An Unrealistic Expectation
The Record Journal reports from Connecticut. “Statistics released this week by the Warren Group show sales of single-family homes dropped to their lowest level since the group began tracking sales in 1987, a 12-percent tumble from totals in 2010. Last year marked the seventh straight year in which sales declined. Mark Lovely, owner of Lovely Development, said that new homenumbers in the state are at their lowest since they were first reported. Lovely has been able to weather the tough times by buying land when the price is right and building a large customer base off of referrals. His goal, he said, is to mark new homes affordable when compared to homes already for sale on the market.”
“‘We try to beat their price by about $5,000,’ he said.”
“‘The market in Connecticut is very slow,’ said Timothy M. Warren Jr., CEO of The Warren Group. ‘I think it’s fair to say we are bumping along the bottom and can only go up from here.’”
The Conway Daily Sun in New Hampshire. “In an end-of-year interview, veteran local Realtor Dick Badger said home prices remain depressed, and are well below the replacement value that it would take to build a new home — not good for builders, certainly, but good for qualified buyers. The inventory of unsold homes is still excessive, he agreed, but added that again, it allows buyers ‘a multitude of choices.’ ‘These are the facts of life,’ said Badger. ‘If someone is in the market to buy a home, they would be foolish not to do it now.’”
“He remains bullish about Mount Washington Valley as a second-home market and as a destination resort. ‘I am a great believer that we are the foremost four-season resort — OK, three-season, with mud season being our fourth — in the Northeast. Look at what we have to offer,’ said Badger.”
The Nashua Telegraph in New Hampshire. “Despite signs of improvement in 2011, foreclosures in Nashua and most area communities remained at historically high levels that are almost unchanged from 2008, the first full year of the recession. ‘Before, if you lost a job, got a divorce, had a medical catastrophe so you couldn’t keep up with your mortgage, prices were going up, so you could sell and get out from under your mortgage, oftentimes get out with a profit,’ said Jane Law, director of communications for the New Hampshire Housing Authority. ‘Today, you can’t do that.’”
“‘The old heady days of the early 2000s are definitely a thing of the past,’ said Law. ‘During the early 2000s … up to 2007, people were treating their houses like cash cows. Nothing can sustain that, no market can sustain that. It was an unrealistic expectation to think that was going to go on forever,’ Law said. ‘It’ll never go back to the way it was. Lenders are never going to lend like that again.’”
The Woonsocket Call in Rhode Island. “Two Republican lawmakers, Cumberland Sen. Bethany Moura and Portsmouth Rep. Dan Gordon, attacked the 49-state settlement agreement with the nation’s five largest mortgage service providers that Democratic Attorney General Peter Kilmartin signed onto last week, calling the $25 billion the financial institutions agreed to pay ‘a drop in the bucket.’ ‘What an insult to the American people,’ Gordon declared at a Statehouse press conference. ‘What an insult to the people of Rhode Island. The people should be inflamed.’”
“Moura, who works as a loss mitigation specialist in the office of one of the leading Rhode Island attorneys in the recent spate of foreclosure cases, struck a similar tone, telling reporters, ‘This settlement values the American Dream at $2,000,’ the amount she estimates an aggrieved homeowner will receive. She said the principal reduction the lending institutions are offering consists of the fees and other amounts they added to the homeowners’ balance during the default process. ‘I’ve seen doctors, dentists, educated people who can not apply for a loan modification that has been promised to them,’ she said. ‘When you are promised principal reduction in this deal, get over it, it’s not going to happen.’”
The Worchester Telegram & Gazette in Massachusetts. “In Massachusetts, the attorney general and others are pushing lenders to avoid unnecessary foreclosures by offering more loan modifications. ‘This crisis has frozen the entire market,’ said Massachusetts Attorney General Martha Coakley. ‘It is affecting the entire economy. Until we stabilize it and allow for people again to build equity in their homes, we’re not going to have the kind of growth in individual consumer wealth that we need.’”
“In Massachusetts, foreclosures took 544 days on average, RealtyTrac said. A detailed study by researchers at Harvard University and the Massachusetts Institute of Technology found that foreclosures predict lower prices for houses less than a quarter-mile away, and particularly for homes less than one-tenth of a mile away. Data like this has observers saying the glut of foreclosures is slowing the nation’s economic recovery.”
“Edward A. Hjerpe III, CEO of the Federal Home Loan Bank of Boston, said the housing market can’t recover until lenders work through the foreclosure backlog. ‘It won’t be fully back to normal until much of that supply is absorbed,’ he said.”
“Timothy M. Warren Jr., CEO of the Warren Group, said foreclosures have a psychological effect on home buyers. ‘It has an effect on consumer thinking,’ he said. ‘They hear foreclosure, they hear these sad stories. It just makes people say, ‘Oh, gee. I don’t want to buy a house and end up like that.’”
