Perrysburg Blog

The sales numbers:  GRIM.

I am sure that they will be all over the news.

“Existing-home sales plunged to their lowest level in 15 years in July as inventories soared, painting a grim picture for the housing market absent government support.

“Home resales dropped a record 27.2%—nearly twice as much as analysts had expected—to an annual rate of 3.83 million in July, the National Association of Realtors said Tuesday. Meanwhile, inventories rose to 12.5 months from 8.9 months in June, pressuring already depressed home prices. Inventories are at their highest level in more than a decade.”

This is not a surprise.

Residential real estate is a game of positioning.  Of immediacy.  Of marketing impact.

Give financial incentives to lots of buyers to hurry up and buy . . .  they will and then prices and sales will crater.

Pull demand forward  . . . and there is a snap back the next quarter.

None of this was unpredicted.

Sellers in Perrysburg today have to have their home in PERFECT condition.  Priced PERFECTLY to the market.   They have to be on the top of their game.

The numbers are grim – but houses that are presented and priced well are selling.

Even in this market.

Next post: Perrysburg sales numbers . . .

I was talking this week with a fellow Realtor.

About the dearth of new REO orders.

In the face of hundreds of empty houses.

“What is going on in your business?” I asked . . .

He is seeing the same thing that I am.

The REO pipeline has been shut down.

It started 3 or 4 weeks ago.

Someone “of a higher paygrade” decided to slow down the marketing of new foreclosed homes.  The news is grim – at least in the headlines.  Then you read the reassuring copy – “nothing to worry about”, “move on . . . nothing to see here”.  Let’s say I agree.  There is no wave of new REO coming.    Then the tactic of the lenders to hold off inventory now is a premeditated attempt to firm up prices and values for today’s buyers and to protect their asset values.

The houses that are foreclosed and not available?

Oh – they are still there.  They are just sitting empty.  Waiting.  Marinating.

Does this make sense?  Does this make money?  Does this “help” the housing market?  Does this increase prices?

Like “Rosebud” in Citizen Kane . . . NO MAN KNOWS.

Nope.

Not now.

Not when this: Local Plant Closes Due to Ohio EPA Rules is happening.

214 GREAT manufacturing jobs.

214 bread winners.

214 actual or potential homeowners.

214 new foreclosures?  214 destroyed families.

Why?  Because some Columbus-focused bureaucrats decided to close this plant.

Note this well:  There will be NO HOUSING RECOVERY while such decisions are being made.

The lifeblood of Northwest Ohio is being shipped off – factory by factory and line by line – to Indiana, Tennessee, Mexico, and China.

Your house just went down in value.

Your prorata share of taxes is going up.

Because 200+ jobs are leaving Wood County.

The people doing this need to be hounded from office.

The destruction of jobs is destroying real estate.

Indiana is CROWING about their new corporate addition.

We keep driving jobs out and raising taxes.

“It can’t happen here!”

“This is an unsinkable ship!”

“The Maginot Line will protect France!”

Umm.  Might want to check your assumptions.

Sellers in Perrysburg need to check theirs too.  RIGHT NOW.

I wrote on this before and told you

If your assumption is “The Lender Will NEVER Come After Me!!”  you may be embarking on a financial voyage of Titanic consequences.

I just put a house on the market today – $120k area in Toledo.

The owner thought he would be smart and TOTALLY REMOVE his updated kitchen.

The home is going on market for . . . $44,900.

And there is a good chance that the banks that are forced into those situations are going to challenge your assumptions.

Read all about this ACCELERATING trend in the Washington Post ….. HERE.

What Palacios did not see coming was the letter from his lender demanding that he pay the shortfall: $148,064.02. “I really thought I was through with this house,” said Palacios, who fell behind on payments when the economy soured and his cleaning business stumbled.

Some consequences:

-Short selling?  Make sure you do it right.  Hire an expert.

-Foreclosed?  Don’t have a trash out the house party.   Keep the “asset” (that’s what it is to the bank) in good condition.  They are going to run a tab on your decisions.

-Facing foreclosure?  There are plenty of options and decisions you have.  Make smart ones.

Foreclosed?

Short-sale complete?

As I wrote earlier, Ohio has a 2 year time frame for mortgage holders jilted by borrowers to come and try and collect.

