The Housing Bubble

The Patriot News reports on Pennsylvania. “Nearly 14,000 Harrisburg-area property owners have lost their homes to foreclosure since 2008. The foreclosures involve all neighborhoods, from downtown Harrisburg to suburban golf course developments. In 2005, Phyllis Adams paid $93,000 for an older two-bedroom townhouse in northern York County. She later refinanced, increasing the loan amount to pay for upgrades and repairs that, as a single woman, she couldn’t do herself. Adams managed a medical office, but was unhappy and changed jobs. She took a pay cut. Her income didn’t increase as expected.”

“Taxes rose, as did maintenance and homeowners association costs, and she struggled to pay her $750 monthly mortgage. Adams twice put the house up for sale, asking about $113,000. She received no offers. She eventually stopped paying the mortgage, mailed the keys to the bank, and moved to an apartment. The home was scheduled for sheriff’s sale. She worried she’d have to pay the difference between the selling price and what’s owed. She also feels she’s being pushed out of the middle class.”

“‘I don’t need welfare and I don’t need the government to take care of me,’ said Adams. ‘But with our economy, and the wages people make, I don’t think the wages people make can support a middle-class lifestyle anymore.’”

“People continue to live in many of the homes listed for sheriff’s sale. The occupant of an upscale townhouse, on which nearly $190,000 is owed, said she was unaware of a sheriff’s sale scheduled for March. She said she stopped paying her mortgage long ago after losing her job. A pile of cartons and trash bags sat in the driveway of a corner-lot home in Hampden Twp. Legal papers taped to a window explained the home was abandoned. A family had lived there since 2000. The home was once worth about $350,000. Nearly $500,000 is owed, according to a sheriff’s sale listing.”

“‘I think he lost his job. He had financial problems. He just walked away,’ said a neighbor who didn’t want his name published.”

The News Journal in Delaware. “Occupy Delaware protesters again disrupted a New Castle County sheriff’s sale on Tuesday and, as they did last month, again demanded a halt to all foreclosure sales. In the protest statement, Bernard August, of Newark, demanded that all foreclosure sales be stopped until they could be reviewed by a third party and that homeowners be given opportunities to work out payment plans. ‘We demand that the banks that caused the economic crisis which forced people into foreclosure and who were rescued by the people’s money repay that debt directly to the people by helping them stay in their homes,’ August said.”

“Charities and nonprofits have long been the recipients of donated cash, cars, food and clothing, but now there is a trend toward houses. They say people are feeling the financial burden of paying taxes, insurance and maintenance on houses that won’t sell — and continue to drop in value. Banks saddled with foreclosures have been major property donors as well.”

“Chase Magnuson, director of Planned Giving, Real Estate for George Washington University in Washington, D.C., said he was hired two years ago to handle real estate donations to the university from its alumni. The university solicits property donations but only accepts donations where the property will net the university at least $100,000 at the closing, he said. ‘Prior to the downturn people could sell their homes for cash unless they were philanthropically inclined,’ Magnuson said. ‘Things have changed.’”

The Frederick News Post in Maryland. “Frederick County home sales were down in November. Interest rates rose in November to the 4 percent range, said Patrick McLister, an attorney with Salisbury and McLister. That is still low, but an increase on October’s rates of 3 percent. ‘First-time homebuyers are caught between deciding whether we have hit the bottom of the pricing market or continuing to be subject to the whims of a landlord by renting,’ McLister said via email. ‘They also need to have money saved for a down payment, now.’”

“Castle said single-family homes in the $250,000 or less range have held their value and sold well, but they have to be in good condition in the market. Homes in the higher end, Castle said, are still decreasing in value, though location of the property is a big factor. ‘They are still losing one-quarter to half a percent a month in value or about 6 percent a year,’ Castle said of the higher-priced homes. ‘We’re in the ‘new normal market.’”

Southern Maryland News. “2005 was the zenith of the white-hot housing market in Southern Maryland. That year, home sales topped $1 billion in Charles County, said Steuart Bowling, director of technology and new business development for the Southern Maryland Association of Realtors. Mortgage loans were free flowing, bad credit was overlooked and home values skyrocketed. Home purchases became bidding wars.”

“The party ended in 2008 ‘when things went thump,’ Bowling said. ‘After that, everything changed.’”

“Loan approvals and settlements plummeted. Home values dropped. Many people had paid much more for a house than what it was now worth. As the national economy soured, people lost their jobs and couldn’t make their inflated mortgage payments. Then the wave of foreclosures came. ‘But it’s a great time to buy, though,’ Bowling said. ‘Rates are very low. Financing is apparently available if you’re qualified.’”

