Foreclosure lists long, grim
Counties publish property tax delinquencies
November 24, 2007
BY KATHLEEN GRAY
FREE PRESS STAFF WRITER
From the well-heeled streets of the Pointes to the desolate neighborhoods of Detroit, thousands of people are facing foreclosure of their properties because they haven't paid taxes for at least two years.
In 121 printed pages of the Sunday Free Press, Wayne County Treasurer Raymond Wojtowicz listed more than 18,000 properties across Wayne County facing foreclosure. Notices sent to homeowners since March have whittled the list from 161,000 properties that had been delinquent on tax payments.
The advertisement will run the next two Sundays. The printed pages cost the county more than $400,000, and are required by law. It's just one more way the county tries to make sure property owners know that they're facing foreclosure.
"No one should ever be embarrassed if they have some debt," Wojtowicz said. "We all get into a scrape every so often, and during these tough economic times, we want to do everything we can to keep people in their homes."
Property owners can go to an administrative hearing on Jan. 7, 8 or 9 to make arrangements to pay their delinquent taxes. The hearings begin at 9 a.m. at the International Center, 400 Monroe, Suite 320, in Detroit.
Once that process is done, Wojtowicz estimates, the list likely will be cut down to less than 4,000 properties and up to 90% of those will be vacant or abandoned. Then, employees from the Treasurer's Office will begin to knock on doors of owner-occupied homes to make sure the owners know they are on the list, so as few property owners as possible lose their assets.
In Oakland County, 8,300 properties are facing foreclosure because of delinquent taxes. At the end of December, the county will publish 19,757 names in the Observer/Eccentric newspapers of people who have had some sort of interest in the property over the years.
"That's the largest number of tax foreclosures we've had," Oakland County Treasurer Patrick Dohany said. "It is an issue, putting people's name in the paper, but it gets people identified."
Oakland's tax foreclosure hearings will be held at 9 a.m. Feb. 13 in the Oakland County Courthouse, 1200 North Telegraph, Pontiac.
In Macomb County, 1,700 properties facing foreclosure will be published in the Macomb Daily on three consecutive Thursdays in December.
"That's about a third more than last year," Macomb County Treasurer Ted Wahby said. "And so far, it's worked really well. We've always collected 100% of the delinquent taxes."
Wahby will meet with property owners facing foreclosure at 10 a.m. Jan. 8 at his office, 1 S. Main, Mt. Clemens. The foreclosure hearings will be held at 8:30 a.m. Feb. 1 in Judge Matt Switalski's chambers, 40 N. Main, in Mt. Clemens.
Saturday, November 24, 2007
Monday, November 19, 2007
No Slowdown in Foreclosure Filings
No Slowdown in Foreclosure Filings
Hardest-hit cities are on coasts and in Rust Belt, according to a new survey
By Les Christie, CNNMoney.com staff writer
Nov. 14, 2007
NEW YORK - California, Florida, and Ohio continue to dominate new foreclosure filings, as most of the nation saw increases in the third quarter, according to a new survey.
During the period ended Sept. 30, 77 out of the nation's 100 largest metropolitan areas reported rises in delinquencies compared with the previous three months, according to the latest report from RealtyTrac, an online marketer of foreclosure properties.
The three most affected states reveal the two main causes of mortgage payment problems: economic weakness, as exemplified by Ohio, and speculative excess that led to high home prices and unaffordable mortgages, as represented by California and Florida.
Making Good on a Bad Real Estate Bet
In the past few months, the foreclosure story has become a tale of two regions. Some of the hardest-hit states have traditionally been in the Midwest, where plant closings and job losses have hit the economy there hard.
The other region is the Sun Belt, which is showing even more significant foreclosure growth as out-sized price increases in the first half of the decade led to virtually unchecked real estate speculation.
According to the Center for Responsible Lending, 7.2 million households have subprime mortgages, and more than 14 percent of those are in default. It projects that one of every five of those loans issued in 2005 and 2006 will end in foreclosure, with 2.2 million families losing their homes.
Not every state has been clobbered, according to James Saccacio, RealtyTrac's CEO. "There continue to be pockets of the country - most noticeably metro areas in the Carolinas, Virginia, and Texas - that have thus far dodged the foreclosure bullet," he said in a statement.
But, nationally, foreclosure filings, which include all three main stages of foreclosure, default, or late payments, auction and real estate owned (properties reacquired by lenders and now being resold), were up 30 percent compared with the previous three months.
Among metro areas, the highest delinquency rate was in Stockton, Calif., which totaled 7,116 filings during the three-month period, one for every 31 households. Second was the Detroit area with one per 33 households and a total of 25,708. Half the cities in the top 10 were in California.
Several Massachusetts cities experienced huge delinquency jumps during the quarter. Boston filings soared 146 percent to one per every 220 households, Springfield's increased 151 percent (one per 172) and Worcester 122 percent (one per 150).
Filings in the Providence, R.I./ New Bedford, Mass. area climbed a whopping 295 percent, albeit from a low base, to one for every 549 households.
The metro areas least affected include Greenville, S.C. (one per 3,289), McAllen, Texas (one per 2,185) and Baton Rouge, La. (one per 2,074).
Hardest-hit cities are on coasts and in Rust Belt, according to a new survey
By Les Christie, CNNMoney.com staff writer
Nov. 14, 2007
NEW YORK - California, Florida, and Ohio continue to dominate new foreclosure filings, as most of the nation saw increases in the third quarter, according to a new survey.
During the period ended Sept. 30, 77 out of the nation's 100 largest metropolitan areas reported rises in delinquencies compared with the previous three months, according to the latest report from RealtyTrac, an online marketer of foreclosure properties.
The three most affected states reveal the two main causes of mortgage payment problems: economic weakness, as exemplified by Ohio, and speculative excess that led to high home prices and unaffordable mortgages, as represented by California and Florida.
Making Good on a Bad Real Estate Bet
In the past few months, the foreclosure story has become a tale of two regions. Some of the hardest-hit states have traditionally been in the Midwest, where plant closings and job losses have hit the economy there hard.
The other region is the Sun Belt, which is showing even more significant foreclosure growth as out-sized price increases in the first half of the decade led to virtually unchecked real estate speculation.
According to the Center for Responsible Lending, 7.2 million households have subprime mortgages, and more than 14 percent of those are in default. It projects that one of every five of those loans issued in 2005 and 2006 will end in foreclosure, with 2.2 million families losing their homes.
Not every state has been clobbered, according to James Saccacio, RealtyTrac's CEO. "There continue to be pockets of the country - most noticeably metro areas in the Carolinas, Virginia, and Texas - that have thus far dodged the foreclosure bullet," he said in a statement.
But, nationally, foreclosure filings, which include all three main stages of foreclosure, default, or late payments, auction and real estate owned (properties reacquired by lenders and now being resold), were up 30 percent compared with the previous three months.
Among metro areas, the highest delinquency rate was in Stockton, Calif., which totaled 7,116 filings during the three-month period, one for every 31 households. Second was the Detroit area with one per 33 households and a total of 25,708. Half the cities in the top 10 were in California.
Several Massachusetts cities experienced huge delinquency jumps during the quarter. Boston filings soared 146 percent to one per every 220 households, Springfield's increased 151 percent (one per 172) and Worcester 122 percent (one per 150).
Filings in the Providence, R.I./ New Bedford, Mass. area climbed a whopping 295 percent, albeit from a low base, to one for every 549 households.
The metro areas least affected include Greenville, S.C. (one per 3,289), McAllen, Texas (one per 2,185) and Baton Rouge, La. (one per 2,074).
Sunday, November 18, 2007
Market forces some to juggle mortgages
November 18, 2007
BY KATHERINE YUNG
FREE PRESS BUSINESS WRITER
One of the worst housing markets in Michigan's history is taking a heavy toll on Barb Corwin's finances, not to mention her psyche.
The Ann Arbor bar owner is shouldering three mortgage payments. She can't sell her condominium, the house she lives in or the dream house she renovated and planned to move into.
Dropping the sales price on her dream house by $50,000 didn't help. And she can't find anyone to rent her condo.
To keep afloat, she cashed in some of her retirement savings and borrowed money.
"You can't even imagine the stress," Corwin said. "I put all my eggs in one basket. Who would have thought this would have happened?"
The poor job market and the subprime mortgage crisis have cost thousands of Michiganders their homes. But less obvious is the housing slump's growing impact on people with stable finances who are simply trying to sell their homes.
Many now owe more on their mortgages than their houses are worth. Others are dealing with the headaches of renting their homes because they can't sell them. And some have put even more money into their houses to make improvements they hope will give them a sales advantage, often to no avail.
The situation has left sellers feeling frustrated, scared, angry and depressed. To weather the turmoil, they're cutting back personal spending, which bodes poorly for the broader economy.
"It's been a tough road for a lot of folks," said Michael Poulos, chief executive and president of Michigan First Credit Union. "It's got a real psychological effect."
'Never seen anything like this'
In the first nine months of this year, the number of homes sold in the state and the average sale price each fell about 6% from the year-ago period, according to the Michigan Association of Realtors. Michigan continues to rank among the states with the highest foreclosure rates.
"We have never seen anything like this," said David Jensen, vice president and senior broker at Max Broock Realtors in Birmingham.
And most of the bank-owned foreclosures haven't come on the market yet, he warned.
Conditions could get worse if soaring oil prices and the fallout from excessive subprime mortgage lending send the country into a recession, experts said.
The national drop in home prices is at its worst level since the Great Depression, said Mark Zandi, chief economist of Moody's Economy.com Inc.
"In terms of pricing, this will be unprecedented," he said.
That doesn't bode well for sellers such as Roger Haezebrouck, who is looking to move to a more affordable house.
He put his Macomb Township home up for sale a year ago, took it off the market for a few months and listed it again two months ago. It's now listed at $268,000.
At first, he was showing his house to potential buyers five times a week. But during the last four weeks, no one has wanted to take a look.
Haezebrouck estimated that he will get only $1,500 from selling his home for $263,000. If he lowers the price by $10,000, as he fears he may have to do, he said, he will lose money.
Adding to the pressure, Haezebrouck is searching for a job. He's living off his savings and buyout money he received after leaving a job in the natural-gas industry.
To cope, he is turning down the heat, buying food in bulk and driving less often to save gas.
But in the meantime, he has had to fix a water leak in his basement and repaint portions of his house.
"Selling a house is nerve-racking," he said. "Nothing is moving."
Coping with multiple mortgages
The financial pressures of owning a home that nobody wants to buy is also playing out in another way: While some people have sold their houses for whatever they could get, others have opted to take on extra costs to hang on to their homes until the market improves.
That's the case with Liz Considine, 37, of Huron Township. She and her husband put their 2 1/4 -acre Westland farmstead up for sale when they moved to another house with more land. Nearly 2 1/2 years later, they're still looking for a buyer, even after dropping the price from $295,000 to $275,000.
The couple has been able to afford two mortgages. But the financial burden hasn't left them with enough money to buy and care for a horse, a major reason they moved in the first place.
And all the money they have spent on the two houses would have been enough for them to pay off the mortgage on the first one, Considine said. They now have someone living rent-free in that house.
Making matters worse, if they don't find a buyer for their first home soon, they may have to pay capital-gains taxes whenever they do sell the property because of the way the tax laws are written.
"It's been a lot to keep up," said Considine. She said she tells herself not to think about how much money is going out the door. "Two and a half years is getting to be a little too much."
Tim Clyne, a 61-year-old pipe fitter at General Motors Corp.'s Technical Center in Warren, said he's in a similar situation. He is coping with three mortgages plus property taxes because he couldn't sell his house in Troy after building a new one in Shelby Township.
Rather than lower the price of his Troy house, now on the market for $225,000, by $50,000, he tore down two-thirds of a massive garage on the property and sold the lot for $110,000.
That has helped him continue paying two mortgages on the house in addition to the one on his new custom-built home.
Clyne also decided to rent his old house instead of selling it, an increasingly popular alternative for many sellers fed up with the weak market. A tenant moved in early this month, but the rent covers only the original mortgage on the house.
Despite the hassles, it could have been worse. Clyne got out of an adjustable-rate loan for his new house, switching to a fixed-rate one with stable payments. Adjustable-rate loans have caused many borrowers to default on their mortgages as interest rates have risen.
But waiting out the housing slump has affected Clyne's finances. The money from the sale of the land at his old house has dwindled, and he has had to dip into his savings.
Clyne and his family live frugally, driving older cars, going to dollar movies and, when they eat out, going to Wendy's.
"I'm not prepared to give up $50,000 that I will never be able to save," he said, explaining his reasons for refusing to drastically mark down the price of his old home.
But not everyone can get by on renting. Corwin, the Ann Arbor bar owner, had been leasing her 1,000-square-foot condo for $1,200 a month until her tenant moved out. Now she would gladly accept $800 a month but hasn't had any takers.
It doesn't help that a nearby apartment building is offering units the same size as Corwin's for $545 a month.
The flood of unsold homes also forced Corwin to lower by $200 the monthly rent on another house she owns in Ann Arbor.
How does she keep herself sane? "Am I? I have to exercise every day," she said.
Problem spreads to other states
No one knows when the housing market will rebound. The last nationwide housing downturn started in late 1988 and didn't end until early 1992, Zandi said. And the most severe housing bust since the Great Depression lasted from 1979 to 1983.
Michigan can take consolation that it's not alone in its suffering. The double-whammy of falling prices and an oversupply of unsold homes plaguing the state the last few years has spread to the rest of the country.
Martin Bouma, one of the top realty agents in Ann Arbor, used to feel left out when attending residential real estate conferences around the country because other states were enjoying booming housing markets. That's no longer the case.
"For the first time, everyone else had the same problem," he said of the mood at a recent conference in Scottsdale, Ariz.
Putting plans on hold
Locally, realty agents are hoping the market will start to stabilize next year. But the uncertainty has led some sellers to take their homes off the sales block and put their plans to move on hold.
That's what Brian Pospy did. In the middle of September, he removed the for-sale sign on his Clarkston home. It sat on the market for a little more than a year, even though Pospy had lowered the price by $30,000, to the $270,000 range.
