Foreclosure Listings Articles » Real Estate

US Real Estate Industry is on a Tailspin

Julie Parker — Fri, 16 Oct 2009 17:44:30 +0000

The US real estate industry is on a tailspin. People are faltering on mortgage payments and banks are taking over the properties. Hence, foreclosures have become common. These foreclosed properties are now being put back on to the market for resale. First-time investors are snapping up these properties propelled by the Federal tax credit announced by the government.

Homes are being built also and KB Home is one of the builders of small and affordable homes. The company has carved out a niche in the segment and is in fact posing a competition to foreclosures. Its losses in the third quarter have come down as it received orders to build new homes. In fact, the company’s orders increased by 62 per cent from the previous year’s contracts. The company specializes in building Open Series homes that would cut down costs.

KB Home’s president and CEO, Jeff Mezger, says that the company’s main objective has been to restore profitability and as the third quarter results reflect the company is on the growth track. The company’s quarterly results are a reflection of the fact that the housing industry is recovering.

The sale of new homes has increased for the fifth consecutive month. Yet the figures are now no where near what they were in the peak season. It is still 70 per cent less than what it was in 2005. This has been a welcome trend for KB, which has been struggling to put a cap on losses through the downturn. Despite gains, KB’s balance sheet is still in the red. This has been the company’s 10th quarterly loss. Revenue has also seen a drop of 33 per cent. While in the previous year it was $681.6 million, it dropped to $458.5 million.

The sales too dropped – it sold 2,240 in the latest quarter. This is a 20 per cent fall from the previous year. The median selling price of homes too registered a decline. It fell by 15 per cent to $202,800. There’s a bright side of the picture though. It received many new orders for constructing homes and these totaled 2,158.

Mezger said that the increase is because of its new brand of houses known as Open Series. This brand will make up for half of its sales not only in the last half but also the first quarter of 2010. There is a good demand for homes in all the regions including Arizona and California.

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Increase in Rental Vacancies Indicates a Positive Change in the Weather

Kevin Simpson — Thu, 05 Mar 2009 21:51:58 +0000

Of late the foreclosure related housing crisis has caused innumerable evictions resulting in thousands – if not millions, being rendered homeless. During the time of the housing boom the mantra had been to own a house. This has always been the great American dream and the very basis of its psyche. The sub-prime mortgage debut was accelerated with the pushing on of this dream into an absurd reality. Those without any income credentials were sanctioned loans to buy houses. The idea was to get the money flowing from the mortgage institutions to artificially balloon up the housing industry. The shrewd thinking was that either way the lenders benefited. If borrowers remained current on mortgage loans then money would be coming in at a high rate because the value of the houses had been falsely appreciated. If borrowers defaulted then the lenders would seize the property and sell at a higher rate. The logic was based on a naïve belief that real estate prices could never come down. But this is exactly what happened.

With so many turning homeless overnight because of foreclosures suddenly the demand for rentals shot up. The greater the demands for rental the more did it indicate that foreclosures were on the rise.

Meanwhile the government at state, local and federal levels as well as the communities pitched in to contain foreclosures. There were massive relief measures. It is an ongoing process with the latest being the mother of all bailouts – the $700 billion package. It is difficult to gauge how far effective the previous efforts that have been in circulation since the last one-year is being successful. Rental vacancies can be taken as a tentative yardstick. If the rental vacancies are increasing then it indicates that the foreclosure weather clouds are perhaps clearing. It shows two things – less number of people is suffering foreclosure evictions and or sale of houses are picking up causing affordable housing to be available for the ordinary American.

Writing rental cheques does not have any benefits like tax deductions or increase in equity of the house. That is why Americans have always wanted to own houses. Rents have been the highest in New York City and San Francisco. It has risen by 6.6% since last year. In the Bay area the increase has been by 7.8%. This shows that the landlords dictate the market. In Columbus, Ohio the rents are slightly lower.

According to a survey conducted by Marcus & Millchap of Encino, California rental data was collected from 40 largest cities of America for 2007. Estimated figures for 2008 were taken including vacancy rates, new building project and job potentials. Of these three, it is the vacancy numbers that affect price rise. In the sales zone an inventory of 5% unsold units means a glut. In the rental world 5% vacancy rate point to a healthy market.

