Articles Posted in Real Estate Issues

We have blogged on three prior occasions on the state of the real estate market in the Hudson Valley area. Today, we revisit the area with continued good news.

In an article in the Wall Street Journal on Sunday, March 2, 2014, it points out that home prices last year posted their largest annual gain since 2005. These numbers come from S&P/Case Shiller price index. A sub index measuring prices in 20 major metropolitan areas rose 13.4%. The article also points out that “gains are slowing from month to month and the strongest point of recovery in the values may be over”.

The gains vary sharply by location. The wealthiest 10% of cities account for 52% of the housing wealth, while the poorest 40% held just 8%. The article ends on a positive note. After prices fell 35% between 2006 & 2012, home prices have risen 21% since the bottom in early 2012.

In an article in the Journal News dated December 7, 2013, it discussed real estate agents use of gadgets and social media. The agents use I phones, Androids and electronic house entry cards. Sales agents can now connect to customers on social media. The customer never needs to leave their chair to take virtual tours of homes on the internet.

Better Homes and Gardens/Rand Realty managing partner led a tour of their new office in White Plains and showed a designed cafe with small clusters of bistro tables and electronically fitted a work cubicle against a back drop and large wall mounted monitors. On weekends, 60% of customers contact came from mobile devices. Customers use Wi-Fi internet while waiting for a showing.

The director for New York State Association of Realtors states mobility is the key technology which has helped with efficiency and getting information to the audience. Customers take virtual tours and learn about the property before they go and look at the property. The article points out consumers are better equipped and they know what is available and expect the realator to help them narrow it down so as not to introduce new properties.

Two articles about real estate were published this past week. The headlines of each are contradictions. Wednesday, January 15, 2014, the Journal News had an article entitled “Hudson Valley home closings soar, prices rise in ’13”. In the Westchester County Business Journal, an article appeared on January 13, 2014 entitled “Foreclosures surge in 2013”. One article speaks to the real estate recovery and the other article speaks of the surge in foreclosures.

The Westchester County Business Journal points out mortgage lenders foreclosure proceedings rose 49% in 2013 from 2012. Court judgments against defaulting homeowners rose 77% in 2013 from 2012. The main reason for the increase is that banks have been clearing a backlog of sold and resold mortgage loans dating from the 2005 – 2007 housing market boom. The Westchester County Clerk’s office reported 2694 foreclosure actions started in 2012, up from 1813 in 2011. The lenders filing last year were the highest since 2009 when 3,123 foreclosures were started. 369 foreclosure judgments were entered in 2013, the highest in three years. In 2006-2010 foreclosure judgments peaked at 1034 in 2008. The article states that attorneys and real estate brokers have said they expect the surge in filing to continue in 2014 and that it could be another 2 – 3 years before the backlog of mortgage loans in default are cleared. The Westchester County Clerk, Timothy C. Idoni noted that stricter mortgage financing rules take effect this month “which will no doubt curb foreclosures down the road”. So much for the bad real estate news which results from the great recession.

On the positive side, the Journal News article on January 15, 2014 states housing sales hit highest level since 2007. The lower Hudson Valley ended the year with double digit increases in the volume of closings for 2013. Not only were home sales the highest since 2007 but the median home price rose across the board according to the Hudson Gateway Association of Realtors, Inc. in Westchester, Putnam, Rockland & Orange counties. Westchester posted 21% sales increase from 2012 to 2013. Putnam a 17% jump and Rockland a 14% rise. Orange County led the area with 23% increase. The first quarter of 2013 was the slowest. The second and third quarters were the highest quarters and the fourth quarter slowed a bit with a 16% rise in sale compared to the fourth quarter of 2012.

real estate sign.jpgStatistics in the sale of homes in 2013 are on an increase. The Westchester County Business Journal reported on October 14, 2013, newly released third quarter sales report rose 31% in Westchester County alone. Closings jumped 29% in a four county region of Rockland, Putnam, Orange and Westchester counties. In Westchester, the listing service was notified of 2,943 completed sales of single family homes, condominiums and cooperatives and 2 – 4 family homes. Cooperatives saw the greatest spike in third quarter deals with 469 sales which represented a 38% increase from a year ago. The article points out that third quarter activity included 1,991 closings on single family homes, a 30% increase from the same quarter in 2012. HGAR CEO Richard Haggerty reported that was the highest total for any quarter since 2005.

HGAR reported the median price for a single family home in Westchester County was $652,050, up 3.5% from last year. The median price for coops was unchanged from last year at $155,000. 372 condos sold in Westchester County from July through September, a 35% increase from 2012. Condos median price was $355,500, a 2% increase in price.

High end properties had an average sales price of $862,356 for single family homes, an 8% increase from a year ago. More than 24% of Westchester County homes sold for 1 million or more in the last quarter. Throughout the year, million dollar plus sales accounted for 16% – 22% of total sales throughout 2013.

