“Housing Slump Hitting New England Harder”
The Newtown Bee reports from Connecticut. “2006 is shaping up to be the year the region turned into a buyer’s market, with a housing slump hitting New England harder than most of the rest of the country, and predicted to stay that way through the decade’s end.”
“‘Statistically, I just don’t see prices coming down fast or far enough,’ said independent Newtown broker Susan Washburn. ‘When I attend open houses, frankly I’m shocked at some of the asking prices still out there.’”
“Ms Washburn is telling her clients that today, they cannot expect to get the same type of price as the highest selling similar home in their neighborhood, even if that sale was relatively recent. ‘And I’m strongly advising clients not to go forward with new home purchases unless they have airtight contracts in place on their existing properties. Today, there aren’t many people in a position to carry the burden of two homes,’ she said.”
“Every state in the region except New Hampshire ranked among the nation’s bottom ten states in housing starts from 2000 through 2004, according to the Federal Reserve Bank of Boston.”
The Cape Cod Times from Massachusetts. “Record numbers of mortgage holders on Cape Cod and the rest of the state are in jeopardy of losing their homes. An analysis released yesterday reported 838 foreclosure filings in Barnstable County from Nov. 1, 2005, to Oct. 31, nearly double the previous 12 months.”
“The spike in foreclosures on the Cape may be particularly high because of the region’s disparity between home prices and incomes, said Nancy Davison, (who) counsels people facing foreclosure. The Hyannis nonprofit estimates the Cape’s median home price at about $362,000 and the median income for a family of four at $65,800.”
“Davison said the people who seek help do not always have exotic mortgages. Rather, they often simply cannot afford their payments after a sudden decrease in their family’s income. ‘I can’t say the exotic is completely out of the picture, but it’s not the driving force,’ she said. ‘There is just no wiggle room.’”
“Davison said that many of the borrowers facing foreclosure received mortgages from large, national mortgage companies, not local banks. That suggests the large mortgage companies may have been less careful about whom they chose to approve for a loan, and may have helped many people on the Cape get into houses they could not afford, she said.”
“‘It would make sense that the buyers would go to those lenders,’ Davison said. ‘They seem too good to be true. And they are.’”
“Charles Dowick, an East Falmouth real estate investor, said he receives about five calls a week from people facing foreclosure. ‘It’s just really expensive to get into a mortgage in the first place because the property values are so high on the Cape,’ he said.”
“Dowick said he anticipates temporary layoffs in the construction and other seasonal industries on the Cape may lead to even greater increases in foreclosures in January and February. Higher interest rates may also have an impact as loans with adjustable rates reset, he said.”
The Patriot Ledger in Massachusetts. “Mortgage foreclosures are skyrocketing across the region, especially in such urban areas as Brockton and Taunton among immigrants and moderate-income people who used nontraditional financing to buy homes.”
“Leo O’Neil, VP at Brockton-based HarborOne Credit Union, attributed the surge in foreclosures to ‘exotic’ or nontraditional mortgages that attracted marginal buyers during the past few years. ‘The problem is escalating,’ said O’Neil.”
“Mortgage broker Don Lambert said the state has cracked down on mortgage brokers with questionable practices, shutting more than 30 in recent months. But, he said, much of the blame for the marginal mortgages rests with the ’stated-income products’ that allow applicants to use income levels other than IRS W-2 forms, and to consumers themselves.”
“Lambert said one consumer went to a nearby mortgage company and got a loan after he denied her. The nontraditional mortgages also allowed people to buy more home than they should, he said. ‘Now, it’s all coming home to roost,’ Lambert said. ‘The payments increase and they can’t afford them.’”
The Boston Herald. “The real meltdown is happening at in neighborhoods like Dorchester, Roxbury and Mattapan. A silent plague of foreclosures is doing its own devastating work.”
“As banks lower the boom, more condos and homes pour onto a market already glutted with units for sale. So far, Dorchester has seen nearly as many foreclosure filings this year, 412, as Boston as a whole saw last year, said John Anderson, who runs a data collection business.”
“Just ask Chris Phelan, with a two-bedroom condo he bought near Savin Hill in 2004 for $245,000. Phelan, who wants a home now, not a condo, says he’s ready to sell his unit for what he paid for it, or less, in order to move on. So far, he’s received only ‘ridiculous’ offers, including one for $200,000.”
“‘It’s tough,’ Phelan said, adding ‘there are 400 condos for sale in the Dorchester area alone.’”
“Condo prices in Dorchester peaked in April 2005 at $286,262 before sliding to $231,738 today, Anderson reports. Dorchester accounts for a large percentage of the 984 foreclosure filings in Boston so far this year, he adds.”
