Route to Recovery

A trip through the epicenters of the recession

Short sale a good deal for couple looking to make a move

Nov 16, 2009 16:10 UTC


PENSACOLA, Florida – As it turns out, the Akermans’ inability to buy three years ago has turned out to be a good thing.

“We’ve been talking about moving for three years,” said Daniel Akerman, 36, who works for the county fire service. “But we weren’t ready financially to buy.”

“We’ve outgrown our old house and feel secure enough to buy at this point,” said Robin, 37, finishing off Daniel’s thoughts outside the house they just bought through a short sale.

Under a short sale, the bank agrees to forgive some if not all of a borrower’s debt even though the home owner sells the home at a loss.

The home they have made an offer on – and are just waiting to close the deal on – sold for $225,000 during the peak, but they will $150,000 for it. It is twice as large as their old home and has a swimming pool – though it is badly in needs of repair work. The home has three bedrooms, a large master bathroom and front and back yards as well as the pool.

“We’re delighted with what we’re getting,” Robin, a nurse, said. “We’re getting a whole lot of house for our money.”

The Akermans’ only frustration with the short sale process was that it took so long. They made their initial bid in mid-July and have only just received approval.

“We weren’t in any rush so we were able to wait for the bank’s approval,” Daniel said. “If you can afford to wait then there are some great deals out there.”

Photo by Carlos Barria

Click here for more Route to Recovery


The states with the highest unemployment rates are not represented. ie Michigan & Oregon.

Posted by Renee | Report as abusive

Military families struggling to avoid losing large sums on their homes

Nov 13, 2009 20:37 UTC

ROUTE-RECOVERY/PENSACOLA, Florida – Sacrifice is familiar for members of the armed forces and their spouses, but Maritza Lee feels that losing large amounts of money on a house should not be one of them.

“When we signed up we knew there would sacrifices and we have made them,” said Lee, a realtor and Navy wife, whose husband is a pilot. “But it would be nice if the government could do something to help us.”

There are some 16,000 military personnel at the Pensacola naval complex here. Transfers every three to five years are a way of life for military families, which means selling their homes and moving on.

The trouble is that many families bought at the peak of the housing boom and now stand to lose a great deal of money.

“Foreclosure is not an option for many of these families,” Lee said. “They have to have security clearance for the work they do and bad credit would cost them that clearance.”

When Lee and her husband moved down from Virginia two years ago, they were unable to sell their house, which they bought for $359,000 and is now worth $300,000. They have rented that house out but are losing money on it every month.


Mitchell Perry, 26, is a hospital corpsman in the Navy who bought a home here for $115,000 in 2006 at the peak of the market after he was transferred here from Virginia. This was the first home he and his wife bought. His wife has since moved back to Virginia with their children to work, as she could not find a job in the Pensacola area.

“It’s really tough to be apart, but if we weren’t both working we’d have trouble paying the bills,” he said. “Some military families can spend most of their lives being apart, but we’re not one of them. I didn’t marry the love of my life to be separated from her for so long.”

Perry refinanced his home to get a lower mortgage rate, but said the broker that approached him about refinancing did not explain to him that his mortgage would rise as a result to $125,000.

“I should have read the fine print, but at no point did anyone say my mortgage would go up,” he said.

Now Perry is due to be transferred in January, though he does not know where yet. The best he may be able to get for his home is around $90,000, now the bubble has burst. He does not want to sell at that price and be stuck with $35,000 in debt.

“There’s no way I want to still be paying a mortgage for something I don’t even own anymore,” he said.

Foreclosure is also not an option as he would lose his security clearance, which is vital to his job.

Lee, who is trying to help Perry, said his best option is to rent the home out. He will still lose some money every month as a result, as there are lot of rental properties on the market.

“There are no good options for me at this point,” Perry said. “But if I rent the place out then that will at least reduce my losses.”

Rene Dixon, 36, and her husband, a Navy supply officer, were transferred to Pensacola from Virginia in August and are struggling to come to terms with the fact that they bought their home for $485,000 in 2007 and now may get just $424,000 for it.

“We’ll break even if we sell for that much, but we’ll lose most of the $96,000 in equity from our previous home that we put down on the place,” she said. “I try to think of it as imaginary money, but this has not been easy for us.”

The Dixons are paying rent in Pensacola and paying their mortgage in Virginia while they try to sell their home.

“The two sets of bills have put a lot of strain on us,” Renee Dixon said.

Maritza Lee said there is a stigma attached to talking about financial difficulties among members of the armed forces, which means no one knows how widespread this problem is.

“In the military we tend to suffer in silence as we don’t want others to know that we are in trouble,” she said. “But I’m getting calls from guys at other bases around the country asking me for help because they’ve heard from someone that I’m trying to help.”

“Big corporations help families when they move them,” Lee added. “If the government were to buy up houses when they transfer people that could help military families avoid financial difficulties like these.”

“I always felt protected being part of the military,” she said. “But we’re not. We’ve been left out in the cold.”