Tossing Between Rented Accomodation and Shared Ownership

Kevin Simpson — Wed, 04 Mar 2009 18:37:14 +0000

It is a difficult to answer the question of which option is better – opting for a rented accommodation or a shared ownership. The best is a toss up and leave it to fate! Both sides have strong arguments in favour and against.

Shared ownership indicates owning a part of the property jointly with a co-owner – usually the housing association. Shared ownership is sometimes referred to as part-buy-and-part-rent scheme. It is of great benefit to those who cannot afford to buy a house outright. Part of the house is bought while rent is paid for the other part. As the payment towards ownership increases correspondingly the equity or the share on the house rises. This is technically known as ‘staircasing’. One goes on climbing the stairs until the entire unit is bought.

There are certain costs involved. Some of these have to be paid at one time while there are others that have to regularly remitted. The at-a-time costs include legal charges, valuation, stamp duty, mortgage arrangement fees plus a deposit. The regular remits will be for mortgage, rent, service charges, insurance, tax, fittings and furnishings, gas, water, electricity and telephone as well as for regular maintenance etc.

In shared ownership certain questions arise regarding permission for redecoration, subletting, selling of share and will. More important issues relate to revised valuation each time the share on the house is increased and the consequences of defaulting on the mortgage. These are queries for the solicitor.

The advantages of shared ownership are that it is the first step towards owning property. The properties are either brand new or in tiptop condition. The sharing proportion can range from 25% to as much as 75% at the onset. There are certain preconditions for those who qualify for shared ownership. Those employed in the right kind of jobs are given priority. Joint application is permissible. There is also tax relief.

Among the disadvantages are that sometimes there is a long waiting queue to overcome. The choice of properties and locations are limited. It may so happen that one shareholder in the absence of others is weighed down with the responsibility of the entire unit. Increase in share proportion may involve additional costs.

Young people about to build nests should think twice before opting for shared ownership. For those just debuting into independent lifestyle one cannot predict where the next job or assignment will be. As such rented accommodation gives a lot of freedom. It has fewer responsibilities and allows for more flexibility. But in these troubled times landlords may not be what they pose to be. The so-called landlord might be under the scan of foreclosure but is quietly pocketing the rent. In extreme cases he or she might be an outright trespasser who plays out the role of the landlord convincingly and decamps with security money as well as two months rent. Most rentals are yearly leases and this leaves a feeling of uncertainty.

Considering the long waiting and conditions attached to shared ownership the toss goes in favour or rented accommodation – for the moment right now!

Guidelines for Rented Accommodation During Troubled Times

Kevin Simpson — Tue, 03 Mar 2009 19:27:51 +0000

With USA being in the throes of a housing crisis it is not easy to find rented accommodation. With innumerable families being evicted due to foreclosures there is a high demand for rented accommodation. One is so desperate to find shelter that often the dangers are not weighed. Here comes in the importance of guidelines for rented accommodation during troubled times.

The greatest danger is that the lease is an agreement between the renter and the landlord. But when the landlord is foreclosed upon and evicted there is no understanding with the new landlord and the tenants. They are expected to move out within a short notice. Meanwhile the previous owner vanishes with the security deposit. The renter falls into a rut with limited finances to hunt for another accommodation – whether a room or a house.

In most states if mortgage was inked before signature of the lease then the foreclosure will negate the lease. It is known by the rule of “first in time, first in right.” As most of the leases do not exceed a year, the general practice is for the mortgage to be dated ahead of the lease and thus it is destroyed as soon as foreclosure starts.

In the majority of the cases the landlord keeps the renter ignorant about the foreclosure proceedings and continues to collect rent. It is only when the notice is pasted that the renter becomes aware of the duplicity. There have been many cases of families jumping from one foreclosed house to another as tenants to be duped each time with a foreclosure knock.

There are also instances of smart crooks walking into vacant foreclosed houses, posing as landlords, and collecting the security deposit as well two months rent before disappearing. The renter is left to face the music of being accused of trespassing.

Under such circumstances it is better to go through bonfire agencies that connect the right landlords with the right tenants for a small fee. It is worth the time, effort and money for the peace of mind gained. Recently more laws are being enacted to give protection to the tenants.