He said he hopes to put his house up for sale again next spring. He wants to move closer to his job in Livonia. But with his oldest son starting elementary school next fall, he needs to make the move soon so his child won't have to switch schools later.
Like many other sellers, Pospy said he has tried to make his house more appealing to buyers. He just finished spending about $2,500 to replace the linoleum on his kitchen floor with ceramic tiles and to install new carpeting in the family room.
Pospy estimated that his house is worth $50,000 less than two or three years ago.
"Buyers are looking for somebody in a distressed situation," he said. "It is a little frustrating."
BY KATHERINE YUNG
FREE PRESS BUSINESS WRITER
One of the worst housing markets in Michigan's history is taking a heavy toll on Barb Corwin's finances, not to mention her psyche.
The Ann Arbor bar owner is shouldering three mortgage payments. She can't sell her condominium, the house she lives in or the dream house she renovated and planned to move into.
Dropping the sales price on her dream house by $50,000 didn't help. And she can't find anyone to rent her condo.
To keep afloat, she cashed in some of her retirement savings and borrowed money.
"You can't even imagine the stress," Corwin said. "I put all my eggs in one basket. Who would have thought this would have happened?"
The poor job market and the subprime mortgage crisis have cost thousands of Michiganders their homes. But less obvious is the housing slump's growing impact on people with stable finances who are simply trying to sell their homes.
Many now owe more on their mortgages than their houses are worth. Others are dealing with the headaches of renting their homes because they can't sell them. And some have put even more money into their houses to make improvements they hope will give them a sales advantage, often to no avail.
The situation has left sellers feeling frustrated, scared, angry and depressed. To weather the turmoil, they're cutting back personal spending, which bodes poorly for the broader economy.
"It's been a tough road for a lot of folks," said Michael Poulos, chief executive and president of Michigan First Credit Union. "It's got a real psychological effect."
'Never seen anything like this'
In the first nine months of this year, the number of homes sold in the state and the average sale price each fell about 6% from the year-ago period, according to the Michigan Association of Realtors. Michigan continues to rank among the states with the highest foreclosure rates.
"We have never seen anything like this," said David Jensen, vice president and senior broker at Max Broock Realtors in Birmingham.
And most of the bank-owned foreclosures haven't come on the market yet, he warned.
Conditions could get worse if soaring oil prices and the fallout from excessive subprime mortgage lending send the country into a recession, experts said.
The national drop in home prices is at its worst level since the Great Depression, said Mark Zandi, chief economist of Moody's Economy.com Inc.
"In terms of pricing, this will be unprecedented," he said.
That doesn't bode well for sellers such as Roger Haezebrouck, who is looking to move to a more affordable house.
He put his Macomb Township home up for sale a year ago, took it off the market for a few months and listed it again two months ago. It's now listed at $268,000.
At first, he was showing his house to potential buyers five times a week. But during the last four weeks, no one has wanted to take a look.
Haezebrouck estimated that he will get only $1,500 from selling his home for $263,000. If he lowers the price by $10,000, as he fears he may have to do, he said, he will lose money.
Adding to the pressure, Haezebrouck is searching for a job. He's living off his savings and buyout money he received after leaving a job in the natural-gas industry.
To cope, he is turning down the heat, buying food in bulk and driving less often to save gas.
But in the meantime, he has had to fix a water leak in his basement and repaint portions of his house.
"Selling a house is nerve-racking," he said. "Nothing is moving."
Coping with multiple mortgages
The financial pressures of owning a home that nobody wants to buy is also playing out in another way: While some people have sold their houses for whatever they could get, others have opted to take on extra costs to hang on to their homes until the market improves.
That's the case with Liz Considine, 37, of Huron Township. She and her husband put their 2 1/4 -acre Westland farmstead up for sale when they moved to another house with more land. Nearly 2 1/2 years later, they're still looking for a buyer, even after dropping the price from $295,000 to $275,000.
The couple has been able to afford two mortgages. But the financial burden hasn't left them with enough money to buy and care for a horse, a major reason they moved in the first place.
And all the money they have spent on the two houses would have been enough for them to pay off the mortgage on the first one, Considine said. They now have someone living rent-free in that house.
Making matters worse, if they don't find a buyer for their first home soon, they may have to pay capital-gains taxes whenever they do sell the property because of the way the tax laws are written.
"It's been a lot to keep up," said Considine. She said she tells herself not to think about how much money is going out the door. "Two and a half years is getting to be a little too much."
Tim Clyne, a 61-year-old pipe fitter at General Motors Corp.'s Technical Center in Warren, said he's in a similar situation. He is coping with three mortgages plus property taxes because he couldn't sell his house in Troy after building a new one in Shelby Township.
Rather than lower the price of his Troy house, now on the market for $225,000, by $50,000, he tore down two-thirds of a massive garage on the property and sold the lot for $110,000.
That has helped him continue paying two mortgages on the house in addition to the one on his new custom-built home.
Clyne also decided to rent his old house instead of selling it, an increasingly popular alternative for many sellers fed up with the weak market. A tenant moved in early this month, but the rent covers only the original mortgage on the house.
Despite the hassles, it could have been worse. Clyne got out of an adjustable-rate loan for his new house, switching to a fixed-rate one with stable payments. Adjustable-rate loans have caused many borrowers to default on their mortgages as interest rates have risen.
But waiting out the housing slump has affected Clyne's finances. The money from the sale of the land at his old house has dwindled, and he has had to dip into his savings.
Clyne and his family live frugally, driving older cars, going to dollar movies and, when they eat out, going to Wendy's.
"I'm not prepared to give up $50,000 that I will never be able to save," he said, explaining his reasons for refusing to drastically mark down the price of his old home.
But not everyone can get by on renting. Corwin, the Ann Arbor bar owner, had been leasing her 1,000-square-foot condo for $1,200 a month until her tenant moved out. Now she would gladly accept $800 a month but hasn't had any takers.
It doesn't help that a nearby apartment building is offering units the same size as Corwin's for $545 a month.
The flood of unsold homes also forced Corwin to lower by $200 the monthly rent on another house she owns in Ann Arbor.
How does she keep herself sane? "Am I? I have to exercise every day," she said.
Problem spreads to other states
No one knows when the housing market will rebound. The last nationwide housing downturn started in late 1988 and didn't end until early 1992, Zandi said. And the most severe housing bust since the Great Depression lasted from 1979 to 1983.
Michigan can take consolation that it's not alone in its suffering. The double-whammy of falling prices and an oversupply of unsold homes plaguing the state the last few years has spread to the rest of the country.
Martin Bouma, one of the top realty agents in Ann Arbor, used to feel left out when attending residential real estate conferences around the country because other states were enjoying booming housing markets. That's no longer the case.
"For the first time, everyone else had the same problem," he said of the mood at a recent conference in Scottsdale, Ariz.
Putting plans on hold
Locally, realty agents are hoping the market will start to stabilize next year. But the uncertainty has led some sellers to take their homes off the sales block and put their plans to move on hold.
That's what Brian Pospy did. In the middle of September, he removed the for-sale sign on his Clarkston home. It sat on the market for a little more than a year, even though Pospy had lowered the price by $30,000, to the $270,000 range.
He said he hopes to put his house up for sale again next spring. He wants to move closer to his job in Livonia. But with his oldest son starting elementary school next fall, he needs to make the move soon so his child won't have to switch schools later.
Like many other sellers, Pospy said he has tried to make his house more appealing to buyers. He just finished spending about $2,500 to replace the linoleum on his kitchen floor with ceramic tiles and to install new carpeting in the family room.
Pospy estimated that his house is worth $50,000 less than two or three years ago.
"Buyers are looking for somebody in a distressed situation," he said. "It is a little frustrating."
Sunday, November 11, 2007
Banks just can't wait to lend money to some borrowers
Banks just can't wait to lend money to some borrowers
Good credit, job and stability help
November 11, 2007
BY SUSAN TOMPOR
FREE PRESS PERSONAL FINANCE WRITER
Just because it's harder to tap into home equity doesn't mean that no one can get any money.
In September, amid talk of the credit crunch, Derek Palm, a West Bloomfield homeowner, walked into a National City Bank branch to take care of some business with his son's account at college, got a pitch from a banker and pretty much walked out with a $50,000 home-equity line of credit.
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He's the kind of customer banks are begging to find these days. He's not likely to go blow all that money.
It's essential to remember Palm's experience and realize that all home equity isn't lost, either. After all, consumers nationwide have roughly $21 trillion in household real estate wealth.
"It's not like there's a credit crunch across the entire spectrum of the economy," said Mark Zandi, chief economist for Moody's Economy.com.
Some homeowners -- those who bought their homes years ago, those who continued to pay down debt, those who didn't borrow to the hilt -- are doing OK. So they will be able to continue to buy and borrow.
"They're the reason why" the U.S. economy "is likely to continue to grow," Zandi said.
It also may help that the Federal Reserve has cut interest rates twice since Sept. 18.
Right now, banks still want to lend money to top borrowers and continue to offer home-equity loans and lines of credit.
Auburn Hills-based USA Credit Union has a promotion going through Nov. 30 on a 7-year, fixed-rate home-equity loan for as low as 6.25%. The credit union is offering homeowners the chance to borrow up to 90% of their home's current value, less the outstanding mortgage balance. The minimum loan balance is $5,000.
Huntington Bank has a promotion on a home-equity personal credit line, too. This fall, National City Bank offered a promotion -- no longer available -- for a home-equity line of credit as low as 6.75%. The rate was based on the prime rate minus one percentage point. The minimum credit line was $50,000. It also required that the customer withdraw $25,000 at closing.
"There's a huge demand for good borrowers right now," said Diane Swonk, chief economist for Mesirow Financial in Chicago.
She dubs it a bit of a "feeding frenzy."
No one has to tell that to Palm.
"They made it very easy," said Palm, who has good credit, has a good job as a medical sales representative and has lived in his home for 14 years.
He estimates that his house would sell for about $550,000. He sees the equity line as a backup. He said he doesn't have plans to buy anything new; maybe he'll use some money toward a child's college tuition.
Even so, many Michigan homeowners won't find it that simple to borrow as much as they once could.
Good credit, job and stability help
November 11, 2007
BY SUSAN TOMPOR
FREE PRESS PERSONAL FINANCE WRITER
Just because it's harder to tap into home equity doesn't mean that no one can get any money.
In September, amid talk of the credit crunch, Derek Palm, a West Bloomfield homeowner, walked into a National City Bank branch to take care of some business with his son's account at college, got a pitch from a banker and pretty much walked out with a $50,000 home-equity line of credit.
Advertisement
He's the kind of customer banks are begging to find these days. He's not likely to go blow all that money.
It's essential to remember Palm's experience and realize that all home equity isn't lost, either. After all, consumers nationwide have roughly $21 trillion in household real estate wealth.
"It's not like there's a credit crunch across the entire spectrum of the economy," said Mark Zandi, chief economist for Moody's Economy.com.
Some homeowners -- those who bought their homes years ago, those who continued to pay down debt, those who didn't borrow to the hilt -- are doing OK. So they will be able to continue to buy and borrow.
"They're the reason why" the U.S. economy "is likely to continue to grow," Zandi said.
It also may help that the Federal Reserve has cut interest rates twice since Sept. 18.
Right now, banks still want to lend money to top borrowers and continue to offer home-equity loans and lines of credit.
Auburn Hills-based USA Credit Union has a promotion going through Nov. 30 on a 7-year, fixed-rate home-equity loan for as low as 6.25%. The credit union is offering homeowners the chance to borrow up to 90% of their home's current value, less the outstanding mortgage balance. The minimum loan balance is $5,000.
Huntington Bank has a promotion on a home-equity personal credit line, too. This fall, National City Bank offered a promotion -- no longer available -- for a home-equity line of credit as low as 6.75%. The rate was based on the prime rate minus one percentage point. The minimum credit line was $50,000. It also required that the customer withdraw $25,000 at closing.
"There's a huge demand for good borrowers right now," said Diane Swonk, chief economist for Mesirow Financial in Chicago.
She dubs it a bit of a "feeding frenzy."
No one has to tell that to Palm.
"They made it very easy," said Palm, who has good credit, has a good job as a medical sales representative and has lived in his home for 14 years.
He estimates that his house would sell for about $550,000. He sees the equity line as a backup. He said he doesn't have plans to buy anything new; maybe he'll use some money toward a child's college tuition.
Even so, many Michigan homeowners won't find it that simple to borrow as much as they once could.
Equity harder to tap as home values fall
Days of getting easy cash are over
Equity harder to tap as home values fall
November 11, 2007
BY SUSAN TOMPOR
FREE PRESS COLUMNIST
Flush real estate values for years meant that consumers could put little money down on a house, watch the home's value grow and then treat that added equity just like a bonus.
But the credit crunch has landed with a thud, falling particularly hard on Michigan. The days are over where practically anyone could turn the house into an ATM.
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In metro Detroit, we're watching the collapse of home-equity financing.
Homeowners here pulled $200 million out of their homes' value in the first half of 2007 -- compared with $2.2 billion in 2006 -- reports Equifax and Moody's Economy.com. The number had been as high as $4 billion in 2000.
This piece of havoc in the housing market is national and isn't just hitting people who borrowed way over their heads or are trying to sell the house.
We're looking at a legitimate threat to the overall economy, as homeowners discover that they can't bank on the house anymore to cover extra spending. Nationwide, consumers picked up roughly $800 billion from home equity in 2006, according to Equifax and Economy.com.
Home-equity cash could be spent on boring stuff like plumbing projects, but it was also was used on furniture, SUVs, vacations, college educations, business start-ups, paying down credit card debt -- you name it.
The troubling losses in home values won't put the emergency brake on most consumer spending, but we are looking at a sizable speed bump.
It is acute in metro Detroit, where "consumers are no longer able or willing to tap their home for cash to finance spending," said Mark Zandi, chief economist for Moody's Economy.com. "It's arguably the worst housing market in the country."
