As Owners Feel Mortgage Pain, So Do Renters
Renters of single-family homes and apartments make up a significant, but not-so-obvious population whose world is being turned upside down by the wave of foreclosures sweeping certain housing markets. With an estimated one million-plus properties set to go into foreclosure this year nationwide, there are no exact numbers telling us how many of those units are currently occupied by someone other than the home owner, but a recent survey by the Mortgage Bankers Association conservatively pegs the total at one out of every eight. Attorney Judith Liben at the Massachusetts Law Reform Institute refers to the number of renters who face losing their homes through no fault of their own “an explosion,” and says the owners of foreclosed units are primarily to blame. “These are investors who overleveraged themselves, and the renters are collateral damage in the mortgage crisis,” she says. (www.nytimes.com)
The New York Times (11/18/07); John Leland
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Bits of Bad News Obscure A Big Truth About Wealth
Not only do American home owners still control nearly $11 trillion in equity ― close to an all-time record — but many housing markets that have recorded price declines on a year-over-year basis are still well ahead of the game after the huge price gains they chalked up during housing’s recent boom years. Looking at the newly released Standard & Poor’s/Case Shiller home price index, home prices are off by about 4.4% on average in 20 major U.S. housing markets. But in the 33 major markets where prices more than doubled over the past five years, even price reductions of 10% have left home owners in good position with regard to the current value of their homes. Exceptions to the rule include those home owners who purchased at the very peak of the housing boom and have not had the opportunity to benefit from double-digit appreciation, as well as those home owners in markets that are experiencing significant economic and job-market problems, particularly in the Midwest. (www.washingtonpost.com)
The Washington Post (11/17/07); Kenneth R. Harney
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Housing Slide May Chill Sales for Holiday
Midwestern retailers in the home-improvement sector and across the industry are bracing themselves for very modest sales gains this holiday season amidst ongoing problems in the housing market, labor contract issues in the auto industry, rising energy costs and other issues. In particular, home owners are expected to delay putting money into home improvement projects this season at a time when home values are on the decline. “I think the housing market is having some significant ramifications, and that is having considerable fallout,” noted Federal Reserve Bank of Chicago Senior Economist William Strauss. “People previously felt really comfortable putting money back into their homes, thinking the price would keep going up. I think now people are more cautious.” (www.freep.com)
Detroit Free Press (11/19/07); Greta Guest
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Investment Fund Targets Washington’s Housing Market
Some people see trouble when they look at the significant inventory of unsold homes and partially built subdivisions in the Washington, D.C. metro area, but to Los Angeles-based LandCap Partners, it’s a land of opportunity. The $1 billion residential investment fund is specifically targeting single-family housing developments that have stalled in mid-development or failed to sell out, with plans to offer debt-ridden developers a leg up. “If you bought a piece of land in 2005, that project is under water right now,” said Steve Coniglio, senior vice president for LandCap’s Mid-Atlantic Division. “And the problem with liquidity today is, nobody’s out there to write the check. This fund can be used to get deals moving. We can add liquidity to a number of scenarios.” Coniglio says his fund will offer various financing options such as land loans, land development financing and joint ventures. The fund primarily purchases property from smaller builders for resale to national home building companies, and plans to target the country’s 100 largest builders for purchases of those investments. Beyond the Washington metropolitan area, LandCap will also be looking at properties across the Southwest, Southeast and California. (www.washington.bizjournals.com)
Washington Business Journal (11/19/07); Joe Coombs
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$38 Million in Grants to Fund Homeless Housing
The Homeless Housing and Assistance Program of New York state’s Office of Temporary and Disability Assistance is devoting $38 million in grants to not-for-profit corporations, charitable and religious organizations and municipal and public corporations for the purpose of developing 730 housing units for homeless families and individuals in New York City and across the state. The funds, which are awarded annually through a competitive process, can be used to acquire, construct or rehabilitate housing to support a variety of people in need. In all, 16 community groups will share the funding to help the homeless in the boroughs of Manhattan and the Bronx and in 11 counties elsewhere in the state. New York Governor Elliot Spitzer announced the awardees of the grants this week. (www.northcountrygazette.org)
The North Country Gazette (11/18/07)
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As Housing Market Slows, Towns Re-Examine Growth Caps
Towns in at least two counties in the state of Maine have started to re-examine growth policies that were previously aimed at minimizing impacts on schools and infrastructure. With the housing slowdown well under way, such growth caps may not be necessary under the current conditions, noted York Town Manager Rob Yandow. Current permit backlogs in the counties of Wells and York are now pegged at 18 months to four years. One developer noted that some of those who are waiting on permits are not necessarily looking to build right away, but rather hoping to increase the value of a piece of land prior to putting it up for sale. (www.wmtv.com)
WMTV.com ― ABC Channel 8 News (11/19/07); The Associated Press
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