“Another hard-hit area is Ward 18, which covers sections of Mattapan and Hyde Park and has seen 190 foreclosure notices to date, up from 78 last year. ‘Dorchester, Mattapan, Roxbury, they are feeling the hit. The sellers are feeling the pressure of foreclosures,’ said John Ford, head of a top downtown brokerage.”
“The foreclosures are a sign of the larger real estate crisis gripping the ZIP codes where most Bostonians live. Builders found condo gold in humble Dorchester triple-deckers, and a host of rapacious, subprime lenders were only too eager to help make the unaffordable seem suddenly attainable, experts say.”
‘New Hampshire’s primary foreclosure reporting service reports a surge in foreclosures in the state, up 214% since the same time last year and a month over month increase of 37%, ending October 31. ‘We are seeing a trend where properties are not being bid on or purchased at auction because there is either no equity or negative equity after all the up-front costs are paid to acquire the property, never mind any repairs that need to be completed. These foreclosures end up reverting back to the banks and mortgage companies who, in turn, are listing them with real estate brokers for a quick sale and to ensure a quick sale, the price is reduced periodically until the property is sold.’
‘Using upscale, mostly suburban ‘McMansions’ as a front, a drug ring converted the pricey properties into marijuana labs where more than 6,000 plants, worth about $24 million on the street, were seized by police in coordinated raids yesterday. State Police Col. Frederick H. Booth said investigators were surprised by the residential homes used to grow the plants from seedlings to harvest. ‘It’s not the type of houses you would typically look at and say ‘That’s a drug house,’ he said of the fairly new homes on suburban lots with sweeping lawns and stands of trees.’
‘The city’s latest plan for reviving southwest Brooklyn’s gritty waterfront includes filling it with breweries, a marina, a second cruise-ship terminal and ferry service to Governors Island - but no luxury condos. Kate Ascher confirmed yesterday that her agency’s vision…no longer includes a controversial plan to build 350 housing units on Columbia Street. ‘The community made it clear this is something they don’t want, so we it pulled it,’ Ascher told The Post.’
Casey should have thought of growing weed to save his investments. Brilliant.
LMAO!!!! I know people make jokes about that but it’s really happening?????????????
About the “growing marijuana” part. I would love to think there was more to the story such as when the police told the grower that because he was growing a controlled substance, the police could confiscate the McMansion and sell it, the grower replied: “Go ahead. Auction the property off. I got an exotic loan with no down payment and I haven’t been paying the mortgage anyway.”
$24M ?? Perhaps they should tax it instead. It’ll help revenues for the coming meltdown.
Red Hook Brooklyn was a ‘hot’ neighborhood 2-3 years ago. Problem is there is no way to get there. Minimal public transportation, a 20 minute bus ride to the subway half a mile away to a mile away. They have a fairway grocery now.
I forgot, you are separated from the much nicer Caroll Gardens by the elevated BQE expressway and Brooklyn battery toll plaza. Plus the Red Hook housing projects, on Columbia Street, one of the nastiest in the city.
FYI, this is where Cunard now docks the QM2, but dont expect any local tours of Red Hook to b on the itinerary any time soon.
“Just ask Chris Phelan, with a two-bedroom condo he bought near Savin Hill in 2004 for $245,000. Phelan, who wants a home now, not a condo, says he’s ready to sell his unit for what he paid for it, or less, in order to move on. So far, he’s received only ‘ridiculous’ offers, including one for $200,000.”
I bet that in 2002 $200k would have been ridiculously high. If he needs to sell he better take the best offer he can get. I understand he may be underwater but what else can one do?
I have been to that part of town in years. I am sure it’s still a pretty rough neighborhood. I agree $200,000 is a ‘ridiculous’ offer. I wouldn’t even pay $100,000 for it.
Correction.
Have = haven’t
If he had no offers and someone offers him 200k for it. Then he is a fool for not taking it, not the person offering it. That person wants the house he does not.
I have to agree.
But it amazes me, 90% of the poplulation can only drive by looking in the rear view mirror. So we wait. And in spring they’ll be “shocked” by the inventory and lack of buyer interest. Zzzzzzz
The market is brutal. Prices went up 28% in a year not long ago. Should it shock anyone if prices went down 28%? Nope… well, not me. We simply have more volitile housing markets.
Besides, look at the statistics… there aren’t that many credit worthy buyers on the sidelines this time. Do your math, but to me it seems we have about half the normal people on the sidelines… so its going to be tough to catch and slow this falling knife.
