Short Sales Will Increase

Short Sales Will Increase

According to this Diana Olick CNBC article, Let the Short Sales Begin, the Obama Administration's Home Affordable Foreclosure Alternatives Plan (aka HAFA) (effective April 5, 2010), which is offering financial "incentives to borrowers, servicers, investors and second lien holders" to encourage short sales, plus the coming wave of foreclosures (shadow foreclosures, Option ARM and related foreclosures) will result in a substantial increase in the number of short sales. I absolutely agree. The question is whether the increase will be enough. The article goes on to state that the "Administration increased the incentives such as "doubling the amount of cash to $3000 offered as borrower "relocation expenses" and juicing the payoffs to the others as well. Of course they want to push short sales because of course they know that their modification program isn't working as planned." That is no surprise. Very few people I talk to are granted loan modifications and even the ones that are know that the loan modification it is a band-aid, not a solution.

Short Sale and Foreclosure Help and Assistance for Real Estate Investors, Home Builders and Developers in Nashville TN and Middle TN. If you are a Nashville Tennessee, Franklin Tennessee, Brentwood Tennessee, Nolensville Tennessee, Spring Hill Tennessee, Murfreesboro Tennessee, Smyrna Tennessee, La Vergne Tennessee, or Middle Tennessee real estate investor, home builder, condo developer or real estate developer who cannot pay the property/project mortgage payments (due to the poor economy, adverse financing conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), have already defaulted on the mortgage, or are already in foreclosure, or owe more than the property/project is worth, please contact me to discuss your options including a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/project). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (property owners, real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN, Belle Meade TN, Nolensville TN, Springfield TN, Gallatin TN and Mt. Juliet TN). If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Nashville Tennessee and Middle Tennessee Short Sale and Foreclosure REALTOR, Real Estate Expert and Real Estate Investor.

White House Admits Housing Will Not Recover Anytime Soon

White House Admits Housing Will Not Recover Anytime Soon

I read this Economy Watch article about the March 2010 US Unemployment Rate in which the White House basically admits (at least in a round about way) that the US housing market cannot rebound to anywhere near peak 2005-2007 (depending on the market) price levels until at least 2017. The article doesn't actually say this, but it states "The White House does not expect the rate to return to its healthy-economy level of 5 percent until at least 2017." Based on the fact that a healthy (i.e. low) unemployment rate is required to drive housing (employment has long been one of the major drivers of housing), one can only logically conclude that housing prices cannot improve to peak levels until unemployment also does the same. Therefore, the White House's 2017 "healthy-economy" unemployment rate prediction is also basically a prediction for the housing market as well. Given that political predictions usually appear to be "spun" for political gain I a guessing that 2017 is an optimistic estimate.

There are those like myself that remain "bearish" on the economy for the next several years. However, despite this many people are still "bullish" on the US economy due to the "economy always having bounced back." Unfortunately, I believe that this time is different (in a bad way) due to the following:

• Absurdly high levels of private and public debt that is near peak levels.
• Ill advised government deficit spending that is only adding to the already enormous debt. Think healthcare (aka Obamacare), Cap and Trade (aka Cap and Tax), etc.
• The US's rapid movement toward socialism.
• Unlike previous recessions, US manufacturing is basically dead and not likely to come back.

The issues above (i.e. combination of the huge debt, accelerated deficit spending and movement to socialism) will result in the US government having to hike taxes significantly, which will in turn reduce the incentive and ability to earn a profit so businesses will hire less workers, fewer business will be started, fewer businesses will be expanded and more businesses will close or merge resulting in less jobs.

I think many people will be "surprised" and "shocked" when all of this ends badly. They will then be "uncertain" about the future, etc. However, my view is that the near future (unforseen natural disasters, etc. aside) is little more than a small extension of the past and present, and, as a result is already set to a large degree based on the events and actions in the past and recent past. Given that I am reasonably sure that the short term future is very dim for the US economy, housing and more. As a result there will be many more foreclosures and short sales over the next 5-10 years.

Short Sale and Foreclosure Help and Assistance for Real Estate Investors, Home Builders and Developers in Nashville TN and Middle TN. If you are a Nashville Tennessee, Franklin Tennessee, Brentwood Tennessee, Nolensville Tennessee, Spring Hill Tennessee, Murfreesboro Tennessee, Smyrna Tennessee, La Vergne Tennessee, or Middle Tennessee real estate investor, home builder, condo developer or real estate developer who cannot pay the property/project mortgage payments (due to the poor economy, adverse financing conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), have already defaulted on the mortgage, or are already in foreclosure, or owe more than the property/project is worth, please contact me to discuss your options including a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/project). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (property owners, real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN, Belle Meade TN, Nolensville TN, Springfield TN, Gallatin TN and Mt. Juliet TN). If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Nashville Tennessee and Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

Greenspan: Unemployment Likely to Exceed 10%

Greenspan: Unemployment Likely to Exceed 10%

According to this Bloomberg article, Greenspan Opposes New Stimulus Even With 10% Unemployed Likely, Alan Greenspan, the former Federal Reserve Chairman, believes that the federal government should not consider a new stimulus package even though the US unemployment rate is likely "to penetrate the 10 percent barrier and stay there for a while."