Hard times and horror stories
I've heard a fair share of horror stories during the past few months. A woman tapped into the equity of her house to unload credit card debt -- now she's looking at foreclosure. One couple saw a retirement strategy backfire. They downsized to a condo but still can't sell their house. So they plan to work more, not less.
Sean Gurskey, 37, took out a $22,000 equity loan on his Woodhaven home. He invested that money in a tanning salon that didn't work out.
Gurskey, who has worked for 15 years at the Chrysler Trenton Engine plant, now owes about $245,000 on a house that's worth less than the $265,000 he paid for it in 2003.
His monthly mortgage payment is $2,486 and set to climb in July when his adjustable rate goes up again. He's having trouble refinancing into a fixed rate because the home's value has dropped, he has that home-equity line and he filed for bankruptcy in 2005.
He said he hasn't missed a mortgage payment yet. He's working with two lenders -- one has the original mortgage, the other the home-equity line -- but he isn't getting any help so far to keep the payments lower.
"I'm the one that wrote my name down, but I didn't expect the housing industry to go down like it did," he said. "I wasn't expecting to lose all this equity."
Rising home values meant everyone -- even those who didn't tap into home equity -- could feel a little rich.
"The bubble that fueled a lot of consumer spending just isn't there anymore," said P. Brett Hammond, senior managing director and chief investment strategist for the Teachers Insurance and Annuity Association-College Retirement Equities Fund, or TIAA-CREF, in New York.
Now, people think twice about spending as much on their homes.
"We have things we'd like to do with our home, but we're not going to do any improvements right now because we don't want to take out a home equity," said Kris Marcath, 50, of Leonard.
She estimates that her home's value has fallen by $75,000 or more. She questions whether she could get $400,000 for the 2,700-square-foot home on 18 acres.
Pava Leyrer, president of the Michigan Mortgage Brokers Association, said Michigan's declining home values mean that even people who are paying their mortgages on time can find it difficult to refinance out of an adjustable-rate mortgage into a fixed rate or take out a home-equity loan.
"A lot of them are owing more on their homes than their homes are currently worth in Michigan," Leyrer said.
Leyrer, who is president of Heritage National Mortgage in Grandville, had one customer in the Grand Rapids area who had to borrow about $30,000 through an unsecured loan so he could sell his house. He brought that money, plus some savings, to the table to cover what he still owed on his mortgage and home-equity loan. The house -- once appraised at $380,000 a few years ago -- sold for $285,000 in July.
"It's extremely frustrating right now on these values," she said.
Going forward, three things will cut into borrowing power:
• Home values are expected to continue to trend down. "The values are coming in lower and lower by the day," said Steve Gornick, business development officer for Shore Bank in Detroit.
In some cases, he said, he has worked with homeowners who saw a 20% drop in the appraised value of a house in just six months in metro Detroit suburbs.
• Interest rates are no longer at rock bottom. Three years ago, the interest rate on a home-equity line of credit averaged 5.09%. Four years ago, consumers could find a rate as low as 4%. Now, the average is considerably higher, at 7.64%, according to Bankrate.com. • Lenders are edgy, especially in metro Detroit. "In markets where housing prices are weak, we want to keep people from owing more than the house is worth," said Tom Kelly, a spokesman for Chase in Chicago. "Nobody wins if you make a loan that they can't pay back."
Banks make it harder to borrow
Chase, Comerica Bank and other lenders already have slapped on tougher borrowing standards.
Homeowners in other weak markets, such as California, Arizona, Florida, Nevada and New Jersey, are finding stricter lending policies, too.
Take a homeowner in Michigan with a $150,000 house and a $120,000 mortgage.
A year ago, that homeowner could have gotten up to $30,000 in a home-equity line of credit or loan at Chase or Comerica.
Now, that homeowner would only be able to get up to $15,000 for a home-equity product, thanks to tighter lending standards. Chase put new rules in place in August. Comerica tightened standards in March.
What's key: That estimate assumes that the value of the house held true at $150,000.
If the value fell to $139,000, then the homeowner might be able to get only $5,100.
Chase and Comerica now limit borrowers in Michigan to financing up to 90% of their home's value. The old rule was a maximum combined loan-to-value of 100% of the value.
Some families are discovering that they do not have enough equity in their homes to take advantage of Oakland County's program for home-improvement loans. The county program offers up to $18,000 to families with low to modest incomes, provided there is sufficient equity in the house. The county typically does about 250 such loans a year. These loans have rates of 0% to 3%.
The worst is yet to come
Some experts warn that the housing slump will get worse in the next year to 18 months or so.
Zandi projects that metro Detroit's housing market could experience an average loss in home values of 25% from the high point to the low point. Values have already fallen about 14%.
Nationwide, he expects home values to decline 10% -- with another 6% to go in the year ahead.
Detroit, Livonia and Dearborn are listed as No. 1 among the Top 10 riskiest mortgage markets, according to First American CoreLogic's fourth-quarter forecast issued last month.
No. 2 on the list? Warren, Troy and Farmington Hills.
"Housing bubbles, they don't pop. They hiss," said Sam Khater, senior economist for the First American CoreLogic Inc., a company that provides data for the real estate business.
And that means it will be a long time before easy money will be on the house again.
Equity harder to tap as home values fall
November 11, 2007
BY SUSAN TOMPOR
FREE PRESS COLUMNIST
Flush real estate values for years meant that consumers could put little money down on a house, watch the home's value grow and then treat that added equity just like a bonus.
But the credit crunch has landed with a thud, falling particularly hard on Michigan. The days are over where practically anyone could turn the house into an ATM.
Advertisement
In metro Detroit, we're watching the collapse of home-equity financing.
Homeowners here pulled $200 million out of their homes' value in the first half of 2007 -- compared with $2.2 billion in 2006 -- reports Equifax and Moody's Economy.com. The number had been as high as $4 billion in 2000.
This piece of havoc in the housing market is national and isn't just hitting people who borrowed way over their heads or are trying to sell the house.
We're looking at a legitimate threat to the overall economy, as homeowners discover that they can't bank on the house anymore to cover extra spending. Nationwide, consumers picked up roughly $800 billion from home equity in 2006, according to Equifax and Economy.com.
Home-equity cash could be spent on boring stuff like plumbing projects, but it was also was used on furniture, SUVs, vacations, college educations, business start-ups, paying down credit card debt -- you name it.
The troubling losses in home values won't put the emergency brake on most consumer spending, but we are looking at a sizable speed bump.
It is acute in metro Detroit, where "consumers are no longer able or willing to tap their home for cash to finance spending," said Mark Zandi, chief economist for Moody's Economy.com. "It's arguably the worst housing market in the country."
Hard times and horror stories
I've heard a fair share of horror stories during the past few months. A woman tapped into the equity of her house to unload credit card debt -- now she's looking at foreclosure. One couple saw a retirement strategy backfire. They downsized to a condo but still can't sell their house. So they plan to work more, not less.
Sean Gurskey, 37, took out a $22,000 equity loan on his Woodhaven home. He invested that money in a tanning salon that didn't work out.
Gurskey, who has worked for 15 years at the Chrysler Trenton Engine plant, now owes about $245,000 on a house that's worth less than the $265,000 he paid for it in 2003.
His monthly mortgage payment is $2,486 and set to climb in July when his adjustable rate goes up again. He's having trouble refinancing into a fixed rate because the home's value has dropped, he has that home-equity line and he filed for bankruptcy in 2005.
He said he hasn't missed a mortgage payment yet. He's working with two lenders -- one has the original mortgage, the other the home-equity line -- but he isn't getting any help so far to keep the payments lower.
"I'm the one that wrote my name down, but I didn't expect the housing industry to go down like it did," he said. "I wasn't expecting to lose all this equity."
Rising home values meant everyone -- even those who didn't tap into home equity -- could feel a little rich.
"The bubble that fueled a lot of consumer spending just isn't there anymore," said P. Brett Hammond, senior managing director and chief investment strategist for the Teachers Insurance and Annuity Association-College Retirement Equities Fund, or TIAA-CREF, in New York.
Now, people think twice about spending as much on their homes.
"We have things we'd like to do with our home, but we're not going to do any improvements right now because we don't want to take out a home equity," said Kris Marcath, 50, of Leonard.
She estimates that her home's value has fallen by $75,000 or more. She questions whether she could get $400,000 for the 2,700-square-foot home on 18 acres.
Pava Leyrer, president of the Michigan Mortgage Brokers Association, said Michigan's declining home values mean that even people who are paying their mortgages on time can find it difficult to refinance out of an adjustable-rate mortgage into a fixed rate or take out a home-equity loan.
"A lot of them are owing more on their homes than their homes are currently worth in Michigan," Leyrer said.
Leyrer, who is president of Heritage National Mortgage in Grandville, had one customer in the Grand Rapids area who had to borrow about $30,000 through an unsecured loan so he could sell his house. He brought that money, plus some savings, to the table to cover what he still owed on his mortgage and home-equity loan. The house -- once appraised at $380,000 a few years ago -- sold for $285,000 in July.
"It's extremely frustrating right now on these values," she said.
Going forward, three things will cut into borrowing power:
• Home values are expected to continue to trend down. "The values are coming in lower and lower by the day," said Steve Gornick, business development officer for Shore Bank in Detroit.
In some cases, he said, he has worked with homeowners who saw a 20% drop in the appraised value of a house in just six months in metro Detroit suburbs.
• Interest rates are no longer at rock bottom. Three years ago, the interest rate on a home-equity line of credit averaged 5.09%. Four years ago, consumers could find a rate as low as 4%. Now, the average is considerably higher, at 7.64%, according to Bankrate.com. • Lenders are edgy, especially in metro Detroit. "In markets where housing prices are weak, we want to keep people from owing more than the house is worth," said Tom Kelly, a spokesman for Chase in Chicago. "Nobody wins if you make a loan that they can't pay back."
Banks make it harder to borrow
Chase, Comerica Bank and other lenders already have slapped on tougher borrowing standards.
Homeowners in other weak markets, such as California, Arizona, Florida, Nevada and New Jersey, are finding stricter lending policies, too.
Take a homeowner in Michigan with a $150,000 house and a $120,000 mortgage.
A year ago, that homeowner could have gotten up to $30,000 in a home-equity line of credit or loan at Chase or Comerica.
Now, that homeowner would only be able to get up to $15,000 for a home-equity product, thanks to tighter lending standards. Chase put new rules in place in August. Comerica tightened standards in March.
What's key: That estimate assumes that the value of the house held true at $150,000.
If the value fell to $139,000, then the homeowner might be able to get only $5,100.
Chase and Comerica now limit borrowers in Michigan to financing up to 90% of their home's value. The old rule was a maximum combined loan-to-value of 100% of the value.
Some families are discovering that they do not have enough equity in their homes to take advantage of Oakland County's program for home-improvement loans. The county program offers up to $18,000 to families with low to modest incomes, provided there is sufficient equity in the house. The county typically does about 250 such loans a year. These loans have rates of 0% to 3%.
The worst is yet to come
Some experts warn that the housing slump will get worse in the next year to 18 months or so.
Zandi projects that metro Detroit's housing market could experience an average loss in home values of 25% from the high point to the low point. Values have already fallen about 14%.
Nationwide, he expects home values to decline 10% -- with another 6% to go in the year ahead.
Detroit, Livonia and Dearborn are listed as No. 1 among the Top 10 riskiest mortgage markets, according to First American CoreLogic's fourth-quarter forecast issued last month.
No. 2 on the list? Warren, Troy and Farmington Hills.
"Housing bubbles, they don't pop. They hiss," said Sam Khater, senior economist for the First American CoreLogic Inc., a company that provides data for the real estate business.
And that means it will be a long time before easy money will be on the house again.
Sunday, November 4, 2007
When Will Housing Hit Bottom?
When Will Housing Hit Bottom?
by Rex Nutting
Wednesday, October 24, 2007
The housing market is just getting worse. Home resales tumbled 8% in September to the lowest levels in this decade, prompting the obvious question: When will it all end?
The honest answer is no one knows. Optimists have been saying for more than a year that the worst is behind us, while the pessimists have been saying recovery is still a year, or years, away.
So far, the pessimists have been right about the weakness in the housing market, but their forecast that the collapse in housing would lead to a general economic malaise has, at least so far, failed to pan out. The economy has slowed, but has not fallen into recession, as consumers and investors adjust to a world in which home prices don't automatically rise 5% or 10% a year.
The only thing that's clear now is that the housing market has gotten worse since the spring. The market was in a free fall in September. Sales of existing home fell 8%, while inventories of unsold homes rose to a 10.5-month supply. It could take 320 days for a home to sell.
Sales of existing single-family homes are down 20% in the past year, the fastest decline in 16 years.
Median prices have dropped 4% in the past year, in part because fewer expensive homes are being sold, but also because the typical home is worth less than it was a year ago.
Homes are only worth what someone is willing to pay for them, and right now, most homes on the market have no buyer in sight. Prices may have to fall much more to bring supply and demand back into balance, economists say.
Builders have almost no confidence. The home builders' index fell to a record low in October (the index dates back to 1985). New construction on single-family homes has plunged 31% in the past year, but still the inventory of new homes on the market, after adjusting for cancellations, is at the highest level since the early 1990s.
As if the fundamental sickness in the housing market weren't enough, a secondary infection has developed. The credit crisis in the mortgage market that erupted in the summer has left huge numbers of potential buyers without any access to mortgages.
The subprime sector has essentially died, with the newly reinvigorated Federal Housing Administration able to replace only a tiny segment of what was once a huge market of home buyers.
The top end of the market was also frozen out, as jumbo loans (those with mortgages above the conforming level of $417,000) became more expensive or completely unavailable.
The jumbo freeze-out devastated sales in pricey areas such as the San Francisco Bay area, where jumbo loans had accounted for about 52% of purchases in August, but just 39% in September.
There's some evidence that the jumbo market is slowly returning, but it's not functioning normally yet.
So where does the market stand now?
"We are seeing the first buds of spring" in the recovery of the jumbo market, said Stephen Stanley, chief economist for RBS Greenwich Capital. "It's a slow, glacial recovery."
