Freezing in NH

American Home Mortgage Says It Will Close

In a news release issued last night, American Home Mortgage said that that it would lay off all but 750 of its 7,000 employees “in light of liquidity issues resulting from disruptions” in the secondary mortgage market.

“Conditions in both the secondary mortgage market as well as the national real estate market have deteriorated to the point that we have no realistic alternative,” Michael Strauss, the chief executive of American Home Mortgage said in a statement.

Great News! NetBank® announces an agreement with EverBank®.

Why is the bank being sold?
The bank’s holding company, NetBank, Inc., has been evaluating a number of strategic alternatives to help address the business pressures it has been experiencing. The company has continued to record operating losses as market conditions, especially in the housing market, have remained poor. In considering the alternatives, the company had to balance the interests of our customers, shareholders and employees. We believe this transaction serves the best interests of our customers.

Can’t Sell Your Home? Maybe It’s Priced Too Low

“The homes that are having a hard time selling are the average-priced homes,” said Vanessa Justice, a real estate agent with Pacific Union GMAC in the Bay Area, where the median house price is about $750,000. For upper-end homes, she said, “it’s actually pretty crazy right now.”

The title is a little misleading, since it’s not the price of the house so much as the size/type of house.  Our area is about the opposite.  The lower end (bottom 30 or 40% in terms of price) seem to be moving quite well, and then the high end (the top 10 or 15%, but maybe not the top 2%) are also selling fast.  The mid-range houses are sitting on the market 6 months or more with several reductions.

Luckily the house I bought to fix and resell is nicely in that bottom 30%.  Small house but fits in with the neighborhood, had a lot of cosmetic stuff that needs doing but nothing that requires a major contractor/engineer.  Now I just need to finish it and get it on the market.

A False Sense of Security? You Must Own a Home

The wonderful world of leverage has lifted homeownership to near-record levels, and we thump our chests with pride at the prosperity and middle-class life that possessing a home implies. Hovering in the background, however, is a glaring statistic: Never before have homeowners actually had such a small ownership stake in the houses they occupy.

The reason is debt. Home prices have gone up a lot, but borrowing against homes has gone up even more in almost all of the last 20 years.

[...]

The culture of “own your home free of debt as soon as possible” had endured for decades. Through the 1960s and ’70s, owners’ equity ranged from 65 to 70 percent. As recently as 1983, some 52 percent of American homeowners who were 55 to 65 years old owned their homes without any mortgage debt — allowing them to be free of monthly installment payments during their retirement years. By 2004, however, that percentage had dropped to 36 percent, according to Federal Reserve data.

So how do you plan to retire?  I hope to have a house paid off before retirement.  My current house will not be that house, but maybe the next house will.  Either way I’d like to keep rolling the paid-off amount of each house into the next purchase.   Retirement calculators assume you’ll only need about 70% of your current income in retirement.  Some of that is the 6-10% you should already be putting into your 401(k), but the other 20+ percent can be housing.  I’m not going to spend any less on food and travel in retirement.

Banks May Rescue Defaulting Homeowners is a guest post on Five Cent Nickel.  The premise of the post is basically that banks are rewriting loans to borrowers at risk of default not to help the borrowers but to cover their own mistakes.

I think that banks are going to have to take their lumps on some of the houses, but it’s possible that letting borrowers with either equity or stable employment re-write their loans (for longer terms or different payments) might help stabilize some of the “shock” that housing prices are feeling.  Flooding the market with houses that don’t sell isn’t really helpful to anyone. 

What, me worry?

Despite turmoil in the housing markets that includes record foreclosure numbers, mortgage rate increases and home price depreciation, homeowners don’t believe there’s a real estate slump, according to a new poll.

Most – 55 percent – are confident that their homes continued to increase in value compared with a year ago, according to a nationwide telephone survey conducted this month by The Boston Consulting Group (BCG), a business and management strategy firm. 

Wow.  I bought my house in 2004 and figure it appreciated that year (mostly due to improvements, not to the market).  I have some more repairs to make which should increase the price, but I don’t think the base price is up much if any over what I paid (2004 up, 2005/6/7 down, comes out about even).

An article in CNN Money today: Foreclosures drift to Sun Belt from Rust Belt

A study for CNNMoney.com by RealtyTrac, an online marketer of foreclosure properties, showed that 139 of California’s ZIP codes fell within the top 500 for total foreclosure filings in the United States. The next highest count for any state is less than half that at 72 and is in another sun-belt state – Florida.

 They go on later to say:

The number one ZIP code in the nation for foreclosures is still, however, in the Rust Belt. It’s Cleveland, 44105, with a total of 784 filings during the three months ended June 15, according to the RealtyTrac study.

Heck, who wants to live in Cleveland. 

I’d like to see these numbers as a percentage of SFH (single family homes) in each zip.  I imagine there might be some hard-hit zip codes in less populated areas.  CA and FL win because they’re heavily populated.

Check out this map of foreclosures!   Pretty amazing.  Not sure if it’s a result of scams or just lots of people being overly optimistic about what they could afford (and that their adjustable rate would never adjust). 

Full article on the foreclosures here.

The Wall St Journal has a series called Hitting the Market about a columnist trying to sell her home.

Interesting series so far, I think she’s a little optimistic about how fast it will sell, but her market may be hotter than the rest of the country…

There’s an interesting article in the NYTimes today about FSBO (for sale by owner) vs agent real estate transactions.  The results (using data from 98 to 2004) are that in Madison, Wisconson it makes financial sense to do it FSBO. Prices are similar (though FSBO are on the market a little longer) and that 6% commission eats into your profit if you’re getting the same price.

Caveats include the longer time on market as well as the fact that Madison has a very popular FSBO site, which helps drive potential buyers. Though I think that today (vs 1998) people are more willing to look at things like Craigs List when looking for a home. So that’s a point for FSBO. And many places have a service for about $400 or so that lets you put your personal home on the MLS, which is one of the big advantages of going with an agent.

The potential downside is that you might have a buyer’s agent backlash (even if you’re willing to pay them their half of the 6%) where they want to stand together as realtors and not show your house. But if you’ve got the time and energy, it’s worth a try.