Why couldn’t we clean those to big to fail just like we’re doing doing in Iraq and Afghanistan? I think many millionaires already received loan modifications and wait Military won’t ?
Wow !

In Austin’s office property market, waiting for something to happen

Nov 9, 2009 18:26 UTC


AUSTIN, Texas – Chris Perry says that virtually everything that is wrong with Austin’s office property market is global.

“The problems we’re facing are not local in the making,” said Perry, a realtor at AQUILA Commercial, LLC.

The freezing up of the credit markets following the implosion of Lehman Brothers in September 2008 plus the virtual collapse of the global financial sector have left this market in suspended animation. That’s occurred even though Austin has lower unemployment than the national average and none of the structural problems of northern industrial cities like Detroit.

Austin’s housing market has also got off lightly. While some parts of America have seen steep drops in property prices, the median home price in Austin was down just 0.1 percent in the second quarter.

But nothing is happening in the office property market here.

“We haven’t seen a single major transaction in this area this year because no one really knows what properties are really worth,” said Michael Kennedy, president of commercial real estate company Commercial Texas.

Gary Farmer, president of title insurance firm Heritage Title Company of Austin Inc, described the office property market as “constipated.”

“The capital markets are in disarray, debt is hard to come by so everyone is waiting for the market to settle and find out what is the new normal,” he said. “Things are pretty much frozen right now.”

Nationally, some analysts believe that the office property market, and commercial real estate as a whole, has yet to truly suffer following the crisis in U.S. residential real estate.

According to Perry, part of the problem in the office market is that sellers and prospective buyers have vastly different expectations.

“There is a major disconnect between what sellers think they can get for a property and what the vultures out there think they can pay for a property,” he said. “The real value lies somewhere in between, but no one has got there yet.”

Perry said there are doubtless financially distressed office property owners out there who are holding on for now, but cannot do so forever if the market doesn’t pick up.

“There has yet to be some kind of reckoning in the market,” he said. “The majority of people in this business still think that the worst is yet to come.”

Photo by Lucy Nicholson

Click here for more from the Route to Recovery

Austin feels the economy’s pain, but to a lesser degree

Nov 6, 2009 18:48 UTC


AUSTIN, Texas — To an outside observer, it seems Austin has taken a light hit from the recession.

Unemployment here was only 7.2 percent in September, compared with a national average of 9.8 percent and 8.2 percent in the state of Texas.

“As bad as our unemployment numbers are by our standards, we have been quite lucky compared to much of the rest of the country,” said Dave Porter, senior vice president for economic development at the Austin Chamber of Commerce.

And while the housing crisis saw median house prices in the United States down 15.6 percent in the second quarter the median price in Austin was down just 0.1 percent on the year at $194,000 (after sliding to $182,300 in the first quarter), according to the National Association of Realtors.

But when it comes to economic pain, it’s all a matter of perspective.

“Our unemployment numbers are at record levels and what is worrying is that the jobless rate has been above 7 percent for much of the year,” said Angelos Angelou of Austin-based AngelouEconomics, which provides economic development consulting services. “This is the hardest recession we’ve experienced so far.”

Retail sales are down 11 percent on the year, which Angelou said indicates that “people are either saving their money or are concerned about losing their jobs.”


“We haven’t seen a single major transaction in this area this year because no one really knows what properties are really worth,” said Michael Kennedy, president of real estate company Commercial Texas. “What’s affecting us is the same thing that is affecting the whole world right now.”

Austin has grown rapidly in recent years – the population grew 7.6 percent to 709,893 between 2000 and 2006 – thanks to a combination of government jobs (it’s the capital of Texas), education jobs related to the University of Texas and hi-tech companies.

Computer maker Dell Inc was founded here by Michael Dell while he was still at the University of Texas in 1984. IBM, Samsung and Apple all have large operations here. The city consistently ranks as one of the most attractive locations for companies and entrepreneurs to set up shop in the United States.

According to Angelou, Austin’s growth has in large part been based on an inflow of people from elsewhere.

This year he estimates the population will grow by 45,000, down from growth of 66,000 in 2007.

“For meaningful growth we need more people to come here,” he said.

Mark Dotzour, chief economist at the Real Estate Center at Texas A&M University, said that what may have dissuaded more people from moving here is that their homes have lost so much value they are reluctant to sell.

“For people whose homes have lost 20 percent to 30 percent in value, moving in this market is tough,” he said. “But once Austin starts adding jobs again, I think we’ll see some people in badly affected markets decide to walk away from their homes and move here anyway.”

Photos by Lucy Nicholson


“According to Angelou, Austin’s growth has in large part been based on an inflow of people from elsewhere. “For meaningful growth we need more people to come here,” he said.”

This economist must be an Aggie. Only Aggies state the obvious and consider it enlightening.


Posted by JMKeynes | Report as abusive

Despite two foreclosures, Bob is still singing

Nov 6, 2009 13:44 UTC


BULLHEAD CITY, Arizona – Talking to Bob Kriegh you’d never guess that he had to foreclose on the two homes that were meant to pay his mortgage.

