Right now most of the country is anguished over the slack job market and global economic uncertainty. Almost half of U.S. homeowners are feeling house poor. That is, most folks can’t get their wealth out of their homes or even put a realistic price tag on it. They may even be stuck in a house that’s worth less than its mortgaged value.
This morass has led to a massive liquidity and consumer psychology malaise. Is there a way out? Yet there are signs that the clouds are parting.
Ingo Winzer, president of Local Market Monitor, a real estate information service, says he is seeing indications that lower consumer debt and increased spending may lead to an uptick.
The AARP Foundation Litigation unit filed a class action lawsuit yesterday against Wells Fargo Bank and the Federal National Mortgage Association (Fannie Mae), charging that they failed to allow surviving spouses and heirs of reverse mortgage borrowers to purchase the property for the appraised value after loans came due — typically after the borrower’s death.
There’s no getting around it: In much of the country, this is a terrible time to unload your home.
Roughly 11 million mortgages are now “underwater” and over a million properties are in foreclosure proceedings. Even after all the carnage, home prices in 20 U.S. cities just dropped by the most in 18 months.
Reverse mortgages are available only to homeowners over age 62. They allow seniors who need cash to tap their home equity while staying in their homes. The most popular loan type is the Home Equity Conversion Mortgage (HECM), which is regulated and insured by the U.S. Department of Housing and Urban Development (HUD).
The devilish deficit dance going on in Congress right now has been a convenient distraction for big U.S. banks. They’ve not only escaped new taxes for now, but they also are relishing their taxpayer bailout by earning robust profits.
Except for Bank of America, the major U.S. banks are doing just fine, thank you. Yet for all of the abundant generosity and forgiveness of the American people, have banks lent out enough money to Americans to make a difference to the economy at large?
“We’re certainly seeing more of those properties coming to market and more of those properties foreclosed on,” says Rick Sharga, senior vice president of RealtyTrac Inc., publisher of the largest database of foreclosure and bank-owned property records.
At least 30 percent of all purchases were financed with cash between mid-April and mid-May, according to the May 2011 Realtors Confidence Index by the National Realtors Association, and the numbers are even more robust for the luxury property market.
Wells Fargo & Co. said last week it will stop originating new reverse mortgage loans at the end of June, expressing concern about rising loan defaults and the threat of foreclosures foreclosures among seniors. The bank — which accounts for 26 percent of the market — will continue to service 125,000 existing loans it has already written. Wells Fargo’s decision follows Bank of America’s exit from the market in February.
Beyond the double-dip U.S. housing recession, is there a future for the American home market? What I see emerging as growth magnets are established city enclaves and “new urbanist” communities that resemble old-style neighborhoods without the sprawl. They are close to public transportation, walkable and loaded with culture and amenities. They personify the new American dream.
Unfortunately, I also see the slow death of the “spurb,” a word I needed to coin for my book The Cul-de-Sac Syndrome to describe sprawling, car-addicted ex-urban areas far from central cities. While I think many inner suburbs will do fine and prosper, the next wave of real-estate growth favors vibrant cities and energy-efficient communities.
A report issued today on the nation’s housing market is full of all-too-familiar news on the state of America’s housing industry. But one statistic from The State of the Nation’s Housing stands out: home owners are going gray.
The number of U.S. households headed by someone over age 65 will jump 35 percent in the coming decade as baby boomers age, according to the report from the Joint Center for Housing Studies at Harvard University (JCHS).