July 30, 2014

Cheering Replaced With Gnawed Fingernails

KSN.com reports from Kansas. “In April the Farm Bill made more Kansas towns eligible for the USDA’s Guaranteed Rural Housing Loan program, now the first recipient of the program in Dodge City has moved into her new home. The loan program used to apply to towns with 20,000 people or less, but now includes towns with up to 35,000 people, making Dodge City, Garden City, and Lansing eligible. ‘It’s about time,’ said Mayor of Dodge City Brian Delzeit. ‘How much more rural can you get than Dodge City, America or Garden City?’”

“With more people now eligible, the office is actually backlogged, with over 100 applications waiting to be reviewed. As more people are able to buy houses, the hope is that rural Kansas will grow. ‘There’s a tremendous demand for housing,’ said Senator Pat Roberts, ‘and if we could solve that, a lot more job growth would occur in the areas where we’re seeing growth.’”

Reuters reports on Illinois. “D.R. Horton Inc, the No.1 U.S. homebuilder, said it had to offer discounts in the third quarter to boost sales in Chicago, a particularly bleak spot in a weak U.S. housing market. Higher U.S. home prices along with rising mortgage rates in 2014 have reduced affordability for many, resulting in an underwhelming spring selling season, which is to homebuilders what the holiday season is to retailers. ‘We (increased) the level of incentives in many communities throughout the spring in an effort to improve sales and maximize returns and profit,’ Chief Financial Officer Bill Wheat said.”

“D.R. Horton said that Chicago in particular was performing below its expectations. The company reported a 15 percent drop in home deliveries in the Midwest, including Chicago, and the Southwest in the quarter.”

From Chicago Magazine in Illinois. “Remember the cheering from homeowners that echoed across Chicagoland last year? It has been replaced with a few gnawed fingernails. The healthy price increases that followed the 2012 bottom of the local housing market have induced more people to list their homes. In part because of that increased inventory, sales prices appear to be leveling off. It’s happening for bungalows—but especially for mansions.”

“Would-be sellers are finally getting real about what their spreads are actually worth. In the wealthy North Shore village of Winnetka, for example, brokerage firm Redfin counted 11 residences for sale at $5 million or more as of early July. Seven of them had been on the market 12 months earlier; five of those have had significant price cuts. ‘We’re beginning to see price cuts a little more often,’ says Svenga Guddell, director of economic research at real-estate research firm Zillow, ‘and [high-end] homes are being sold at below list price.’”

“When price cuts don’t work, some brokers are turning to gimmicks. Another Winnetka mansion, a 27,000-square-footer billed by the agent as the most expensive Chicago-area house ever built, hit the market in April for the sixth time in four years—this time at $18.8 million, down from $32 million in 2011. In June, the agent offered brokers a $250,000 bonus on top of the $375,000 commission. Richardson has heard similar stories in other markets. ‘In D.C., the seller of an $800,000 home offered a Lexus to the broker who found a buyer,’ says Nela Richardson, Redfin’s chief economist.”

The Beacon Journal in Ohio. “Residential and agricultural property values are going down again in Summit County. The latest property reappraisal determined that values fell an average of 2.3 percent this year. The decline — based on home sales over the last three years and site inspections — represents about $500 million in lost value for homeowners and farmers. It also shows that the local housing market is still rebounding from the Great Recession and foreclosure crisis.”

“‘Summit County is not alone,’ said Shelley Wilson, an executive administrator at the Ohio Department of Taxation. ‘Unfortunately, I think the northeastern sector of the state has been a little slower to recover in terms of the housing market.’”

“County Fiscal Officer Kristen Scalise blamed the bigger declines in Sagamore Hills and Twinsburg on condominium sales. ‘Condos are losing value faster than single-family homes,’ she said. Sagamore Hills residents agreed that there are many condos in the community that have lost substantial value. Homeowner Doug Huth also said the overall decline wasn’t surprising. ‘I think you’re still seeing the effects of 2008,’ he said.”

The Oakland Press in Michigan. “Andy Meisner stood in front of a two-story house on Cloister Court in Troy last week, one of 948 properties to be auctioned off in late August for nonpayment of property taxes. The Oakland County treasurer was filming an ad about the upcoming auction, a three-year process that culminates in a sale of tax foreclosed properties each August, with a second auction in October.”

“Starting bid for the home with four bedrooms and three fireplaces? Just over $62,000. Websites like Zillow and Trulia estimate the home’s value at $315,000 to $340,000. ‘There are still a lot of foreclosures in the queue,’ Meisner said. ‘Another dumping of distressed properties on the Oakland County real estate market is something that could happen, and it could point us back in the wrong direction.’”

