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A new development is taking place in the real estate industry of the US. As foreclosures increase and people are evicted from their homes, rented apartments are becoming more popular. Architect Brian Keith is now more preoccupied than he ever was. He is trying to finish work on an apartment unit in Dallas. Amidst foreclosures, the demand for rental apartments is increasing.

This is just one order that that Brians’ firm, JHP Architecture, has with it. There is a flood of orders for rental properties in the US. That is because the demand for these properties has increased.

Even JHP has expanded operations in tune with the demand. The firm will be expanding till the first half of next year. Keith, who is the director of urban design in JHP, said, “We’re seeing overall work come back and there’s a backlog of contracts to go through. There’s strong interest in multi-family units and plenty of pent-up demand.”

The unemployment level in the US is quite high at 8.6 %. Foreclosures are increasing. Although property prices are still low, most Americans do not have the wherewithal to pay for the mortgage amount. Hence, they are shifting to rented homes. And that is the new reality in the real estate industry.

In fact, the percentage of people owning homes in the US has seen a sharp drop. It dropped from 69.2 % in late 2004 to 65.9 % in September 2011. The figures improved slowly to 66.3 % by late 2011.

However, the number of empty rental properties has dropped too.  The percentage fell from 10.3 % to 9.8 % recently. A Morgan Stanley analyst, Oliver Chang said that 2012 would be the year of the landlord. The report said, “Rents are rising, vacancies are falling, household formations are growing and rental supply is limited. We believe the demand for rental properties will continue to grow.”

New housing is being developed. This has fueled optimism that the real estate market is slowly reviving. Multi-family housing is the one to gain. Also prices are indicative of the demand shift.

Rental costs have gone up by 2.4 % compared to 2010. The senior economist at IT Investment Research, Steve Blitz, said what is giving a boost to the construction of apartment buildings, is the prospect of good returns. That indeed spells good news for the entire economy.

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The economy continues to be weak and vulnerable. Its condition will worsen with more foreclosures as prices will further tumble. Against this scenario Mitt Romney has suggested that foreclosures should rumble on unhindered.

It suits him to ignore the fact that the bubble in the housing segment was caused not only by reckless borrowing but also by predatory lending. When the property market crashed the banks were quickly bailed out while the investors and the borrowers by the thousands whom the lenders had chased relentlessly during the boom years speedily began to see their properties and investments vanish.

Facts have proved that the damage to the economy has gone much beyond the irresponsible greedy borrowers. The proof is the Great Recession, staggering unemployment and tumbling real estate market. All combined has ruined the lives of millions – even those who never went anywhere near the sub-prime mortgages. This is the price the nation is paying for the drunken behaviour of the banks and the equally heady bailouts. These people should be saved.

Each and every one of the troubled borrowers cannot be saved. It is estimated that 14.7 million borrowers are underwater. Of these 1.6 million are beyond redemption as per the findings of Moody’s analytics. Many of them have already moved out of the houses to unknown destinations as they are hopelessly defaulting thanks to long stretches of unemployment. The group already in their houses needs counseling so that they can turn their units into rentals.

Another lot of 1.6 million borrowers are defaulting because of a temporary setback in their financial condition. Forbearance would be able to help them. It means they will be allowed not to make any payments for a scheduled period of time but later they would have to make up the difference; alternatively their loans could be modified so that their monthly mortgage payments become afford ably reduced.

Remaining are 11.5 million underwater borrowers who continue to be current on their housing dues. But they come under the high risk category of falling into default. They have no incentive to continue with their payments – more so if prices tumble further.

The best solution is modification of loans that bring down the principal amount because it causes restoration of equity and reduction of monthly dues. The banks would be hit by these reductions but this price they will have to pay. The Obama government is expanding its running programme to include refinancing. Romney commented that this is “worth further consideration”.

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The Occupy Wall Street movement protesting foreclosures is being pushed forward because of anemic political measures and police aggression. One of the placards read, ‘The only way to experience the American Dream is while sleeping”.

However, Wall Street financiers are not willing to stomach anymore troubles. They have recently been floating a flyer that screams, “We are Wall Street: Wall Street Strikes Back”. Unfortunately, bankers have taken up a defensive stand to Wall Street financiers.

They contend that their job is money-making. America did not complain when the market was roaring and the income of all doubled every third year. The writer for the bankers is angry as winter approaches. They do not like to be called lazy as they wake up at the crack of dawn and work till the lunch break. They do not have unions. They do not retire with any pension when they are fifty years old.

It is not surprising those banking groups are also frustrated. The Occupy Wall Street activists have not only held up the fact for all to know about escalating social inequality, but they have pointed the finger at Wall Street bankers for this unprecedented outrage.

