(10 am. – promoted by ek hornbeck)
It seems like there is no end to the housing crisis that continues to be a major drag on the economy. The recent foreclosure agreement solved little to nothing of the problem and may have exacerbated it with thousands of homeowners still facing foreclosure or loss of equity in their homes. There is also the matter of all those homes that sit vacant, boarded up as a sign of the “suburban decay” that is plaguing minority neighborhoods the worst.
David Dayen at FDL News Desk points out the bright side and dark side of suburban foreclosures:
Kaid Benfield from the Natural Resources Defense Council takes a look on the bright side in regards to the foreclosure crisis, postulating that it will sound the death knell for exurban communities and sprawl. [..]
I don’t think there’s much question, from my perspective, that a sharply reduced exurbia would benefit the country. It would limit fuel consumption and demand; and culturally, more livable, walkable, sustainable cities would foster a greater sense of community, which typically aligns with progressive values. Sprawl policies can answer for a number of societal problems over the past decades. [..]
And yet I’m not convinced that we’re in for an era of reduced sprawl. The private equity players trying to purchase homes at a discount and rent them back out will find most of their inventory in the exurban areas. The expected rental market increase will probably increase the number of single-family units for rent more than anything. In fact, a report in today’s Washington Post finds that these kind of units are practically the only livable vacant properties left. Studies show that banks maintained their properties in white areas at a far greater rate than the ones in minority areas.
With regard to the Washington Post article Think Progress‘s Travis Walden had this to say:
The report is the latest sign of discrimination on the part of big banks when it comes to America’s housing market. Earlier reports found that blacks and Latinos were twice as likely to have been affected by the housing crisis, largely because an industry that has become infamous for its predatory lending practices was even more predatory when dealing with black and Latino borrowers. Banks and lenders often pushed minority borrowers into subprime loans even when they qualified for prime loans, adding as much as $100,000 in interest payments over the life of the loan.
Housing prices remain depressed and are likely to drop another 10%:
Sales of repossessed properties probably will rise 25 percent this year from 1 million in 2011, according to Moody’s Analytics Inc. Prices for the homes could drop as much as 10 percent because they deteriorated as they were held in reserve during investigations by state officials resolved in February, according to RealtyTrac Inc. That month, 43 percent of foreclosures were delinquent for two or more years, from a 21 percent share in 2010, according to Lender Processing Services Inc. in Jacksonville, Florida.
Prices for repossessed properties could drop as much as 10 percent because they deteriorated as they were held in reserve during investigations by state officials resolved in February, according to RealtyTrac Inc.
As Yves Smith at naked capitalism notes, this isn’t just a few thousands foreclosed homes but millions that are sitting empty:
Note this view is based simply on the notion that foreclosures were attenuated on 1.25 million houses, allegedly due to banks keeping them off the market due to the robosiging crisis. By contrast, top housing analyst Laurie Goodman estimates the amount of shadow inventory at between 8 and 10 million homes, and our Michael Olenick, using a different methodology, comes in at just under 9 million homes.
Moreover, evidence on the ground suggests that the banks had reasons other than the robosigning scandal for drawing out foreclosures. While NEW foreclosure actions slowed down markedly, and have ramped up again in the wake of the settlement, it looked far more likely that banks were attenuating foreclosures to maximize income . The longer a house in delinquent and then in the foreclosure process, the more the bank can collect in late fees and servicing fees. And there is considerable evidence that banks pile junk fees on top of that, for instance, double charging the borrower and the trust for fees like broker price opinions.
To get a better idea of what this crisis looks like o a map, Ben Geddes of the Florida Coastal School of Law, working with April Charney, has been putting together Google Maps of vacant properties in Jacksonville, Fl.. If you go to the article you can zoom in on neighborhoods. It’s really very depressing and this is just one medium sized city.
Until this crisis is truly addressed in a way that helps the homeowner stay in the home the housing market will continue to haunt any recovery from the recession.
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