Prompted by a great article I read today on Forbes.com:   The Foreclosure Fallacy  I decided it was time once again for me to tackle the ever growing pile of information, mostly about our national and Lake Norman housing market, that is in a stack on my desk I call “Blog Topics”.  Most of these are not worthy of their own post so I will share a quick summary of a number of them here at one time:

National:

•  The Foreclosure Fallacy  is wonderful in its simplicity.  In one short article they touch on all of the major issues related to foreclosures from the risks involved to the sage advice from one Detroit area broker:  “Don’t be too picky.  A lot of houses will need work.”  I have mentioned in previous posts the importance of being willing to “compromise” if you are search for a bargain.  So true!

• Standard & Poors: Modifications and Slower Foreclosures Shrink Shadow Inventory article in the Wall Street Journal was one of many referencing the release of Standard & Poor’s  yearly report.  (S&P defines shadow inventory as properties with borrowers who are 90 days or more delinquent on their mortgage payments).  One disconcerting figure in this article:  “The time it takes for a lender to foreclose on a borrower has lengthened—from about 20 months to about 40—”. The amount of Shadow Inventory here in Lake Norman is one of the biggest unknowns that keeps home-buyers uncertain about when to move forward with a purchase.

• The Mortgage Bankers Association released a report today, February 18th, that says that the percentage of mortgage holders who are behind in their payments dropped to the lowest number in two years in the fourth quarter of 2010.  “While delinquency and foreclosure rates are still well above historical norms, we have clearly turned the corner in the foreclosure crisis” according to MBA Chief Economist Jay Brinkman in a statement.

• There have been numerous articles recently about the death of the “McMansion Era”.  According to both the National Association of Realtors and the National Association of Home Builders the “median sized home being built today is smaller” and the future trends will be towards smaller, more energy efficient homes. Will the 8000 sq ft+ homes on Lake Norman one day be obsolete?  Probably not but it will be interesting to watch!

Local:

• CNNMoney.com recently listed Charlotte NC in their top 10 housing markets as the best recovery bets.

• Charlotte was chosen as the host city for the 2012 Democratic National Convention!

• Unfortunately, many of the ambitious housing/urban villages/mixed use developments that were in the pipeline several years ago are either drastically changed or no longer viable.  There have been a number in our local news over the past few months.  Instead of the Mooresville Cotton Mill mixed use village in the old Burlington Factory on Hwy 115 there will now be a large furniture store.  According to an article in the Charlotte Observer “In Cornelius, a massive mixed use project was planned that leaders predicted could generate thousands of jobs.  The bank now owns the farmland.”  Langtree at the Lake, the $850,000,000 upscale Lake Norman resort development that I have written about a number of times has still not broken ground.  The project was recently in the news announcing the sale of  land which will bring in enough cash to finance the first phase of their newly re-designed project which will now include 300 luxury apartments (originally planned as very high-end condominiums) with retail and commercial to come soon after as well as an hotel. 

• According to an article today in the Statesville Record & Landmark,Iredell County revaluation notices were sent out today.  “The final line is a 1.5% total decrease in value in the county…Nearly 58% of Iredell property owners saw the values of their property decline.”

• All Lake Norman residents will receive notification this month of our 2011 home revaluation. (Remember that 4 counties comprise the Lake Norman shoreline).

Personal:

• I, as I’m sure every member did, received a summary from the social network LinkedIn letting me know that 53 of my LinkedIn connections “started something new” meaning a change in job titles in 2010.  Lot’s of change, that’s for sure!

Mission accomplished!  My pile is now a full inch shorter.  Hopefully you found at least one or two of these of interest to you!

Last week I called our Centralized Showing Service to make appointments to show properties in our Lake Norman area for one of my buyers.  Two of the properties were foreclosures.  I got a call from one of the listing agents letting me know that I wasn’t able to show the property because the bank had pulled it off of the market that very day and that he had absolutely no idea what was going on.

I was able to show the second bank-owned property and my buyer wrote up an offer.  When I submitted it on the 13th (last Wednesday) I was told by the listing agent’s staff that they had no idea when we would hear back.  (Normally a bank will respond in 24-48 hours).  A few hours later I got a call for the listing agent telling me that the offer had been rejected and no offers would be reviewed or accepted until GMAC released the property.  He told me his crystal ball had fallen off his desk and shattered so he had no idea when it would be available.  At least he had a sense of humor about the whole thing!

This is the reality of most of the foreclosures in our Lake Norman real estate market.  Right now, foreclosures or REO (real estate owned) properties make up 18% of our Conditional Sales, 29% of our Contingent Sales, 35% of our Pending Sales and 20% of the closed sales in the past month. Will most of the active contracts be cancelled?