Stanley believes home sales will be "really bad" for two or three more months, before the credit markets begin to function more normally. "It won't return to where we were six or 12 months ago."
At that point, the secondary infection would be gone, but the underlying illness would still be there. The market will really begin to recover only after sellers capitulate on prices.
And then home sales might level out, Stanley said, acknowledging that he's one of the more optimistic analysts.
Historically, housing corrections take a long time. After the market softened in the late 1980s, sales fell for five years, then took three more years to return to the peak level. Prices took just as long to recover.
Some analysts say the fundamentals will worsen in coming months. The main problem is that so many adjustable-rate mortgages will reset to a higher interest rate. The typical family with an ARM will see mortgage payments rise by $10,000 a year, according to Andrew Jakabovics of the Center for American Progress, a progressive Washington think tank.
Millions of these home owners will be unable to refinance their current loan and will either have to scrounge to make the payments, or lose their home through a fire sale or foreclosure. That would throw even more supply onto a saturated market.
"The mortgage crisis is neither wholly contained nor likely to abate in the near future," said Jakabovics. "Default and foreclosure loom ever more menacingly as borrowers are unable to find a reasonable payment option and unable to sell their homes."
by Rex Nutting
Wednesday, October 24, 2007
The housing market is just getting worse. Home resales tumbled 8% in September to the lowest levels in this decade, prompting the obvious question: When will it all end?
The honest answer is no one knows. Optimists have been saying for more than a year that the worst is behind us, while the pessimists have been saying recovery is still a year, or years, away.
So far, the pessimists have been right about the weakness in the housing market, but their forecast that the collapse in housing would lead to a general economic malaise has, at least so far, failed to pan out. The economy has slowed, but has not fallen into recession, as consumers and investors adjust to a world in which home prices don't automatically rise 5% or 10% a year.
The only thing that's clear now is that the housing market has gotten worse since the spring. The market was in a free fall in September. Sales of existing home fell 8%, while inventories of unsold homes rose to a 10.5-month supply. It could take 320 days for a home to sell.
Sales of existing single-family homes are down 20% in the past year, the fastest decline in 16 years.
Median prices have dropped 4% in the past year, in part because fewer expensive homes are being sold, but also because the typical home is worth less than it was a year ago.
Homes are only worth what someone is willing to pay for them, and right now, most homes on the market have no buyer in sight. Prices may have to fall much more to bring supply and demand back into balance, economists say.
Builders have almost no confidence. The home builders' index fell to a record low in October (the index dates back to 1985). New construction on single-family homes has plunged 31% in the past year, but still the inventory of new homes on the market, after adjusting for cancellations, is at the highest level since the early 1990s.
As if the fundamental sickness in the housing market weren't enough, a secondary infection has developed. The credit crisis in the mortgage market that erupted in the summer has left huge numbers of potential buyers without any access to mortgages.
The subprime sector has essentially died, with the newly reinvigorated Federal Housing Administration able to replace only a tiny segment of what was once a huge market of home buyers.
The top end of the market was also frozen out, as jumbo loans (those with mortgages above the conforming level of $417,000) became more expensive or completely unavailable.
The jumbo freeze-out devastated sales in pricey areas such as the San Francisco Bay area, where jumbo loans had accounted for about 52% of purchases in August, but just 39% in September.
There's some evidence that the jumbo market is slowly returning, but it's not functioning normally yet.
So where does the market stand now?
"We are seeing the first buds of spring" in the recovery of the jumbo market, said Stephen Stanley, chief economist for RBS Greenwich Capital. "It's a slow, glacial recovery."
Stanley believes home sales will be "really bad" for two or three more months, before the credit markets begin to function more normally. "It won't return to where we were six or 12 months ago."
At that point, the secondary infection would be gone, but the underlying illness would still be there. The market will really begin to recover only after sellers capitulate on prices.
And then home sales might level out, Stanley said, acknowledging that he's one of the more optimistic analysts.
Historically, housing corrections take a long time. After the market softened in the late 1980s, sales fell for five years, then took three more years to return to the peak level. Prices took just as long to recover.
Some analysts say the fundamentals will worsen in coming months. The main problem is that so many adjustable-rate mortgages will reset to a higher interest rate. The typical family with an ARM will see mortgage payments rise by $10,000 a year, according to Andrew Jakabovics of the Center for American Progress, a progressive Washington think tank.
Millions of these home owners will be unable to refinance their current loan and will either have to scrounge to make the payments, or lose their home through a fire sale or foreclosure. That would throw even more supply onto a saturated market.
"The mortgage crisis is neither wholly contained nor likely to abate in the near future," said Jakabovics. "Default and foreclosure loom ever more menacingly as borrowers are unable to find a reasonable payment option and unable to sell their homes."
Thursday, November 1, 2007
Michigan ranks fourth in foreclosure filings (Nov 1 07)
Michigan ranks fourth in foreclosure filings
Alex Veiga / Associated Press
LOS ANGELES -- A soaring number of U.S. homeowners struggled to make mortgage payments in the third quarter, with properties in some stage of foreclosure more than doubling from the same time last year, a mortgage data company said Thursday.
A total of 446,726 homes nationwide were targeted by some sort of foreclosure activity from July to September, up 100.1 percent from 223,233 properties in the year-ago period, according to Irvine-based RealtyTrac Inc.
The current figure was 33.9 percent higher than the 333,731 properties in foreclosure in the second quarter of this year.
There was one foreclosure filing for every 196 households in the nation during the most recent quarter, RealtyTrac said.
All but five states reported a year-over-year increase in foreclosure filings, which include notices of default, auction sale notices or bank repossessions, the company said.
A single property can sometimes receive more than one notice in a three-month period.
In all, 635,159 filings were reported in the third quarter, up 99.5 percent from the year-ago quarter and up 30 percent from the second quarter of this year.
RealtyTrac CEO James J. Saccacio said in a statement that August and September accounted for the highest monthly totals since the company began issuing foreclosure filing reports in January 2005.
"Given the number of loans due to reset through the middle of 2008, and the continuing weakness in home sales, we would expect foreclosure activity to remain high and even increase over the next year in many markets," he said.
Mortgage lenders are bracing for a flood of defaults as many adjustable-rate mortgages originated in 2005 and 2006 during the height of the housing market frenzy reset to higher interest rates.
The loans were initially attractive options for buyers because of their cheaper "teaser" interest rates that kept monthly payments low, but even a small percentage increase can translate into a far higher payment.
With home sales in decline and prices down or flat in many regions, more homeowners are landing in foreclosure because they can't afford to sell their homes after falling behind on payments.
The three states with the highest foreclosure rates during the third quarter were Nevada, California and Florida, RealtyTrac said.
Nevada reported one foreclosure filing for every 61 households, with 16,817 filings on 12,982 properties.
That marked a 22.8 percent increase in filings from the previous quarter and a tripling from the year-ago quarter.
California led the nation in total foreclosure filings and reported one filing for every 88 households.
The state had 148,147 filings on 94,772 properties, an increase in filings of 36 percent from the previous quarter and nearly four times more than the year-ago period.
In Florida, there were 86,465 foreclosure filings on 60,992 properties during the third quarter, RealtyTrac said. Foreclosure filings rose 51.5 percent from the previous quarter and more than doubled from the same quarter last year.
Florida's foreclosure rate amounted to one filing for every 95 households, RealtyTrac said.
Rounding out the top 10 states in foreclosure rates were Michigan, Ohio, Colorado, Arizona, Georgia, Indiana and Texas.
Alex Veiga / Associated Press
LOS ANGELES -- A soaring number of U.S. homeowners struggled to make mortgage payments in the third quarter, with properties in some stage of foreclosure more than doubling from the same time last year, a mortgage data company said Thursday.
A total of 446,726 homes nationwide were targeted by some sort of foreclosure activity from July to September, up 100.1 percent from 223,233 properties in the year-ago period, according to Irvine-based RealtyTrac Inc.
The current figure was 33.9 percent higher than the 333,731 properties in foreclosure in the second quarter of this year.
There was one foreclosure filing for every 196 households in the nation during the most recent quarter, RealtyTrac said.
All but five states reported a year-over-year increase in foreclosure filings, which include notices of default, auction sale notices or bank repossessions, the company said.
A single property can sometimes receive more than one notice in a three-month period.
In all, 635,159 filings were reported in the third quarter, up 99.5 percent from the year-ago quarter and up 30 percent from the second quarter of this year.
RealtyTrac CEO James J. Saccacio said in a statement that August and September accounted for the highest monthly totals since the company began issuing foreclosure filing reports in January 2005.
"Given the number of loans due to reset through the middle of 2008, and the continuing weakness in home sales, we would expect foreclosure activity to remain high and even increase over the next year in many markets," he said.
Mortgage lenders are bracing for a flood of defaults as many adjustable-rate mortgages originated in 2005 and 2006 during the height of the housing market frenzy reset to higher interest rates.
The loans were initially attractive options for buyers because of their cheaper "teaser" interest rates that kept monthly payments low, but even a small percentage increase can translate into a far higher payment.
With home sales in decline and prices down or flat in many regions, more homeowners are landing in foreclosure because they can't afford to sell their homes after falling behind on payments.
The three states with the highest foreclosure rates during the third quarter were Nevada, California and Florida, RealtyTrac said.
Nevada reported one foreclosure filing for every 61 households, with 16,817 filings on 12,982 properties.
That marked a 22.8 percent increase in filings from the previous quarter and a tripling from the year-ago quarter.
California led the nation in total foreclosure filings and reported one filing for every 88 households.
The state had 148,147 filings on 94,772 properties, an increase in filings of 36 percent from the previous quarter and nearly four times more than the year-ago period.
In Florida, there were 86,465 foreclosure filings on 60,992 properties during the third quarter, RealtyTrac said. Foreclosure filings rose 51.5 percent from the previous quarter and more than doubled from the same quarter last year.
Florida's foreclosure rate amounted to one filing for every 95 households, RealtyTrac said.
Rounding out the top 10 states in foreclosure rates were Michigan, Ohio, Colorado, Arizona, Georgia, Indiana and Texas.
Wednesday, October 31, 2007
When It Takes a Miracle To Sell Your House
When It Takes a Miracle
To Sell Your House
Owners, Realtors Bury Statues
Of St. Joseph to Attract Buyers;
Don't Forget to Dig Him Up
By SARA SCHAEFER MUÑOZ
October 30, 2007
Cari Luna is Jewish by heritage and Buddhist by religion. She meditates regularly. Yet when she and her husband put their Brooklyn, N.Y., house on the market this year and offers kept falling through, Ms. Luna turned to an unlikely source for help: St. Joseph.
Some choose to bury St. Joseph upside down.
The Catholic saint has long been believed to help with home-related matters. And according to lore now spreading on the Internet and among desperate home-sellers, burying St. Joseph in the yard of a home for sale promises a prompt bid. After Ms. Luna and her husband held five open houses, even baking cookies for one of them, she ordered a St. Joseph "real estate kit" online and buried the three-inch white statue in her yard.
"I wasn't sure if it would be disrespectful for me, a Jewish Buddhist, to co-opt this saint for my real-estate purposes," says Ms. Luna, a writer. She figured, "Well, could it hurt?"
With the worst housing market in recent years, St. Joseph is enjoying a flurry of attention. Some vendors of religious supplies say St. Joseph statues are flying off the shelves as an increasing number of skeptics and non-Catholics look for some saintly intervention to help them sell their houses.
Some Realtors, too, swear by the practice. Ardell DellaLoggia, a Seattle-area Realtor, buried a statue beneath the "For Sale" sign on a property that she thought was overpriced. She didn't tell the owner until after it had sold. "He was an atheist," she explains. "But he thanked me."
Existing-home sales fell 8% in September to a seasonally adjusted annual rate of 5.04 million units, the lowest level in nearly 10 years, according to the National Association of Realtors.
Some Catholic clergy are uncomfortable with the St. Joseph's trend. Read about this and track other news in the housing market at Developments, WSJ.com's new real-estate tracker.Statues of St. Joseph sold online can be as tall as 12 inches. One, made of colored resin, portrays St. Joseph cradling the baby Jesus. Yet most home sellers favor the simpler three- or four- inch replicas -- most of which are made in China and often depict St. Joseph as a carpenter.
Most statues come in a "Home Sale Kit" that is priced at around $5 and includes burial instructions and a prayer. One site, Good Fortune Online, recently added another kit with a statue of St. Jude -- known as the patron saint of hopeless causes -- "to help those with a difficult property to sell," the site says. Another site, Stjosephstatue.com, takes orders for its "Underground Real Estate Agent Kits" at 1-888-BURY-JOE.
Demand for the statues has been growing. Ron Weissman, who sells the statues at Good Fortune Online, says about six months ago he switched to online transactions because the increase in calls -- from about two a week to 25 calls a day -- was too much to handle. Richard Weigang, owner of www.catholicstore.com, says he sells about 400 statues a month, double the amount he sold a year ago.
In Catholicism, St. Joseph, a carpenter, is honored as the husband of Mary and foster father of Jesus. Representing a humble family man, he is the patron saint of home, family and house-hunting, according to the Rev. James Martin, a Jesuit priest and author of "My Life With the Saints." Popular belief holds that people who wish to enlist St. Joseph's help in selling a house should bury his replica upside-down in the yard. (Apartment dwellers are advised to put him in a potted plant.)
Methods of burying the statue vary. Instructions in one package give buyers several options, including burying it upside-down next to the "For Sale" sign, burying it three feet from the rear of the house and burying it next to the front door facing away from the home. Phil Cates, owner of stjosephstatue.com, says: "I've seen it buried in all types of places with all types of ceremonies." He says the detailed burial instructions are largely intended to prevent people from forgetting where they put their St. Joseph. (His kits advise burying it facing it away from the house, to symbolize leaving.)