The article quotes Greenspan as saying "The focus has got to be on trying to get the economy going, but you also have to be careful that in trying to do too much you can actually be counterproductive" on ABC’s "This Week" program. Greenspan noted that only abouyt 40% of the $787B stimulus money has been spent thus far.

Regarding last week's unemployment report, the article quotes Greenspan as saying that the unemployment report was "pretty awful no matter how you looked at it." However, Greenspan still believes the economy is in the early stages of a recovery. Greenspan did raise concerns, though, about the number of people unemployed for 6 months or more. According to the September 2009 unemployment report, that figure is now at 5.44 million people, which is a 9% increase over August 2009. The result of these alarming figures is that more homeowners will default on their mortgages and short sales and foreclosures will increase.

If you are a homeowner in Middle Tennessee who has lost their job and cannot pay your mortgage and your home is worth less than your mortgage balance, please contact me to discuss selling your home via a short sale. I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure expert and REALTOR. I serve real estate owners, homeowners and investment property owners in Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN.

If you need to sell your home fast you can request help on my website JimTheRealEstateExpert.com.

Unemployment Rate Increases to 9.8% as Jobless Claims Come In Higher Than Expected

According to this New York Times article, Jobless Report Is Worse Than Expected; Rate Rises to 9.8%, the "American economy lost 263,000 jobs in September 2009, which was a lot more than was expected. As a result, the unemployment rate rose to 9.8%. This reduces the chances of the job market recovering by the end of 2009.

The US Labor Department raised concerns over huge government deficits coupled with high unemployment. The article stated "The numbers could intensify pressure on Congress to provide additional unemployment benefits and extend some programs that are set to expire toward the end of the year, such as tax credit for first-time homebuyers and health-insurance subsidies for people who lose their jobs."

According to the article, the government's stimulus efforts are not working to provide lasting employment. As an example, the article noted that state and local governments cut 47,000 jobs and auto dealerships (in the post "Cash for Clunkers" world) cut 7,100 jobs in September 2009. Also, the number of hours worked flattened and overtime hours declined in many industries. The article stated "while many businesses are making money again and seeing new orders trickle in, most are not ready to hire back the workers, even part-time. To economists, that suggests that unemployment could remain at historically high levels through next year, if not longer."

According to ean Baker, co-director of the Center for Economic and Policy Research, "People have been celebrating that we’re through the financial crisis, but the underlying issues are all still there. We’ve lost trillions of dollars in housing wealth, and consumption’s going to be weak. It’s not the ’30s, but there’s really nothing to boost the economy."

According to Andrew Stettner, deputy director of the National Employment Law Project, "This is still severe. It's not going to be turning around as fast as people want."

According to the article, there is a good chance that "other economic measures are beginning to waver, signaling that the initial phase of the recovery — a sharp rebound from a deep bottom — may be giving way to a long grind higher, marked by uncertainty and pain for many."

As I have been saying for quite some time now, this is only going to get worse. The problem was caused by too much debt. Now the economy needs to recede back down to a sustainable level not based on the high level of debt. The same goes for real estate - prices need to come down. All of this is going to result in more mortgage delinquencies, short sales and foreclosures.

If you are a homeowner in Middle Tennessee who cannot pay your mortgage and your home is worth less than the amount(s) you owe, please contact me to discuss selling your home via a short sale. I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure expert and REALTOR.

• Rutherford County Tennessee: Murfreesboro TN, Smyrna TN and La Vergne TN (LaVergne TN)
• Williamson County Tennessee: Brentwood TN and Franklin TN
• Davidson County Tennessee: Nashville TN and Belle Meade TN

You can find out more information about me via my website JimTheRealEstateExpert.com and my Active Rain profile Jim McCormack's Active Rain Profile - Short Sale REALTOR and Real Estate Expert.

Peterbilt Permanently Closing Middle Tennessee Plant

According to this Nashville Business Journal article, Peterbilt permanently closing Tennessee plant, effective 12/1/2009 Peterbilt Motors Co., the well known truck manufacturer, will shutter the Madison Tennessee (located in Davidson County TN northwest of Nashville TN) plant. According to the article, "The Madison plant had not built trucks since July 2008, when the company and the United Auto Workers Local 1832 were unable to agree on a new contract. But company officials said the decision to shutter — and eventually close — the plant was a result of falling demand for the heavy-duty trucks, not because of labor issues."