“On the front lines, lifelong Pontiac resident Mona Hoffmeister — a community activist and vice president of the group Citizens Against Blight — said she doesn’t see the housing market getting better, no matter what the numbers say. She added that not only are abandoned properties an eyesore in the community, but they’re ripe for squatters, which adds another degree of danger to local neighborhoods. ‘It’s still as bad as it has been,’ Hoffmeister said of the real estate market.”




Bits Bucket for July 30, 2014

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July 29, 2014

Sellers Have Come Out Of The Woodwork

The Orange County Register reports from California. “Mike Shapiro has an uneasy feeling, one that’s refreshingly surprising for a real estate brokerage owner coming off a record month. Shapiro is chairman of Hom Sotheby’s International Realty, a Newport Beach-based operation with a network of upscale-oriented brokerages stretching from Los Angeles’ Westside through Orange County’s beach towns and out to Palm Springs’ desert enclaves. In June, Hom agents sold a company-best $325 million in property. Shapiro is stunned that it looks like July’s projected closings will be roughly half that sum. One month doesn’t make a trend, he notes. But the sharp drop, paralleling other hints at economic anxiety, is, if nothing else, thought-provoking.”

“Shapiro, who in a previous career traded stocks, wonders if recent skittishness among Wall Street traders bubbled over into real estate. ‘Something is up … I don’t know what,’ the 51-year-old executive says.”

The Union Tribune. “Q: Halfway through 2014, what has surprised you so far in the housing market? Bill Davidson, president of Davidson Communities: ‘This recession has been unlike any economic downturn I’ve experienced in my career. The housing market has traditionally led the recovery. The traits and values of today’s Millennials are different from previous generations, in direct response to this disastrous recession. Not committing early to family formations, trouble finding good paying jobs, and, after witnessing what happened to their parents since December 2007, they’re skeptical of real estate. They are staying flexible, free and cautious.’”

“Kurt Wannebo, real estate broker and CEO of San Diego Real Estate and Investments: ‘The slowdown in sales and appreciation were all predicted factors, as we knew that investors would be leaving the market as foreclosures dried up, and sellers with equity who were waiting things out would start to flood the market, slowing the growing prices.’”

The Los Angeles Daily News. “It was supposed to be a breakout year for home sales. But after years of recession that bulldozed the Inland Empire housing market, there are still glitches in the road to recovery. The first quarter of the year looked promising, but it has come to full stop, said Redlands Realtor Perrie Mundy, a 30-year industry veteran, primarily because people are still worried about keeping their jobs. ‘It’s just at a standstill. We have no inventory,’ she said. ‘I think there is just so much uncertainty in our whole economic picture. Everyone wants it (the market) to be healthy and march along but there is a lot of uncertainty and people are wondering if they are going to have jobs tomorrow.’”

“Paul Herrera, government affairs director for the Riverside-based Inland Valleys Association of Realtors, believes the market is still adjusting to changes over the last year. ‘I think a year ago you had a lot of buyers who were ready and willing but were getting outbid by investors but that is no longer the case,’ he said. ‘The scenario of having a dozen or 20 or 30 offers come in on a home is gone. The price increase has stopped.’”

The Desert Sun. “Once-soaring price gains for single-family homes slumped in June across the Coachella Valley, two housing reports show. The rapid price appreciation during the first five months — jumping as high as 20 percent from the year before – ended its streak amid a tight inventory and fewer sales in June. The median price of single-family homes sold in the nine desert cities was $382,400, according to the Palm Desert-based California Desert Association of Realtors, which tracks properties through its MLS. That’s a 1.7 percent drop from the $389,000 in June 2013.”

“‘The market will correct itself, and that’s what we’ve been going through,’ said Mark Hilgenberg, a Keller Williams agent based in Rancho Mirage. ‘You will see prices rise, but not at the rate that they did.’”

From SCV News. “The median single-family home price in the Santa Clarita Valley dipped slightly in June to $481,000 from $485,000 in May, but the figure was still well ahead of last June’s $430,000. ‘I expect prices to keep moving up, but not at the double-digit pace seen last year,’ said Jim Link, CEO of the Southland Regional Association of Realtors.”

“Sales were somewhat more sluggish than Realtors tended to expect. ‘Pricing the property correctly is the key to a quick sale,’ said Nancy Starczyk, president of the Realtor group’s SCV Division. ‘Homes are taking longer to sell now, buyers are much more selective, and the pool of prospective buyers shrinks as prices move higher. The market is highly competitive.’”