Due to the advanced capitalistic state of modern society, it is extremely difficult to pinpoint the culprit. During feudal times, there was the castle of the baron or the office of the moneylender to vent one’s rage. They were easily located and the peasantry attacked these with their agricultural tools.

But in modern times it is not as easy to protest against those higher up than you. Social domination is abstract and makes it much more complicated for those striving to rise above their social status.. Banks have now become representative of financial ills because it is the banks that do the foreclosing and evicting.

But the banking sector is just a cog in the wheel – a complex infrastructure that was founded on the idea that only a few can wield actual power and have property for the welfare of the vast masses who can only nurse illusions about real estate and power. The employees of the banks are also surviing on these shaky ideas; not unlike those found in the streets.

Broadly speaking, the banks have come to represent the system. But revamping of the banks alone will not be the solution – the cancer has spread far and wide. There is dangerous anger at the swelling inequality and the austerity measures the government is imposing. Taking jobs from American citizens is characteristic of globalization. Unfortunately, the entire system is seen as untenable.

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The US economy is not yet on the growth track and the real estate industry still needs to recover. The number of foreclosures is still at a record high. Now with Christmas coming up., the Salvation Army is making a fervent appeal to all those willing to help struggling homeowners.

In the early years, the Salvation Army used to collect donations. Now donations are down because of the sad state of the economy and a decline in consumer confidence. With prices rising, people cannot afford to buy essential items. In fact, their prices have outpaced people’s income.

Subsequently, many are taking the Army’s help. Major Thomas Riggs, said, “To our neighbors in Calhoun County who are blessed with jobs and steady income, our message is: ‘Please don’t forget them’”.

It’s especially important to show those who are unfortunate enough to be struggling this Christmas season that they haven’t been forgotten. However, faithful friends and new supporters of the Salvation Army will be sure to see that the needs of the destitute are met.

The Salvation Army will give clothing, food, and other assistance to people who are in need during Christmas. In fact, the Army has been doing it for the past 120 years in this county. Major Thomas also promises to provide Christmas toys to the children. After all, children do look for special gifts during the festive season. These children will not be forgotten and the Army hopes that the community too will not forget hungry or homeless children.

The Army has also reported that it will continue to help the community. Even though the Salvation Army’s efforts become more visible during the festive season, Riff says it’s important to know that the programs will continue to exist.

Riggs says, “We’re not just going to hand out a blanket and a cup of coffee to a needy person. We want to get them back on their feet and moving into a productive and fulfilling role in life. Our motivation comes from faith in Jesus, and at The Salvation Army we’ll help them regain their hope and purpose by sharing the good news of God’s love and offering support in any way we can.”

It may be pointed out that the Salvation Army serves communities in Barry and Calhoun counties.  Besides providing food, clothing, and shelter, it also provides services to 6,000 people including families.

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The realtor of Prudential America Sam Wagmeister made a study of those people who bought homes in the period between 2004 and 2008. The purpose of the study was to find out who were still living in the same house. And how many of these homes have been foreclosed upon.

The study is not very scientific as the one done by Sales Traq. The selection of communities has been very random, so are ZIP codes. According to the study most homes had been made since1994. These had common features like tile roofs and stucco exteriors.

The homes’ values have now slipped to 50 % of their original values.  It may take five years at least for the home values to go up. Wagmeister said, “The assumption that I have is that, eventually, these homeowners will choose to stop supporting the super banks by making payments on homes that they will probably never realize equity in, and either short-sell the properties or suffer the long-term consequences of foreclosure.”

That means more foreclosures are on the way. Everyone wants to know the answer to this question. Jacksonville based company, Lender Processing Services have come up with the report that 16 % per cent of homeowners in Las Vegas are saddled with mortgage that are delinquent by 30 days.

The situation is indeed very confusing. Many people are lagging behind on home payments. It could be 10% 17% or 27%, and many of them are heading to foreclosure. The situation is bad in regions like Nevada, California, and Arizona.

In Nevada there is a new law that may slow down the foreclosure process. But ultimately it will not stop them. An average of 4,000 notices has been sent in September. Default filings had dropped to 771 last month.

Tim Kelly Kiernan, Re/Max Extreme, said, “Some Realtors feel the world is coming to an end because the foreclosure process will take forever, while others feel it’s just a speed bump and things will be fine in a month or so. I met with my Bank of America contacts and they say it’s also just a speed bump. Who knows? Patience is a virtue, I guess.”

James Saccacio, CEO, RealtyTrac, said the law had indeed caused a drop of 75 % in default notices – the first step in the foreclosure process. In fact, defaults have dipped lowest since the real estate boom in 2006.

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The continuing foreclosure crisis is causing even the wealthy to feel the pinch. It needs sack full of dollars to maintain and pay taxes for high ended houses like mansions, waiting endlessly for the elusive buyer. George Graham of Concierge Auctions (CEO0) said “Eventually, even people who have unlimited means will throw in the towel at some point”.

