Perrysburg Blog

There really is no accurate answer to that question.

There should be - but there is not.

What does “foreclosed” mean?

Is being already run through the Sherrif Sale in Bowling Green . . . . is that foreclosed?

What about homes that the owner has walked away from?

Homes that are foreclosed but no new deed has been prepared/recorded?

Homes that have an owner who has decided not to walk away, but to simply not pay anymore on the mortgage.

“Foreclosed”.  Simple word - many uses.

Right now there are hundreds of “foreclosed” homes in Perrysburg (city and township).

But there are just6 that are for sale on the MLS:

-10760 Avenue Road

-24230 Luckey Road

-7422 Starbright

-7296 Winding Brook

-24918 Fort Meigs

-1802 Whispering Way

-7315 Starlawn

As always, you can find all of the Perrysburg REO (”real estate owned” - aka bank owned) on my bank REO Google maps/MLS mash up at www.ToledoBankOwned.com

6 active MLS listings.

With many, many more to come.

Why?  How?

You might want to read the sad and troubling article in this weekend’s Washington Post about the loss of good jobs in Northwest Ohio, specifically in Perrysburg.   These foreclosures are the result of our jobs and economic policies.

Until those change . . . expect more tears.

Foreclosed vs. Short Sale?

Sadly becoming an important question.

A vital question.

A confusing question.

As a CDPE (Certified Distressed Property Expert - trained and credentialed by The Distressed Property Institute -  of whom I am now on their Board of Directors) I have seen first hand how this question is impacting the decisions that many homeowners have to make this year.    Tough, gut-wrenching decisions.

As always, seek legal counsel.  But - sadly, I have attorney’s who ask ME for help and information!  So be careful what attorney you ask!

Here is a chart of the effects on your credit of doing a short sale vs. being foreclosed:

Most people know that Perrysburg prices have dropped (a few Realtors surprisingly have not gotten that memo - but I don’t want to be snarky . . .)

But what of taxes?

Property taxes should be coming down too, n’est pas?

I do not believe that the County automatically adjusts taxes down.   They must have missed that memo too!

So what can I do to find out the history of taxes.  Not that hard if you have a record of old MLS comparable sales . . . and here is what we find:

We find that property taxes in Perrysburg have relentlessly increased.

The 3 bed, 1.5 bath house in the Southwood Park subdivision of Perrysburg would cost you $393 in 1/2 year taxes back in 1984.

In 1994 that same house would cost the owner $557.

In 2004 your 1/2 tax bill would have been $1076.

Today?  You are may be looking at almost $1400 per 1/2 year for a 3 bed, 1.5 bath in Southwood Park (Edgewood, Southwood, etc. by the big blue city water tower for those who do not think in terms of subdivisions like I do!) (Caveat: Not everyone pays the same tax amount for the same home - it depends when you were last assessed/appraised by the County, how accurate your assessment is, and if you have recently filed for a reappraisal).

$393 to $1400.   I think that is an increase.

But - property values have declined in 2006, 2007, 2008 and this year.

I wonder if property taxes have gone down since 2007?

What is your experience?

Enjoy your tea!

I do hear this.

Probably at least once per week.  Maybe more.

The buyer calls me or emails me and has the address of a specific house that is REO (”real estate owned” aka bank owned) and wants to see/buy said house.

But the problem is . . . THIS house is not for sale yet.

It is bank owned.  But NOT for sale!

It is part of the “Shadow Inventory”.

“We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market,” said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. “California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You’d have further depreciation and carnage.” (San Francisco Chronicle)

Many people cannot understand why it is not for sale.

There are many reasons.

1.  The foreclosure process may not be completed.

2. The former home owner may still be occupying the house.

3. A tenant may be in the house.

4. The home is being appraised/prepared for market.

5.  The lender is simply overwhelmed and CAN’T get it on the market.

6. The lender is not willing to sell it - so that it does not have to be written off as bad debt on their balance sheet.

And amazingly the most common reason is that the bank is simply not going to put it on the market right now.

Which seems to make no sense.

But if ALL the REO homes hit the market right now . . . their values would be very depressed.  So it makes financial sense for banks to parse them out “slowly” or at lease more slowly then they can be marketed.

And think about this - up until this year, in Perrysburg, we have MAINLY been dealing with “Alt-A” and Sub-prime foreclosed loans.

But there is a giant “clot” of OTHER types of bad loans/foreclosures coming right for us.

Look at this chart:

It is a forecast of the future REO inventory.

And it is a sobering picture.