The New York Post. “On Dec. 6, nearly 300 members of the Occupy Wall Street movement flooded into East New York to begin what they considered phase two of their efforts. ‘Occupy Our Homes’ was that idea. The group would take over an empty house, foreclosed on by a bank, fix it up and provide shelter to a homeless family.”
“Last week, Wise Ahadzi opened the door to the house he still owns, 702 Vermont Street in East New York. Inside is a war zone. The walls are torn down, the plumbing is ripped out and the carpeting has been plucked from the floor. It’s like walking through a ribcage. Garbage, open food containers and Ahadzi’s possessions are tossed haphazardly around the house. ‘This is where my kitchen was,’ Ahadzi says. There is no sink, no refrigerator and no counter space. Instead there are dirty dishes piled high.’”
“Ahadzi owned the house but was forced to leave in 2009 when he couldn’t make the mortgage payments to Bank of America. In January, The Post found squatters in the house instead of the family. ‘They only stay here sometimes,’ a protester explained. ‘There’s not enough room for the kids.’”
“‘I’m pissed off,’ Ahadzi said. ‘I’m trying to get my house back, and they’re trying to take it from me.’”
The New York Observer. “The luxurious condo building in Williamsburg, The Jardin, has called off all sales and is converting the building into rentals. More than half of the building has been sold, but the developers decided to cancel all contracts. Tough luck for the buyers, waiting patiently to move in, The Journal reports: ‘We felt like we hit the jackpot,’ said Beat Kaestli, a freelance musician, of his experience of finding an ideal one-bedroom apartment in the building. ‘Now we feel violated.’”
“It’s dirty play, but it could also be a blessing in disguise, saving them from years of living in Williamsburg.”
House completely trashed by OWS’ers.
Gee, who could ever have expected that ???
…or by the hobos they let in. There is quite often a very good reason people are homeless.
“There is quite often a very good reason people are homeless.”
You mean it’s not all Bush’s fault???
You mean it’s not all Bush’s fault???
No, I believe it was Reagan who “main-streamed” all the mental patients by streeting them…
No, it was JFK that signed the laws ending involuntary commitments and streeted all the menatal patients.
It’s Geraldo’s Fault!
‘The recession, and repeated cuts in state aid to cities and towns, has increased the reliance on local property taxes, the New Hampshire Center for Public Policy Studies reports in a new study. The sting of the tax bill has been made all that much worse because owners are paying more on property that’s worth less. The total valuation of the property in the state, which hit $174 billion in 2007, has fallen to $157 billion.’
http://www.concordmonitor.com/article/311623/paying-the-price-of-state-downshifting?SESS47954be05bab2d3cdc345a25fb2f786b=google&CSAuthResp=1329751953%3A250hit1rd34n8g1h6fduhmfip5%3ACSUserId|CSGroupId%3Aapproved%3A01951A8E8AFD68364DB42BBA23F72612&CSUserId=94&CSGroupId=1
No state income tax, practically no state aid for schools. The state and local total tax burden is among the lowest in the U.S.
WT dont you think this has a lot to do with that… Speaking ENGLISH in schools is the accepted norm?
According to the 2010 U.S. Census Bureau, the racial makeup of New Hampshire was as follows:[22]
* 93.9% White (92.3% Non-Hispanic White)
* 2.2% Asian
* 1.1% Black or African American
* 0.2% Native American/American Indian
A lot of people commute to jobs in Mass from southern New Hampshire.
wow that’s whiter than Montana.
The property taxes in NH aren’t low. At least not along the coast or even 40 minutes inland. I recently looked into a listing in Madbury. The taxes were the same as what I complain about here. I’ve looked at the taxes where my mother and brothers live. They’re only slightly lower, negligible when you think about all that they have that goes w/those taxes that we don’t have here.
NH property taxes are killer. Same in Maine. Just like NY. There is no escape.
“‘We try to beat their price by about $5,000,’ he said.”
There’s the money quote.
There is so much profit in new construction that contractors compete with resales and will continue to do so for as long as it takes to get to actual costs of materials and labor plus a 12-15% margin.
Now you can sit back with your facts and say “it costs $200/sq just to build it” all day long. You’re going to find out the hard way that guys are building and making money at $60/sq. And they’re doing it every day. I know them. I work with them.
Ironically, last night Mrs. and I were checking out new construction in Kent and Sussex County DE. Resales are getting murdered by builders. Home-debtors can’t compete. And you know what? Builders prices are still inflated substantially.
The next time some AssHat comes up with the braindead statement “you can’t build it for that much”, just do a quick calculation and be prepared to shut him down.