Theologians say there's no official doctrine that calls for the statue's interment. The practice may have stemmed from medieval rites of land possession, in which conquerors claimed land by planting a cross or banner, says Jaime Lara, associate professor of Christian Art and Architecture at Yale Divinity School. Mr. Lara also suggests that the tradition may have gotten mixed up at some point with folklore surrounding St. Anthony. St. Anthony, known as a matchmaker, would often be held ransom, upside-down, until he found a husband for someone's daughter, he says.
Some clergy aren't sure how St. Joseph would feel about his replica ending up on its head in the dirt, and suggest displaying it somewhere in the house instead.
"I think it's much more respectful than burying the poor guy," says Msgr. Andrew Connell, the archdiocesan director of the Pontifical Society for the Propagation of the Faith in Boston. Some retailers, such as Mr. Weigang, owner of www.catholicstore.com, also encourage buyers to put the statues in the house.
"We don't advocate burying," he says. "Some of those statues are quite beautiful."
Catholic leaders also say that faith and devotion are necessary, in addition to burying a statue, otherwise the practice amounts to little more than superstition or magic. But they are also enjoying the saint's newfound popularity. "If they have a good result and they think it was St. Joseph, it might inspire them to practice more," says Msgr. Connell.
The St. Joseph "Underground Real Estate Agent Kit" from www.stjosephstatue.com
Once someone's home sells, the custom holds, the statue should be dug up and put in a place of honor in the new home. That's what Ms. Luna did after she and her husband sold their house shortly after burying St. Joseph. She put the statue in her office in their new home in Portland, Ore.
But not everyone is aware of the follow-up step. Trudy Lopez and her husband buried a statue of St. Joseph when they were trying to sell their condo, even though Ms. Lopez is Jewish and her husband is a nonpracticing Catholic. They sneaked out late at night, worried they might be breaking a condo association rule.
"And I'm thinking, 'If my family knew what I am doing, they'd die,' " she says.
Soon they got an offer, but didn't realize they were supposed to bring the statue with them to their new home.
"I'm afraid a lot of the statues won't be unearthed and someone will go over St. Joseph's feet with a lawnmower," says Father Martin
To Sell Your House
Owners, Realtors Bury Statues
Of St. Joseph to Attract Buyers;
Don't Forget to Dig Him Up
By SARA SCHAEFER MUÑOZ
October 30, 2007
Cari Luna is Jewish by heritage and Buddhist by religion. She meditates regularly. Yet when she and her husband put their Brooklyn, N.Y., house on the market this year and offers kept falling through, Ms. Luna turned to an unlikely source for help: St. Joseph.
Some choose to bury St. Joseph upside down.
The Catholic saint has long been believed to help with home-related matters. And according to lore now spreading on the Internet and among desperate home-sellers, burying St. Joseph in the yard of a home for sale promises a prompt bid. After Ms. Luna and her husband held five open houses, even baking cookies for one of them, she ordered a St. Joseph "real estate kit" online and buried the three-inch white statue in her yard.
"I wasn't sure if it would be disrespectful for me, a Jewish Buddhist, to co-opt this saint for my real-estate purposes," says Ms. Luna, a writer. She figured, "Well, could it hurt?"
With the worst housing market in recent years, St. Joseph is enjoying a flurry of attention. Some vendors of religious supplies say St. Joseph statues are flying off the shelves as an increasing number of skeptics and non-Catholics look for some saintly intervention to help them sell their houses.
Some Realtors, too, swear by the practice. Ardell DellaLoggia, a Seattle-area Realtor, buried a statue beneath the "For Sale" sign on a property that she thought was overpriced. She didn't tell the owner until after it had sold. "He was an atheist," she explains. "But he thanked me."
Existing-home sales fell 8% in September to a seasonally adjusted annual rate of 5.04 million units, the lowest level in nearly 10 years, according to the National Association of Realtors.
Some Catholic clergy are uncomfortable with the St. Joseph's trend. Read about this and track other news in the housing market at Developments, WSJ.com's new real-estate tracker.Statues of St. Joseph sold online can be as tall as 12 inches. One, made of colored resin, portrays St. Joseph cradling the baby Jesus. Yet most home sellers favor the simpler three- or four- inch replicas -- most of which are made in China and often depict St. Joseph as a carpenter.
Most statues come in a "Home Sale Kit" that is priced at around $5 and includes burial instructions and a prayer. One site, Good Fortune Online, recently added another kit with a statue of St. Jude -- known as the patron saint of hopeless causes -- "to help those with a difficult property to sell," the site says. Another site, Stjosephstatue.com, takes orders for its "Underground Real Estate Agent Kits" at 1-888-BURY-JOE.
Demand for the statues has been growing. Ron Weissman, who sells the statues at Good Fortune Online, says about six months ago he switched to online transactions because the increase in calls -- from about two a week to 25 calls a day -- was too much to handle. Richard Weigang, owner of www.catholicstore.com, says he sells about 400 statues a month, double the amount he sold a year ago.
In Catholicism, St. Joseph, a carpenter, is honored as the husband of Mary and foster father of Jesus. Representing a humble family man, he is the patron saint of home, family and house-hunting, according to the Rev. James Martin, a Jesuit priest and author of "My Life With the Saints." Popular belief holds that people who wish to enlist St. Joseph's help in selling a house should bury his replica upside-down in the yard. (Apartment dwellers are advised to put him in a potted plant.)
Methods of burying the statue vary. Instructions in one package give buyers several options, including burying it upside-down next to the "For Sale" sign, burying it three feet from the rear of the house and burying it next to the front door facing away from the home. Phil Cates, owner of stjosephstatue.com, says: "I've seen it buried in all types of places with all types of ceremonies." He says the detailed burial instructions are largely intended to prevent people from forgetting where they put their St. Joseph. (His kits advise burying it facing it away from the house, to symbolize leaving.)
Theologians say there's no official doctrine that calls for the statue's interment. The practice may have stemmed from medieval rites of land possession, in which conquerors claimed land by planting a cross or banner, says Jaime Lara, associate professor of Christian Art and Architecture at Yale Divinity School. Mr. Lara also suggests that the tradition may have gotten mixed up at some point with folklore surrounding St. Anthony. St. Anthony, known as a matchmaker, would often be held ransom, upside-down, until he found a husband for someone's daughter, he says.
Some clergy aren't sure how St. Joseph would feel about his replica ending up on its head in the dirt, and suggest displaying it somewhere in the house instead.
"I think it's much more respectful than burying the poor guy," says Msgr. Andrew Connell, the archdiocesan director of the Pontifical Society for the Propagation of the Faith in Boston. Some retailers, such as Mr. Weigang, owner of www.catholicstore.com, also encourage buyers to put the statues in the house.
"We don't advocate burying," he says. "Some of those statues are quite beautiful."
Catholic leaders also say that faith and devotion are necessary, in addition to burying a statue, otherwise the practice amounts to little more than superstition or magic. But they are also enjoying the saint's newfound popularity. "If they have a good result and they think it was St. Joseph, it might inspire them to practice more," says Msgr. Connell.
The St. Joseph "Underground Real Estate Agent Kit" from www.stjosephstatue.com
Once someone's home sells, the custom holds, the statue should be dug up and put in a place of honor in the new home. That's what Ms. Luna did after she and her husband sold their house shortly after burying St. Joseph. She put the statue in her office in their new home in Portland, Ore.
But not everyone is aware of the follow-up step. Trudy Lopez and her husband buried a statue of St. Joseph when they were trying to sell their condo, even though Ms. Lopez is Jewish and her husband is a nonpracticing Catholic. They sneaked out late at night, worried they might be breaking a condo association rule.
"And I'm thinking, 'If my family knew what I am doing, they'd die,' " she says.
Soon they got an offer, but didn't realize they were supposed to bring the statue with them to their new home.
"I'm afraid a lot of the statues won't be unearthed and someone will go over St. Joseph's feet with a lawnmower," says Father Martin
Monday, October 29, 2007
Housing bust takes big toll on Realtors
Housing bust takes big toll on Realtors
3,500 left real estate industry in Michigan in the last year alone.
Nathan Hurst / The Detroit News
STERLING HEIGHTS -- Thousands of Michigan real estate agents -- some with decades of experience -- are getting squeezed out of the business, casualties of one of the worst housing slumps in state history.
Agents who prospered a few years ago, when consumers' appetite for real estate seemed insatiable, now are struggling or switching careers.
Michigan agents say a lack of home buyers for the glut of houses on the market is driving them from the business. Those who do manage to move a property are realizing lower commissions as a result of dampened real estate prices.
In the last year alone, the Michigan Association of Realtors has lost 10 percent of its membership, or about 3,500 agents. Membership now stands at about 30,000, the trade group said. An untold number of agents have taken second jobs to weather the slump or have put their licenses in "escrow," basically not using them until the market turns around.
Metro Detroit has been among the regions worst hit by the housing slowdown, which started in Michigan in late 2005 and hit the rest of the nation early this year. In September, Realtors sold 3,703 homes in Metro Detroit, down from 4,184 in September last year and 4,456 the year before that, according to multiple listing service Realcomp II Ltd.
Real estate agents across the country are leaving the business as the sales downturn worsens. The National Association of Realtors is predicting a 4 percent decline in its membership by the end of 2007, from a record high of 1.4 million members at the beginning of this year.
When Metro Detroit's real estate market entered its downward slide, John Kurczak, a 17-year veteran of the industry, thought he had the tools and experience to ride out the storm.
But after watching the agency he worked at for 16 years close its doors and the number of homes he sells drop off dramatically, Kurczak, 36, is wondering just how much longer he can stand the 14-hour days and long stretches between commission checks.
"I've reinvented myself and spent countless hours trying to get ahead," said Kurczak, who is looking at job offers from other states and in other fields.
"But it's not always paying off. It's a shame -- I can spend all this money trying to market a home, but nobody's buying. I only get paid when the fat lady sings."
Strategies change
Agents still in the business said they're fighting hard to keep ahead.
Some have changed their advertising strategies in an attempt to grab the attention of scarce buyers.
Kurczak, now an agent at Keller Williams in Sterling Heights, said the transition away from his old Century 21 AAA digs in Eastpointe was a rough one. Forced to find a new professional home after the Eastpointe office was shuttered last year, Kurczak renewed his focus on developing and maintaining his own Web site, while keeping in contact with anybody and everybody who could be a sales lead.
Others, like Maureen Francis of SKBK Sotheby's Realty, in Birmingham, have started offering potential customers their own brand of real estate news analysis.
Francis, who specializes in selling luxury properties in Oakland County, started a blog, mioaklandcounty.com, with her husband, also a Realtor. She regularly updates the site with commentary on local and national real estate news and said her site has been instrumental in connecting with customers.
"It lets them get a better idea of what's going on in the market," Francis said. "It's honest and shows what kind of agent I am."
Dreams die
Being honest and tech-savvy isn't enough to stay afloat as a Realtor, Kurczak said. And with job offers coming in from other fields with companies in other states, Kurczak said his days working Metro Detroit's property market likely are numbered.
Kurczak said his current job is one that's only gotten harder as friends and even family members have fled the real estate business while he's tried to hold on.
Both of his brothers got their real estate licenses within the last year. But after seeing Kurczak struggle -- including a situation last winter in which Kurczak was dropped by a couple looking for a home after he took them on 70 private showings -- both brothers have decided to wait to get in the business until the market improves.
Sandy Covert, 33, said she wishes she had done just that.
Lured by tales of plump paychecks and the allure of a job that came with a business card and no uniform, Covert decided in November 2005 to ditch her merry-go-round of low-wage retail jobs for the world of Metro Detroit real estate.
Covert of Dearborn Heights said she did everything right -- taking licensure classes in the evening and spending lunch breaks studying economics and accounting volumes picked up from a used bookstore. She was assured by instructors and more experienced agents that there was no end to success in the real estate business, even with talk of a downturn swirling in the news.
But after thousands of dollars spent on preparation and six months working every angle of the market she could, Covert had sold only one home.
"It was a complete embarrassment," Covert said of the dilapidated structure a few blocks from her own Dearborn flat that she sold for a mere $4,500. "That was all I could sell. I tried harder at this than anything before in my life and I couldn't make it work. People don't believe what a tough business this is."
Covert was lucky, other agents said. Though she abandoned her dreams of real estate success after a year, she was able to return, albeit reluctantly, to her career in retail.
Marlene Bryant, a 52-year-old instructor at a private school in Toledo, said she stopped teaching in 2002 to try her hand at selling real estate around her hometown of Monroe. But after three years, she said she's happy to be back to her life of guaranteed work hours and a pension.
"It was like a glamorous dream job," Bryant said. "I drove a Cadillac and took people to nice places. It was great while it lasted."
Others like Kurczak, whose professional life started as a real estate agent, aren't sure what they'll do if they leave the business.
"It's not as if we're not working hard," he said. "But you can't make people buy houses, which is unfortunate. I'd be a very rich man if I sold everything there is to sell in Metro Detroit."
3,500 left real estate industry in Michigan in the last year alone.
Nathan Hurst / The Detroit News
STERLING HEIGHTS -- Thousands of Michigan real estate agents -- some with decades of experience -- are getting squeezed out of the business, casualties of one of the worst housing slumps in state history.
Agents who prospered a few years ago, when consumers' appetite for real estate seemed insatiable, now are struggling or switching careers.
Michigan agents say a lack of home buyers for the glut of houses on the market is driving them from the business. Those who do manage to move a property are realizing lower commissions as a result of dampened real estate prices.
In the last year alone, the Michigan Association of Realtors has lost 10 percent of its membership, or about 3,500 agents. Membership now stands at about 30,000, the trade group said. An untold number of agents have taken second jobs to weather the slump or have put their licenses in "escrow," basically not using them until the market turns around.
Metro Detroit has been among the regions worst hit by the housing slowdown, which started in Michigan in late 2005 and hit the rest of the nation early this year. In September, Realtors sold 3,703 homes in Metro Detroit, down from 4,184 in September last year and 4,456 the year before that, according to multiple listing service Realcomp II Ltd.
Real estate agents across the country are leaving the business as the sales downturn worsens. The National Association of Realtors is predicting a 4 percent decline in its membership by the end of 2007, from a record high of 1.4 million members at the beginning of this year.