“Some sellers have come out of the woodwork, though. As of June 30 there were 706 homes listed for sale on SRAR’s MLS, that’s 65 percent more than a year ago.”

The Signal. “Home sales sputtered slightly in June, although the increasing number of existing homes listed for sale are beginning to pull the Santa Clarita Valley out of the ‘inventory drought’ it had been in during the recession. Increased inventory is giving buyers slightly more leverage to negotiate. ‘Sellers have tried to continue the rise in prices from last year and there is some ‘push back’ in the market, meaning the buyers overall are not biting at the higher prices,’ said Dwight Hawkins with Realty Executives.”

“In the past seven days there were 100 new listings and 110 prices changes, and all sales prices went down except on 17 homes, Hawkins said. ‘We are seeing more inventory than has been on the market for a while in the SCV cities,’ said Connor MacIvor with Re/Max.”

“Other factors slowing home sales in June include fewer buyers qualifying as a result of stricter lending requirements, and appraisals still coming in too low to match the seller’s listing prices, said Bob Khalsa with United American Realty. The conservative appraisal is causing some blowback, Hawkins said. It causes some homes to have to go back on the market when a buyer’s lender won’t approve a loan at the agreed-upon sales price. ‘The appraisal comes in low and sometimes the seller and buyer will negotiate again,’ he said. ‘The sellers want the buyers to bring in money over the appraisal, and sometimes they can’t come to terms.’”

“One sales number did spike, however, and that was for properties listed as a short sale. Unlike a traditional home sale, in a short sales the seller owes more on the mortgage than the home is worth on today’s market. Short sales jumped to 9.1 percent of the total sales in June, up from 4.6 percent in May.”

“‘We are now seeing those who have been trying to hang on to their homes by the tips of their fingers losing their grip and finally short-selling,’ said Sam Heller with Keller Williams VIP Properties. ‘They (the sellers) tried to wait for the market to come up to cover their current mortgage amount, plus cover selling closing costs. Although the rise in prices was faster than many expected, they were not fast enough or high enough to save everyone.’”




A Dark Cloud In The Distance

The Gainesville Sun reports from Florida. “Jennifer Beguiristain plans to be in Gainesville at least three more years to work on a master’s degree in speech pathology, so she traded in her $700-a-month apartment for a $988 mortgage payment and arranged to rent out two rooms for $400 each. The 27-year-old recently closed on the four-bedroom, 1,500-square-foot house in northwestern Gainesville for $139,000 with a 5 percent down payment. ‘I just feel like, renting, you’re throwing money out of the window,’ she said.”

“If she gets a job out of the area when she is done with graduate school, Beguiristain likes her chances to make money on the property. ‘The good thing about a house in that area is I do have the option to sell or rent it since it’s near Santa Fe (College) and the values are going up, so I think it was a very good investment,’ she said.”

“Matt and Hallie Johnson recently bought a three-bedroom, 1.5-bath home in Micanopy on a USDA loan with 100 percent financing after Hallie was accepted into the UF veterinary school. The Johnsons were paying $700 a month for a condo and wanted instead to put that money toward a $810 mortgage payment. ‘When you’re paying rent, you don’t have to worry about lawns, so we really didn’t have any financial burden in terms of taking care of the place, but I knew that home equity and being able to purchase our first home would allow us to put that monthly income of rent toward something that might actually make us some money in the future,’ Matt Johnson said.”

The Sun Sentinel. “More than 4,000 coastal condo units are coming to Broward County as developers trying to capitalize on an upbeat housing market. The number of units completed, under construction or planned has nearly doubled over the past year, according to the database created by the CondoVultures consulting firm in Bal Harbour. Some analysts wonder whether that’s even enough to satisfy demand from wealthy empty-nesters, retirees from the Northeast and opportunistic foreign investors.”

“‘People don’t want the hassle of mowing the lawn or maintaining the roof,’ said Dennis Eisinger, co-developer of a handful of boutique condos in Las Olas Isles, east of downtown. ‘And right now it makes much more sense to buy than rent.’”

“To be sure, Broward is no Miami-Dade County, where more than 27,000 units are completed or in the pipeline, prompting some market watchers to wonder whether Miami-Dade is destined for another downturn like the one that devastated the area from 2006 through 2011.”

The News Press. “Two of Southwest Florida’s biggest builders say condo skyscrapers could rise again here as the economy improves and inventory tightens. But it’s not clear that potential buyers are ready to shell out for the high life in Southwest Florida at the prices they’d have to pay, some say. ‘The problem is the new condos being built in Florida have primarily been contracted by high-end investors, who are predominantly interested in south Florida although there are some in Sarasota and Orlando,’ said Jack McCabe, a Deerfield Beach-based real estate consultant. ‘One of the worries I’ve heard is that the target pool of potential buyers is really retiring baby boomers,’ he said. ‘That west coast area between Fort Myers and Port Charlotte doesn’t have the attraction for major builders.’”