The renters today have most probably been house owners of yesterday who have been foreclosed upon. Their numbers run into millions. They do not fall under any single category as they come from different walks of life with different income levels. They seek rented accommodation in various cities, suburbs and neighborhoods – some smart, some medium and others humble. In short renters are scrambling to exist everywhere.

Those who rented out houses were many who bought units during the housing boom, rented them out for the time being, hoping to reap rich harvests when the price escalated. The falling market upset their carts. For instance 65% of the foreclosures in Minneapolis were rented units.

Many owners of rented properties are trusts that deal with investment. They have bought mortgages directly from the banks and done the hard work of foreclosing, evicting and taking possession so as to rent them out.

What is the Best Way to Search for Residential Properties in Foreclosure, Tax Lien or Bankruptcy?

Kevin Simpson — Tue, 03 Mar 2009 17:23:40 +0000

Well – the question is a most general one, aspiring for foreclosure properties in three different segments. All residential properties listed for sale under foreclosures listings in the above segments have different modes and places to search for. Also buying residential properties have two different purposes namely – for own occupation for living with family and as investment to let out and get a steady monthly income or a profit by resale at the appropriate time.

At the outset, it can be confidently said that the Best place to search for residential properties is the Internet. Although you can find advertisements in the local news papers of your area, about residential properties that are available for sale under foreclosure, going through all of them will be daunting and contacting the advertiser individually for further processing is also not an easy one.
There are hundreds of websites publishing foreclosure listings of residential and other properties. All of them boast of best service to home buyers, but sadly the truth is the other way round. Like most of the businesses, real estate business has also been invaded by scammers, a customer should be varying about. That said there are genuine sites doing fair and loyal business and they can be identified easily by making a search through the popular search engines.

If you are ready to make the search for residential properties, you have to do some grounds work. First decide why you want to buy a foreclosure property listed for sale under foreclosure listings. If you are a home buyer for the first time for own occupation, you are head and shoulder above the rest and you will be the most welcome customer by these sites. If you are interested in investing and you have the necessary financial resources, you are the next best customer for them.

For both the above options, it is ideal that you select a suitable buying agent first. It will greatly reduce your hassles and finish off the deal of home buying amicably, without any loose ends. Admittedly home buying from foreclosure listings is very profitable, given the scenario existing in the country today. More than 2 million homes are rendered for foreclosure sales and are available for a fraction of their real value as sale price.

You have to make clear your preferences to the buying agent – the location, amenities and conveniences expected in the property, utilities and services available nearby for a peaceful living and of course the price range. It is the considered and unanimous opinion of the experts in the field of foreclosure buying that Bank Repossessed properties are the best. Reasons are – the properties will not have any further headaches like eviction of the home owner; good and ready to occupy condition; no other liens or mortgages attached to the property as the Banks would have cleared them well before repossession.

Regarding Tax Liens these are properties confiscated by the Government authorities from the defaulted home owners on payment of property tax. These are entangled with the Court proceedings and the defaulted home owner can retrieve the property by paying off the taxes with fines. So home buying from Tax liens, though very cheap, is not guaranteed to keep the property by the buyer for long. Also these properties will generally be in dilapidated condition, not fit for living.

As for Bankruptcy, the home owner can only delay the inevitable end of foreclosure by filing a Bankruptcy petition in the Court, under Chapter 7 or Chapter 13. In both the cases, the Court will issue a temporary stay for the lenders from proceeding with foreclosure process. But the lenders can move the Court for vacating the stay and pursue with their foreclosure proceedings in due course. Home buying from Bankrupt home owners is therefore a hassle one could avoid at any cost.

The Right Time to Invest in Property – Today or Tomorrow

Kevin Simpson — Mon, 02 Mar 2009 16:46:46 +0000

There is nothing like owning a house of your own – it spells security, privacy and a feeling of independence. With the financial market in turmoil and a plunging real estate market it seems to be a right time to invest in a property today. But with the trend of plunging continuing a question arises about postponing the purchase for tomorrow. To find an answer one needs to know in brief something about the crisis, its causes and results.

