Buncombe County Home Sales Up 17.30% For October 2009

In preparing for my sales meeting scheduled for tomorrow, I made a quick analysis of lot and homes sales comparing October 2009’s preliminary results to October 2008. The results are exciting.

Lot sales in Buncombe County are up 41%.

Resales of existing homes are 23% overall. Single Family is up 14.6%, Condos are up an astounding 92% and townhomes are up 75%.

New construction sales were flat, but I attribute this to foreclosed new construction being sold from banks’ REO portfolios and then classified as resales.

Overall homes sales in Buncombe County are up 17.3%. My more indepth analysis will follow later in the week, but this is certainly good news.

Pleasant Surprises In the Revised Homebuyer Tax Credit Bill

I am surprised and delighted as I read the details of the revised first-time homebuyer tax credit bill. The revised bill, that is awaiting President Obama’s signature, not only extends the existing $8000 first-time homebuyer tax credit, but expands the program for other buyers as well.

The biggest thing that impresses me with the current bill is that is appears to have been thought out! Do not laugh. Having personally lobbied on the state level for a bill to alleviate a tax imposed by a treasury ruling, it can be amusing and frightening the things that can get lost in the rush to push through a bill. What immediately jumps out is a reasonable timetable. For buyers to take advantage of the tax credit, they must have the home “under contract” by April 30 and close by July 1. This should minimize rushing a closing after a home is put under contract. I personally would hate to see buyers waiving inspections or surveys because they did not have an adequate due diligence period between effective contract date and the deadline for the tax credit.

The expansion to buyers who have owned homes is well thought out. If a buyer has owned a home for five consecutive years of the past eight years, they qualify for a $6500 tax credit. This means if someone purchased a home in 2001, sold it in 2007 and rented the past two years they would qualify for the $6500 tax credit.

There are income limits and the credits do NOT apply for homes costing more than $800,000. Details for limitations will appear in a post next week.

In the meantime, buyers should rejoice that the opportunity has been extended and equitably expanded. Sellers should plan to see increased demand.

September 2009 Foreclosure Statistics

With Buncombe County’s unemployment rate for August 8.3%, it should come as little surprise that homes entering the foreclosure process or lost to foreclosure are running well ahead of 2008’s statistics.

As of the end of September, 977 property owners found themselves in the foreclosure process. This is up 28% compared to the same period last year. If we want to looks at 2007, 2008 and 2009 graphically, it looks like this:

Clearly it is a record year for property owners in distress.

Roughly 31% of all homes that enter the foreclosure process are lost to the lender. Year-to-date in Buncombe County, 302 properties have been seized by the lienholder. This is an astonishing increase of 58% compared to 2008.  This is more astounding when we consider that 248 were lost in all of 2008, which seemed like a very tough year at the time.

Our graph for cumulative losses or properties year-to-date is as follows:

Perhaps the best news is that increase of homes lost to foreclosure compared to 2008 is actually down from last month. While properties lost to foreclosure cumulatively stand at 58% greater than last year, as of a month ago we were above 71%.

First Time Homebuyer Tax Credit to Be Extended?

I guess it was inevitable. The $8000 First Time Homebuyer Tax Credit which is slated to expire on November 30, 2009 may be extended.

I was a huge fan of this program when it began as my previous posts explained, but I was unenthusiastic regarding the program that would allow buyers to “borrow against” the credit to cover closing costs. I am convinced that using the credits to cover closing costs is an expensive second mortgage and the buyers could find themselves getting in over their heads with this easy form of credit. Homebuyers overextending themselves is the crux of our economic predicament.

Should the credit be extended? The grapevine says area home sales are improving, though my perusal of the statistics say otherwise. I personally would like to the credit run its course and expire on December 1. First, the program will lose its urgency if the sunset is extended. Second, I want to see if we still need the incentive. Let’s see how the market is after the holidays. Perhaps we will not need the credit. If we do, a new program can be put into place in the spring.

Graphic of Buncombe County Foreclosures 2007, 2008 and 2009

Time for a cliché: A picture is worth a thousands words.

I have been collecting data on Buncombe County foreclosures since 2006. Being a spreadsheet user since the old VisiCalc days in the early 80’s, I am tuned in to spreadsheets and the tables make instant sense. After VisiCalc, there was Lotus 123 which brought graphs to the masses. Why not take my spreadsheets and make some graphs?

