The Housing Bubble

The Greenwich Citizen reports from Connecticut. “Everyone loves a bargain, especially on the largest purchase they’ll typically make — real estate. Here are some Greenwich sales recently recorded that may surprise you: Fourty-seven Locust Street, a six bedroom, three bath downtown triplex appraised by the town for tax purposes at more than $1 million was recently purchased from the lender for $411,900 after having been held for over a year by the lender, J.P. Morgan Chase Bank.”

“Another bank-owned property in Riverside was recently sold for $600,000, which equates to 63 percent of its tax-appraised value. The property had been marketed by two different realtors, the first starting at $1,150,000 and the second starting at $674,900.”

“This Week’s Success Quote: ‘A bargain is in its very essence a hostile transaction; do not all men try to abate the price of all they buy? I contend that a bargain even between brethren is a declaration of war.’ — Lord Byron.”

The Cape Cod Times in Massachusetts. “Cape Cod continued along an uneven road toward economic recovery this spring. Condominium sales also suffered this spring, declining by 47 percent as compared to the same period last year, according to The Warren Group’s numbers. Steve Clay, a Falmouth agent with Real Estate Associates who specializes in condo sales, said he has not seen drop-offs that severe. But he acknowledged that the Cape Cod condo market is not thriving.”

“‘Now the price on houses has come down so much that they — particularly younger buyers — are much more inclined to go with a house than a condo,’ he said.”

“The drop-off in sales this year may not reflect a lack of interested buyers, said Deborah Garner, owner of Century 21 Cape Sails in Sandwich. ‘A lot of buyers are out looking at the opportunities that they’re seeing and realizing that the prices today are those of yesteryear and if they’re going to do anything they’d better step up to the plate and do it soon,’ she said.”

The Kennebec Journal in Maine. “If you are behind on your mortgage and in jeopardy of losing your home, you have until the end of the week to apply for federal assistance. The Kennebec Valley Community Action Program is taking pre-application screening worksheets for the Emergency Homeowner Loan Program, a federal program authorized by the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law by President Obama in 2010.”

“KVCAP’s program manager, Casey Bromberg, said 319 households in Maine will leverage $10.3 million in funds — an average of approximately $32,000 — to, hopefully, catch up on languishing mortgage payments. Bromberg said more than 200 applications have come in to KVCAP, but there are only 134 spots to allocate in the program.”

“And foreclosures are a problem in Maine — there have been 1,879 filings here in 2011 and 72 of the houses have been sold, according to Realtytrac. This June, the website says, 51 filings have popped up in Kennebec County alone.”

GlobeSt on New York. “Properties once hindered by the credit crisis–like a stalled market-rate condominium project at 23-10 41st Avenue in Long Island City, Queens–is now getting a major overhaul. Under the Housing Asset Renewal Program (HARP) of the New York City Department of Housing Preservation & Development, local officials announced on Monday that the formerly stalled site will be transformed into Queensboro, a 117-unit apartment complex targeted toward middle-income New York families.”

“The property is the second to be revamped under HARP, a $20 million pilot program administered by the city’s HPD, which focuses on turning newly-completed projects that are vacant and projects that have stalled mid-construction into affordable housing opportunities. AM Holding of NY Corp. acquired the site for redevelopment in September 2005. After spending a total of $9.7 million on the original condo project the project stalled, and was sold to Queensboro Development LLC for $6.4 million in June 2009, says the HPD.”

Crain’s New York Business. “Sales are officially resuming at the Setai Wall Street, a once-troubled financial district condo conversion now under direction of Synergy New York, a marketing firm retained by the project’s developer, Zamir Equities. The remaining units will be sold for roughly 16% less than the original prices set three years ago.”

“Currently, one bedrooms start at $750,000, two bedrooms start at $930,000 and penthouses start at $1.2 million. The average price per square foot is $1,090, but that figure is slightly inflated since many of the remaining units are large penthouses, noted Elie Pariente, a principal at Synergy. Even then, the price is far below the $1,300 per square foot the developer first hoped to get when the project was conceived, pre-Lehman Brothers collapse, said Mr. Pariente.”

“Synergy has 35 to 40 units left to sell, Mr. Pariente says, noting that a few contracts have been sent out this past week. The units had to be re-priced ‘to match today’s market,’ he said.”