Buying a house that is going to be a home is a big investment and should not be done hastily. The first thing is to decide whether one needs to buy a house right now. If not then it may be wiser to wait. But since prices are at an all time low perhaps it will be unwise to forego the opportunity. In that case the purchase will be an investment. Taking a lesson from the foreclosure crisis one should weigh the pros and cons about buying today when the banks are offering reckless discounts.

With the withdrawal of regulations the financial sector went wild and injected the market with sub-prime mortgages. Anybody with a pulse could get a loan and the result was that flushed with cash flow the housing market went booming and zooming with activity. Real estate prices began to swell. Speculators honed in and snapped up houses by the dozen. The inevitable happened and the bubble burst. Those who did not have the capacity to carry on with the mortgages did not do so. They defaulted. Banks foreclosed. Now the banks are sitting uncomfortably with not thousands but millions of unsold houses that are white elephants. The entire society is held hostage by these vacant houses while millions are seeking shelter.

Apparently it seems to be the best time to buy a house with the banks offering sometimes 50% discount. But can it really be regarded as discount? If the value of the house had been falsely increased by say 100% few years ago, a 50% discount means that it is still 50% above the real price level. It is better to buy the house when the market corrects itself and wait for further plunges – opine some experts.

A novice or a new nest builder should carefully test the waters before entering the market selling bank repossessed foreclosed houses. The banks have given a cosmetic face-lift to the houses but there may be deep cracks inside going to the roots with termites and moulds having already taken over the structure. The previous owners in frustration have often resorted to vandalism before leaving by inflicting the maximum possible damage. Even if all did not stoop so low, it is an undeniable fact that the previous owners were financially constrained and it is this led to them being foreclosed upon. As such there were in no financial condition to see to the maintenance of the house. Thus the price may be apparently cheap but one should not be surprised if hidden expenses pop up.

Home Prices Dipping Down Still Further

Kevin Simpson — Mon, 10 Nov 2008 16:36:31 +0000

The aftermath of foreclosure crisis is haunting US Real Estate market, if the latest press reports are any indication. Market watchers report that Single-family home prices are heading south, particularly in the Western parts – a regretful 7.7% during the first quarter. This is the largest decline year-to-year ever since the National Association of Realtors started reporting property prices in 1982. Compared with the last three months of 2007, the median sale prices of housing properties fell to $196,300 – a 4.8% nose-dive.

Realty circles attribute this record decline to troubles faced in the financial markets, liquidity problems in particular. High priced markets attract jumbo loans and the last quarter has turned out only fewer originations in this segment. Realty experts hasten to add that California accounted for 40% of all sales with jumbo mortgages going over $417,000, and the liquidity crunch has it from the summer of 2007 to taper down in home sales to only 10%.

Another reason for this high priced markets sales getting discouraged could be, the Government sponsored agencies – Fannie Mae and Freddie Mac – raising the cap of jumbo loans from $417,000 to include prices up to $729,750 since February. Other mortgage lenders charge higher rates of interest for these conforming jumbos at 1% to 1.5% more than ordinary conforming loans, leading to fall of sales figures in higher price ranges.

The subprime implosion forced a lot of lower priced housing properties back on the markets, hitting hard the higher priced markets to suffer, which again has the effect of dragging down NAR’s statistics as above. California and similar other Sun Belt cities have the unfavorable combination of high prices as well as heavy proportions of subprime mortgages for losing big on the sales indexes.
Plummeting price lines are recoded thus – California, Sacramento 29.2% to $258,500 in comparison with last year’s prices; Riverside 27.7% to $287,100; Las Vegas 20.2% to $247,600 and Phoenix, Arizona 15.4% to $222,200.

Loss of employment due to factory closing is plaguing the Midwestern cities. So the median prices fell sharply as – Lansing, Michigan 26.9%. Out of 150 real estate markets studied, Saginaw, Michigan turns out the lowest median price – an amazingly low $65,400 for a housing property. Analysts are of the opinion that the factors behind such a steep fall are – weak industrial economics caused by the Big Three automakers – Ford, GM and Chrysler and deflating of the real estate bubble.