Below a graphic representation of homeowners who are facing the foreclosure process. Remember, once the bank (or lienholder) begins the legal process to seize the property, you are in foreclosure. Hopefully, the process terminates with the homeowner retaining the property. As we can see 2008 was an increase over 2007 and 2009 is eclipsing 2008.

 

In Buncombe County just over 30% of the property owners who find themselves in the foreclosure process, lose the property. Graphics represented it looks like this:

 

Neither are very pretty pictures, aesthetically or from an economic perspective. I heard numerous reports today on CNN, CNBC and MSNBC stating that we are in a recovery. Until I see those 2009 numbers begin to moderate, I will remain skeptical.

Foreclosures in Mecklenburg and Buncombe Counties Compared

I was speaking with two Realtors this past weekend who practice in Charlotte NC. Inevitably the conversation turned towards foreclosures and they were both alarmed at the increase in local foreclosures.

I wanted to do some research myself. Naturally, the numbers in Mecklenburg  County and Charlotte are significantly higher in all respects when compared to sleepy Buncombe County and Asheville. It is simply the population base. Census figures estimate Mecklenburg’s population in 2008 at 890,515 with Buncombe County being almost one fourth in size at 229,047.

People “in foreclosure” and properties that have been lost to foreclosure are running higher than four times the Buncombe population however. Based on Buncombe’s population and 845 properties in foreclosure, you would expect roughly 3400 substitution trustees, but actually Mecklenburg is running at 5155! Properties lost to foreclosure are even higher. You would expect just over 1000, but Mecklenburg has seen 1833 properties go back to the lender.

The Charlotte Realtors were right. This is a tough market.

I always like to look for some ray of sunshine and did manage to find one. Properties lost to foreclosure are DOWN for the first eight months in 2009 compared to the same period in 2008. In 2008, 2151 properties went back to the bank compared to this year’s 1833. Do we attribute this to loan modifications being granted? The courthouse being swamped and unable to process paperwork. Is it because NACA has a Charlotte office and is ramping up hiring?

One sobering comment came from my conversation this weekend. The Charlotte Realtors expect foreclosures to DOUBLE in 2010. The lion’s share of these foreclosures are predicted to be $1,000,000 plus homes where families purchased high-end homes using no-doc loans with adjustable rates.

Never live beyond your means. Never borrow as much the mortgage broker is willing to lend.

August 2009 Foreclosures in Buncombe County NC

I continue to hear in the media that the economy and residential real estate are seeing improvements. I also had a conversation with a few people down at the Asheville Board of Realtors who said they are seeing an up tick in sales.

Unfortunately, this optimistic attitude is not reflected in our recent foreclosure statistics. As of the end of August, homes, or rather properties, in the foreclosure process are up just over 24% compared to the same period for 2008. At this point in our economy, I prefer to refer to foreclosures as properties as at least one third of all foreclosures are partially completed homes with the builder losing the property to the lender or we are seeing an increase in commercial properties lost to foreclosure.

Properties where the foreclosure process concluded in the bank gaining control are up over 61% compared to 2008. This is an increase compared to the end of July so we are seeing an escalation in foreclosures. Year-to-date 845 property owners have been served notice that they are in foreclosure and 252 property owners have lost their properties to foreclosure.

As I have repeatedly said, until foreclosures abate and this discounted priced inventory is liquidated, home prices will not stabilize.

Buncombe County Foreclosure Stats for July 2009

I keep hoping for good news to report as far as foreclosures in greater Asheville and Buncombe County. Unfortunately, I will have to continue to wait.

In July 2009, 147 property owners received notice that their lienholders were commencing foreclosure proceedings in Buncombe County. Roughly one half of these property owners are developers or construction firms with the lienholder holding multiple properties as security. Year to date, foreclosures are running nearly 25% up from 2008.

In July, 37 property owners lost their real estate to lienholders who concluded the foreclosure process.  Again, more than half of these property owners were developers or builders with multiple properties that they could not sell to the satisfaction of their lenders. Year to date, properties lost to foreclosure are up more than 59%!

I often cite the percentage of properties that enter the foreclosure process that are ultimately seized or sold on the courthouse steps. In 2008 from January through the end of July, roughly 22% of property owners lost their real estate.  Year to date we see that 29% of property owners have lost their real estate to foreclosure.