Neil
ps, I’m going to blog later my opinion on why the market has to slow at today’s prices. But work calls first.
Note that it only takes a 22% decline to wipe out a 28% gain. Keep that in mind and you realize that the market is in worse shape than the MSM makes it out to be…
100,000? That might be generous. As anyone in Boston knows, this is adjacent to the most dangerous area in town.
He’d better sell now, or be “priced in” forever!
“Davison said the people who seek help do not always have exotic mortgages. Rather, they often simply cannot afford their payments after a sudden decrease in their family’s income.”
“Sudden decrease in income”…. This speaks volumes directly to the risks associated with shouldering a mortgage in an economy where employers are exporting jobs and cutting wages. How could anyone in their right mind sign for a mortgage with the kind of economic future we all face?
read the community banking bill
a house in every pot
“Sudden decrease in income”….
This is a very important issue for places with large percents of workers who are hourly (like factory work). Salary workers have fairly consistant paychecks. Hourly people do not. In times of economic expansion, employees work a lot of overtime, and their paychecks go up dramatically. This can last for years, not months. Then an economic downturn comes and the OT is cut off. Weekly salaries fall 20-30%, and stay at those ‘basic’ rates for years. People buy bigger houses and other toys during the OT periods, and sell/lose them during the standard period. I’ve seen this multiple times. Looking for a slightly used boat? .. look in a factory town during a slowdown.
Looking for a slightly used boat?
I’m finding pretty good used tools at pawn shops now.
Dead on Cincy. The exact point of my post but it got trolled by a moonbat.
Searching foreclosed property’s last night and came across these interesting numbers of pre foreclosed and tax lien property’s, Look at CA numbers.
Michigan
Updated: 12/14/06 9:58 PM
Foreclosures: 11,321
Preforeclosures: 69
Bankruptcies: 21,705
FSBOs: 1,567
Tax Liens: 12
Auctions: 0
Colorado
Updated: 12/14/06 9:58 PM
Foreclosures: 6,041
Preforeclosures: 10,330
Bankruptcies: 7,267
FSBOs: 419
Tax Liens: 1
Auction
California
Updated: 12/14/06 9:58 PM
Foreclosures: 6,931
Preforeclosures: 55,917
Bankruptcies: 24,833
FSBOs: 1,350
Tax Liens: 259,395
Auctions: 0
Pretty interesting variation in preforeclosures. Does that indication a great difference in the amount of time a loan remains in that status?
Look at those property tax liens. About two years ago I remember reading where 70% of the folks in CA who lost their homes did so because of taxes - these numbers sure seem to bear that out. Enough can’t be said about the ticking time bomb that is property taxes. Over the years, in buying and selling all three of my past homes I never remember an agent ever giving any emphasis at all to property taxes. My places were all small - imagine how they glossed over property taxes to put people in McMansions?
Ben, could we have a discussion about the ticking property tax bomb? I rent in Newton, MA. Essentially all of my colleagues have had their property taxes double over the last 10 years — despite city taxes limited by law to 2.5% increases. Even with a few tax-increase overrides, the real increases far outpaced the Prop 2 1/2 requirements. No-one cared that much when their house values were skyrocketing (it was a kind of brokerage fee). But now with a collapsing market and looming foreclosures, I predict tax wars will soon break out all over the map. As a potential buyer, property tax is moving up to my number 1 concern.
You should post that in the topics suggestions so that other readers can add or expand on the topic.
10 years? That’s pretty slow. Ours doubled in the last
four years. I’d guess that over the last 10 years, you’d
have trouble finding a lot of places where the property
taxes didn’t double. Except for the places with no kids.
A case in Southern California: One single parent family bought a house a few year ago 150K. Got greedy, sold it for 350K and rolled over to a 700K home . The woman recently got the annual RE tax bill for 10,000 (no one told her about tax or so she said).
Now she is working 3 jobs to find money to pay tax. It’s also likely that the 500K mortgage is IO. We can see disaster coming …
Should have stayed with the older house, low tax, no worry.
$180K profit will pay the rent for quite some time.
some from my office have attended the foreclosure auctions regularly in s.e. massachusetts. as recently as six months ago third party bidders represented over half of the buyers at these auctions. for the last two months not a single third party has bid, all went back to the original lender. they did not identify a single property during the past month that did not go to auction for more than the property was worth. between the 25-30% haircut these lenders will take when they attempt to dispose of these properties and the 25-30% haircut they’re taking on the sale of their defaulted paper, i can’t imagine that subprime will be in the vocabulary a year from now. the business was predicated on “basis point” spreads. originate, securitize on a 300-400 basis point spread, costs amount to 250-300 basis points, book a profit and enjoy that residual cash flow from their portfolio. i don’t think a 2500 basis point hit was in their business plan.