“The towers in downtown Fort Myers were conceived mainly during the last days of the real estate frenzy that gripped Lee County in 2004 and 2005. Some never got off the ground when the market crashed in early 2006, and even builders who managed to complete a project often were deserted by buyers who walked away from their deposits as prices plunged. Where demand is strong, builders are putting up a lot of towers, McCabe said, noting that statewide there are 227 new condo projects with almost 40,000 units announced or under construction. Most of those are in south Florida, he said.”

“As the towers return, the question arises whether coming years will see a repeat of the first decade of the century, when a frenzy of high-rise activity led to a crash in 2006. ‘I definitely think it’s going to happen in south Florida, maybe in Sarasota,’ McCabe said. ‘The people here can’t afford them. Builders are relying on out-of-state and out-of-country buyers.’”

The Orlando Sentinel. “The once-sizzling home-sales market has cooled off this summer in the Orlando area as sellers face increasing competition and buyers no longer have to wait in line with investors to buy houses. The number of listings has ballooned. In June 2013, about 7,600 houses were listed in the core Orlando market, which primarily covers Orange and Seminole counties. It’s still considered a seller’s market, but last month the area had more than 11,500 listings, according to the Orlando Regional Realtor Association.”

“One shift that has just started in Orlando could help determine future prices: Investment groups are bundling the single-family homes they own and trying to sell them in bulk. At least some of those groups are trying to sell to other real-estate companies that want homes for rental income. Last week, for example, a Naples-based group offered a portfolio of 43 houses in Orlando, Deltona, DeLand, Daytona Beach, Mount Dora, Sanford and Apopka for a total price of $3.1 million.”

“The prospect of investors selling off properties and lenders auctioning off their foreclosures could further increase the supply of home listings and reduce prices. ‘When there’s too much inventory on the market, there’s a dark cloud in the distance,’ said Orlando resident Justin Stamper, who has bought and sold about 90 foreclosed homes since the recession for Investment Homes Direct. ‘If the [investor groups] do unload their inventory, prices are going to go down. If they don’t, then prices will rise steadily.’”

The Palm Beach Post. “Aging foreclosures continue to linger in Florida’s court system with 33 percent of Palm Beach County’s backlogged cases at least two years old. According to new data from the Florida State Courts Administrator, the 15th circuit has 15,195 foreclosure cases pending, with 5,005 topping the 730-day mark. Statewide, 55,798 foreclosures are two years old or older. The total number of pending cases statewide is 185,823.”

“While new foreclosure files have fallen to levels more common pre-real estate crash, some foreclosure defense attorneys wonder whether there won’t be an uptick soon. Wellington attorney Malcolm Harrison said banks are struggling to adjust to new regulations issued by the Consumer Financial Protection Bureau. ‘I have met with clients who have not made payments in over two years and who still have not received foreclosure papers,’ Harrison said. ‘The cases will eventually be opened against them but only when the old cases are resolved and the banks know how to comply with the new regulations.’”




Bits Bucket for July 29, 2014

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July 28, 2014

The Real Estate Economy

NTD TV reports on China. “Recently, Chinese Communist Party (CCP) Premier Li Keqiang said in an internal conversation that China’s economic problem is the real estate economy. In the Win Business Network article, Li admitted that, ‘China’s economy is basically the real estate economy, and China’s economic problems are basically real estate economic problems.’ Real estate prices continue to fall, but why do investments continue to flow into the real estate industry?”

“Mainland finance analyst Ren Zhongdao: ‘Without constructing new buildings, the local governments do not sell land, and then they have no money to pay debts. If the real estate developers do not buy land, then they have no land to use as loan collateral or issue trusts and other financial products. Therefore, in order to return the money, they still have to construct buildings. Now this has become a vicious cycle.’”

From the BBC. “At one property development here in eastern Hangzhou, the asking price of new apartments has been reduced by 25%, compared to the original sales price in 2011. The sales agent, who only gives her name as Miss Wang, shows me around. She explains it is a ‘perfect apartment’ for a three-person family - a family that can afford $900,000, that is. ‘The banks have tighter cash flow. People think the government might launch something like a property tax. That would make the price go a bit lower so buyers have started to wait and see,’ she explains. ‘The real estate developer wants to get their investment back. That’s why we’re giving a better discount,’ she says.”