The fast paced sales have driven inventory to “low but not marketing killing amounts”. Condos had the deepest drop in inventory of 22%. Houlihan-Lawrence President and CEO, Stephen Meyes said third quarter reports expected brokers in Westchester to close out 5,400 sales for the year, the most since 2005. The real estate industry feels we are in a long period of stability where prices will not spike and yet, not decline and gives a modest appreciation in values which makes a perfect climate for home sales.

An article in the Journal News of October 24, 2013, gives NY State statistics which show in the last three months sales jumped 17.4% in July – August, compared to 2012. The Siena Poll predicts the real estate market will continue to stabilize and grow.

The Somers Record of October 24, 2013 confirmed third quarter residential real estate sales soared 29% for four counties, Westchester, Putnam, Rockland & Orange. The percentage increased in sales in Westchester County was the greatest at 31%, Rockland 26%, Orange 24% and Putnam 22%. Median prices also rose in Westchester County to $652,050 a 3.5% price increase. In Rockland County, a 5.4% price increase to $410,000 as a median price. Putnam County posted a 5% increase in median prices to $332,750 and condos posted a 6.9% increase in prices. Only in Orange County the median price fell 2% lower than last year. The article points out Orange County provides the most affordable housing in the region and Orange County condo section posted a 4.4% increase to a median price of $166,000.
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All the news since January, 2013 has forecasted and has actually seen an increase in home prices. In March, 2013, in an article from news.msn.com headlined “US Home Prices Rise At Fastest Pace in 7 years”. Home prices rose 9.7% in January from a year ago. Prices increased in 92 of the 100 largest metropolitan areas. The article points out that demand is up and combined this with fewer available homes on the market. The states with the biggest percentage gains were Arizona up 20.1%, Nevada up 17.4%, Idaho up 14.9%, California and Hawaii rose 14.1%. The cities with the biggest gains were Phoenix, Los Angeles, New York, Atlanta and Riverside California. Since the real estate bubble exploded in the recession, home prices were down 26% from a peak in April, 2006. The effect of home prices rising is to encourage homeowners to sell homes and would be buyers to purchase homes before prices increase.

In an article which ran in April, 2013, money.msn.com stated “February 2013 Home Prices See Best Yearly Rise in Almost 7 years”. Single family housing prices rose more than expected in February. Prices in 20 cities gained 9.3% in one year, the biggest increase since May, 2006. On an average, home prices were back to the levels they were at in the autumn of 2003. Prices are rising because all the cheap sales are gone. The homes selling at the bottom were the ones who had to sell or were bank owned. Much of the inventory in gone.

In an article in the New York Times on Wednesday, May 29, 2013, on the front page in bold print “Home Prices Rise, Putting Country in a Buying Mood, Biggest Gain in 7 Years”. The article reported the Standard and Poor’s Case-Shiller home price index posted the biggest gains in 7 years. Home prices rose in every one of the cities tracked, continuing the January trend. New and existing home sales and building permits have increased encouraging construction companies to accelerate building and hiring. This housing recovery influenced consumer confidence to a 5 year high in May, 2013. Economist state growth in the value of existing home prices, means homeowners are feeling richer and that creates a wealth effect making consumers loosen their purse strings. The twenty city composite index rose 10.9% since last year, the biggest increase since April, 2006. The cities of Charlotte, North Carolina, Los Angeles, Portland, Oregon, Seattle and Tampa, Florida had the largest month to month gains in more than 7 years.

The article points out the double digit house price increase are a result of a number of factors. Employees have added jobs for 31 straight months. This puts the working middle class back to work and those who didn’t lose their jobs are more secure in their jobs. This middle class (which is always the basis for economic growth) puts these people back into the housing market. This, plus the inventory of homes available, remains unusually low together with the Federal Reserve’s policy of keeping low mortgage interest rates.

The higher prices are beginning to encourage would be sellers to come off the sidelines and place their homes on the market. Daniel Silverman, economist at JP Morgan Chase said “that he expected home prices to continue growing but not necessarily double digit rates in May, 2013”. The new construction has picked up in response to the rise in home prices. Also pushing up the home prices are the decline of distressed sales. Foreclosures and short sales have also lowered the home prices. Now that this inventory is gone, home prices leveled off and have begun to rise. Some of the areas with the largest decline in house prices during the housing crisis have shown the greatest increases in house prices. Phoenix is up 22.5% and Las Vegas has posted a 20.6% gain. As the economy improves, more young people move out of their parents’ homes and into the housing market. They have reasons to buy now after 10 months of housing prices gain. The price index is well below the previous peak in July, 2006 which still leaves room for increase in pricing.
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In an article (blog) by Teresa at MSN Real estate on April 9, 2013, shocking statistics were revealed about how banks (who were bailed out by US taxpayers) have wrongly foreclosed on many different classes of people who could not have been foreclosed under the law.