“Just ask Chris Phelan, with a two-bedroom condo he bought near Savin Hill in 2004 for $245,000. Phelan, who wants a home now, not a condo, says he’s ready to sell his unit for what he paid for it, or less, in order to move on. So far, he’s received only ‘ridiculous’ offers, including one for $200,000.”
“‘It’s tough,’ Phelan said, adding ‘there are 400 condos for sale in the Dorchester area alone.’”
Ya think this is why they’re folding? I imagine its getting really tough to sell subprime paper. That is going to increase the premium for the MBS’ backed by junk mortgages.
Neil
“…i can’t imagine that subprime will be in the vocabulary a year from now.”
**************************************************************************
So why has Bear Stearns upgraded LEND, one of the leading subprime lenders. Incidentally, LEND is highly leveraged. Should make for a quick demise when the time comes.
Dunno, but when that particular firm upgrades something like that, they usually get behind it with their money too. I remember them upgrading XMSR in the winter of 2002 when it was in the 2s and nobody wanted it, thought it would go bankrupt. They rode that sucker to 40+
B-bo,
Using “Banker and Tradesman” at the local library, this summer I was tracking who was buying foreclosed properties in MA. It looked as though 85% of the homes were bought back by the banks. Very few were bought by individuals. I’ve been sidetracked lately, it might be time to update the stats.
like i said up until the summer most were sold to third parties, the equity train made these homes at auction attractive, then the train stopped. most of the mortgage inquiries these days are “unrefinancable”.
‘When I attend open houses, frankly I’m shocked at some of the asking prices still out there.’
I was shocked before the prices started going down. Since they haven’t started going down where I live yet, I’m still shocked.
It’s $1 million for a 17 foot wide rowhouse in Brooklyn, in a cop-teacher-fireman-storekeeper neighborhood. Redlined until the early 1980s (the banks assumed it was heading for abandonment), these houses sold for $200K in the early 1990s.
Wonder how “ridiculous” that offer will look in 6 months.
“The spike in foreclosures on the Cape may be particularly high because of the region’s disparity between home prices and incomes, said Nancy Davison, vice president of operations for Housing Assistance Corp., which counsels people facing foreclosure. The Hyannis nonprofit estimates the Cape’s median home price at about $362,000 and the median income for a family of four at $65,800″.
I wonder how much of this are higher income Bostonians and New Yorkers who stretched too much on vacation homes.
I’ve visited a few beach front homes in the cape that have slashed asking prices by 30%-50%. Unfortunately, after seeing Al Gore’s movie, I don’t think we’re going to touch them. There is just too much risk.
I’m just thankful Al Gore created the Internet so we can all discuss these things.
Direct quote without UnRealtor’s massaging:
“During my service in the United States Congress, I took the initiative in creating the Internet.”
Which is correct.
It’s correct that Al Gore “took the initiative in creating the Internet”?
False.
Gore entered Congress in 1976.
Thanks for mentioning this point, which has often crossed the back of my mind. All of us use the term “underwater” to denote debt exceeding the value of the securing asset, but there is an older and more obvious meaning that could soon pertain to coastal housing!
The Manhattanites who have been coming to buy in the Hamptons have slowed down to a trickle and are waiting for bigtime price slashing. Trouble in paradise!
“The nontraditional mortgages also allowed people to buy more home than they should, he said.”
I’ve read this and similiar quotes about a thousand times. Basically the truth is that they “allowed people to borrow more money then they should.” Has nothing to do with buying more house, as in more granite, more stainless, more imagined appreciation.
I think people ended up with the same house for more money in built-out areas like the Northeast and California. In fast growing areas with overbuilding, they got more house.
Where I live, it might as well be the 1920s. Very little difference, aside from the internet.
That is so true! Well said!
We all understand gentrification. When yuppies start moving into some working class or ghetto neighborhood, a rise in prices can be expected.
But the strangest thing about this bubble is that prices have tripled WITHOUT any gentrification. The people buying houses in my neighborhood today are the very same people who were buying them six years ago. Yet prices have tripled!
People really are getting the same house for more money. That’s exactly right.
“Just ask Chris Phelan, with a two-bedroom condo he bought near Savin Hill in 2004 for $245,000. Phelan, who wants a home now, not a condo, says he’s ready to sell his unit for what he paid for it, or less, in order to move on. So far, he’s received only ‘ridiculous’ offers, including one for $200,000.”
So the condo he bought is not a home, yet a house will be.