“In Hangzhou, some of the price falls have been fast. One property developer’s office in the city was smashed up by buyers. They were angry they had paid more for their apartments a year ago than their new neighbours were now paying. ‘A lot in China depends on confidence, and it’s a matter of trying to get the middle class to think the value of their investment will go up again,’ says Jonathan Fenby, China director at Trusted Sources.”

The Global Times. “Driving in the downtown area of Hohhot, capital of North China’s Inner Mongolia Autonomous Region, Jin Fang felt surprised to see so much more high-rise apartment buildings compared to three years ago, when she left the city for studies. ‘How can these apartments be sold out in such a short period given the limited demand here?’ Jin, a 31-year-old white collar worker who lives in the city, said skeptically to the Global Times.”

“Jin said recently she was always being bothered by calls from housing agencies staff promising high discounts on apartments, but she kept refusing them because she had already bought an apartment of 125 square meters with her husband in 2012.”

“The total inventory of new apartments for Hohhot hit a high number of around 120,000 units as of June, according to Centaline Property Agency. However, only 3,780 units were sold in the first five months of this year, according to Hohhot real estate portal 365hf.com. In the light of the current poor sales, it will take around 10 years for the city to fill up its housing inventory, according to Centaline. Jin still remembers when three years ago, people from other cities rushed to Hohhot to buy property, which directly caused home prices to rise.”

“‘Most of the buyers were private lenders from Ordos city, where unregulated private lending activities were rampant’ partly due to excessive liquidity, said Jin. ‘I hope a rapid rise in home prices will not happen again,’ Jin said.”

The Wall Street Journal. “When Monte Burnham, the president of Birmingham, Ala.-based Foundry Manufacturing Solutions, recently visited Tianjin, China, he was pleasantly surprised to find its air more breathable than during his previous stay. ‘Then I realized, the smelters weren’t running,’ recalled Mr. Burnham, referring to the northern port city’s giant steel plants, which until recently had been delivering economic growth rates as high as 16% to Tianjin province.”

“So, how is China achieving 7.5% growth if it is powering down steel plants and letting copper stockpiles build up? With debt. Despite official instructions to banks to curtail lending to overstretched developers and municipalities, loans are still increasing at rates twice as fast as the economy—and those numbers exclude a so-called shadow-banking lending system estimated at more than $5 trillion, or 80% of gross domestic product.”

“‘That doesn’t make sense,’ says PNC Financial economist Bill Adams. ‘Eventually, sustainability concerns will either cause Chinese policy makers to slow credit growth or investor risk aversion will cause less credit to flow through the trust companies’ that manage the shadow lending programs.”

Radio Australia. “The top 1 per cent of households in Communist-ruled China control more than one third of the country’s wealth, while the bottom 25 per cent control just one hundredth, official media said, citing an academic report. The wealth gap is of significant concern for the ruling Communist Party, which places huge importance on preserving social stability to avoid any challenge to its grasp on power.”

“‘One per cent of households at the top level nationwide control more than one third of the country’s wealth,’ the website of the People’s Daily newspaper said late Friday in a report on the university’s statistics. ‘Twenty-five per cent of families at the bottom level only own one per cent of the country’s wealth.’”

The New York Post. “To avoid taxes or even seizure by the government, rich Chinese have exported a stunning $1.4 trillion between 2002 and today. China leads the world in ‘illicit capital flows’ — we call it ‘money laundering’ — while Russia, with $800 billion hidden outside the country, is runner-up. So much money is fleeing China — $10 billion a month — that it’s distorting the global economy, particularly in the art market and with real-estate booms in cities like New York.”

“China began to crackdown on the practice in 2012, following the arrest of powerful politician Bo Xilai for bribery and corruption and his wife for murder. Thousands of high-level confiscations have followed and this month two top oil executives, a popular television anchorman and the Bank of China itself were accused of laundering money and other forms of skullduggery.”

“It wasn’t until 2013 that China’s first money-laundering convictions occurred, and these were bit players. A 19-year-old Hong Kong delivery boy was convicted of laundering $1.7 billion in eight months through his bank account in a subsidiary of the Bank of China. Another involved an illiterate 61-year-old woman who laundered $876 million in three years by making small deposits of cash daily in several banks. Both netted 10-year jail sentences, and no one else was charged despite evidence they did not act alone.”

“Even more devious schemes by big shots have moved tens of billions offshore without handling cash or involving banks at all. For instance, money managers in North America were offered inflated fees of 20% to invest billions of Chinese corporate funds abroad. The catch was that half of the fees would be paid out to shell companies owned secretly by Chinese officials to buy them condos or art.”