What we are seeing in Buncombe County is a flood of REO properties coming on the market. Roughly half of these properties are completed or partially completed new construction. The balance are of course resales of existing homes where the previous owner could not make the mortgage payments.

This is creating some incredible opportunities and bargains. Bargain hunters should keep in mind however that all bargains are not necessarily short sales or REO’s. This glutted market has put downward pricing pressure on the entire inventory. Have your Realtor do some research. You may discover the home of your dreams is on the MLS, in excellent condition and the family selling it has priced it at market.

Buncombe County Foreclosure Rates Continue To Climb

Foreclosure rates in Buncombe County continue to climb, far outstripping 2008’s foreclosures. Year-to-date, my research shows 176 homes were lost to foreclosure for the first half of 2009. This is a 60% increase over 2008.

Another way to summarize the situation: We have had as many properties lost to  foreclosure for the first two quarters of 2009 as the first THREE quarters of 2008.

A significant portion (I estimate as much as 30%) of foreclosed properties are partially finished new construction homes. These place a unique burden on the local housing market. First, the lenders who take these properties back under foreclosure now must hire contractors  and incur the costs to complete these homes. Homeowners adjacent to these semi-completed, foreclosed home will likely see additional depreciation of their own homes as the community wonders when the economy will turn and these homes be completed and finally sold.

Remember, foreclosure is a process. Many homeowners may find themselves in foreclosure, but may be able to restructure the loan, refinance or perhaps sell and avoid the lienholder taking the property back.

If a homeowner finds themselves behind in their mortgage, there are many strategies to keep them in the home. Contact me to learn more.

Homes in the foreclosure process are on the rise.  For the first two quarters of 2009 we see 594 properties in the process of foreclosure compared to 496 for the same period in 2008. Perhaps more disturbing is the percentage of homes that enter the foreclosure process that ultimately leads to the loss of the property. For the first half of 2008, 22% of homes in the foreclosure process actually had the unhappy ending of property loss. For the first half of 2009 we are seeing more than 29% of properties that enter foreclosure result in the loss of the property.

We regrettably have a one-two punch. Homes in the foreclosure process are up. More homes that enter foreclosure are being lost.

Realtors and the Ethics of Short Sales

This past weekend I had a series of very interesting conversations regarding the economic crisis. home retention and short sales. As many people know, I practiced real estate and specialized in short sales. In my personal defense, I offered a short sale solution as the last scenario if foreclosure was inevitable. Believe, me, if I pushed short sales without looking for other solutions that kept the client in the home, I would have sold more homes and be in a LOT better financial shape myself.

What I encountered and was surprised to learn, is that there is a group of people out there who assume that anyone who has any involvement in a short sale is part of the problem, not the solution. I was completely caught off guard when I found myself sitting across the table who thought I was evil incarnant because of my short sale past. Some people believe that anyone who sold a home as a short sale actually wanted to keep the home. This is the extreme argument to banks claiming people are walking away from their homes.

As is so often the case, the truth lies between the two extremes. I certainly have worked with people who worried themselves sick in an effort to keep their home. I have also worked with people who had to sell and the declining market (or poorly timed equity out refinancing) owed more on the home than market value.

The story you are about to read is true, the name and personal circumstances were changed to protect the individual’s identity: Jane had moved to Asheville on the promise of a teaching job. Jane bought at the height of the market in 2005 with a form of 100% financing. Jane’s teaching creditionals were questioned so she could not find employment in the public school system, so she tried a few entreprenuerial activities to make money. Sadly, she lost money, but in 2006 was able to negotiate an equity out refi where she was able to bank about $28,000. She continued to dabble in the entreprenuerial world, but failed to make a dime so in 2007 she negotiated a second equity out refi and banked about $18,000. In 2008, Jane still had no job and had spent the “equity” money. She was broke, facing foreclosure and just wanted to return to Champaign where her teaching credentials were valid. Sadly, her home ’s market value was about $50,000 less than she owed!

Jane had to leave as she could not find work. Jane had two choices. She could simply walk away and allow the home to be foreclosed. She could try to sell as a short sale. Jane talked to me and agreed that the short sale would not only be a less of a hit to her credit rating, but by avoiding foreclosure she was protecting the property values of her neighbors. It took a couple months, but we sold the home, the lender (who was willing to allow repeat equity out refi’s) foregave some debt and the neighborhood avoided a foreclosure.

In this instance I feel short sale was the correct way to go.