The Housing Bubble

The Tri-County Times reports from Michigan. “In Michigan, foreclosure filings were reported on one out of every 322 housing units in September 2011, according to RealtyTrac. This statistic also makes it very possible that one doesn’t have to look far to find someone who is going through this process. A 56-year-old Fenton Township woman has weathered the foreclosure process and has chosen to stay positive about the experience, despite losing her home that she and her husband shared for more than 30 years with their two sons. She and her husband are on disability.”

“By October 2010, the woman was six months behind on their mortgage payments. She attempted an in-house loan modification but she turned it down when the bank tacked on an additional $25,000 to the principal of her loan to cover their fees. Had she agreed to the $185,000, her monthly payment would only have been lowered by $40. The woman and her husband and their youngest son are now comfortable in their apartment. Their place is handicap accessible and they were allowed to keep their dog and cat. ‘It’s been a blessing in disguise, but it was devastating,’ she said.”

“On Thursday, the woman learned that her home had been put on the market for $68,000. This is a stark contrast to her being given an offer to buy it back from the bank between January and July for $185,000. ‘I am just so sick,’ she said. ‘Why couldn’t they have worked with us?’ She said there was no way for she and her husband to try to buy it back, even at the new low price because they sold everything they needed to maintain the home and 1½ acres of property.”

New Net 5 in Ohio. “A startling preview of a study by the Federal Reserve Bank of Cleveland shows the worst from the housing crisis may be on the way. The report projects a dramatic loss in the Cuyahoga County property tax base. Former Cuyahoga County Treasurer Jim Rokakis blamed a big part of the loss on vacant/condemned homes dragging down property values.”

“‘We’re feeling the impact everyday,’ said Rokakis. ‘We’re feeling it in reduced sale prices, and we’re feeling it in a destabilized real estate market that seems to have no end.’”

“Cleveland Councilman Tony Brancatelli said he believes federal funding must be found to take down an estimated 30,000 vacant homes in the next three years. ‘We’re seeing the loss of value in real estate at incredible level,’ said Brancatelli. ‘So until we take these toxic assets down, we’re going to see a huge loss of value.’”

The Courier Journal on Indiana. “She has lost two sales and marketing jobs in the past three years, exhausted 99 weeks of unemployment benefits and liquidated her 401(k) retirement account. To help pay bills and condo association fees, she raised a few hundred dollars by pawning the diamond engagement ring her late fiancee had given her. Now working again, but at about half her former pay, 58-year-old Pamela Williams is having her mortgage paid by a new government program that she says is the only thing keeping Bank of America from foreclosing on her eastern Jefferson County patio home.”

“The main requirement for the Kentucky and Indiana programs is that borrowers have lost jobs or had to take a job that pays less. One concern is that homeowners won’t be able to find work and take over the payments before the assistance ends, said University of Kentucky economist Ken Troske. If not, lenders can still foreclose, and the tax dollars will have gone to waste, he said.”

“Sharon Thompson is trying to hang on to the three-bedroom house she bought in Crestwood in 2006. Thompson said she has been on several interviews, but the competition is tough, and the economy doesn’t seem to be getting better. ‘If I can’t find a decent job, what’s going to happen if I take a job paying $10 an hour? I am going to be in the same situation, and that weighs heavily on my mind,’ she said.”

“Williams said she used to earn more than $60,000 but now makes about half that with her new health care sales job. She acknowledged that she may eventually have to move from the $205,000, 3-bedroom patio home that she has had for 10 years. But Williams sees potential for more income in her new job and hopes to get back on track by next fall, when the assistance should end. ‘If it comes time for me to leave, I want to leave on my own terms,’ she said.”

From Minnesota Daily. “Before 2007, there were roughly 5,000 and 6,000 foreclosures in Minnesota per year. Numbers have since increased about 400 percent, said Julie Gugin, executive director of the Minnesota Home Ownership Center. Bankruptcy attorney Ian Ball pointed to past practices of lending and borrowing, which added to the number of foreclosure sales in the state. Temporary financing was given to people who sometimes couldn’t afford their homes, he said, making it nearly impossible for some homeowners to pay off their mortgages.”