• 1.8% of all U.S. homes are in foreclosure
• Therefore, 98.2% are NOT in foreclosure
• 33% of all owner-occupied homes don’t even have a mortgage!
• 18% of all U.S. mortgages are upside with 2/3 of them located in 7 states (Arizona, California, Florida, Nevada, Ohio, Michigan, Georgia)
• 2.8% of all U.S. mortgages are three or more months in arrears.
• There are 18.6 million vacant homes in the U.S. now.
• 25 MLS closed sales, single family, in Perrysburg, February 2009
• 305 MLS closed sales, single family, in Lucas and Wood Counties, February 2009
• Average Toledo Board of Realtors agent sold just .25 of a home in February 2009
• Jon Modene closed 11 transactions in February, 2009.
• Perrysburg number of listings for sale on MLS, end of February, 2009 = 305
• Perrysburg number of listings that went “pending” in February, 2009 = 30
• Perrysburg median SOLD price, February 2009 = $172,000
• Total number of houses for sale in Lucas and Wood Counties in February 2009 = 4838
• Total number of houses that went pending in Lucas and Wood Counties in February 2009 = 363
• 11.1 Months supply of inventory in Wood and Lucas Counties

When Will The Market Thaw??

I am asked by about every client or customer: “When is it going to turn around (in real estate)?”

I don’t know the answer.

I used to say “If I did have the answer to that question I would be working on Wall Street” - but that’s not a good place to work anymore!

Here’s what I think:  when the number of new bank owned properties starts to dry up, then the market will change course.

But you must know this - Fannie, Chase, Freddie, Bank of America, et al have all had a moratorium on new foreclosures and evictions for the past 60 days - and that “REO HOLD” has NOT slowed the pace of new REO properties coming on the market.

Sadly there is no Case-Shiller study for Perrysburg.

Our market is too small.

And too nice.

And too friendly.

But I digress.

The Case-Shiller study of residential home prices, which I have written about before, is a matched pair study.

Only the exact same houses are included, when they have sold and resold.

So it is pretty accurate as least as far as the lack of “adjustments” that applied by appraisers when trying to make different houses look and act and price the same.

But I digress.

Which I am doing a lot of this month when thinking about the Case-Shiller numbers.

Why?

Because I operate on a couple of standard assumptions.

1. You reap what you sow.

2. Practice and hard work make you succesful, not MLM’s.

3. Detroit = Toledo.  At least as far as real estate values go.  Generally.  Mostly.

And the 12/2008 Case-Shiller numbers say that Detroit real estate lost, on average, 21.7% in value during the previous 12 months.

The latest Case-Shiller chart?  Reminds me of Deer Valley in Utah.  And that’s a beginner hill there!

Which kind of takes your breath away.

And makes you want to digress and diverge and divest and maybe even weep.

But - I have to remember and remind my clients that Detroit is not Perrysburg.  And that if you waited to buy, congratulations, you just made more money.  And that you and your 401k probably would be ECSTATIC over a 21.7% decrease.

But still - that’s a huge, unprecedented decline.

Is it over?

Are values firming up?

Time will tell.

I don’t think that there is another -21% left to give.

But then almost no one thought this COULD happen 4 years ago.

You don’t have to pay anyone money!

You don’t have to go to the Wood County courthouse - although the Sherrif personally runs the auction.

You don’t have to drive around and look for “Bank Owned” or “Foreclosure” sign riders.

Not any more.

You can just go to my newest website- www.ToledoBankOwned.com and you will see a map.

A simple map of Northwest Ohio.

But it is so much more than a regular map!

It’s a Google Map “mash-up” that combines all of the current Realtor listings for bank owned, HUD, and REO status listings.

You can pick you area or look at them all.

Toledo looks a little crowded, n’est pas?

Anyway, it only shows active listings.  The REO’s that are sold or pending or off the market don’t show up.

So this is a tool for buyers and investors.

I hope that you enjoy it!

Not one bit.

There are going to be income phase outs.

There are going to be all kinds of government red tape requirements.

But don’t believe me.

Read the experts.

A real economist, James Hamilton, opines:

“If my hunch is correct, then all the house purchase tax credit will do is to modestly increase the number of houses sold each month… with no noticeable impact on house prices.

That doesn’t mean that the tax credit would have no impact. In particular, it may be a boon to some cash-constrained households that want to buy a house right now but can’t borrow enough. And it should help to reduce inventories of unsold houses by a bit. But if you’re hoping that it will make house prices rise, with all of the beneficial economic effects on home equity that such a rise might have… think again.”