When Metro Detroit's real estate market entered its downward slide, John Kurczak, a 17-year veteran of the industry, thought he had the tools and experience to ride out the storm.
But after watching the agency he worked at for 16 years close its doors and the number of homes he sells drop off dramatically, Kurczak, 36, is wondering just how much longer he can stand the 14-hour days and long stretches between commission checks.
"I've reinvented myself and spent countless hours trying to get ahead," said Kurczak, who is looking at job offers from other states and in other fields.
"But it's not always paying off. It's a shame -- I can spend all this money trying to market a home, but nobody's buying. I only get paid when the fat lady sings."
Strategies change
Agents still in the business said they're fighting hard to keep ahead.
Some have changed their advertising strategies in an attempt to grab the attention of scarce buyers.
Kurczak, now an agent at Keller Williams in Sterling Heights, said the transition away from his old Century 21 AAA digs in Eastpointe was a rough one. Forced to find a new professional home after the Eastpointe office was shuttered last year, Kurczak renewed his focus on developing and maintaining his own Web site, while keeping in contact with anybody and everybody who could be a sales lead.
Others, like Maureen Francis of SKBK Sotheby's Realty, in Birmingham, have started offering potential customers their own brand of real estate news analysis.
Francis, who specializes in selling luxury properties in Oakland County, started a blog, mioaklandcounty.com, with her husband, also a Realtor. She regularly updates the site with commentary on local and national real estate news and said her site has been instrumental in connecting with customers.
"It lets them get a better idea of what's going on in the market," Francis said. "It's honest and shows what kind of agent I am."
Dreams die
Being honest and tech-savvy isn't enough to stay afloat as a Realtor, Kurczak said. And with job offers coming in from other fields with companies in other states, Kurczak said his days working Metro Detroit's property market likely are numbered.
Kurczak said his current job is one that's only gotten harder as friends and even family members have fled the real estate business while he's tried to hold on.
Both of his brothers got their real estate licenses within the last year. But after seeing Kurczak struggle -- including a situation last winter in which Kurczak was dropped by a couple looking for a home after he took them on 70 private showings -- both brothers have decided to wait to get in the business until the market improves.
Sandy Covert, 33, said she wishes she had done just that.
Lured by tales of plump paychecks and the allure of a job that came with a business card and no uniform, Covert decided in November 2005 to ditch her merry-go-round of low-wage retail jobs for the world of Metro Detroit real estate.
Covert of Dearborn Heights said she did everything right -- taking licensure classes in the evening and spending lunch breaks studying economics and accounting volumes picked up from a used bookstore. She was assured by instructors and more experienced agents that there was no end to success in the real estate business, even with talk of a downturn swirling in the news.
But after thousands of dollars spent on preparation and six months working every angle of the market she could, Covert had sold only one home.
"It was a complete embarrassment," Covert said of the dilapidated structure a few blocks from her own Dearborn flat that she sold for a mere $4,500. "That was all I could sell. I tried harder at this than anything before in my life and I couldn't make it work. People don't believe what a tough business this is."
Covert was lucky, other agents said. Though she abandoned her dreams of real estate success after a year, she was able to return, albeit reluctantly, to her career in retail.
Marlene Bryant, a 52-year-old instructor at a private school in Toledo, said she stopped teaching in 2002 to try her hand at selling real estate around her hometown of Monroe. But after three years, she said she's happy to be back to her life of guaranteed work hours and a pension.
"It was like a glamorous dream job," Bryant said. "I drove a Cadillac and took people to nice places. It was great while it lasted."
Others like Kurczak, whose professional life started as a real estate agent, aren't sure what they'll do if they leave the business.
"It's not as if we're not working hard," he said. "But you can't make people buy houses, which is unfortunate. I'd be a very rich man if I sold everything there is to sell in Metro Detroit."
Friday, October 26, 2007
No end in sight for housing slump
No end in sight for housing slump
By Ron Scherer
Fri Oct 26, 4:00 AM ET
New York - Home prices are now at 2005 levels.
And, even with the falling prices, the number of unsold homes is the highest since 1999 – as far back as the data goes – suggesting to economists that more price- cutting is ahead.
One of the major implications of the continuing slide in housing is the drag on the total economy. With home sales now lower than many of the most pessimistic forecast, some economists worry that the economy could be closing the year in a weakened state.
In fact, Wall Street is now convinced that the Federal Reserve will reduce interest rates a second time this fall when the central bank convenes next week.
"Housing is clearly the big factor for the Fed," says Jeff Kleintop, chief investment strategist at LPL Financial Advisors in Boston. "The Fed will clearly be looking at that drag [housing] on the economy and the financial consequences of the pullback."
This week, evidence accumulated detailing the housing slump. Yesterday, for example, the Commerce Department revised lower new-home sales for August to the slowest pace in 11 years. September sales rose 4.8 percent compared with the slow August pace. But, new-home sales are still 23 percent below last September.
"Technically it looks like it improved but not when you look at the downward revisions which totaled 167,000 homes in June, July, and August," says Sam Bullard, an economist at Wachovia in Charlotte, N.C. "There is so much inventory out there on the market, builders will have to put out discounts to help move this inventory off their books."
Wednesday, the National Association of Realtors (NAR), reported in September that existing home sales fell by 8 percent from August's level and are down 19 percent from a year ago. Home prices fell 4.2 percent from a year ago, and inventories were equal to 10.5 months of sales.
"The market is glutted with houses," says Peter Morici, economics professor at the University of Maryland.
According to the NAR report, there were 4.4 million existing homes on the market. The weakness is extending into the condo and coop markets where September sales fell 4.3 percent from August levels.
With weak sales and rising inventories, the median home price fell to $211,700. This is down 4.2 percent from September 2006. Part of the reason for the falling price is turmoil in the mortgage market, where it has become more difficult to obtain a loan that is higher than $417,000, the cut-off for a loan to qualify for Fannie Mae or Freddie Mac coverage.
Even in some well-to-do communities, immune to the price drop until recently, prices are under pressure. That's the case in Madison, Conn., where the average sale price is down 11.2 percent from last year.
"There is downward pressure on prices, inventories have risen," says Brendan Grady, a regional vice president for Caldwell Banker.
However, Mr. Grady says the falling prices are attracting buyers to the upscale shore community. Sales this year are up 22 percent.
Falling home prices may have a larger impact on low-income families, says Andrew Jakabovics, an associate director at the Center for American Progress. "It's more likely that a low-income borrower has made a lower down payment, so when prices fall, they may have negative equity."
The implications for a buyer holding a house now worth less than when they bought it are significant. "No one will refinance the house if it's under water [below purchase price]," says Mr. Jakabovics.
Mr. Morici says home owners with negative equity in their homes will find it difficult to buy another house. "If you have to sell and there are not enough proceeds, you get a bill," he explains. "You can't walk away from it without the lenders coming after you."
Earlier this year, many investment professionals had hoped the real estate and mortgage markets would be able hop out of trouble by year-end. However, now there are doubts. On Wednesday, Merrill Lynch shocked the markets with a $8.4 billion write down.
"We just don't know how deep in we are," says Morici.
On Wednesday, an on-line poll of real-estate finance professionals attending the upcoming Asset Backed Security (ABS) East Conference in Orlando, Fla., found still more pessimism. Ninety-eight percent of the respondents see the problems in the subprime market now spreading to higher-rated mortgages, up from 85 percent in March. The ABS conference is for professionals involved in the securitization industry – where the bulk of the financial crunch has taken place.
However, "The only thing stressing is home prices; that's not so bad," says Mark Adelson of Adelson & Jacobs, a consultant to the securitization business. "The main-stream core of the mortgage business is Fannie Mae and Freddie Mac and that's fine. That is the part of the business that puts most Americans in their homes."
By Ron Scherer
Fri Oct 26, 4:00 AM ET
New York - Home prices are now at 2005 levels.
And, even with the falling prices, the number of unsold homes is the highest since 1999 – as far back as the data goes – suggesting to economists that more price- cutting is ahead.
One of the major implications of the continuing slide in housing is the drag on the total economy. With home sales now lower than many of the most pessimistic forecast, some economists worry that the economy could be closing the year in a weakened state.
In fact, Wall Street is now convinced that the Federal Reserve will reduce interest rates a second time this fall when the central bank convenes next week.
"Housing is clearly the big factor for the Fed," says Jeff Kleintop, chief investment strategist at LPL Financial Advisors in Boston. "The Fed will clearly be looking at that drag [housing] on the economy and the financial consequences of the pullback."
This week, evidence accumulated detailing the housing slump. Yesterday, for example, the Commerce Department revised lower new-home sales for August to the slowest pace in 11 years. September sales rose 4.8 percent compared with the slow August pace. But, new-home sales are still 23 percent below last September.
"Technically it looks like it improved but not when you look at the downward revisions which totaled 167,000 homes in June, July, and August," says Sam Bullard, an economist at Wachovia in Charlotte, N.C. "There is so much inventory out there on the market, builders will have to put out discounts to help move this inventory off their books."
Wednesday, the National Association of Realtors (NAR), reported in September that existing home sales fell by 8 percent from August's level and are down 19 percent from a year ago. Home prices fell 4.2 percent from a year ago, and inventories were equal to 10.5 months of sales.
"The market is glutted with houses," says Peter Morici, economics professor at the University of Maryland.
According to the NAR report, there were 4.4 million existing homes on the market. The weakness is extending into the condo and coop markets where September sales fell 4.3 percent from August levels.
With weak sales and rising inventories, the median home price fell to $211,700. This is down 4.2 percent from September 2006. Part of the reason for the falling price is turmoil in the mortgage market, where it has become more difficult to obtain a loan that is higher than $417,000, the cut-off for a loan to qualify for Fannie Mae or Freddie Mac coverage.
Even in some well-to-do communities, immune to the price drop until recently, prices are under pressure. That's the case in Madison, Conn., where the average sale price is down 11.2 percent from last year.
"There is downward pressure on prices, inventories have risen," says Brendan Grady, a regional vice president for Caldwell Banker.
However, Mr. Grady says the falling prices are attracting buyers to the upscale shore community. Sales this year are up 22 percent.
Falling home prices may have a larger impact on low-income families, says Andrew Jakabovics, an associate director at the Center for American Progress. "It's more likely that a low-income borrower has made a lower down payment, so when prices fall, they may have negative equity."
The implications for a buyer holding a house now worth less than when they bought it are significant. "No one will refinance the house if it's under water [below purchase price]," says Mr. Jakabovics.
Mr. Morici says home owners with negative equity in their homes will find it difficult to buy another house. "If you have to sell and there are not enough proceeds, you get a bill," he explains. "You can't walk away from it without the lenders coming after you."
Earlier this year, many investment professionals had hoped the real estate and mortgage markets would be able hop out of trouble by year-end. However, now there are doubts. On Wednesday, Merrill Lynch shocked the markets with a $8.4 billion write down.
"We just don't know how deep in we are," says Morici.
On Wednesday, an on-line poll of real-estate finance professionals attending the upcoming Asset Backed Security (ABS) East Conference in Orlando, Fla., found still more pessimism. Ninety-eight percent of the respondents see the problems in the subprime market now spreading to higher-rated mortgages, up from 85 percent in March. The ABS conference is for professionals involved in the securitization industry – where the bulk of the financial crunch has taken place.
However, "The only thing stressing is home prices; that's not so bad," says Mark Adelson of Adelson & Jacobs, a consultant to the securitization business. "The main-stream core of the mortgage business is Fannie Mae and Freddie Mac and that's fine. That is the part of the business that puts most Americans in their homes."
No end in sight for housing slump
No end in sight for housing slump
By Ron Scherer
Fri Oct 26, 4:00 AM ET
New York - Home prices are now at 2005 levels.
And, even with the falling prices, the number of unsold homes is the highest since 1999 – as far back as the data goes – suggesting to economists that more price- cutting is ahead.
One of the major implications of the continuing slide in housing is the drag on the total economy. With home sales now lower than many of the most pessimistic forecast, some economists worry that the economy could be closing the year in a weakened state.
In fact, Wall Street is now convinced that the Federal Reserve will reduce interest rates a second time this fall when the central bank convenes next week.
"Housing is clearly the big factor for the Fed," says Jeff Kleintop, chief investment strategist at LPL Financial Advisors in Boston. "The Fed will clearly be looking at that drag [housing] on the economy and the financial consequences of the pullback."
This week, evidence accumulated detailing the housing slump. Yesterday, for example, the Commerce Department revised lower new-home sales for August to the slowest pace in 11 years. September sales rose 4.8 percent compared with the slow August pace. But, new-home sales are still 23 percent below last September.
"Technically it looks like it improved but not when you look at the downward revisions which totaled 167,000 homes in June, July, and August," says Sam Bullard, an economist at Wachovia in Charlotte, N.C. "There is so much inventory out there on the market, builders will have to put out discounts to help move this inventory off their books."
Wednesday, the National Association of Realtors (NAR), reported in September that existing home sales fell by 8 percent from August's level and are down 19 percent from a year ago. Home prices fell 4.2 percent from a year ago, and inventories were equal to 10.5 months of sales.
"The market is glutted with houses," says Peter Morici, economics professor at the University of Maryland.
According to the NAR report, there were 4.4 million existing homes on the market. The weakness is extending into the condo and coop markets where September sales fell 4.3 percent from August levels.
With weak sales and rising inventories, the median home price fell to $211,700. This is down 4.2 percent from September 2006. Part of the reason for the falling price is turmoil in the mortgage market, where it has become more difficult to obtain a loan that is higher than $417,000, the cut-off for a loan to qualify for Fannie Mae or Freddie Mac coverage.
Even in some well-to-do communities, immune to the price drop until recently, prices are under pressure. That's the case in Madison, Conn., where the average sale price is down 11.2 percent from last year.
"There is downward pressure on prices, inventories have risen," says Brendan Grady, a regional vice president for Caldwell Banker.
However, Mr. Grady says the falling prices are attracting buyers to the upscale shore community. Sales this year are up 22 percent.