“Other tactics involve bribing officials by selling assets at a loss so they can pocket immediate profits; or wiring cash to ‘fronts’ owned by officials or their children who wash the bribes as though they were legitimate income.”




The Market Has Stalled Because Buyers Are Picky

The Philadelphia Post Gazette reports from Pennsylvania. “While Pittsburgh never had a housing price bubble, the region suffered a foreclosure crisis along with other major cities where real estate values did rise to a peak and then crash back down to earth. ‘What we saw was wealth stripped from people who had built it in their homes,’ said Ernie Hogan, executive director of the Pittsburgh Community Reinvestment Group. ‘We didn’t see the overexaggeration in price of houses, but we did see people who might have been in their homes for many years lose that wealth through the foreclosure process and subprime lending.’”

“Howard Hanna, CEO of Howard Hanna Real Estate Services, said the difficulty many working-class borrowers face now stems from the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. One of the provisions prohibits banks from approving mortgages for anyone whose debt-to-income ratio is higher than 43 percent. Banks used to be able to approve borrowers with a ratio of around 50 percent or even higher. Credit score requirements also have gone from around 570-580 to around 640-650.”

“‘The provisions in the Act makes it very difficult for lenders to lend money to low- and moderate-income borrowers,’ Mr. Hanna said. ‘It hurts moderate-income borrowers because credit scores are not there and down payments are not there.’”

The Times Tribune in Pennsylvania. “First-half property seizures, mortgage-default notices and home auction warnings in the Scranton/Wilkes-Barre metro area were up 10 percent over the first six months of 2013, according to RealtyTrac. Foreclosure activity in the region was the most-active among Pennsylvania metro areas in 2013, advancing by 60 percent, RealtyTrac data indicate. ‘There is still above-average activity for us,” said Mike Elick, CEO at Consumer Credit Counseling Service of Northeastern Pennsylvania. ‘Some of this goes back 18 to 24 months.’”

“The area’s unemployment predicament continues to provide fuel for the foreclosure pipeline, said Austin Jaffe, Ph.D., chairman of the insurance and real estate department at Penn State University. The region has held the state’s highest jobless rate for more than four years. ‘In the northeast, housing is weak, but the jobs are weaker,’ he said. Housing has failed to contribute significantly to the choppy economic recovery nationally and probably will not become a major growth driver for years, Dr. Jaffe predicted. ‘It’s back to basics,’ he said. ‘You need strength in the fundamental economy.’”

The Watauga Democrat in North Carolina. “After four years of incremental sales growth, the High Country real estate market is showing signs of slowing. Median sold prices are down 5 percent from the first half of 2013, and 10 percent from that span in 2012, according to the High Country Association of Realtors. Those declines are occurring as supply is expanding. There are currently more than 3,240 homes for sale within the High Country MLS, which records Realtor activity in Ashe, Avery and Watauga counties. That’s a 26 percent increase compared to the 2,571 listings active last August, according to the group’s report.”

“‘With the current high inventory, our Realtor association has teamed up with the High Country Host to reach potential buyers interested in coming to our area,’ said Laurie Phillips, executive officer of High Country Association of Realtors. ‘This campaign will encourage residents from surrounding states to visit the High Country by highlighting our unique natural beauty.’”

The Loudoun Times in Virginia. “For the third month in a row, Loudoun’s housing market has hit a snag. Second quarter reports released by Dulles Area Association of Realtors for April, May and June 2014 showed a 6.7 percent drop in home sales compared to the second quarter of 2013. The number of houses on the market has grown, however, with a 21.1 percent increase in new listings since last quarter, showing a buyer’s market this season.”

“Sue Smith, associate broker with Remax Premier and The Sue Smith Team owner, said the market has stalled because buyers are picky. The surplus of listings means buyers can afford to take their time. ‘It is a great time to buy,’ Smith said. ‘You have a lot of options right now. You have a lot of homes to choose from and you possibly could have a little more negotiation power if you’re a buyer, depending on the situation. I expect to see that role into the fall.’”

The Virginian Pilot. “The story of Hampton Roads’ real estate market in 2013 was one of slow and steady growth. This year, the tale has taken a turn. Hampton Roads has shown signs of retreating. ‘We’re just not as healthy as we should be, due to the hangover with the downturn,’ said Terry Gearhart, a sales manager with Rose & Womble Realty Co.”

“In The Pilot’s comparison of metro areas in the first quarters of 2013 and 2014, the three lowest performers were, starting from the bottom, Hampton Roads, Baltimore and Washington, D.C. Vinod Agarwal, an economics professor (at) Old Dominion University, said the three metro areas are heavily reliant on federal spending. Hampton Roads’ dependence on the military, in particular, has kept the percentage of distressed sales – foreclosures and short sales – much higher than before the housing crisis.”