Do we really want to be encouraging “cash constrained households” to buy houses they really cannot afford today?

Seriously.

Is not that “solution” somehow related, at least tangentially, to the problem we find ourselves in?

With a GM and Chrysler bankruptcy imminent . . . with declining real property values in Perrysburg . . . with our regional banks failing . . . might I suggest a tax cut?  A payroll tax cut?  A tax holiday?  A tax cut for business?  Something to goose employment?

I will encourage every American to pray for our leaders.  Pray that they have wisdom.  They are lacking it right now by borrowing or printing a TRILLION DOLLARS that we don’t have for things that will not work.

Case history:

1842 Watermill Lane in Perrysburg.   Great house. Great street.  Great neighborhood (disclosure: my brother lives right around the corner - which is no reflection of the quality of the other people in Rivercrest).

New in 1997 with a $366,000 price tag - 4700 sq. feet.

1842 Watermill in better times . . .

Refinanced for $488,000 in 2001, just 4 years after it was sold.   An indicated 33% gain!?!?

A new loan added to the tab in 2003.  For $100,000.  New imputed value $588,000.

Refinanced again in 2004.  $535,000 loan.

And then a second mortgage with First Franklin for an ADDITIONAL $125,000 in 2004.

AND:  new debt of a nature that the records I have access to make it difficult to fully ascertain, but a new $197,000 loan from Irwin Union Bank and Trust.

I will be conservative and HOPE that the $197 paid off the $125 2nd mortgage.

Which means in 2004 as our local market started melting down in flames, this $350,000 house had $732,000 in federally insured mortgages on it.

You think about that for a moment.

For the story gets worse.

Much worse.

Somehow the home went into foreclosure.  Oh my!  What a surprise!

And then, abandoned, cold, lonely, and without anyone paying the electric bill (and thus the juice for the sump pump) - bad little invisible gremlins moved into this house.

The basement filled with water.

The mold grew and grew and grew.

The banks that foreclosed on it put it on the market for $400,000 in November of 2007.

It finally sold, for $225,000 in December of 2008.

All that time it went down in value, the mold went up the walls, and the neighbors watched a good house become a drag on their homes’ values.

Let’s look at the math:  some collection of banks loaned AT LEAST $700,000 on this house.

They sold it for $225,000.

They had to pay lawyers, Realtors, tax bills, some insurance, internal management and holding costs - all told at least $25,000 over 2 years.

That represents a $500,000 loss.

And SOMEONE has to eat it.

Someone has to pay it.

This represents one of those “assets” you are hearing about.   Bank assets that no one wants to value.   Except that this one already hit the books because Northwest Ohio was first into the real estate recession.

Ignore the lost income tax, the lost property tax to our schools/city/county, the impact on the immediate neighbors.

Ignore it all.

The people who MADE the loans have passed their mistakes onto the taxpayers.

THAT is how close Perrysburg is to the real estate financing implosion.

I am doing more and more short sales these days.

Why?

Because our local economy is slowing down.

Which puts job pressure on workers and business owners.

Which puts income pressure on homeowners.

Which puts houses behind in mortgage and second mortgage payments.

Which leads to . . . . short sales.

Or at least attempted short sales.

Because often there are 2 different lenders on the same piece of real estate.

And there are complications.   Like bankruptcy, income collapse, damaged homes, etc.

All of which conspire to make the short sale harder and harder to accomplish.  And you do know, of course, what a short sale is.  Right?  It is when the bank or lender takes less than what they are owed (they are shorted) and they still release the mortgage so that the seller can still sell.

What is the problem?

Most lenders are buried with paperwork and applications for mortgage renegotiations and short sales and foreclosures right now.  Absolutely buried.

In my experience less than 1 out of 3 short sale attempts get closed.   We can increase the odds if the seller does all of the right things and has a good reason for attempting the short sale and if the buyer involved is very, very patient.   Then the odds go up to 60 or 70%.   But it takes a lot of work and a lot of time.

Right now the lenders are the main problem.   When they forgo the shorts sale they then end up having to foreclose on the house.  Which usually, by the time they get into the property, is full of mold/water/broken pipes/stolen copper/and any other bad thing you can imagine.   When they finally get clear title, pay off there acquisition costs, and finally get it sold in a declining market, they always will have been better off to take the short sale dollars.  Every time they would have netted more money with a short sale vs. a foreclosed sale.

Perrysburg short sales are difficult - and worth the effort for the seller.   If the lenders catch a clue, they will win in a difficult situation as well.