Some of the realtors are warning that when a famed mansion or a big estate cannot be sold at any auction because of lack of buyer then in future it becomes even more difficult to push through with the sale. Jeffrey Hyland of Hilton & Hyland based in Beverly Hills said, “If you have all that hype and then it doesn’t sell, then you’ve got egg on your face”.

Bob Hurwitz has been in the brokerage business for a long time in California (South). He recently tried but failed to auction off a house with a price tag of $45 million in La Jolla. He explained that after paying marketing fees it is a loss to the seller.

For the luxury estates the fees can go up to $150,000. He added that auctions turn off possible buyers as they are reluctant to pay an extra 8% to 12% as premium following the sale. It can add up to a million dollars or perhaps more for an expensive property. Laura Brady of Concierge Auctions commented that the majority of the buyers know about the fees that are involved – the system being the same as in traditional sales.

The luxury estates are frequently sold for much less than the price asked for previously. However in the beginning these prices are unrealistically high. The art auction houses of Sotheby’s and Christie’s are connected with the property firms but neither directly conducts auctions in this field in America. Both of them have affiliated agencies with auction departments that partner with firms like Premiere Estates and Concierge.

Neil Palmer of Christie’s International Real Estate (CEO) said that such types of auctions are quite usual in some regions of Asia as well as Australia. The firm does not think it is the best option for sellers in USA because here at the moment the discounts are too steep. But JP King’s Mr. King holds that it is the steep discounts that attract buyers but not always at an auction.

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The US real estate industry is yet to recover. Foreclosures are happening thick and fast. The number of homes with negative equity has also increased. Now it is time for Ruth Hyman Jewish Community Center (JCC) of Monmouth County to be auctioned. JCC is located in Ocean Township.

A foreclosure notice had been filed with the lender — TD Bank. But the suit has not been settled. It seems possible that the center may come up for auction.  The auction will be conducted in the Hall of Records at Freehold.

The auction of JCC was scheduled for October 24. However, the spokeswoman of Monmouth County Sheriff’s Department, Cynthia Scott, said a defendant can appeal for postponement of auction on two occasions. The JCC did it first on October 24 and then again on November 7.

The president of the board of directors for the JCC, Stephen Levy, said there are still options. There are still ways that the recent one could be avoided. Levy said, “We are still in negotiations with the bank and several stockholders.

I’m optimistic, but not certain, that the sale won’t occur.”  Levy has been in the midst of conference calls to find out the latest status. Another option for JCC is to come up with bankruptcy filing. Raising funds from stockholders is the other option.

It may be pointed out that JCC does not have to shell out property taxes of the land as it is a non-profit organization. The land is 12 acres approximately. The taxes would also work out to $180,000 in a year.

The plaintiff is the bank. The firm — Buchannan Ingersoll and Rooney – is representing JCC. However, JCC has retained services of Neumann, Fisher and Shaver LLC and Timothy Neumann of Broege, to represent the company. The sale’s approximate amount is $6,502,717.18.

The organization was located in Second Avenue. However, it relocated in 1977. In a major expansion move in 1999, a 520-seat theater auditorium was added. This was known as Axelrod Performing Arts Theater. The area is 110,000 square feet in area. Wellness and fitness programs are on offer. There are programs for the senior and the youth as well. Currently there are 700 memberships.

Levy said that the center was badly hurt when the economy was in a poor shape. That’s why the present foreclosure suit is threatening them. The numbers of members too have declined. In December 26th the JCC roof had collapsed.

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Today’s US real estate market is more depressed than thriving. Foreclosures are still experiencing high numbers. However, there is a still bright spot amidst all these crisis- home sales are still going on. Prices are often affected by seasonal changes because different homes sell at varying times of the year. However, September’s reading shows that there has been additional pressure put on home prices. That is not merely because of the presence of troubled homes in the market.

CoreLogic says property prices have dropped by 1.1 % every month – this the second time that property prices have shown a decreasing succession. The concern now is that prices of both short sales and foreclosed properties have shown, even when distressed properties are excluded from the equation

Paul Diggle of Capital Economics, said, “The acceleration in the rate at which the CoreLogic house price index is falling reflects the slowing in the pace of job creation and wider economic growth earlier this year.” The Residential Mortgage Backed Securities Sector (RMBS) has estimated that home prices will decline by another 10 % before they start stabilizing.

Paul Diggle is not happy about the drop of 10 % in this nation’s home prices. “After all, relative to historical norms housing is now about 25 % undervalued against incomes. And with mortgage rates lower than at any point in the past 40 years, mortgage affordability looks favorable,” he argues. But there is yet another problem besides this one–  a lack of consumer confidence. Many Americans – 36 % to be precise – feel that loan rates will increase next year.

