Housing blip hits home for many
By Jessica VanderKolk, jvanderkolk@altoonamirror.comArticle Photos
Fact Box
Housing plans
-Republican John McCain: Would not allow taxpayer-funded bailouts of
financial firms; allow homeowners to receive more manageable mortgages
reflecting their home's market value.
-Democrat Barack Obama: Create a 10 percent mortgage interest rate tax
credit; allow families to renegotiate mortgages in bankruptcy court;
pass a law to crack down on fraudulent lending.
It's a home buyer's market in Cresson lately, with sale prices low as housing and mortgage problems continue across Pennsylvania and the rest of the country.
In the last 15 months, Lang Real Estate and Tax Service owner Louann Hoffman has watched home prices plummet between 15 and 20 percent, a substantial decrease when homes typically increase in value.
But people who want to buy a home in Cresson still are buying, especially homes needing few repairs.
"People don't have the money to do fix-ups," Hoffman said. "It's not advisable to put a home on the market if it's not in move-in condition because you're going to get less money. That's really important."
While those homes often sell in as little as 30 days, others sit on the market for a year or more because buyers in today's economy don't have the money to invest in home repairs as in the past. Some sellers have to lower their asking price to make a sale.
Some call the last 18 months a housing "crisis," which began in 2006 with falling home prices and a credit crunch, stimulated by the subprime mortgage problem. People with adjustable-rate mortgages planned to refinance when home values increased, but that didn't happen, resulting in higher interest rates and mortgage holders who couldn't pay.
In July, Congress approved and the president signed a law to assist homeowners delinquent on their loans and create refinancing oversight.
This year's presidential candidates have talked endlessly about the faltering economy, offering their own solutions.
Penn State business administration, insurance and real estate professor Austin Jaffee doesn't think the situation is a crisis, but he called 2006 the beginnings of one. He said it took time for the problems to reach Pennsylvania.
"In Pennsylvania, housing markets tend to lag behind the nation and neighboring states," he said. "So activities come here a little later and are not as volatile. So when things were starting to fall apart in 2006, prices continued to rise in healthy markets in Pennsylvania. People were fooled into thinking that Pennsylvania was immune to it, but it's just that it was going to be delayed."
The lag may come from the state's conservative economy and less subprime borrowing and lending than other states, Jaffee said. Rural areas with less real estate activity have suffered less, and Pennsylvania's foreclosure rates are lower than in other states.
Despite the continued "crisis" report, John Buffington, a realtor with Howard Hanna Laurel Realty in DuBois, said people can't take national media reports on the situation at face value, adding that the market is not as bad as it appears.
"It's not that bad around here," he said. "When the statistics come out, they're from cities with more growth than we typically do."
While business is a bit "off" in 2008 after a good year last year, Buffington said he hasn't noticed an increase in foreclosures.
"Some have a hard time getting a mortgage," he said, noting people received mortgages previously who shouldn't have. "This year they're not letting it slide."
Buffington said higher gas prices made people hesitate to buy homes, but he said new homes sell quicker.
"Some take longer if they've been on the market for awhile," he said.
"New houses on the market are selling fairly fast. Some of the older homes, if they're priced right, they sell."
Buffington said he thinks housing in the DuBois area is more affordable than other parts of Pennsylvania and neighboring states.
"They come from Maryland for the Treasure Lake area," he said. "Prices are two to three times higher down there. It's a recreational area; they're second homes, that type of thing."
According to the National Association of Realtors' latest list of median sale prices of single-family homes, Buffington's figures are close. For the Hagerstown metropolitan area, the listing shows prices at $193,100 for the second quarter of 2008, nearly three times that of prices in the western border area near Youngstown, Ohio, at $71,700.
The later area is one of the closest to DuBois listed in the NAR prices.
Don Delozier, an Altoona contractor, employed real estate trading to sell a series of homes.
In a trade, the seller agrees to buy the home of his home buyer at a wholesale rate - similar to trading in a used car.
Delozier bought a home at 2010 Pleasant Valley Blvd. that he's trying to sell or trade. The former owners bought a home in Juniata, the Juniata owners bought a home on Ridge Avenue, and those owners bought a home in Greenwood that Delozier was selling.
"I would just as soon not do it, but it was a way to keep things moving," Delozier said, noting the homes would not have sold as quickly in the current market without a trade. "Trading is probably a necessary evil because somebody, if they want to buy my house, they have to do something with their house."
Paula Biddle, Delozier's real estate agent at Altoona's Remax Results Realty Group, handles property trading and said she's not sure it will be a common option for the average home seller.
"It's great for buyers and sellers, but your average person's not going to be able to offer a trade," she said. "Most people selling their house are buying another house they're going to move into."
Ken Lashley of Ebensburg pointed out that many people facing housing problems put themselves in that position, purchasing homes way outside their price range.
"I personally feel people just overstep their boundaries and buy a $500,000 house on a $30,000 salary," he said. "It doesn't take a rocket scientist to figure that out."
There's some truth to that, Jaffee said. While nontraditional mortgage brokers engaged in negligence and abuse in making deals, he said a majority of the problems came from people making decisions to take some risk, borrowing at a higher rate and waiting for home values to rise, allowing for refinancing in a year or two.
"When prices rose, they couldn't sell and couldn't refinance," Jaffee said. "Pretty soon, they were faced with mortgage payments going up 30 to 50 percent. Then they got in trouble."
As the federal government has bailed out several financial firms in the wake of mortgage losses, retired Kingston fire fighter Ralph Brunza, who majored in economics at nearby Wilkes University, said people need to let the markets adjust.
"With the housing problem, people on Wall Street created it," he said. "Let it go and it'll come back up. The government is not the answer to these problems."
Jaffee used the word "crisis" to describe the financial system breakdown, with federal government bailouts for mortgage finance companies Fannie Mae and Freddie Mac, and just this week for insurance firm American International Group.
John McCain's plan would not allow taxpayer bailouts of financial firms, although last week he said the government was forced to loan $85 billion to AIG. McCain's "HOME Plan" would allow homeowners to trade in for a more manageable mortgage reflecting their home's market value.
Barack Obama supports the new law helping families refinance their homes. His plan includes a 10 percent mortgage interest rate tax credit to make home ownership more affordable. He also wants to allow families to renegotiate mortgages in bankruptcy court, especially if the loan was predatory or unfair, and wants to pass a law to crack down on fraudulent lending practices.
There's no end in sight to today's situation, and no evidence that the U.S. has hit rock-bottom, Jaffee said. But he said it isn't the end of the world and it will turn around.
"Now people are saying the housing market might not return into a world in which there's appreciation until 2010 or beyond," he said.
"House prices haven't fallen enough yet, given how fast they've gone up."
The number of houses on the market also is higher than in years past, worsened by foreclosures.
"When that stops, it's another signal that house prices might stabilize soon," Jaffee said. "So it's not very good news. This is a serious correction. The most serious since the 1930s."
In the meantime, Hoffman advises her clients not to sell right now, if possible, or to rent their homes until the economy looks up.
"We actually have clients who are doing that and it's working real well for them," she said. "They won't be losing that percentage off their home when they go to sell it."
Mirror Staff Writer Jessica VanderKolk is at 946-7465.
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orlandobob
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09-21-08 6:08 PM
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Well Orlandos market is a mess,a few years ago when i was looking for a home i couldnt find a home for under 250,000 and now foreclosures everywhere people are begging you to buy there homes
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