The Housing Bubble

The Times Picayune reports on Louisiana. “The average price per square foot of homes in the New Orleans area fell 5 percent in the first half of this year, according to new data from the New Orleans Metropolitan Association of Realtors. All parishes except Orleans have entered their fourth year of declining prices, and any appreciation in home values after Hurricane Katrina has been erased. Mary Vastola, manager of the West Bank location for Coldwell Banker TEC Realtors, said the excess supply of homes is dizzying for buyers and makes it harder to close deals.”

“‘We have an oversupply of real estate inventory. There’s too much for the buyers to choose. They lowball the offer — and if you don’t take it, then they’ll move on to another house,’ she said.”

“Signs of distress are mounting in the New Orleans area real estate market. The collective financial shock of multiple disasters, the run-up and correction in real estate prices after Katrina and ongoing job losses are starting to manifest themselves, said Wade Ragas, president of the Metairie research firm Real Property Associates. ‘Foreclosures will become a bigger and bigger story over the next few years,’ Ragas said. ‘Could we get into a mess with a lot more foreclosed assets? Yeah.’”

First Arkansas News. “The numbers from northwest Arkansas are in and they show that sales in July this year were up considerably over those in the same month a year ago. ‘The good news is that year over year and for the month of July the number of homes sold in the region has increased significantly,’ said Eric Harris, a Realtor with Weichert Realtors - Downum Group in Springdale. ‘Bad for sellers and great for buyers is the sale price per square foot which dipped below $70 in the month of July 2011. Price wise it is definitely a buyer’s market and a great time to buy a new home. With mortgage rates still at great rates, real estate is definitely on sale.’”

The Star Telegram in Texas. “The Mortgage Bankers Association reported that the number of Texans falling behind on their mortgage payments rose 5.2 percent at the end of the end of the second quarter, indicating that more problems may be ahead. ‘Upside-down postings have surged 34 percent over the past year, with 28 percent of the homes posted so far this year involving homes in this no-win situation,’ said George Roddy Sr., president of the Foreclosure Listing Service. ‘Whether you call it upside-down or underwater, it means the same thing — trouble.’”

“Of the homes posted so far this year for foreclosure, Roddy found that 4,210 homeowners in Tarrant County were upside-down on their mortgages, a 44 percent increase from 2010. Statewide, the delinquency rate for residential mortgage loans in Texas was 8.43 percent in the second quarter, slightly higher than the national rate of 8.11 percent.”

The American Statesman in Texas. “Foreclosure listings have dropped to their lowest quarterly level in 2½ years in Central Texas. Postings have dropped because ‘the foreclosure process is in chaos,’ said Peter Sajovich, a local real estate broker.”

“Lenders increasingly are opting for short sales, in which they agree to accept less for a property than the balance owed , ‘while the legal process tries to come up with an equitable solution’ for so-called robo signing, in which lenders were foreclosing on owners without having proper documentation , Sajovich said.”

“‘By the time lenders actually get around to selling the properties, there is very little or no equity left,’ Sajovich said.”

The Express News in Texas. “Bexar County foreclosure postings took a dip this summer. ‘Foreclosure numbers are down everywhere because of the procedural stuff with institutions,’ said James Gaines, research economist with the Real Estate Center at Texas A&M. ‘We expect a splurge at some point.’”

“So far this year, 11,328 properties have been posted for foreclosure, compared with 12,641 for the same three quarters in 2010.”

Laurin Darnell, division president for Centex in San Antonio, said the biggest hurdle in the market now isn’t finding willing buyers — it’s getting them qualified for a mortgage loan. ‘Now the challenge these days tends to be getting people qualified for the loan,’ Darnell said. ‘Everyone is much more risk-averse.’”

“Gay Guilott, president of Guilott Realty, said Bandera County is feeling the effects of the drought, particularly when it comes to waterfront properties. Guilott said buyers of both single-family homes and rural property have the ability to be particular. ‘The buyers are still out there but slow to make decisions because they want the best deal,’ Guilott said.”

“The home-building market remains slower than it was a few years ago, with most of the activity for customers who want a custom home on a particular lot or piece of property. ‘It’s mainly custom jobs,’ she said. ‘The spec builders have really slowed down.’”

The Seguin Gazette in Texas. “While the national housing market is dragging, locals say the picture in Seguin is a bit brighter. Gloria Elder, a broker associate with Karen McMillan Realtors, said Seguin area’s housing market, particularly for new and lower-priced homes, is strong. ‘I don’t think we’ve ever been where the national market is, not in Texas and certainly not in this area,’ she said. ‘Our economy is good and our outlook is even better.’”

“In Seguin, a local custom builder said that business for his family’s company has slowed, but lower-priced homes seem to be selling quickly. ‘Usually, we’d have 10 to 12 houses being built and right now we have three,’ said Manuel Moreno III, construction manager at Moreno Construction.”

The Lufkin Daily News in Texas. “At least half of all households in Angelina County are not worried about how they will pay the house note next month, for one simple reason: They don’t have one. Robert Telford, president of The Advanced Financial Group in Lufkin, said he was not surprised by the numbers of paid-off homes here, considering the financial situation of most of his firm’s clients.”

“‘If they’re 55, generally speaking, they may not have paid it off,’ he said. ‘But between 60 and 65, most of the people we deal with — the majority, by far — do not owe anything on their house. That’s been part of their game plan; they’ve been paying on it for 25 or 30 years.’”

“Joe Pase and his wife, Nancy, paid off a home in Southeast Lufkin in 2002, two years after building it and moving into it, largely using funds from the sale of their previous (and also paid-for) home. ‘My wife and I, thankfully, are completely debt-free,’ Pase said. ‘This has been our philosophy for the 35 years we have been married. Except for home mortgages, we have had no other debt. The 30-year loan on our first home was paid off in 15 years.’”

“When you drill down into the new Census data, some other interesting statistics stand out. For starters, one in five housing units in the county were vacant in 2010. Across Texas, there are 77,853 more vacant housing units than there were in 2000 — an increase of 38.4 percent. Jim Gaines, the housing expert at the Texas Real Estate Center, said the number of ‘other vacant’ units has doubled nationally over the last three years. Many homes may still have people living in them, but are in the process of going through foreclosures. That’s a concern, Gaines said.”

“‘That’s the ‘shadow inventory’ that kind of hovers over our economy right now,’ he said. ‘We don’t know how to react to it.’”

The Oklahoman. “with mortgage interest rates drilling even lower into the historical record, anyone who hasn’t yet refinanced a loan, and can, surely will, lenders said. Mortgage banker Scott Senner of Edmond’s First Commercial Bank welcomed the coverage — as an antidote to what he called negative and inaccurate national news stories that are unnecessarily spooking people.”

“‘Even some of my own past customers have been poisoned by the national stories telling them that qualifying is super hard and they need tons of equity to do anything,’ Senner said. ‘While it is true that mortgage lenders have tightened up on credit requirements over the last few years, the minimum credit score required to qualify for a home loan is still only 620.’”

“‘The minimum amount of money required for a down payment on FHA (Federal Housing Administration-backed loans), the most popular type of financing in Oklahoma, is still only 3.5 percent of the purchase price. In addition to that, there is still plenty of first-time homebuyer bond money available which enables qualified buyers the opportunity to buy with no money down. Veterans Administration loans are also available to active-duty, reserve-duty and retired veterans with no money down,’ he said.”

“‘Some national stories would have would-be homebuyers believe that 20 percent down and perfect credit is required to buy a home; those stories are completely untrue.’”