My supposition after attending a couple of national REO meetings is that the banks are planning on using this power to get more money from former homeowners.

Unless, of course, you are sick with cancer.

And suing your former borrower generates a lot of bad press.

Remember – if you are in a short sale situation make ABSOLUTELY SURE you are not responsible for any money owed.  In writing.  With your attorney approving.

If you are in a foreclosure situation . . . know your rights and your obligations.  Try to short sell it and use the negotiations in that process as a lever to get the bank to release your contingent liability.

Or else you have to develop cancer to get the bank to be nice.

Details?

Can’t give them to you.

But in a recent meeting with a Perrysburg homeowner, I realized that they were in denial.

Which can be a serious emotional state that is impervious to reason, evidence, and logic.

These potential clients want their 2005 price.

They “NEED” it as an old mentor, Howard Brinton, used to say.

But it is 2010.

Chrysler is BK.   Toledo, City of, is BK.   Ohio, State of, is broke.   GM has filed for BK.  The entire giant mortgage brokerage that loaned them their money . . . BK and gone.

2005 is long gone.   What you or I paid is immaterial.  What you or I “NEED” is not important.

We should be moving beyond denial to truth.

In fact, we actually have more practice and experience at distressed markets than anyone else in America.

Seriously.

We (Northwest Ohio) went into this market first – along with Cleveland and Detroit.    (“Why?”, o student of history, you ask.  I will tell you:  we shipped our manufacturing jobs over to China first.  Before we shipped our tech jobs and info jobs and pharma jobs.  We – first!, but I digress.)

So – no excuses.   We are experienced in these matters.   Or we should be.

Nationally, 30% of the ENTIRE U.S. market is distressed.

Perhaps 50% of the total market activity in Toledo is now “distressed”.   That means short sales, REO, foreclosures, deed in lieu, and upside down, underwater sellers who have to bring cash to the table just to close.

Half.

One out of two.

We have to move beyond denial now.

There are some very good Realtors that I know that have not closed a single deal yet this year.

They are in denial.

There are some very good homes that will not sell for their owners.

Denial.

“But . . . the tax credit!”

“But . . . ”

Denial.

It hurts.

But you have to move on.

If you want closure.

Is this one from Forbes . . . about the WORST real estate markets in America right now.

Toledo is on this trajectory:  lost jobs, out of control State government, public school meltdown, and out of control local government.

You can just look north . . . to DTW . . . to see what the potential future holds if some serious changes are not made in Northwest Ohio.

With interest rates rising,  taxes increasing, and a steady grab of diminishing income from private citizens being answered with decreasing city services, things are not on a good path right now.

Toledo does not need this kind of publicity.

This blog is about PERRYSBURG real estate.

And . . . I sometimes have made tongue in cheek comments about Perrysburg gaining at Toledo’s expense . . .

But I do not want to see Toledo drained dry.

I don’t know anyone who does.

It’s the Greater Toledo Metro Area . . . and we are all interdependent economically.

Let’s hope they make some wise decisions up there!

Here are the comments and the list from Forbes:

1. Milwaukee, WI: Some cities’ housing crisis stemmed from rampant overbuilding. Others can blame the decline of the manufacturing industry. Milwaukee has felt both. The worst-selling housing market saw a 47% increase in unsold homes between 2008 and 2009, thanks both to underlying economic problems and overzealous development during the housing bubble.
2. Denver, CO: Denver doesn’t come to mind as a housing-crisis hot spot, but the city that once looked like it would escape the housing bust unscathed now shows signs of strain. More than 42,000 homes are on the market in the metro, 27% more than last year.
3. Los Angeles, CA: Los Angeles has yet to recover from the blows it took when the housing bubble burst. Home sales fell by 5% in the metro between 2008 and 2009, while they rose, if only modestly, in most other large metros. Home sale prices peaked in late 2006, and it looks like the remnants of overbuilding will continue to clog the housing supply.
4. St. Louis, MO: The city has shed jobs and seen housing prices plummet. Inventory in the metro is up 36%, in part as a result of its 11% unemployment rate. Manufacturing jobs no longer drive the city’s economy, and slow sales are just one symptom of its economic maladies.
5. San Francisco, CA: Unemployment has reached 11% here, and home prices fell by 6% between 2008 and 2009. The area’s poor-home-sale performance shows that California’s housing woes spared no city.
6. New York, NY: New York likely made the list in part because the condominium market, which drives much of Manhattan real estate, wasn’t included in the analysis. Still, not everything’s rosy in the Big Apple: Sale prices were down 13% between 2008 and 2009, and inventory has seen a 13% rise.
7. Cincinnati, OH: Like Cleveland and other Rust Belt cities, Cincinnati suffers from a lack of jobs–the city is 11% unemployed–which has cut sales dramatically and left a glut of unsold houses behind. Inventory in the city rose 48% between 2008 and 2009.
8. Cleveland, OH: Cleveland was suffering before the housing crisis hit, but the bursting of the bubble surely didn’t help. Unemployment is at 10% in the metro, which has hemorrhaged manufacturing jobs. That means families don’t have the means to buy, and homes remain unsold.
9. Atlanta, GA: Inventory was up 6% in 2009 from the previous year. That may not sound like much, but together with flat quarter-over-quarter single-family home sale prices and sluggish sales rates, the overbuilt city shows significant signs of strain.
10. San Diego, CA: Scores of new condominiums were constructed before the market peaked in the first quarter of 2006, driving up prices and spurring overbuilding. Many units were built for speculative buyers, but today the brand-new luxury buildings sit empty.