Falling home prices may have a larger impact on low-income families, says Andrew Jakabovics, an associate director at the Center for American Progress. "It's more likely that a low-income borrower has made a lower down payment, so when prices fall, they may have negative equity."
The implications for a buyer holding a house now worth less than when they bought it are significant. "No one will refinance the house if it's under water [below purchase price]," says Mr. Jakabovics.
Mr. Morici says home owners with negative equity in their homes will find it difficult to buy another house. "If you have to sell and there are not enough proceeds, you get a bill," he explains. "You can't walk away from it without the lenders coming after you."
Earlier this year, many investment professionals had hoped the real estate and mortgage markets would be able hop out of trouble by year-end. However, now there are doubts. On Wednesday, Merrill Lynch shocked the markets with a $8.4 billion write down.
"We just don't know how deep in we are," says Morici.
On Wednesday, an on-line poll of real-estate finance professionals attending the upcoming Asset Backed Security (ABS) East Conference in Orlando, Fla., found still more pessimism. Ninety-eight percent of the respondents see the problems in the subprime market now spreading to higher-rated mortgages, up from 85 percent in March. The ABS conference is for professionals involved in the securitization industry – where the bulk of the financial crunch has taken place.
However, "The only thing stressing is home prices; that's not so bad," says Mark Adelson of Adelson & Jacobs, a consultant to the securitization business. "The main-stream core of the mortgage business is Fannie Mae and Freddie Mac and that's fine. That is the part of the business that puts most Americans in their homes."
By Ron Scherer
Fri Oct 26, 4:00 AM ET
New York - Home prices are now at 2005 levels.
And, even with the falling prices, the number of unsold homes is the highest since 1999 – as far back as the data goes – suggesting to economists that more price- cutting is ahead.
One of the major implications of the continuing slide in housing is the drag on the total economy. With home sales now lower than many of the most pessimistic forecast, some economists worry that the economy could be closing the year in a weakened state.
In fact, Wall Street is now convinced that the Federal Reserve will reduce interest rates a second time this fall when the central bank convenes next week.
"Housing is clearly the big factor for the Fed," says Jeff Kleintop, chief investment strategist at LPL Financial Advisors in Boston. "The Fed will clearly be looking at that drag [housing] on the economy and the financial consequences of the pullback."
This week, evidence accumulated detailing the housing slump. Yesterday, for example, the Commerce Department revised lower new-home sales for August to the slowest pace in 11 years. September sales rose 4.8 percent compared with the slow August pace. But, new-home sales are still 23 percent below last September.
"Technically it looks like it improved but not when you look at the downward revisions which totaled 167,000 homes in June, July, and August," says Sam Bullard, an economist at Wachovia in Charlotte, N.C. "There is so much inventory out there on the market, builders will have to put out discounts to help move this inventory off their books."
Wednesday, the National Association of Realtors (NAR), reported in September that existing home sales fell by 8 percent from August's level and are down 19 percent from a year ago. Home prices fell 4.2 percent from a year ago, and inventories were equal to 10.5 months of sales.
"The market is glutted with houses," says Peter Morici, economics professor at the University of Maryland.
According to the NAR report, there were 4.4 million existing homes on the market. The weakness is extending into the condo and coop markets where September sales fell 4.3 percent from August levels.
With weak sales and rising inventories, the median home price fell to $211,700. This is down 4.2 percent from September 2006. Part of the reason for the falling price is turmoil in the mortgage market, where it has become more difficult to obtain a loan that is higher than $417,000, the cut-off for a loan to qualify for Fannie Mae or Freddie Mac coverage.
Even in some well-to-do communities, immune to the price drop until recently, prices are under pressure. That's the case in Madison, Conn., where the average sale price is down 11.2 percent from last year.
"There is downward pressure on prices, inventories have risen," says Brendan Grady, a regional vice president for Caldwell Banker.
However, Mr. Grady says the falling prices are attracting buyers to the upscale shore community. Sales this year are up 22 percent.
Falling home prices may have a larger impact on low-income families, says Andrew Jakabovics, an associate director at the Center for American Progress. "It's more likely that a low-income borrower has made a lower down payment, so when prices fall, they may have negative equity."
The implications for a buyer holding a house now worth less than when they bought it are significant. "No one will refinance the house if it's under water [below purchase price]," says Mr. Jakabovics.
Mr. Morici says home owners with negative equity in their homes will find it difficult to buy another house. "If you have to sell and there are not enough proceeds, you get a bill," he explains. "You can't walk away from it without the lenders coming after you."
Earlier this year, many investment professionals had hoped the real estate and mortgage markets would be able hop out of trouble by year-end. However, now there are doubts. On Wednesday, Merrill Lynch shocked the markets with a $8.4 billion write down.
"We just don't know how deep in we are," says Morici.
On Wednesday, an on-line poll of real-estate finance professionals attending the upcoming Asset Backed Security (ABS) East Conference in Orlando, Fla., found still more pessimism. Ninety-eight percent of the respondents see the problems in the subprime market now spreading to higher-rated mortgages, up from 85 percent in March. The ABS conference is for professionals involved in the securitization industry – where the bulk of the financial crunch has taken place.
However, "The only thing stressing is home prices; that's not so bad," says Mark Adelson of Adelson & Jacobs, a consultant to the securitization business. "The main-stream core of the mortgage business is Fannie Mae and Freddie Mac and that's fine. That is the part of the business that puts most Americans in their homes."
Tuesday, October 23, 2007
Weakest U.S. Housing Markets
Weakest U.S. Housing Markets
By Matt Woolsey, Forbes.com
Oct. 5, 2007
How much longer can real estate in already depressed areas decline in value?
At least another year.
In fact, it's reasonable to expect 8 percent to 9 percent median home-sale price decreases through 2008 in Detroit, Riverside, Calif., and Las Vegas, currently the three least stable real estate markets in the country, according to data compiled by Moody's Economy.com, a Westchester, P.A.-based research firm.
In Pictures: Weakest U.S. Housing Markets
To arrive at these findings, Moody's ran projection models based on a number of supply and demand drivers: the state of the local economy, job growth, new construction contracts, construction costs, unsold housing inventory and housing affordability; researchers also looked at figures projecting housing turnover and housing sales rates. The third model took into account the state of local credit markets, and foreclosure and delinquency projections.
Overall rankings were a weighted average of the three models, slightly favoring factors contributing to supply and demand. Data were supplied by the U.S. Census Bureau, National Association of Realtors, Equifax, a credit market tracking firm, and Moody's Economy.com.
Falling Figures
Economists generally agree that a market requires around a 2 percent annual price growth to stay neutral. That means an 8 percent or 9 percent drop in price can cause chaos. That's what those living in California, Arizona, Florida, Detroit and Las Vegas can expect. These markets are projected to post the biggest price drops in the coming year. Except for Detroit, all experienced impressive price growth during the boom, which in turn spurred a great deal of construction. When the housing market fell apart, it hurt these markets in two ways. First, they were left with high amounts of unsold inventory, which depresses prices. Second, when construction stopped so did all the housing-related job growth that came with it.
"It's very clear that in Florida, California and Nevada, many of the jobs were housing related," says Mark Zandi, chief economist at Moody's Economy.com, noting that job creation is a key component of recovery and that for these markets to address their inventory problems, "builders are going to have to slash construction, which hurts job growth."
High foreclosure rates don't help, either. Detroit, Riverside and Las Vegas are expected to lead the nation in delinquencies and foreclosures in 2008.
Las Vegas does have something of a silver lining: Its sales rate is the second fastest in the nation, according to Moody's, a sign that sellers are slashing prices to move inventory and thus tightening the unsold housing supply.
In a real bind is California, which gets hit by lending and credit problems on both the top and bottom end of the market. Riverside, Sacramento and Los Angeles all have high ARM shares and loads of sub-prime mortgages, but also have such expensive housing stock that the securitization freeze is hitting those buying in the middle of the market. In a market like Los Angeles, where the median home price is $593,000, it's increasingly difficult for buyers to get loans.
On Sept. 18, Congress voted through a bill to raise the securitization limit of government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac (who currently securitize loans below $417,000) as a way to help offset the credit problems hampering many of the aforementioned markets.
Still, don't expect the legislation to bail out speculators.
"There's a need to increase the [securitization] limit on a regional basis, but you need to keep in mind that the GSEs were created for low- and middle-income home buyers," says Rep. Lincoln Davis, D-Tenn., who sits on the House Finance Committee. "[Securitization] should continue for modest houses, but the government shouldn't be involved in luxury home buying and lending with federal money."
By Matt Woolsey, Forbes.com
Oct. 5, 2007
How much longer can real estate in already depressed areas decline in value?
At least another year.
In fact, it's reasonable to expect 8 percent to 9 percent median home-sale price decreases through 2008 in Detroit, Riverside, Calif., and Las Vegas, currently the three least stable real estate markets in the country, according to data compiled by Moody's Economy.com, a Westchester, P.A.-based research firm.
In Pictures: Weakest U.S. Housing Markets
To arrive at these findings, Moody's ran projection models based on a number of supply and demand drivers: the state of the local economy, job growth, new construction contracts, construction costs, unsold housing inventory and housing affordability; researchers also looked at figures projecting housing turnover and housing sales rates. The third model took into account the state of local credit markets, and foreclosure and delinquency projections.
Overall rankings were a weighted average of the three models, slightly favoring factors contributing to supply and demand. Data were supplied by the U.S. Census Bureau, National Association of Realtors, Equifax, a credit market tracking firm, and Moody's Economy.com.
Falling Figures
Economists generally agree that a market requires around a 2 percent annual price growth to stay neutral. That means an 8 percent or 9 percent drop in price can cause chaos. That's what those living in California, Arizona, Florida, Detroit and Las Vegas can expect. These markets are projected to post the biggest price drops in the coming year. Except for Detroit, all experienced impressive price growth during the boom, which in turn spurred a great deal of construction. When the housing market fell apart, it hurt these markets in two ways. First, they were left with high amounts of unsold inventory, which depresses prices. Second, when construction stopped so did all the housing-related job growth that came with it.
"It's very clear that in Florida, California and Nevada, many of the jobs were housing related," says Mark Zandi, chief economist at Moody's Economy.com, noting that job creation is a key component of recovery and that for these markets to address their inventory problems, "builders are going to have to slash construction, which hurts job growth."
High foreclosure rates don't help, either. Detroit, Riverside and Las Vegas are expected to lead the nation in delinquencies and foreclosures in 2008.
Las Vegas does have something of a silver lining: Its sales rate is the second fastest in the nation, according to Moody's, a sign that sellers are slashing prices to move inventory and thus tightening the unsold housing supply.
In a real bind is California, which gets hit by lending and credit problems on both the top and bottom end of the market. Riverside, Sacramento and Los Angeles all have high ARM shares and loads of sub-prime mortgages, but also have such expensive housing stock that the securitization freeze is hitting those buying in the middle of the market. In a market like Los Angeles, where the median home price is $593,000, it's increasingly difficult for buyers to get loans.
On Sept. 18, Congress voted through a bill to raise the securitization limit of government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac (who currently securitize loans below $417,000) as a way to help offset the credit problems hampering many of the aforementioned markets.
Still, don't expect the legislation to bail out speculators.
"There's a need to increase the [securitization] limit on a regional basis, but you need to keep in mind that the GSEs were created for low- and middle-income home buyers," says Rep. Lincoln Davis, D-Tenn., who sits on the House Finance Committee. "[Securitization] should continue for modest houses, but the government shouldn't be involved in luxury home buying and lending with federal money."
The quickest path to finding true foreclosure bargains
The quickest path to finding true foreclosure bargains
Monday October 15, 1:07 pm ET
By Jennifer Openshaw
Following the facts on discounts can help you find the real deals
NEW YORK (MarketWatch) -- You've heard a lot (probably too much!) about real estate market problems and especially the rapid rise in foreclosures. But as a real estate investor you're picking up big-time "bargain" signals on your antennae.
The headlines are ominous: some 243,000 foreclosures in August, up 36% from July and 115% from August 2006. There's blood in the streets.
So how do you get from "there must be bargains out there" to "how much will I save, and where are the best bargains?"
I like to guide any buying decision as much as possible with the facts. But while lots of foreclosures are out there, how good an opportunity they might be was hard to know. Until now.
For sale and on sale
RealtyTrac, the same real estate portal and analysis group that supplies monthly national foreclosure statistics, also calculates the average discount-to-value by market -- that is, how much foreclosed homes actually sold for vs. their estimated market value in their markets. So -- bingo -- you've got a good indicator of how good an opportunity you're looking at. Search on "foreclosures by state," and then click "view (state) foreclosure trends," and you'll get a nice snapshot of foreclosure filings, actual sales, average sales price and -- most of all -- the discount-to-value.
You could page through state by state to get a national picture of where the good deals are. Instead, I went to the source. RealtyTrac was kind enough to supply me with source data in a spreadsheet. I'll share the most interesting findings.
National trends
Nationwide, in the three months June through August, some 68,426 foreclosed homes sold in 2007 vs. 54,886 in 2006. The average sales price dropped from $271,000 to just over $239,000.
The discount-to-market ratio increased slightly from 76.42% to 77.68%. How do you read this ratio? It is the actual foreclosure sales price compared to the perceived market value of the home. So 77.68% means, on average, you'd get just over a 22% savings or "discount" on your foreclosure purchase. That's down from just over 23% a year ago.
The best (and worst) around the country
So, now the fun part: a state by state look at where the best deals and biggest changes are happening:
From June-August 2006 to June-August 2007, California, Nevada, Michigan, Massachusetts and Arizona showed the greatest increase in the number of foreclosure sales, while New York, New Jersey and North Carolina posted the biggest decreases among states that had 1,000 or more foreclosure sales.
But while California heads the list in sales, the discount is relatively small -- one of the five smallest in the country at only 17%. The best deals are in troubled Rust Belt or manufacturing-centric states -- Alabama, Pennsylvania, Indiana and Ohio.