“Matt Dowling and his family moved to Charles County from Omaha, Neb., three years ago. They kept their house back home and rented it out, while renting a townhouse in Waldorf. Dowling commutes to Alexandria while his wife works in La Plata most of the time. Coming from Nebraska, where the cost of living is much lower than Southern Maryland, Dowling said, ‘For what I envisioned … I wasn’t seeing the value there.’ Homes he saw in Charles County would sell for $100,000 less back in Nebraska, he said. Going into the process, he said, ‘We will not be emotionally attached to a house. I want to get a bargain.’”

“The Dowlings almost bought a foreclosed home, but then a house went up for sale that was to their liking. The owners couldn’t sell it, he said, because it was priced too high. The owners then renovated the kitchen and put it back on the market.”

“He got a tri-level house in Port Tobacco on 2½ acres with four bedrooms and three bathrooms with lots of storage space for $345,000. The only trade-off in the transaction was that Dowling’s commute got a little longer. ‘We negotiated. We got what we wanted for the price,’ Dowling said.”

“Realtor Linda Swanson sells properties in Calvert and Anne Arundel counties. She has found recently that people who want to sell their house aren’t really in a position to do so. ‘Their property is worth less than what they owe, so they’re upside down.’ she said. And some potential buyers have no sense of urgency, she said, knowing new homes will continue to come on the market. But overall, she said, ‘The market is not as bad as the media portrays it to be.’”

“Rebekah Gingerich, a teacher at Westlake High School in Charles County, also bought her first home this year. She rented for five years before that. She started looking at houses in March and settled in July. Gingerich looked at both townhomes and single-family houses. She finally found one that she really liked — a four-bedroom Cape Cod with a basement on a quarter-acre lot. It was at the top of her price range, but, ‘I loved it so much I was willing to pay for it.’ She paid $202,000 for the home in Bryans Road.”

“The sellers had inherited the home and updated its interior to live in, but then decided to put it on the market so they could buy another home, so they were motivated to sell. ‘I just got to reap the benefits,’ Gingerich said.”

The Free Lance Star in Virginia. “Housing prices were about 5 percent higher last month in the Fredericksburg area than they were in November 2010. The median sales price was about $209,500, according to data released yesterday by Metropolitan Regional Information Systems Inc. That was the highest monthly median since July.”

“The low inventory levels are likely due to a combination of few new homes being built and people being unwilling or unable to list their residences. Homes spent about 96 days on the market before selling last month, about 10 percent longer than the year before. They sold for about an 8 percent discount from list price on average. About 57 percent of the November home sales were financed with government-backed mortgages. Foreclosures made up about a quarter of the sales.”

“The higher-end market continued to struggle last month. No homes sold for more than $800,000 in the local market.”

The Journal in West Virginia. “When Tabler Station Manor Homeowners Association Treasurer Fred Riggleman looks around his community, he can’t help but notice what’s still missing and the work that has yet to be completed. Although he’s lived in the south Berkeley subdivision since 2005, things have changed since those early days when the community was new and still under construction. At that time, Riggleman believed it would be built out because the housing slump hadn’t yet begun.”

“But that didn’t happen and some of the vacant lots have since become eyesores, he said, adding that the original builder is now out of the picture. ‘As you can see, this land was supposed to be developed. … But A&A Homes sold it to Jett Builders and they went belly up, so that BB&T has it now and you can see what it looks like,’ Riggleman said, gesturing toward mounds of dirt overgrown with tall weeds and even some tree saplings.”

“‘We do get complaints from property owners, really their rental tenants because this situation leads to snakes and rats. … So I wrote the bank a letter and BB&T did have someone use a weed-eater on it about a year and a half ago, but nothing else has been done and I haven’t heard any more from them,’ he said. ‘Plus it just sits here because we can’t do anything. … We even asked them to either donate or sell it to us at a reduced rate so that we could at least get someone in here to try to clean it up,’ Riggleman said.”

“HOA President Cheryl Stancover said her major concern is how these problems - especially the vacant, overgrown lots and the addition of a new railroad siding beside the community - are diminishing property values. ‘Some of these homes were purchased for $200,000 and up but now are barely selling for $70,000,’ Stancover said. ‘And when it comes to the empty lots we do have a terrible problem with snakes. They even come out on the streets, and my husband killed five in our yard,’ she said.”