This was all revealed by the housing survey of Fannie Mae. Rents are also expected to increase, and there are many Americans who feel that they would rent a home rather than pay for it. Around 77 % of respondents also said that the economy is not proceeding on the right track. The financial situation, people say, will not improve.

The picture of unemployment has further tainted the real estate scenario. Even foreclosure rates have increased; in a month foreclosure rates increased by ten percent. The unemployment is at a high number-around 9% of this nation’s population is currently unemployed.

Even those with a high credit rating are faltering on their mortgage payments. The foreclosure rate is also at its highest in states like Nevada, Arizona, and California. Prices were at their highest too at the peak of the real estate boom.  What is distressing is that when a home in a particular region becomes foreclosed, it has an impact on other homes in that area as well. Prices of other properties also crashed, which has further depressed the market.

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The Federal Government is desperately trying to revive the economy. It has even brought down interest rates on loans in order to stem the rampant occurrences of foreclosures. After all, the real estate market is down in the dumps and foreclosures are high.

The Federal Government has come up with a refinance program that is expected to help 1 million homeowners. The refinance program is expected to save a few dollars for each troubled homeowner affected by foreclosure. The refinance program is expected to improve consumer spending.

For the last three years, the Federal government has brought down mortgage rates through the buying up of mortgage securities. Besides buying mortgage securities, Operation Twist  has propped up long-term securities through selling short-term ones.

However, sales of homes are still low. Construction of multi-unit properties, however, has increased. Americans seem to be more interested today in renting properties than buying homes. However, those who want to sell homes are unable to do so as there are very few takers. Moreover, prices have dipped so much that, even if they want to sell, homeowners will still have to lower prices.

It may be pointed out here that during the real estate boom, people were encouraged to buy homes with fancy loans. Subsequently, more properties were built than were required, resulting in a surplus that dragged down prices. Unfortunately, it will probably take a long time for the market to revive.

The pace at which new foreclosures are occurring as well as the number of bank-owned homes is expected to continue next year- banks are trying to put right the mess that was created due to robo signatures.

Unfortunately, banks have been facing civil penalties for their alleged misconduct. Homeowners have been hit real hard since they have had to evict their homes. These properties again hit the real estate market. The supply of extra homes will keep the home values suppressed for a long time now.

A second wave of recession may even drive down home values. It may be pointed out here that values have already come down by 31 % since prices peaked in 2006. Today, there are many risks to consider when buying a home.

Hence, people who do not have high paying jobs find it better to live in a rented place rather than buy a home. After all, recessions can exist even in upscale cities, like Washington and New York. For youngsters, it would be better to invest in a home loan only when it is available at a zero percent interest rate.

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Foreclosures show no signs of respite. This year, the numbers of foreclosures has decreased slightly. However, economists can foresee only gloom for the housing market. They do not really have any hope for economic recovery.

Brown County is no exception to this. Around 528 foreclosures have been reported in September alone. Last year, the number of foreclosures in September was 649. Foreclosures have been going up steadily in Brown County since 2006. In that year, there were only 346 foreclosures during September.

Economists are of the opinion that the lull has been created partly by the moratorium on foreclosures. It may be pointed out here that towards the end of last year, banks were embroiled in a major controversy. They were accused of indulging in a practice known as “robo-signing.” Robo-signing is when someone signs foreclosure documents without verifying the documents. Henceforth, the attorneys of states protested against this and banks were compelled to put a stop to foreclosures.

The owner of Dallaire Realty, Greg Dallaire, said, “Even if they stall (a foreclosure) for a time period or put more time on it for a little while, eventually it’s probably going to hit the point where it has to go through the whole process. We’ve got an insane amount of actual foreclosure properties coming down the pipeline.” He also observed that there has been an upswing in the amount of foreclosure activity.

Craig Haskin, an executive vice-president of the Knight Barry Title Group, said that the office lobbies used to bustle with people. There used to be sellers and buyers waiting to buy the prized possession. However, this was before 2008. Things really started to change in this country after that year.

The real estate industry came crashing soon after. Craig reminisced, “I used to walk into the office and there’d be people sitting in our lobby waiting to use our conference room to buy a house. We don’t have too much of that anymore. I don’t think people have used some of our lobbies for a while now.” Knight Barry, which is one of the largest agencies in Wisconsin, was founded in 1854.

As the selling and buying of properties fizzled out, foreclosures began to increase in number. Over the past few years, foreclosures have actually ballooned. That happened only after news of banks resorting to unfair practices came to light.

Bank of America, JPMorgan Chase, and Ally Financial were asked to put a stop to foreclosures.  Haskins said that the foreclosures are putting a lot of pressure on the market.

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