The Press of Atlantic City in New Jersey. “Distressed properties have been the big story of the real estate market since the housing bubble collapsed nearly four years ago. With so many houses already owned by banks and many more at risk of foreclosure — 2 million total, according to RealtyTrac — the pressure to sell them promises prices below their true market value.”

“The three-bedroom, one-bath house in sparsely populated western Mays Landing, is an example of what the bargain hunters are seeking. RealtyTrac roughly estimates the house is worth $167,000. Current price? $45,390, said Daniel Boddy, the agent with Century 21 Frick Realtors in Galloway Township who is handling the sale for the bank.”

“Boddy laughed when told the estimated value. He said the bank listed the property at $60,000 when it first hit the market 83 days ago. ‘The bank’s looking to move it and will keep dropping the price until somebody picks it up,’ he said.”

“A specialist in bank-owned properties, Boddy said he doesn’t know whether they are good deals or not. This one seems so, but he’s probably seen better. ‘You can’t beat getting a house for under 50 grand that you can definitely move into,’ he said. ‘But then, I sold one in Atlantic City for 20 grand, and it wasn’t as bad as you would think.’”

“Jean Ball, of Galloway Township, is also a specialist in bank-owned properties, called REOs in the industry for ‘real-estate owned.’ For most of the 17 years she’s worked on bank-owned properties, they were a tiny fraction of the market. The foreclosure crisis has made her a top-seller. Or at least she was until the New Jersey judicial system essentially stopped foreclosure processing — a legal matter in New Jersey and 20 other states — to ensure more thorough legal and court review following the robo-signing controversy at some lenders.”

“‘We were seeing a big increase until the courts stopped them in December,’ Ball said. ‘Once the properties are reviewed by the courts and released by the state, the market will be flooded.’”

“Greg Schenker, an agent with Balsley Losco in Northfield, said the distressed properties have already caused the market to overshoot on price reductions. He said the quality of the houses available as short sales and bank repossessions has gone down, but buyers are nonetheless comparing prices on such distressed properties to regular homes. ‘They don’t compare apples to apples. They figure if it has the same number of beds and baths it should be the same price,’ Schenker said, even though the nondistressed property might have a new heating and air conditioning system, a fireplace and other amenities.”

“‘I didn’t think I’d ever see the day when a three-bedroom rancher would be worth less than $150,000, yet you see people who only want to give you $130,000 for them,’ said Schenker of Folsom.”

The Marlton Sun in New Jersey. “With recent reports stating that promising signs have been seen in the national real estate market, many homeowners looking to sell may be wondering where exactly those signs are as each day of their contract passes without a buyer. According to Mark McKenna of Pat McKenna Realtors, there’s a 99.9 percent chance the problem is the asking price.”

“He said, despite the fact that a real turnaround in the real estate market is at least another year or two away, a home that basically looks good and is priced right should sell in a short period of time. ‘It’s kind of a funny market because if a house is priced right and it looks good, it sells in two weeks,’ McKenna, based in Marlton, said. ‘If it’s not priced right, it sits there for a good six months. Pricing is key out of the gate.’”

“Realtor Dave Lewis also shared the same advice as McKenna, stressing that homes need to be priced at, or even below, market value. Appearance is also a deal maker or breaker. ‘Since there are so many homes on the market, people pick the creampuffs,’ he said. ‘Your home has to be in really good shape.’”

McKenna added that an up-to-date appraisal is key to knowing what a house should be priced at. In his area, McKenna is currently seeing average sale prices in the area of $320,000. He said that a ‘normal’ housing market doesn’t exist anymore, so it’s important not to look too far into a comparison of that amount to previous years.”

“Diane Streichert, CEO of the Burlington/Camden County Association of Realtors, reiterated Lewis’ thoughts. She also stressed that now is not the time to try and sell your home on your own because you need to take the advice of an experienced Realtor. ‘Looking at these statistics, I think we’re going to plod along,’ Streichert said. ‘We’re really at the same place we were last year. We went up in the fall last year, so we have that chance again this year, but then in the fourth quarter it came back down.’”

“‘We’re not going to see what we saw before when everything just skyrocketed up (during the market’s peak),’ she added.”