The most shocking groups that were wrongly foreclosed on were US military members. 1,082 US military members had their homes taken from them while in the service. The law provides in most mortgages that a moratorium occurs while the military member serves. Thus, none of these mortgages were in foreclosure yet and the bank started foreclosure proceedings and took the homes. A settlement has been reached with the banks and they are required to pay $9.3 billion on wrongfully foreclosed homeowners. Now this sounds like a lot of money however, when you distribute the net settlement (after attorney fees and expenses) a military member gets $15,000.00. The bank who wrongfully foreclosed on a military member’s home (worth $100-200,000), by the settlement, the individual doesn’t get enough money to be applied as a down payment on a new home. These homes were and will eventually be resold for a lot more than $15,000. The banks make the profit. This is an outrage on military members. They are in the Middle East fighting for our freedom and they lose their homes wrongfully and end up with $15,000.

According to the MSN Real Estate Article, 5,838 homeowners lost their homes to foreclosure and they had filed for bankruptcy proceedings. By law, when one files for bankruptcy, the proceedings stay all actions against you including foreclosure. Yet, the banks ignored and wrongfully took their homes in foreclosure when the Bankruptcy Law forbids it. These homeowners have ruined their credit by filing for bankruptcy to save their homes, still lost their homes and by the $9.3 billion settlement, each homeowner gets $25,000. Some of these people were even making modified payments on their mortgages and they still lost their homes and will receive $25,000.

The third class of borrowers are the ones who asked for modifications and were wrongfully denied or never got a decision from the bank and these homeowners lost their homes to foreclosure. The 872,546 homeowners get from the settlement $1,000 each for wrongful denial of modification. In this group, the homeowner who never got an answer about modification gets $400 back.

The real question is what happened to all these foreclosed homes? Most of which made up real estate inventory since the meltdown of 2007 & 2008. The homes were sold or are still being sold for a lot more than $15,000 or $25,000 each. Further, they are holding onto these foreclosed homes until the market returned in 2012-2013. A newspaper article in the Journal News of April 23, 2013, states that as a result of these foreclosed homes, they are being resold and the real estate inventory for sale is the lowest since 2006. This leads one to believe most of the foreclosed homes have been resold by the banks and any foreclosed inventory of the bank are now going up in value since housing prices are rebounding due to the lack of inventory.

In the first quarter of 2013, a 4% growth occurred in median price of homes in New York State.
Closings were up 8% during the first three months of 2013 and in Putnam, Rockland and Westchester counties, prices are up between 2 & 4%.

With record low mortgage rate (under 3%) and home prices on the rise (even modestly); it is time for those homebuyers that have been waiting for the bottom of real estate prices to get back into the market. This is why the prediction of a good real estate market continues. We can only hope that the bank continues to approve mortgages even for those who had their homes wrongfully foreclosed.
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Recently we represented a party in the sale of her one family residential home in Thumbnail image for 1177032_old_style_charm.jpgWestchester County, New York. Despite the delay on behalf of the purchasers in executing the contract, much to my surprise, this deal took approximately 90 days to close title from start to finish.

One of the main factors is because the purchasers applied for a FHA (Federal Housing Authority) loan. FHA loans are very attractive to potential home buyers because they only have to place 5% down upon contract signing, thereby financing 95% percent of the sale price.

When applying for a FHA loan, aside from the bank wanting to know where your last penny comes from, they can also demand specific conditions to close the loan and if you don’t adhere to their demands, you can be assured the bank is not giving clearance to close the deal. Of the last several real estate transactions, the majority of the loans were FHA. The writer of this blog recently refinanced their home mortgage and shortly after closing, they received notification that the original lender sold their mortgage to FHA.

Even though the standard contract calls for a conventional loan, you can rebut the purchaser(s) FHA loan, but one has to ask themselves, how bad do you want to sell your home? You are perplexed because after your home has been on the market for a long period of time, without any real interested parties, now you have a potential purchaser. Do you decline the FHA loan or sit back and wait for another potential purchaser to come along with the hopes of a conventional loan?

In this particular recent real estate transaction, on the eve of the purchasers’ mortgage commitment expiring, the bank demanded that a two car detached garage be painted. If this was not performed, they would not give clearance to close the loan. So at the last moment, the garage was painted. What this had to do with the value of the home baffles me. No matter what the condition may be, you have no choice but to correct the condition. FHA can require the seller to make aesthetic changes on the home.

Further, another issue arose. The purchasers’ used a mortgage broker to aide them with their mortgage. The lender which was chosen by the broker, no longer offers a wholesale loan. So all the loans had to be closed immediately or the commitment would be recalled. Needless to say, beside all the parties to this transaction scrambling to rearrange their respective calendars to accommodate the last minute closing date, the loan officer assigned to this specific deal was losing her job and wasn’t rushing to approve the documents after execution. As I understand from the bank attorney, approval of the documents is given within a very short period of time. Without the loan officer’s approval, the funds were not clear. This approval was received after five hours of the parties waiting at the closing. Once again, we were at the mercy of the bank.

So if you are in a rush to sell/purchase a home, you may want to consider dealing directly with a bank’s lending officer so to avoid any future problems with placing your mortgage with FHA.
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