Our Lake Norman real estate market simply can not afford to loose 20% of our sales.  I agree with the housing experts who have been quoted as saying that the foreclosure freeze “may due terrible harm to what is left of housing…”. If there were errors made in previous foreclosures, then they certainly need to be corrected.  However, based upon the foreclosures I have sold in the past year, my guess is that they were all valid.  When you see homes that have been sitting vacant for years, were abandoned by builders or homeowners who have long since moved away, as in the case of the two foreclosures showed this past week, there is little doubt that these were not improperly processed. 

All we can do is sit back and hope that this latest mess is sorted out very quickly!

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About a month ago I received an email from James Kelly who writes a blog:  VA Benefits.  James wanted to know if I would allow him to do a series of guest posts focusing on subsidized housing financing for our veterans.  So, it is my pleasure to post this article on his behalf:

Written by James Kelly,

Coming home relieves our military members of their duties overseas. Even though the return is anticipated, certain challenges present themselves quickly. For thousands of veterans, getting proper medical care poses obstacles. But employment and housing don’t always come easy either. 
 A common effect of serving during war time, post-traumatic stress disorder (PTSD) causes a number of serious side effects. Nearly 150,000 veterans from the wars in Iraq and Afghanistan have been diagnosed with the disorder. Getting disability claims for PTSD was a chore until recent amendments from the Department of Veterans Affairs. 

Veterans also come home looking for jobs and homes. As with any economic contraction, jobs aren’t abundant. Combine that with veterans adjusting to life at home, and getting hired seems less likely. Last spring, legislators recognized the struggles veterans face when searching for employment by introducing the Veterans Assistance Employment Act   to spur veteran employment. But housing still remains a challenge.

 The VA has a program available to honorably-discharged veterans and qualifying active-duty members. Because of frequent relocation, military members may find it difficult to build credit or save money. The Veterans Affairs Home Loan Guaranty program accommodates these hurdles to help veterans find a home. 

VA loans do not have income requirements, making them more accessible to veterans looking for work. A host of financial benefits come with VA loans, such as paying no money down. To buy a house worth up to $417,000—or higher in expensive markets—qualifying borrowers don’t put a penny down.  
 Other  loan advantages  include: 

•  - Negotiable interest rates
•  - No private monthly mortgage insurance
• - Sellers covering up to 6 percent of closing and concession costs 
• - Refinancing options that can lower interest rates 

Not all veterans qualify for the home loan program, but working with a VA-certified lender maximizes veterans’ benefits. A trustworthy lender will also aid veterans in finding an affordable home once they return from service.

The federal government has also developed a  new program designed by the VA and the Department of Housing and Urban Development to introduce new ways to prevent homelessness. This innovative joint federal program aims to get hundreds of homeless vets off the streets and into new homes in the next several years.

Finally, many military families are surprised that the federal first-time home buyer tax credit  remains available to them through April 30^th, 2011, even though it is nearly expired for most other homebuyers. As long as the qualified service member  has a sales contract on April 30^th, and has closed by June 30^th, 2011, he or she will be eligible for up to $8,000 dollars in tax credits ($6,500 for repeat home buyers). This valuable program can do a lot to help a veteran and his or her family make a new home a reality.

All of these resources exist to help veterans overcome the housing challenge. When used in combination, these programs are a great tool in the fight to provide every American serviceman and servicewoman with a place to call home.

Thank you to James Kelley! To reach James with questions: james@vabenefitblog.com

Every once-in-a-while I write an eclectic article for my readers with miscellaneous business and real estate news that has accumulated in a stack by my desk.  Here is just such an update!

North Carolina and Lake Norman Area Business:

• North Carolina ranks fourthin CNBC’s recent survey:  America’s Top States for Business:  The Charlotte Business Journal ran an article on July 13th.
• The Palm City Florida based firm Policom recently ranked the Statesville-Mooresville area 15th among 576 Micropolitans nationwide in terms of economic strenth according to a recent article in The Statesville Record and Lankmark Newspaper.
• Today’sMooresville Tribune says that the Iredell County jobless rate dropped to 11.6%
• Lennar,one of the nation’s leading home-builders, recently announced that they will be building town-homes in a brand new community in Cornelius adjacent to Harborside.  It will be called Harborside At Lake Norman

Housing and Real Estate:

• According to the National Association of Realtors, 10 – 14% of all pending home sales don’t close.  (Very interesting!)
• A Wall Street Journal article on July 26th reported that “Foreclosures Reduce Home Values by 27%“.
• “Foreclosure starts hit a record high for Fannie, Freddie loans” according to an article today in Inman News.  It went on to say that in all loans, 30-day delinquencies were down 1.4% from May, 60-day delinquencies rose 2.4%, 90-day delinquencies were down 3.9% and loans in foreclosure were down .4%.
• The Federal Trade Commission has amended rules governing free credit report offers to prevent deceptive advertising.  The only authorized source under federal law for a free credit report is:  AnnualCreditReport.com  or 877.322.8228.
• Note to home buyers and sellers:  HUD has clarified it’s rule regarding fees to Real Estate Brokers for Home Warranty Plans.  Real estate brokers and agents may NOT be compensated by Home Warranty Companies.  I don’t take the fees and have always thought they were unethical and/or against the RESPA laws regarding kickbacks so now it is official!
• The number one source for home searches, REALTOR.COM is in the Beta testing mode of a vastly improved site: http://www.beta.Realtor.com which was launched on June 15, 2010.  It looks to be a truly major different and exciting!

There you have it…my stack of news is now much thinner and I can go back to analyzing our Lake Norman housing market!

Truthfully,  2009 was a pretty easy year to predict real estate trends in our Lake Norman area. (See my 2009 predictions).  Prices came down, foreclosures and short sales dominated our market, new construction ground to a screeching halt putting many of our local builders out of business, and lenders made everyones’  lives extremely difficult. Yes, it was a tough year for home sellers and home buyers.

However, looking forward in 2010 I am not seeing a lot of black and white but rather a medium shade of grey. 

For our Lake Norman real estate market 2010 will be a turning point.  The question is, how bumpy will the road be, how far down the road will we hit the turn, and will it be a gentle, hardly discernable curve or a pronounced change in direction?

The Big Picture:

To a certain degree, our Lake Norman housing market’s ability to begin to stabilize will depend on the national financial policy makers.  Our national financial uncertainly makes it extremely difficult to make solid predictions for our local market.  Here are some of the major issues that will play a significant role in our housing market this year:

• At the end of march, the Federal Reserve will end its $1.25 Trillion program backing the mortgage market and helping to keep interest rates low.
• FHA is currently working on legislation to tighten their underwriting standards although progress is being made to modify and soften their original requests.  This tightening was initiated by a need for capital reserves due to losses FHA has absorbed since the recession began.
• Only a modest rebound in housing starts is expected.  Builders who have survived are still finding it nearly impossible to get loans for new projects and spec building is almost not existent.
• The homebuyer tax credits will end April 30th – June 30th. 
• There is expected to be another wave of  resets of adjustable and interest only loans, especially on jumbo loans, which means sharply higher monthly payments for those homeowners.  This may trigger another wave of shortsales and/or foreclosures.

Regionally:

Our Lake Norman housing market is also going to be impacted significantly by regional economic components, especially jobs. 

• North Carolina’s population growth was the third highest in the US  according to the Charlotte Business Journal.  Lake Norman is still a destination for people throughout the US.  While many of my out-of-state buyers have had to delay their moves here, very few have actually canceled them.

• Jobs play a huge role in our recovery.  The jobless rate in North Carolina started to lessen in November however unemployment rates in Mecklenburg and Iredell Counties remain higher than the state average.  North Carolina pundits seem very mixed in their economic vision of 2010 but they do seem to agree that unemployment has peaked and that we will see improvement by the end of 2010 if not sooner.  But everyone agrees that we must see job improvement before we see any significant change in our housing market. 

My Predictions:

• Bargains will continue to drive the market.  More and more homebuyers who have been sitting on the fence will realized that these bargains, once gone, won’t necessarily be replaced so they will be more confident and motivated in 2010. 
• A year of  foreclosures and short sales.  Sellers who have been hoping to sell at a price that allows them to at least break even are going to run out of time. We will continue to see active listings slowly evolving into short sales or foreclosures. 
• Shadow Inventory?  One of the biggest questions I have is just how many Lake Norman homeowners are either waiting to sell until they see a turn in the market or have withdrawn their homes from the market (which accounts for our drop in inventory) while planning to bring them back on the market once they see signs of improvement.  If, just when our inventory of homes gets down to a good number (6-8 months of supply), a large number of sellers who have been waiting  jump into the market, then we will again face high levels of inventory and a second round of a buyers market.
• A year of stabilization more than recovery is what most everyone is saying throughout the country.  Personally, I don’t think it will be an exciting year with significant changes but rather a slow, methodical road towards recovery.  2010 may hold some surprises but for the most part it will be a year of righting the ship and preparing to sail slowing forward in 2011.

I would love to hear your thoughts and predictions. Please leave a comment!

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