“‘If you are in the military and you get reassigned, you have to go – even if you are underwater,’ Gearhart said. Many of the homebuyers in the region qualify for Department of Veterans Affairs loans, which require no down payment. ‘If housing prices don’t appreciate, when you go to sell a house, many homeowners are underwater the day they buy their house,’ Agarwal said. ‘This economy is basically crawling,’ Agarwal said. ‘If you look at the amount of jobs we’re creating, it is pitiful.’”

From WBAL TV 11. “Thousands of Maryland families have lost their homes to foreclosure or short sales, but many don’t know that third-party debt collectors can still come after them for money they may not have known they owed. In 2005, Miranda Cisneros Bell and her husband, Ed Bell, bought a house in Emmitsburg for $535,000. They still had the house they are living in currently in Frederick County. ‘We could not sell this house. We were stuck between two mortgages,’ Cisneros Bell said.”

‘They were forced to let the Emmitsburg house go into foreclosure in 2009. Thinking that the case was over, they moved on with their lives, but then a third-party debt collector out of Texas started calling. ‘The debt collector was saying I owed $51,000,’ Cisneros Bell said.”

“Avy Mallik, an attorney with the group Civil Justice said if the bank does file a deficiency judgment, they can go after a person’s assets and garnish their wages, and they may wait a while to do so. ‘The banks may wait a couple of years until you are employed and have some assets, and they will go after that balance,’ Mallik said.”

“As for Cisneros Bell, her case remains mired in litigation. ‘I’ve tried to see about refinancing my house now, but I can’t because I have had a foreclosure. It’s very stressful. It’s very upsetting,’ she said. ‘It’s going to take me years of getting these things turned around.’”




Bits Bucket for July 28, 2014

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July 27, 2014

They Are Wrong, Just Like They Were Wrong Last Time

It’s Friday desk clearing time for this blogger. “Alec Diacou bought two large houses in Riverdale in 2004 with the plan to restore and sell them. He’d already rehabbed a number of properties, which he ended up selling with relative ease. But when he finished rehabbing the second in 2009, the recession was in full swing, emboldening some buyers to skip the niceties of negotiation. The real estate market bounced back with a vengeance, and now in Manhattan and parts of Brooklyn and Queens, bidding wars and sky-high prices are the norm. But not so in the high-end niche in Riverdale. Mr. Diacou’s aim now is to break even and move on.”

“Perhaps just a victim of timing and the ruthlessness of the market, he never anticipated all the difficulty he’s been up against. Riverdale’s slump doesn’t make any sense to him. His wife, Suzi Arensberg, is also perplexed. ‘Brooklyn and Manhattan are sold out,’ she said. ‘Why don’t they come 15 minutes up the highway?’”

“‘”Foreclosure, foreclosure, foreclosure.’ Real estate broker John Susani drives down a Paterson, N.J., street where every third house seems to be abandoned or boarded up. During the boom years, money flooded into Paterson. In some cases, he says, home prices jumped as much as 50 percent. The homes on these streets aren’t worth nearly that much anymore. ‘The banking industry allowed everyone to be a homeowner; they gave mortgages to people [just because they were] breathing,’ Susani says.”

“According to RealtyTrac data, 33 percent of the nearly 400 homes in foreclosure in Worcester County were identified as abandoned. In the city of Worcester, though, the number of vacant homes in foreclosure is estimated to be much higher by city officials who keep tabs on them. ‘I say they’re cursed,’ said Lee R. Hall, principal sanitary inspector for the city. ‘Two years is not really very long for these properties’ to sit vacant waiting to be foreclosed.”

“Realtor Nilton Lisboa is one of the people charged checking on these zombie properties to ensure they are maintained properly. ‘I want to get these properties sold,’ he said. ‘We know there’s no one living there. We know it’s an eyesore, but there’s nothing we can do about it, because we have to wait for the banks.’”

“Foreclosures in metro Toledo surged in June, according to RealtyTrac, an increase of nearly 100 percent compared with the same month a year ago. Re/Max Masters broker Jon Modene, who specializes in foreclosed properties, said what could be fueling the surge is a huge drop-off in short sales. Prior to Jan. 1, short sales were not subject to sales tax, but now they are. ‘There’s now a disincentive to do a short sale. You do a short sale, you get a tax bill,’ Mr. Modene said. ‘So nobody is doing short sales anymore. People are staying in the house and … giving the banks back the house. The banks are sitting on inventory. So they have the ability to push the [foreclosure] numbers forwards or backwards.’”