Kriegh is 84 but looks younger. Prior to his 30 years as a computer programmer, he was a singer, including he says with the Washington Opera Company in the 1940s. His business card says “Singing Bob.”

With a chiseled face, pale blue eyes and an unhurried, gravelly voice, Kriegh proved his singing capabilities with an impromptu show tune, though he said his advancing age had robbed him of the ability to commit new songs to memory.

“I’m just a wrinkled old prune,” Kriegh said, standing in the empty living room of one of the homes that went into foreclosure in July. “But God has taken care of me despite all that I’ve done to myself over the years and will take care of me now.”

Kriegh bought a mobile home on this lot 10 years ago for $17,500 when Bullhead City was experiencing rapid growth. Foreclosures and job losses amid a hard recession and housing crisis have brought that growth to an abrupt halt – for now at least – shaving more than 50 percent off median house prices hereabouts.

In 2005 he sold the home to a woman for $35,000 and financed the loan himself. She tore out the mobile home and built this house. But she never made a single mortgage payment to Kriegh, who started foreclosure proceedings in February of this year.

Now he has it on the market for $69,900, which he said would take care of the legal fees and other expenses he has incurred on the property over the past four years.

“This home will sell eventually,” Kriegh said. “I may not make a profit out of it, but I will at least get my money back.”

Just a stone’s throw from this house is another home that he sold for $50,000 in 2007. Again, he acted as the bank on the deal. But the buyer took six months’ rent on the property from a tenant and, after making a couple of interest-only payments, he stopped paying.

The house was foreclosed on in July. The tenant has lost his job at one of the casinos over the river in Laughlin, Nevada, and is working part-time jobs until he finds a new one, so Kriegh is letting him stay there for now.

“He’s a good man and he’s trying hard to find a job. I’ve taken it easy on the rent because he’s finding it hard to make ends meet. I’ll wait a while before I try to sell that house because I can’t throw him out, not while he’s down on his luck.”

Photo of Bob Kriegh by Lucy Nicholson

For more stories from the Route to Recovery, click here

Arizona town feels a double blow after the boom

Nov 5, 2009 17:14 UTC


BULLHEAD CITY, Arizona – Not so long ago this town on the Nevada border was in full boom mode.

It was a magnet for people coming to work in the casinos across the Colorado River in Laughlin, plus Californians looking to retire here or have a second home at a fraction of the cost in their own state. Construction workers flocked here to build homes and roads.

All told, successive booms turned Bullhead City from a fishing village just a few decades ago to being a city of more than 40,000 people.

But America’s housing crisis and the most severe downturn since the 1930s stopped the city’s boom dead in its tracks.

“We had booms in the 1980s and the 1990s, but in 2005 and 2006 things went absolutely nuts,” said John “Mac” McCollum. “Then in 2007 all of a sudden the lights went out.”

Many of the construction workers have gone, as have a lot of people who have been laid off at Laughlin’s casinos. Nevada’s casinos have had 20 consecutive months of declining gambling profits.

“Unemployment is on the rise and we’ve had quite a few foreclosures,” said Bullhead City Mayor Jack Hakim. “Families are leaving because there’s no work to be had.”

“It’s going to be tough for a while around here,” he added.

Unemployment in Mohave County where Bullhead City is located is around 10 percent. The median house price here has fallen from nearly $190,000 in January 2006 to less than $93,000 now, a drop of more than 50 percent.

Around 60 percent of McCollum’s sales now are foreclosures.

“Many of the other sales we handle are people trying to avoid foreclosure or at least break even,” he said. “Either way, right now foreclosures are pretty much the only game in town.”

John McCormick of McCormick Development helps run a number of family businesses – a water company, a construction company, a land development company and a real estate broker’s office – and says that many of the people walking away from homes here are either speculators or Californians who bought a second home here.

“If they end up in trouble, it’s so much easier to walk away from a second home than a primary residence,” he said.


The McCormick clan’s land development business has laid out a subdivision north of Bullhead City with 141 empty lots, complete with roads and water mains. But although there have been plenty of people looking, no one is buying right now. The family business owes the bank $8 million on the development, plus has to pay $160,000 annually in property taxes while the subdivision remains empty.

“There’s money out there but a lot of people won’t let it go,” McCormick said. “They just waiting to see if prices will go lower.”

For Bullhead City to come back, both McCormick and McCollum agree that casino business needs to pick up again but – even more importantly – California’s economy needs to recover.

“If California’s market is in the tank, we ‘re in the tank,” McCormick said. “I think we may be past the worst of it now. But nothing big is going to happen any time soon.”


Bullhead city rules! It’ll never become a ghost town, too much fun to be had there! Take one big lake, one big river, beautiful desert canyons and mountains, shake it all up and add a dune buggy, a jet boat, a kayak and a waverunner. Add tons of weekly happy hours and a Sunday live music jam that rocks this world. Broil it under a hot sun, sprinkle it with fiestas sponsored by the casinos across the river. Hang out in Bullhead for a while and find out just how much fun life can be!!