“‘There are a lot of consumers who unfortunately got in over their heads, and there was a lending industry that helped them jump into the deep end of the pool,’ he said. ‘Some can swim, and a lot couldn’t.’”

“Ball said while lending practices capitalized on the average homeowner in recent years, it is something the market has seen before — a housing bubble in the early 1980s made more Americans into homeowners than ever before. ‘There’s a lot of finger pointing going around,’ he said. ‘Sure, the banks and mortgage lenders had a significant role in encouraging homeowners to take out loans … but you also need a borrower to make a loan.’”

The Associated Press on Iowa. “53% of boomers polled said they do not feel confident they’ll be able to afford a comfortable retirement. That’s up from 44% who were concerned about retirement finances in March. 63-year-old Susan Webb of West Liberty, Iowa had long hoped to retire at 65 from her job as a real estate broker. Webb and her husband, who’s 67, are both still working full time. They hope to ratchet back to part time at some point, but plans for a scenic lake house where they can go fishing and spend time with their two grandchildren will likely mean selling their current home — not part of the original plan. ‘I’m not confident at all,’ says Webb.”

Channel 3000 on Wisconsin. “Rock County real estate agents said that home price increases in the area are a sign the economy is beginning to looking up. This comeback was visible at the Lima Town Hall, which was packed on Friday with area residents waiting to see who will purchase the 163 residential lots, just off of Highway 26. The properties were formerly owned by Illinois developer Kennedy Homes.”

“On this day, a Janesville native was the highest bidder and purchased about 130 acres for less than $400,000, which he intends to sell to home buyers. Todd Kaiser, president of the Kaiser Property Group, said that they think the market has potential. ‘We believe as the economy keeps picking up, this will be the area that will start to redevelop again, where the momentum I guess will take off from,’ he said. ‘Here in Rock County, we fell a lot farther than a lot of counties did so we’ve got a farther climb to get out of it.’”

“Farmland seems to be retaining its value. About 160 acres of farm land also was auctioned off Friday. The land sold off around $7,500 an acre compared to about $2,300 an acre for the residential property, officials said.”

The Chicago Journal in Illinois. “The property at 1712 S. Prairie Ave. that was supposed to be X/O condos but is instead a few empty buildings with badly dated banners has finally found a buyer — the joint venture of Golub & Co. and Sandz Development Co. The old developers filed a lawsuit to build their high rises amid community opposition — only for the towers to never get built when the economy tanked. Meanwhile, a 53,000-foot vacant lot just south of 18th St. on Wabash Ave. is also off the market.”

“These real estate transactions address two of a handful of South Loop vacant properties. While the housing market crash and neighborhood overdevelopment triggered numerous foreclosures, the South Loop has largely steered clear of vacant property issues that plague other neighborhoods. ‘Most of the vacant lots, they’re getting pretty good about keeping the fencing up and not having them occupied by squatters,’ said Deborah Soehlig, former president of the Greater South Loop Association. Soehlig added that even many of the condo high-rises that entered foreclosure are ‘filling up nicely’ thanks to renters.”

“Mary Ellen Smith, a spokeswoman for Golub, said that the company is not granting interviews about the property. ‘They are keeping things very close to the vest,’ said Eve Kronen, a realtor at Coldwell Bankers who works on several South Loop properties. ‘But there will be no new condo developments. Everything that we’ve looked at [in the neighborhood] is going to be high-rise rentals.’”

Chicago Now in Illinois. “I just read the Tribune article about Deborah Robertson, a Baltimore staff assistant for the Social Security Administration, that just won a condo in the Trump Tower in an HGTV contest. My first thought was that her excitement is very short lived. The condo is worth $750,000. Her income tax liability will be $239,814 + 35% of whatever else she is going to make this year. Second, she is now liable for a $560/month assessment. Third, her annual property taxes are going to be around $11,250/ year.”

“Oh…and she doesn’t even live in Chicago. She’s pretty excited about winning this place right now but when reality sets in she’s going to realize that she needs to dump this place ASAP.”