“Former Federal Reserve Chairman Alan Greenspan spoke to MarketWatch about the current stance of Fed policy, the economy and what to do about asset bubbles. MarketWatch: ‘Some economists argue that the economy has just been bubble after bubble and that we’re doomed to repeat this cycle.’”

“Greenspan: ‘Well, I agree with that. I have come to the conclusion that bubbles, as I noted, are a function of human nature. We don’t have enough observations, but my tentative hypothesis to what we’re dealing with is that both a necessary and sufficient condition for the emergence of a bubble is a protracted period of stable economic activity at low inflation. So it is a very difficult policy problem. I do believe that central banks that believe they can quell bubbles are living in a state of unrealism.’”

“Singapore’s central bank said Thursday that recent property-sector cooling steps were working but it was too early to ease those measures as real-estate prices remained at elevated levels. Property prices have risen 60% over the last four years and fell just 3.3% over the previous three quarters, said Monetary Authority Of Singapore Managing Director Ravi Menon. Singapore, like China, is worried about potential property bubbles that could destabilize the financial industry and push up inflation. China has taken some steps including credit curbs and restrictions on multiple home purchases.”

“‘Risk factors have not changed,’ Menon said. ‘It is premature to ease property measures now.’ Global interest rates are still at historical lows and debt levels among highly leveraged households remain high, the MAS said.”

“London property stagnated in July, the first month with no growth since December 2012, as demand plunged and properties took longer to sell, Hometrack Ltd. said. The data add to evidence that measures to cool the market are working after groups including the Organization for Economic Cooperation and Development warned that a bubble could be forming. The Bank of England introduced measures in June to limit riskier mortgages and new rules came into force in April requiring tougher mortgage-affordability tests.”

“‘It is clear that there are bigger forces at work with a pronounced loss of momentum in the London housing market,’ said Richard Donnell, director of research at Hometrack. The slowdown is due ‘in part due to warnings from the Bank of England and others of a possible house-price bubble,’ he said.”

“Many mainstream economists argue that Dublin is not experiencing a house price bubble at present. They are wrong, just like they were wrong last time. Yesterday’s CSO data appears to show that the cost of buying a house has risen by a bubble-like 24pc in the capital over the past 12 months. The reality is there are already enough houses in the capital to put a roof over the heads of everybody currently looking for a home. It is only a matter of time before people begin selling in big numbers. The trend has already begun at the top end of the Dublin market. It will trickle down. It always does.”

“Rising prices are seductive for anybody who either owns a house outright or anybody in or close to negative equity. Most people probably want prices to keep rising for years against their better judgement. History and common sense tell us they won’t.”

“As the price of houses goes up and up, so the debate goes on: does Australia have a house price bubble? Only 20 years ago, household debt stood at about 60 per cent of income. Now, it’s 177 per cent, the highest it’s ever been. The damage is done. For proof, look at the Reserve Bank’s study, released last week, suggesting Australians would be financially better off renting rather than buying.”

“It could just be that this level of debt across the community has simply made a lot of Australians cranky and impatient, even if they do see the value of their homes galloping ahead week after week. Ten years ago, John Howard secured a stunning election win by asking voters ‘who do you trust to keep interest rates low?,’ Interest rates right now are even lower but many of us are so deep in debt we’re reluctant to trust anyone.”

“Given a second trial in Charlotte, former Beazer executive Michael Rand heard the same verdict: guilty. A federal court jury convicted Rand of securities fraud and other charges stemming from what prosecutors describe as a seven-year accounting conspiracy at the Atlanta-based construction giant. Rand was charged with manipulating earning reports to mislead investors and regulators, then lying about it to federal investigators and company auditors.”

“He also was accused of trying to block a federal probe into his company’s illegal home-mortgage practices that led to hundreds of Charlotte-area foreclosures. Rand and Beazer’s former chief accounting officer, faces a maximum penalty of 85 years in prison and a $1.25 million fine. Sentencing will occur at a later date.”

“The federal investigation that led to Rand’s indictment began in 2007. It followed a series of Observer stories focusing on Beazer practices that broke federal lending laws and put hundreds of Charlotte-area residents into homes they couldn’t afford. While the homebuilder amassed $389 million in profits in 2006, more than 13 percent of its Mecklenburg houses resulted in foreclosures, leaving behind wrecked families and ravished neighborhoods.”

“Despite the damage, Rand is one of only two Beazer figures who have faced charges. Janette Parker, the manager of Beazer’s mortgage office in Charlotte, pleaded guilty to three counts of mortgage fraud in 2011.”




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July 26, 2014

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July 25, 2014

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