Secondly, he is willing to sell what he paid for it or less, yet someone did offer less.
What a plonker.
“Ms Washburn is telling her clients that today, they cannot expect to get the same type of price as the highest selling similar home in their neighborhood, even if that sale was relatively recent. ‘And I’m strongly advising clients not to go forward with new home purchases unless they have airtight contracts in place on their existing properties. Today, there aren’t many people in a position to carry the burden of two homes,’ she said.”
Translation: The trend ain’t your friend anymore…
The boston housing market is doubly scary - high prices and nosebleed valuations. Plus crappy demographics (make that triply scary). I’ve sat on the sidelines for several years here - people thought I was a dope to rent. I try to avoid discussing R.E. when I see folks now - it’s too painful.
Oh my God. I used to avoid talking real estate with my south shore friends because they thought I was a fricken moron for not buying. Now I avoid talking real estate with these same people as they sit there and tell me how buttf*$#ed they are with these unpayable mortgages and crushing taxes. Oh well, I just got a new job in Needham, guess what? I get to end my lease in March and move closer to my new job. They get to pay too much for houses they don’t really want anymore.
A buyer’s market is one where homes are afforable. How did we get to the amount of inventory signaling a buyer’s market?
having a lot more of expensive homes on the market to choose from doesn’t sound like a deal to me.
I totally agree.
I think the injection of the term “Buyer’s Market” into the current discussion is a result of groups like the National Association of Realtors and their endless stream of absurd talking points and marketing hype. When the market started heading down, they robotically started chirping, “Buyer’s market! Buyer’s market!” seemingly without having any idea what that term means.
“If we call it a Buyer’s Market, they will buy…”
It’s a steaming load. It ain’t a buyer’s market until the prices come down to where the buyers can actually afford to buy. Until then it’s just a Sucker’s Market. (Or a Renter’s Market - someone here coined that, I think).
Southern NH is still pretty good. Has anybody have any anecdtotes or info on southern NH? The homes still sell for near high prices and have only dropped a little bit as far as volume. Prices going up almost 100 percent and then down 5 doesn’t exactly sound like a crash. I considered buying something in 2002, I wish I did.
NH - Historical model for an unwinding bubble is as follows:
1) Final upsurge in prices/volume characterized by hysteria. We saw that in ‘04, ‘05 - bidding wars on uninspected property, etc.
2) Orderly price price declines follow. Remember, in both 1929 and 1987, there were orderly, yet significant, declines in stock prices in the weeks and months before before “crash” day. This is the stock market example - real estate moves at a much slower pace.
3) Panic
It took six years to build this thing. Don’t expect it to “bottom” in six weeks time.
My read is that things have slowed down quite a bit in the
$250K and up range, especially where the property isn’t
near perfect. Stuff is moving reasonably well in our development but location is good and prices are affordable.
I haven’t checked the prices in a while but my guess is
somewhere between a five and ten percent drop.
Ok, nothing really justified the uptick RE market other than a mania of short term demand with unqualifed buyers going for the hype .The lenders didn’t stop the inflated appraisals and the RE agents were haveing a field day making big commissions off a bunch of people who shouldn’t be buying .
The short term investment people should of been told real estate does not always go up, so you better be able to afford the payments long term ,(something lenders use to do ).
I have never seen so many people buy a house in 2004 or 2005 and already need to sell it .
In general, real estate is not a short term investment .
Now lenders ,after the fact ,are saying that borrowers should qualify for their no down toxic loans. The question should be ,”Why were lenders giving loans that people didn’t qualify for and going along with hyped up appraisals .” A lender is suppose to measure risk and this was a massive failure of duty on the part of the lenders .
Higher fees and interest rates do not make up for a buyer that doesn’t qualify .The lenders didn’t even protect themselves by requiring a higher down payment on high risk loans .
It’s a somewhat slower market here in Portland than say 1.5 years ago, which was probably our peak. Inventory isn’t doing much at all. The following is for single family homes inventory in Cape Elizabeth, Cumberland, Falmouth and Portland:
11/3/2005 425
12/5/2005 406
1/3/2006 352
2/2/2006 344
3/3/2006 345
4/4/2006 351
6/4/2006 409
7/22/2006 477
9/9/2006 467
11/5/2006 437
12/15/2006 355
If your using Realtor.com for your stats, I find them very unreliable. Actually, I think they are pretty useless. When I look there for local places I see for sale, they are almost never listed.
At this point, the inventory number hardly matters when there aren’t any sales. Pretty much everything I have seen for sale remains for sale.
I am and here in Portland they seem to agree with the For Sale signs except For Sale by Owner of course.