A new upcoming listing on Indiana . . .

An old REO listing on Indiana . . .

And . . . a sharp split level on secluded, hidden, hard to find Carolin Ct.

One of my favorite real estate writers posed a similar query in the Wall Street Journal’s excellent real estate blog – Developments.

James Hagerty posed the question: “Will the bank take my iPhone?”

Which is sobering – I have an iPhone.  You can’t have it.  You can’t take it.  It’s addictive and it’s mine . . . and I have a hard time imagining it being surrendered to a creditor.

Which made me do some thinking.

And then some investigation.

Since I deal with many homeowners today who owe the bank MORE than the market value – what can happen to their iPhones?

And their cars?

And their retirement savings?

And their other assets and possessions?

5 or so years ago this was a pointless, absurd question.

It just did not happen in Perrysburg.

Today – it’s a vital, important, timely question.

According to the Fed (specifically the Federal Reserve Bank of Richmond VA) in their monolithic report “Recourse and Residential Mortgage Default:  Theory and Evidence form U.S. States) Ohio is considered a “recourse” state.

That means that lenders may have MORE remedies against a defaulting homeowner than just taking the house back in a foreclosure.

(N.B. – for this entire post, please remember that I am not an attorney and you should and are highly recommended to hire your own attorney to answer your questions!  You need a good, honest attorney . . . call me, and I will recommend one to you)

If I am a defaulting homeowner, I do not like “recourse”.

What is interesting about the lenders right of recourse in our state is that only in Ohio and Iowa does the lender have a very short period to seek recourse – and in Ohio, and thus Perrysburg, it is only for 2 years after the foreclosure.

Y0u can download their 50+ page paper yourself and read the gory details.  The financial equations on page 10 caused me to have a regression attack and revisit my finance classes at Duke University.   I was so shook up by this I had to go out and sell 5 houses today – but that’s another story . . .

2 years.

That is the time frame for recourse that your bank has to get more coins from you.

Lose your house to the bank . . . and they get an automatic deficiency judgment against you.

But they only have 2 years to collect it.

And many banks are taking 12 months to return phone calls right now – so what are the odds they will get your iPhone?

This recourse is usually obviated when a short sale is negotiated – which reinforces my belief that 2010 and 2011 will be the year of the Short Sale in and around Perrysburg.

Because then you will get to keep your iPhone.

A empty shell.

Crabs like them.

But they are terrible for helping homeowners to pay their mortgage.

And if you drive along Alt20 – aka Illinois Ave. in Maumee, you will see a lot of empty shells.

And “FOR LEASE” signs.

And vacant factories, offices, and businesses.

It’s a vivid reminder of what has happened and what has helped residential real estate to collapse in value.

The collateral damage from this one street’s empty and shuttered businesses and factories is felt in every subdivision in Perrysburg.  I know clients that have lost jobs in Crandenbrook and other Perrysburg neighborhoods who used to work on this street.

But now their jobs are gone.

You want reports of the economy getting better?  You want to know when the residential market is better?  You better go for a drive . . .