Can you comment on how that impacts areas where there is plenty of land to build on if you go out in the exurban areas, but most of the places close in are very, very built? There is plenty of land in places where people do commute in DC, but if you really want a place where you can commute to most of the city and densely “jobbed” areas in an hour or less (whether by car or public transport or both) during rush hour, the only available lots require a tear down. There is some multifamily being built, and I think there are still some townhomes being built in PG county (schools not up to area standards), but traffic is so dense, being 10 miles away from downtown DC can mean outrageous commutes.
I have friends in Potomac (and not northern Potomac either) who now take 65 minutes to get to work. Fortunately, they are a husband and wife who commute together, so they can have couple time during their commute, but they probably aren’t travelling 13 miles (as the crow flies) to do it. My dad was able to commute over 60 miles in the same time frame.
Polly,
The rate doesn’t include lot costs and as you indicate, lot costs vary wildly.
I understand the rate doesn’t include lots. I’m just wondering how a lack of land in the desirable areas impacts develper strategy. I guess they just keep building out in the boonies as long as people are willing to do the commute or companies are willing to relocate jobs to be closer to the boonies. But that process has to collapse at some point, doesn’t it? Do developers think about that process?
Polly,
I’m not sure who makes those decisions and at what level. If it’s a national publicly traded builder, we know they’re made internally. If it’s a regional non-traded outfit, I’m sure the financier is involved in a big way.
Do I think the process will collapse? I’m doubtful. Don’t you believe there is a huge disconnect between housing demand and the ongoing building? Frankly I’m shocked there is ANY new construction in DE. I don’t understand the motive at all. There are tons of newer houses there, MLS is chock full, REO’s out the yin-yang yet builders are building STILL. Some of it is real nice too. Single level, hip and gable roof, under 2000sq ft, sweet floor plans. They appear to have gone in 180 degree opposite of the hellish bubble years as far as what they’re building.
RAL
I am in the process of building an addition of 1200 sf and totally agree with you. I am my own contractor and expect to finish at about $80 a sf.
It is a two storey office / solarium with a lap pool in the basement.
There it is…. and you’re GCing it and it’s still only $80/sq.
And here in a nutshell is the entire problem with housing and the US Economy, in general: Government meddling.
“In Massachusetts, the attorney general and others are pushing lenders to avoid unnecessary foreclosures by offering more loan modifications. ‘This crisis has frozen the entire market,’ said Massachusetts Attorney General Martha Coakley. ‘It is affecting the entire economy. Until we stabilize it and allow for people again to build equity in their homes, we’re not going to have the kind of growth in individual consumer wealth that we need.’”
The Government created this problem by trying to put people into houses that shouldn’t have been there, by creating Fannie and Freddie and “community reinvestments” and providing lax oversight and promoting incentives to push loans. Now, they want to “fix” the problem.
And how does this egghead perceive “stabilization”? HOME EQUITY to provide CONSUMER SPENDING. That’s what we’ve become. A society of manic shoppers. That’s their solution to a downturn in economic activity due to TOO MUCH DEBT…………..
A magic bullet of equity growth via government mandates.
They never learn. The DEMOCRACY role of governments demands that whenever some folks start whining, the government must “Do something”.
I’ve a better idea. Let the banks finish the foreclosures. Send the occupants of overly indebted houses to “affordable housing”, even if that means a FEMA trailer(i understand they have plenty left over from their interference in the aftermath of Hurricane Katrina), and let the FREE economy sort itself out by the willingness of buyers and sellers to negotiate a “market price”. Then we can all go about our lives without all this Central Government Planning to manage prices and quantities of goods and services. Stop global whining. End the FED, and get these intrusive government hacks out of the system. Naturally, I also think the FAKE accounting should end at banks that made bad loans and should be in receivership, also. They only still exist because of government intrusion and picking of winners and losers. They are losers and should be liquidated. Now. They should have been broken up years ago, instead of being able to use TAX MONEY to buy up their competition.
Thanks, Obama, for looking out for the little guy and waging a war on the banksters. NOT. Get an attorney general that actually goes after crooks instead of your political enemies. Now, I know I am dreaming.
I’ll, roll over and go back to sleep now. Maybe the bad dreams will stop.
Yeah, no discussion of what people can afford, no acknowledgment that prices went sky high. We can turn back the clock and make the bubble permanent with lawsuits!
There are two views in the one article; either this AG is right or she’s making things worse. I’ll let history decide.
…build equity in their homes, we’re not going to have the kind of growth in individual consumer wealth that we need.
Again with the debt = wealth meme.
Need I remind the HBB of the Bay Area couple in their early 30s from 2006 or 2007 that was very proud of the fact that they had a net worth of $3,200,000 *?