Interestingly in some quarters there is solace by showing gains in nearly one third of the markets, the best performance coming from New York reporting a rise in prices by 11.8% to $109,700; followed by Peoria, Illinois up by 10.4% to $119,400; and Spartanburg, S.C. by 10.2% to $130,300.
Region-wise results are – Northeast shows single-family home prices rising slightly by 3.2% to $280,000, while all others dipped. South dropping 7.5% to $164,200; Midwest reporting a fall of 7.9% to $142,700 and West plunging deep by 12.3% to $296,300.

Overall a gloomy future looms large on the markets by big rises in foreclosure filings hitting home prices severely in the last 12 months, where delinquencies more than doubled. During the first 3 months of the year some 155,000 home owners forfeited their homes to bank repossessions. The projection for 2009 is bleak since adjustable rate mortgages (ARMs) are expected to reset this year for higher rates, making defaults soaring further.
Inventory of unsold foreclosures has risen to an average of 10 months, adding up to the record number of 2.9 million vacant homes for want of takers. Builders looking to sell homes are forced to aggressive slashing of prices and adding up incentives to buyers, while housing starts have been held up at a 17 year low.

Finally the home sales figures at nearly 492,000 a month are hardly a 2/3rds of the peak in summer 2005. The general trend is condo prices are fetching better than single-family homes, the median price falling slightly by 3% since early 2007. The market projections for February 2009 indicate prices falling still worse.

Foreclosure Crisis: Bush Plans For Las Vegas

Julie Parker — Mon, 03 Sep 2007 12:36:06 +0000

If President Bush has his way then the residents of Las Vegas victimized by the foreclosure crisis will heave a sigh of relief. The President does not think it is a bail out operation to help lenders and speculators but is meant to help borrowers who are in the soup worried about the roof above their heads blowing away.

Christine Young based in Henderson is just one among the many boiling in the cauldron. Her property unit consisted of a 2,000 square feet four bed roomed house. About a year ago she had refinanced it under the impression that she was moving into a fixed mortgage scheme. But that was not so in reality. Within a year the ARM shot up beyond her means. It is $700 more with the due date of 1st September looming ahead. Christine squarely puts the blame on predatory lenders. They shrewdly trapped her to sign a mortgage that she had tried desperately to avoid. The smart ways of the mortgage agent made her gullible to his sales talk. At that time she thought him to be a nice honest fellow.

There are thousands of Christines across the length and breadth of the country ready to tell the same tale.
Nevada ranks first in the foreclosure race. The filings have gone up by 93% from what it was the previous year.

Last Friday President Bush detailed steps the federal government would take to help the besieged borrowers. He repeatedly assured that his focus was not to save the lenders and speculators who are also in the red. He emphasized that this operation will give Americans with a good credit past, but cannot bear the burden of recent rises, to refinance into FHA mortgages that are insured.

Pam has yet another story to tell. She had put her house on the market shelves many months previously. She was hoping to sell before the house foreclosed. In this way of direct selling she calculated on cutting down her losses. The initial asking price was $389,000 but now she has climbed down to $299,000. It meant her losing $90,000. Even then she would be lucky to sell it off right now without further loss.

The plans of President Bush will not help the Christines or the Pams because even if sanctioned it will not come fast enough to stop more heads from rolling.

Community Groups And State Help Out Foreclosure Victims

Julie Parker — Mon, 27 Aug 2007 12:34:51 +0000

Poku, a 55 year old taxi owner with wife and three children hails from Columbia. He had to move out of his house. Helped by his group members and a new state programme he shifted to rented accommodation. At lease he is not under the open skies!

One of his passengers Neil Carey, kicked off a fund administered by Grassroots Crisis Intervention Center, helped Poku meet his debts, his survival expenses as well as legal costs for fighting the matter out. Poku had been evicted a year ago having failed to legally prove that the original mortgage had been paid off during the refinancing period because of documents and checks had been lost by the jumbo financial body involved in this deal.

Howard County based Congregation Concerned for the Homeless has been operating for the last 17 years. The state on its part has started off the Family Stabilization Program through the county government to help sufferers like Poku. Its scope of activity involves continued support, counseling on budgets,, use of credit, proper parenting and business advice.

