not want the rest of the country to know, which is that a lot of the public schools are not very good. So, there is intense competition to get into a town with school districts in the top 30%, which in terms of population are less than 10% of the schools.
There is a real panic among the middle class and upper-middle class, as they can see a real risk for their children being left behind in the new economy.
The only thing keeping population from declining is immigration. The 2000 census figures were recently adjusted and now indicate a very small gain in population in Mass.
The schools issue is *huge* here. Towns with a good school district demand a huge premium. School districts (and town governments for that matter) are finding themselves paying more and more for benefits (especially health insurance) for employees and retirees.
If schools are such an issue, why not rent instead of buying in those towns? Rents are still moderate where I live, and the town itself has one of the better school systems around here… The school system mantra is the same as we are running out of land mantra… Somehow even in uber dense settings, it is posible to build higher, and accomodate almost as many people as you want. Think Le Corbusier, and high density living…
Pop 2 1/2 will be the next issue, as energy and health care costs are rising at a few multiples of 2 1/2 percent, and local aid is not going to bail the towns out for budget year 2008. When I was in town meeting in Brookline they just laughed at local aid - it made up 5% of the budget. Not so for the have-not towns. My prediction is that the top 30% towns will hold fairly steady, and the rest of the state will crash.
My prediction is that the top 30% towns will hold fairly steady, and the rest of the state will crash.
I agree…Northshore and inner 128 area to the west of Boston will be the survivors.
For the 4th qt in Mass:
For each 2 homes sold, one home received a foreclosure letter.
For all of 2006:
For each 3.2 homes sold, one received a foreclosure letter.
For all of 2004:
The ration was 8.1 homes sold for each getting a foreclosure letter
ratio
It will be the builders leading the way down, followed by non-distressed sellers, REO’s, then distressed sellers.
- Builders have to move inventory to pay off their interest expenses
- Non-distressed sellers normally bought low and have plenty of equity, so they can cut prices
- REO’s I have seen so far are priced above comps. This will likely change if/when the mass of foreclosures come due to resets
- FB’s cannot afford to cut prices will will hope that a GF bails them out. It’s kind of like the fools who bought tech stocks in March 2000 and got wiped out.
Along those lines, 30,000 new housing units is only a 1% increase in New York City’s supply. Nonetheless, this does represent a big change for the city, which has been a demand and lack of demand market, rather than a supply and demand market. This will be the first time in 40 years supply joins the equation.
kind of funny, but when i was in the army with guys from the south and midwest, my high school graduating class was larger than most people’s high schools and a lot of people’s hometowns.
hell, the public transit here carries more people per day than the populations of most states
95% of the public here in NYC that rides the MTA cannot afford any of those new 30,000 units.
30,000 may be 1% of the total units, but it makes up a MUCH greater part of the units on the market, right? Feels like that’s going to have a pretty big impact. Either depressing prices or lowering rents as these things get dumped onto the rental market.
Dont forget it’s 30,000 units where the average price is probably around $1M a pop.
Most are already stretched to afford these new condos with 5 or 10% down. These aint co-ops. Rare are the condos that require 20% down. and thsoe typically cater to the ridiculous high end where people are dropping $3M-4M pand up on 3000 sf lofts or aprtments.
So who’s going to buy them? Will they just languish?
The words “National Housing Crisis” will be uttered on July 1.
Bold claim. Nature of crisis?
Build it and the Repo-man man will come !
So many articles have is statement provided by NAR
“Price is everything right now” No Sh!t Sherlock
Nice video link from KirkH
How true
Brian Tuttle is on Bloomberg right now! Wow, shown getting out of his SUV, horses trotting on his land. Very interesting to see him in person.