States with largest discounts Average foreclosure sale price Average % of market value
Alabama $133,834 59.95
Pennsylvania 110,936 61.68
Indiana 99,255 63.50
Ohio 90,300 64.70
Missouri 144,768 67.25
States with smallest discounts Average foreclosure sale price Average % of market value
Hawaii $657,211 85.41
Washington 288,397 83.68
Virginia 338,912 83.48
Massachusetts 290,835 83.03
California 437,813 83.00
Finally, trends are interesting: Discounts are increasing in Midwestern states and in New Mexico, while decreasing some in Alaska, Iowa and Texas. This may be a sign of strengthening real estate markets in those states -- or weak market values to begin with.
State Average % of market value Discount increase (decrease)
Louisiana 74.04 15.88%
New Mexico 72.59 12.01
Minnesota 72.79 10.50
Indiana 73.52 9.82
Alabama 63.50 7.48
Alaska 82.02 (8.03)
Iowa 77.32 (5.34)
Texas 78.75 (4.82)
Kansas 74.03 (4.56)
Hawaii 85.41 (3.47)
These facts will help you know how much to pay -- and to know if foreclosures are right for you in the first place. They may also say something about which way the market in your area is likely to go. Either way, they will help you find the "real" deal.
Monday October 15, 1:07 pm ET
By Jennifer Openshaw
Following the facts on discounts can help you find the real deals
NEW YORK (MarketWatch) -- You've heard a lot (probably too much!) about real estate market problems and especially the rapid rise in foreclosures. But as a real estate investor you're picking up big-time "bargain" signals on your antennae.
The headlines are ominous: some 243,000 foreclosures in August, up 36% from July and 115% from August 2006. There's blood in the streets.
So how do you get from "there must be bargains out there" to "how much will I save, and where are the best bargains?"
I like to guide any buying decision as much as possible with the facts. But while lots of foreclosures are out there, how good an opportunity they might be was hard to know. Until now.
For sale and on sale
RealtyTrac, the same real estate portal and analysis group that supplies monthly national foreclosure statistics, also calculates the average discount-to-value by market -- that is, how much foreclosed homes actually sold for vs. their estimated market value in their markets. So -- bingo -- you've got a good indicator of how good an opportunity you're looking at. Search on "foreclosures by state," and then click "view (state) foreclosure trends," and you'll get a nice snapshot of foreclosure filings, actual sales, average sales price and -- most of all -- the discount-to-value.
You could page through state by state to get a national picture of where the good deals are. Instead, I went to the source. RealtyTrac was kind enough to supply me with source data in a spreadsheet. I'll share the most interesting findings.
National trends
Nationwide, in the three months June through August, some 68,426 foreclosed homes sold in 2007 vs. 54,886 in 2006. The average sales price dropped from $271,000 to just over $239,000.
The discount-to-market ratio increased slightly from 76.42% to 77.68%. How do you read this ratio? It is the actual foreclosure sales price compared to the perceived market value of the home. So 77.68% means, on average, you'd get just over a 22% savings or "discount" on your foreclosure purchase. That's down from just over 23% a year ago.
The best (and worst) around the country
So, now the fun part: a state by state look at where the best deals and biggest changes are happening:
From June-August 2006 to June-August 2007, California, Nevada, Michigan, Massachusetts and Arizona showed the greatest increase in the number of foreclosure sales, while New York, New Jersey and North Carolina posted the biggest decreases among states that had 1,000 or more foreclosure sales.
But while California heads the list in sales, the discount is relatively small -- one of the five smallest in the country at only 17%. The best deals are in troubled Rust Belt or manufacturing-centric states -- Alabama, Pennsylvania, Indiana and Ohio.
States with largest discounts Average foreclosure sale price Average % of market value
Alabama $133,834 59.95
Pennsylvania 110,936 61.68
Indiana 99,255 63.50
Ohio 90,300 64.70
Missouri 144,768 67.25
States with smallest discounts Average foreclosure sale price Average % of market value
Hawaii $657,211 85.41
Washington 288,397 83.68
Virginia 338,912 83.48
Massachusetts 290,835 83.03
California 437,813 83.00
Finally, trends are interesting: Discounts are increasing in Midwestern states and in New Mexico, while decreasing some in Alaska, Iowa and Texas. This may be a sign of strengthening real estate markets in those states -- or weak market values to begin with.
State Average % of market value Discount increase (decrease)
Louisiana 74.04 15.88%
New Mexico 72.59 12.01
Minnesota 72.79 10.50
Indiana 73.52 9.82
Alabama 63.50 7.48
Alaska 82.02 (8.03)
Iowa 77.32 (5.34)
Texas 78.75 (4.82)
Kansas 74.03 (4.56)
Hawaii 85.41 (3.47)
These facts will help you know how much to pay -- and to know if foreclosures are right for you in the first place. They may also say something about which way the market in your area is likely to go. Either way, they will help you find the "real" deal.
Thursday, October 11, 2007
Realtors slash sales forecast
Realtors slash sales forecast
National Association of Realtors predicts sales of existing homes will fall to 10.8 percent of last year.
Alan Zibel / Associated Press
WASHINGTON -- This year's decline in existing home sales will be steeper than previously anticipated, a trade group for real estate agents predicted Wednesday.
The eighth straight downwardly revised forecast from the National Association of Realtors calls for U.S. existing home sales to be 10.8 percent below last year as housing market woes persist. Sales of new homes, meanwhile, are expected to finish 2007 at the lowest level in a decade.
The trade group's outlook for 2007 homes sales has grown more pessimistic through the year as foreclosures soared, credit market troubles developed and sales fell. Back in February, the group forecast an annual decline in existing home sales of only 0.6 percent.
In its October report, the association predicts 5.78 million existing homes will be sold in 2007, down from 6.48 million last year. Last month, the association predicted an 8.6 percent drop from a year ago.
This year's sales would be the lowest since 2002, when sales hit 5.63 million.
Sale prices for existing homes are forecast to drop 1.3 percent to a median of $219,000 this year -- a slight improvement from last month's prediction of a 1.7 percent decline. The median price refers to the point where half sold for more and half for less.
Next year, the trade group expects existing home sales to climb to 6.12 million. That is 2.4 percent lower than last month's prediction.
The picture, however, is bleaker in California, one of the states most caught up in this decade's housing boom.
The California Association of Realtors projected Wednesday that existing home sales in that state would fall 9 percent next year.
Nationwide new home sales are projected to fall to 805,000 this year, down 23 percent from 1.05 million last year, according to the national Realtors group. If that forecast is accurate, it would be the worst year since 1997, when 804,000 newly constructed homes were sold. In 2008, 752,000 new home sales are expected.
The group's senior economist, Lawrence Yun, noted that markets including Austin, Texas, Salt Lake City and Raleigh, N.C., are showing price growth and 2007's home sales will be the fifth-highest on record.
"The speculative excesses have been removed from the market and home sales are returning to fundamentally healthy levels, while prices remain near record highs, reflecting favorable mortgage rates and positive job gains," Yun said.
National Association of Realtors predicts sales of existing homes will fall to 10.8 percent of last year.
Alan Zibel / Associated Press
WASHINGTON -- This year's decline in existing home sales will be steeper than previously anticipated, a trade group for real estate agents predicted Wednesday.
The eighth straight downwardly revised forecast from the National Association of Realtors calls for U.S. existing home sales to be 10.8 percent below last year as housing market woes persist. Sales of new homes, meanwhile, are expected to finish 2007 at the lowest level in a decade.
The trade group's outlook for 2007 homes sales has grown more pessimistic through the year as foreclosures soared, credit market troubles developed and sales fell. Back in February, the group forecast an annual decline in existing home sales of only 0.6 percent.
In its October report, the association predicts 5.78 million existing homes will be sold in 2007, down from 6.48 million last year. Last month, the association predicted an 8.6 percent drop from a year ago.
This year's sales would be the lowest since 2002, when sales hit 5.63 million.
Sale prices for existing homes are forecast to drop 1.3 percent to a median of $219,000 this year -- a slight improvement from last month's prediction of a 1.7 percent decline. The median price refers to the point where half sold for more and half for less.
Next year, the trade group expects existing home sales to climb to 6.12 million. That is 2.4 percent lower than last month's prediction.
The picture, however, is bleaker in California, one of the states most caught up in this decade's housing boom.
The California Association of Realtors projected Wednesday that existing home sales in that state would fall 9 percent next year.
Nationwide new home sales are projected to fall to 805,000 this year, down 23 percent from 1.05 million last year, according to the national Realtors group. If that forecast is accurate, it would be the worst year since 1997, when 804,000 newly constructed homes were sold. In 2008, 752,000 new home sales are expected.
The group's senior economist, Lawrence Yun, noted that markets including Austin, Texas, Salt Lake City and Raleigh, N.C., are showing price growth and 2007's home sales will be the fifth-highest on record.
"The speculative excesses have been removed from the market and home sales are returning to fundamentally healthy levels, while prices remain near record highs, reflecting favorable mortgage rates and positive job gains," Yun said.
Michigan foreclosures drop to 4th in country
Michigan ranked fourth nationally in the rate of foreclosure filings for the month of September. Nevada, Florida and California had the highest rates. Rounding out the top 10 were Arizona, Georgia, Ohio, Colorado, Texas and Indiana, a real estate information company said today.
Foreclosure filings across the United States nearly doubled last month compared with September 2006, as financially strapped homeowners already behind on mortgage payments defaulted on their loans or came closer to losing their homes to foreclosure, according to Irvine-based RealtyTrac Inc.
A total of 223,538 foreclosure filings were reported in September, up from 112,210 in the same month a year ago, the real estate company said.
The number of filings in September was down 8 percent from August's 243,947, the firm said.
Despite the sequential decline, the September figure represents the second-highest total for filings in a single month since the company began tracking monthly filings two years ago.
"August was an extraordinarily high month for foreclosure activity, so some falloff was almost predictable," said Rick Sharga, RealtyTrac's vice president for marketing.
The filings include default notices, auction sale notices and bank repossessions. Some properties might have received more than one notice if the owners have multiple mortgages.
Typically, borrowers must be 60 to 90 days past due on their mortgage payments before their lender will consider them in default, the first stage of the foreclosure process. If a homeowner can't find a way to get current on payments, the home is then often put up for auction, and if it doesn't sell, it eventually goes back to the bank.
In all, 39 states saw a decline in foreclosure filings, the firm said.
Sharga noted that there was a spike in the number of bank repossessions in August that did not occur in September.
It's likely that the sequential decline in foreclosure activity between August and September was just a blip, not a bellwether of lessening foreclosure filings.
"We don't see September as the beginning of the end in this cycle of foreclosures," Sharga said.
The foreclosure rate for the nation in September was one foreclosure filing for every 557 households, the firm said.
The U.S. housing market has seen sales decline and home prices fall or remain flat, making it harder for homeowners who can't afford to make mortgage payments to sell their homes or seek refinancing.
Many of those troubled homeowners were among those who took on adjustable-rate mortgages that are now adjusting to a higher interest rate, translating into payments they cannot afford to make.
The rising delinquencies and foreclosures this year have led the mortgage industry to tighten lending standards, further narrowing options for homeowners struggling to pay their mortgage.
Nevada reported one foreclosure filing for every 185 households, earning the state the highest foreclosure rate in the nation for the ninth month in a row. The state had 5,504 filings in September, down 11.1 percent from August and more than triple from September 2006.
Florida had one foreclosure filing for every 248 households. The state reported 33,354 foreclosure filings in September, down just less than 2 percent from August, but more than three times greater than September 2006's total.
California's foreclosure rate was one filing for every 253 households. The state reported the most foreclosure filings of any single state with 51,259, down 11 percent from August but a fourfold increase from September of last year.
Foreclosure filings across the United States nearly doubled last month compared with September 2006, as financially strapped homeowners already behind on mortgage payments defaulted on their loans or came closer to losing their homes to foreclosure, according to Irvine-based RealtyTrac Inc.
A total of 223,538 foreclosure filings were reported in September, up from 112,210 in the same month a year ago, the real estate company said.
The number of filings in September was down 8 percent from August's 243,947, the firm said.
Despite the sequential decline, the September figure represents the second-highest total for filings in a single month since the company began tracking monthly filings two years ago.
"August was an extraordinarily high month for foreclosure activity, so some falloff was almost predictable," said Rick Sharga, RealtyTrac's vice president for marketing.
The filings include default notices, auction sale notices and bank repossessions. Some properties might have received more than one notice if the owners have multiple mortgages.
Typically, borrowers must be 60 to 90 days past due on their mortgage payments before their lender will consider them in default, the first stage of the foreclosure process. If a homeowner can't find a way to get current on payments, the home is then often put up for auction, and if it doesn't sell, it eventually goes back to the bank.
In all, 39 states saw a decline in foreclosure filings, the firm said.
Sharga noted that there was a spike in the number of bank repossessions in August that did not occur in September.
It's likely that the sequential decline in foreclosure activity between August and September was just a blip, not a bellwether of lessening foreclosure filings.
"We don't see September as the beginning of the end in this cycle of foreclosures," Sharga said.
The foreclosure rate for the nation in September was one foreclosure filing for every 557 households, the firm said.
The U.S. housing market has seen sales decline and home prices fall or remain flat, making it harder for homeowners who can't afford to make mortgage payments to sell their homes or seek refinancing.
Many of those troubled homeowners were among those who took on adjustable-rate mortgages that are now adjusting to a higher interest rate, translating into payments they cannot afford to make.
The rising delinquencies and foreclosures this year have led the mortgage industry to tighten lending standards, further narrowing options for homeowners struggling to pay their mortgage.
Nevada reported one foreclosure filing for every 185 households, earning the state the highest foreclosure rate in the nation for the ninth month in a row. The state had 5,504 filings in September, down 11.1 percent from August and more than triple from September 2006.
Florida had one foreclosure filing for every 248 households. The state reported 33,354 foreclosure filings in September, down just less than 2 percent from August, but more than three times greater than September 2006's total.
California's foreclosure rate was one filing for every 253 households. The state reported the most foreclosure filings of any single state with 51,259, down 11 percent from August but a fourfold increase from September of last year.
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