Lawrence Yun, senior economist for the National Association of Realtors, predicts home sales will turn around in early 2008. She states this is due to more favorable conditions in the current mortgage market.
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The tightened home lending standards caused by the bad credit home loan mess haven’t just affected potential borrowers or their lenders.
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After a rough patch caused by the faltering local economy, the Hickory housing market is showing signs of improvement - even as other parts of the country are facing a housing slowdown.
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Charlotte-area home sales fell by double digits in June, the largest dip of 2007, the Charlotte Observer reports this morning.
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The number of residential building permits taken out in an eight-county part of the Triad between January and May is down 22 percent from last year, a sure sign that builders have slowed their pace of putting up new houses.
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Twice this year, real estate broker and analyst Don Davies has accepted a contract to sell property he owns in Leicester, N.C., once from buyers from Florida, once from a California couple.
Willie Ricks fell behind three months on his North Carolina mortgage payments while on strike last fall at the Goodyear Tire & Rubber Co.
A Fayetteville Observer investigation into a North Carolina mortgage deal uncovered some interesting (and disturbing) findings.
The number of Realtors in the Triad grew in 2006, despite a drop in local home sales. With the local housing market expected to remain flat this year, industry experts say a decline in the number of Realtors locally is likely by the end of the year as incomes take a hit.
In 2006, more than 200 new Realtors began working in the Triad, with the total number rising 7 percent over 2005, according to data provided by the profession’s associations in Greensboro, High Point and Winston-Salem.
Meanwhile, existing home sales were relatively flat in 2006, with 16,363 homes sold in the Triad, a 1 percent decrease from the year before, according to data from the N.C. Association of Realtors.
The number of Realtors in the Triad has been growing for the past several years, seeing an overall increase of 38 percent since the beginning of 2002. During that same period, home sales rose 73 percent. North Carolina mortgage demand was high. Everyone was happy.
However, the increase in agents is expected to change this year.
Walter Molony, spokesman for the National Association of Realtors, said historically there has been a decline in Realtor numbers about 18 months after home sales start to decline. After peaking at nearly 1.4 million members this year, Molony said the national association expects to see a decline in membership by the end of the year.
Industry veterans say they also expect to see a decline locally as well.
“Even though the number (of Realtors) has been going up, we won’t reach a saturation point because with the [North Carolina housing market] softening, we will see some attrition,” said Jodi Tate, general manager for Coldwell Banker Triad Realtors.
Tom Harvey, the executive director of the Center for Real Estate Development at UNC-Chapel Hill, said the best sign that a decrease in Realtors is coming would be a drop in income. While Realtor income didn’t fall in 2006, it did remain flat, according to the Employment Security Commission.
The Triad’s average real estate agent made $42,000 in 2006 only $1,000 more than a year earlier, but up significantly from $32,000 in 2002.
However, new agents averaged just $24,000 in 2006, the same as in 2005 and only $4,000 more than in 2002. With income remaining flat, many Realtors, especially those new to the business, are expected to decide the effort isn’t worth the money and leave the home mortgage company industry.
“In the real estate business, you have to sell a home to make a check,” said Mark Yost, principal with Yost & Little Realty Inc. “If you can’t make a living at it, you tend to leave the business.”
The city of Charlotte does not count foreclosures. Neither does Mecklenburg County, the entire North Carolina housing market for that matter.
As a result, authorities did not notice an emerging pattern: Foreclosures increasingly were concentrating in starter home neighborhoods.
An Observer analysis of county records found 35 Mecklenburg developments of low-priced homes built in the past decade with foreclosure rates of 20 percent or higher. Dozens of residents say the concentrations have damaged their communities. Prices fell. Renters moved in. Crime sometimes rose.
However, as the foreclosures piled up, authorities were unaware.
“We wouldn’t know it on a neighborhood level,” said Mark Pearce, deputy state commissioner of banks, which regulates home loan sellers. “A 20 percent foreclosure rate in a neighborhood that’s new is surprising and troubling.”
Even the Federal Housing Administration, which insured many of the failed loans, didn’t track the concentrations.
The Observer on Sunday profiled Southern Chase, a neighborhood of 406 houses in Concord built by Beazer Homes USA. Seventy-seven buyers lost their homes to foreclosure. Forty-five of the failed loans were insured by the FHA. But federal officials expressed surprise when asked about the concentration.
The Department of Housing and Urban Development, which administers the FHA program, was unable at first to say how many mortgage loans it insured on streets in Southern Chase. It was unable to say which ones had foreclosed. And it didn’t know all the failed loans were in one neighborhood.
The lack of information about the location of foreclosures makes it harder to regulate the lending industry. Buyers share responsibility for the loans they accept, and foreclosures sometimes result from the loss of a job or an unexpected expense. But regulators say that concentrations of foreclosures often indicate misconduct by someone else, such as a mortgage broker who arranged a number of loans or an appraiser who valued the homes.
None of the government agencies the Observer contacted plans to start tracking foreclosures.
About 8,700 homes have foreclosed in Mecklenburg County over the past four years. The county’s foreclosure rate is the highest in the state.
The FHA encourages lending to lower-income families by promising to repay lenders if the borrower does not. The money comes from premiums paid by borrowers, not from taxpayers. In the mid-1990s, the FHA started insuring riskier, bad credit home loans. Borrowers no longer needed to make down payments. Lenders could arrange larger loans by projecting borrowers’ income.
The share of Americans who own homes rose to almost 69 percent last year from 65 percent in 1996. The FHA was responsible for a share of the increase. So were subprime lenders, which make loans with high interest rates to the same people traditionally served by the FHA.
But now the number of foreclosures also is pushing into record territory, driven by defaults on FHA and subprime loans, according to estimates made by the lending industry.
“The mortgage industry has said they have increased home ownership,” HUD’s inspector general, Kenneth Donohue, told a U.S. House committee last week. “However, at what cost to the American people?”
SOURCE: The News & Observer