The help programmes try to get the business going again. Poku is one of their ideal subjects. Foreclosure had given him a bad name and so it was not easy for him to find a rented home without help. But finally one was found that suited the work compulsions of his wife and himself. The group saw to the waiver of security fees.

Poku insists that the loan had been paid off but the Seattle based mortgage firm denies it. Poku found his house sold off within six weeks of his being issued a notice. As per Maryland law quick foreclosures are the norm and do not require lenders to prove that the borrower had been notified. Many Maryland officials are keen to change the law. Right now these resolutions will not help Poku who had migrated from Ghana and struggled to set up his small business. He had built up his taxi service from scratch after learning everything about repair and maintenance during off work period at night.

Poku’s lawyers failed in May to prove his point in the Court of Special Appeals. Right now two court actions are pending after the matter was again filed. His lawyers are demanding compensation and a share of the proceeds from the sale of the house.

Via

Up And Up Goes The Foreclosure Baloon

Julie Parker — Fri, 24 Aug 2007 12:29:47 +0000

Five states of California, Florida, Michigan, Ohio and Georgia bore the brunt of more than half the country’s foreclosure burden. In the middle are squeezed in Missouri (18th) and Kansas (32nd). In Missouri the ratio was 1:1,275 and in Kansas it was 1:2,782.The figures are inclusive of default, sale and bank repossession notices. Because of multiple mortgages some of the property units may have been counted more than once. But the tracking group has listed separately individual properties. During the first six months of the current year 573,397 properties showed foreclosure activity in some form or the other. It amounts to 58% rise from the first half of 2006 and 32% rise from the last six months of that year.

In July Nevada, Georgia and Michigan showed the highest numbers. California, Florida and Ohio were the states with the highest foreclosure numbers.

The sub-prime loans and ARM loans have been battering the mortgage market during the last few months. One by one delinquency is being reported and houses are being foreclosed. Falling real estate prices have added woe to misery with owners not being able to sell off units and pay off dues. Sub-prime loans had been given to those with shaky credit history. It started with interest-only repayments but when the grace period was over the cracks began to appear and widen.

But the story did not end there. From the housing credit category it infected the country’s savings and loans. Never had the situation been so bad in the past 14 years. USA Office of Thrift Supervision is nervous and edgy with $14.2 billion in repossessed assets and loans whose dues are more than 90 days old. In other words property is lying around idle with no cash flow coming in. To avoid further decline it is being advised that properties should be sold off quickly without thinking of profit and loss.

According to reliable sources foreclosures rose by 93% from July last year to July 2007 across USA. It went up by 9% from June. In July last year the number of foreclosures had been 92,845 but this year during the same month the number read 179,599. In June the foreclosure number was 164,644. The figures have been released by one of the oldest reliable online groups, keeping track of this specific situation. The national foreclosure rate is 1:693.
Five states of California, Florida, Michigan, Ohio and Georgia bore the brunt of more than half the country’s foreclosure burden. In the middle are squeezed in Missouri (18th) and Kansas (32nd). In Missouri the ratio was 1:1,275 and in Kansas it was 1:2,782.The figures are inclusive of default, sale and bank repossession notices. Because of multiple mortgages some of the property units may have been counted more than once. But the tracking group has listed separately individual properties. During the first six months of the current year 573,397 properties showed foreclosure activity in some form or the other. It amounts to 58% rise from the first half of 2006 and 32% rise from the last six months of that year.
In July Nevada, Georgia and Michigan showed the highest numbers. California, Florida and Ohio were the states with the highest foreclosure numbers.
The sub-prime loans and ARM loans have been battering the mortgage market during the last few months. One by one delinquency is being reported and houses are being foreclosed. Falling real estate prices have added woe to misery with owners not being able to sell off units and pay off dues. Sub-prime loans had been given to those with shaky credit history. It started with interest-only repayments but when the grace period was over the cracks began to appear and widen.
But the story did not end there. From the housing credit category it infected the country’s savings and loans. Never had the situation been so bad in the past 14 years. USA Office of Thrift Supervision is nervous and edgy with $14.2 billion in repossessed assets and loans whose dues are more than 90 days old. In other words property is lying around idle with no cash flow coming in. To avoid further decline it is being advised that properties should be sold off quickly without thinking of profit and loss.

Via