* Before subtracting out the $3,350,000 in mortgage debt owed on their six investment properties and their one primary residence.
I guess they had a different definition of “net worth” than accounting textbooks do.
They were worth it to the bankers that owned their sorry butts.
Hitting the jackpot with a $3600 2 br rental
http://streeteasy.com/nyc/building/the-jardin#building_activity
“‘The market in Connecticut is very slow,’ said Timothy M. Warren Jr., CEO of The Warren Group. ‘I think it’s fair to say we are bumping along the bottom and can only go up from here.’”
Sorry to break the news, Timothy, but until your area’s median house prices get back into line with the 3x median income metric, you’ll be bumping for quite some time.
Slim:
My mom last night to me she noticed a lot of the for sale signs have been dissapearing in the last few weeks, and no one is moving in or out same cars there…at least 6 shes counted every day on the way to work just up and gone…
Maybe they just gave up paying so they dont care anymore??
Here in Tucson, the try to sell/let it go back to the bank sequence has been fashionable for several years.
Matter of fact, some good friends did this back in 2008-2009. They fixed up mom’s house, put it up for sale, and it didn’t sell. So they let it go back to the bank. It was foreclosed in the summer of 2009.
A new owner bought it in what looked to be one of those first-time homebuyer tax credit deals that were so prevalent in early 2010. No word on how long she’s planning to stay, especially since the property across the street got foreclosed after she moved in. That’s not going to help her property’s appreciation.
“Ahadzi owned the house but was forced to leave in 2009 when he couldn’t make the mortgage payments to Bank of America.
This guys leaves his house unattended for 2-3yrs, and he’s surprised that the inside ends up trashed?
What an idiot.
Further, he knew that OWS was moving a family in as part of a publicity stunt, and he took no action. In other words he went along with it, accepting vague assurances from politicians that they knew his situation and would help. Ha!
“‘I’m pissed off,’ Ahadzi said. ‘I’m trying to get my house back, and they’re trying to take it from me.’”
The one you should really be pissed off at is yourself! You could have been living rent-free for the past 2-3yrs, and “your” house would still be in good shape if you had been there!
This guys leaves his house unattended for 2-3yrs, and he’s surprised that the inside ends up trashed?
That’s what I thought.
BTW, there are abandoned houses near the Arizona Slim Ranch and guess what. They’ve been trashed too.
I don’t think I’ve ever seen a single abandoned, trashed house in Loveland. Not that I’ve tried to find one, but they aren’t ubiquitous as in other places.
There is one right down the road from me. Some clown paid $860k for it in 2006. They vacated in early 2009 and it’s trashed. I mean trashed. There is a nice bass pond on the property that I visit and as of last summer, there wasn’t a window left unbroken.
Schweet huh? I wouldn’t give them more than $50k for it. Why it isn’t burned yet is a mystery.
‘It’ll never go back to the way it was. Lenders are never going to lend like that again.’
2006 - 1926 = 80.
Give it 80 or so years…
“‘This crisis has frozen the entire market,’ said Massachusetts Attorney General Martha Coakley. ‘It is affecting the entire economy. Until we stabilize it and allow for people again to build equity in their homes, we’re not going to have the kind of growth in individual consumer wealth that we need.”
It’s stabilization to prop up prices that has frozen the entire market.
“A detailed study by researchers at Harvard University and the Massachusetts Institute of Technology found that foreclosures predict lower prices for houses less than a quarter-mile away, and particularly for homes less than one-tenth of a mile away. Data like this has observers saying the glut of foreclosures is slowing the nation’s economic recovery.”
Foreclosure sales were not an issue back in 2006, as after making an allowance for condition of the home, homes coming back on the market after foreclosure sold for pretty much the same bubblelicious prices as any other property. The reason that foreclosures ‘predict’ lower prices for nearby houses is that foreclosure sales force current market price discovery. Many well-educated observers have drawn the spurious conclusion that foreclosures are causing prices of nearby properties to decrease. Don’t kill the messenger, experts!
‘Oh, gee. I don’t want to buy
aan overpriced house and end up like that.’“The luxurious condo building in Williamsburg, The Jardin, has called off all sales and is converting the building into rentals.”
Repartmentization = blowback to the condo conversion craze of a few short years back
ISTR hearing the word “repartments” at an economic outlook luncheon back in 2008. Or maybe it was 2009.
Any-hoo, such a thing isn’t news around here anymore. A lot of condo conversions are reverting to being apartment complexes. And this town is already bristling with “for rent” signs.
My crew invaded Williamsburg and got comfy with the Hasidim.
I went to a lot of fun rooftop parties there in the early 00’s. That’s when artists could still afford to “live” “near” Manhattan. I’m not sure what it’s like now.
This one time, I uh, oh… nevermind.