The article quotes Bill Jackson, Peterbilt General Manager, as saying "This was a difficult, but necessary decision. The current and projected market conditions are very challenging and Peterbilt is aligning its production capacity with market demand. Peterbilt is proud to have been a member of the greater Nashville community for 40 years and we thank our employees for their excellent contribution."

According to the article, all of the company's truck manufacturing will move to Peterbilt's other plant in Denton, Texas. The article states "The 2,000-worker facility, which does not have union representation, announced layoffs there in January, though the company didn’t specify how many jobs were impacted, saying only that it was a small number. At the Nashville plant, 313 workers were laid off in June 2008 when the contract expired, according to the Tennessee Department of Labor."

While Peterbilt officials said that the Madison TN plant closing was a result of market conditions, not union/labor issues, I have to believe that the union was a major factor in the plant closing. The fact is that unions cause companies to earn less and to layoff workers in order to remain competitive. In this case the union caused the loss of at lease a large percentage of the 313 lost jobs. Given that 25% of homeowners have no savings to cover their living expenses if they were to lose their jobs (see my previous blog post Too Many Homeowers Have No Savings) I think it is reasonable to conclude that more job losses will cause more short sales and foreclosures in Middle Tennessee as a large percentage of unemployed people in Middle TN cannot pay their mortgages even for a short period of time due to a lack of savings.

Nashville Business Journal: Greater Nashville unemployment hits 9.8%

According to this Nashville Business Journal article, Greater Nashville unemployment hits 9.8%, the Nashville Tennessee Metropolitan Unemployment Rate reached 9.8% in August 2009, which is up from 9.6% in July 2009. The article noted the following unemployment statistics for the following counties in the greater Nashville TN area:

• Davidson County TN Unemployment - The unemployment rate increased to 9.6% in August 2009, which is up from 9.2% in July 2009.
• Williamson County TN Unemployment - The unemployment rate decreased to 7.7% in August 2009, which is down from 8.3% in July 2009.
• Rutherford County TN Unemployment - The unemployment rate decreased to 10.1% in August 2009, which is down from 10.2% in July 2009.
• Wilson County TN Unemployment - The unemployment rate increased to 9.5% in August 2009, which is up from 9.1% in July 2009.
• Sumner County TN Unemployment - The unemployment rate increased to 10.3% in August 2009, which is up from 9.9% in July 2009.

The article goes on to state that according to the Tennessee Department of Labor and Workforce Development, across Tennessee unemployment increased in 47 counties, decreased in 42 counties and stayed the same in 6 counties.  Overall, the August 2009 unemployment rate in Tennessee was 10.8%, which is over a full percentage point higher than the US national unemployment rate at 9.7%.

Given that most of the counties in the greater Nashville Tennessee metropolitan area have unemployment rates of over 9%, with Rutherford County TN and Sumner County TN posting unemployment rates over 10%, there is no way that housing prices will increase.  Also, there will continue to be high rates of foreclosures and short sales in Middle Tennessee.

Forecast Predicts Nashville Job Market Will Recover in 2012

According to this Nashville Business Journal article, Nashville predicted to recover in 2012, the Nashville metropolitan job market will return to pre-recession job levels in 2012 along with Memphis, Atlanta, Philadelphia, New Orleans, New York City, Boston and 12 other metropolitan areas. According to the article Austin and San Antonio in Texas will recover in 2010 and Dallas-Fort Worth and Houston and 6 other metropolitan areas will recover in 2011.

While all this sounds good, I am reasonably certain that it is not correct if by "pre-recession job levels" they are referring to the 4.5-5.5% unemployment rates that were the norm from 2004-2006. Those unemployment levels would certainly be welcome given that we now live in the era of 10%+ unemployment levels (10.8% for the state of TN in August 2009 according to the Tennessee Commissioner of Labor & Workforce Development James Neeley). Unfortunately, I cannot see how that can happen. The low unemployment rates of 2004-2006 were 70%+/- fueled by consumer spending that enabled businesses to sell products and services and, therefore, hire more employees. That consumer spending was enabled by cheap and easy to obtain debt (think HELOC's, credit cards, auto loans, personal loans, etc.). That debt is now largely gone, or at least significantly reduced.

Therefore, my problem with this article's rosy "pre-recession job levels" prediction is that it does not make sense. How can we return to "pre-recession job levels" if the consumer spending that created that low unemployment no longer exists? The answer is we can't and job levels will not return to "pre-recession job levels" for many, many years. I predict that unemployment rates will drop (i.e. the job market will improve), but the unemployment rates will stabilize at around 6.0-8.0%.

This will all negatively impact housing prices and ensure that foreclosures and short sales remain at relatively high levels for the next several years even after the job market recovers. Simply put, less people will be employed and, as a result, there will be less home buyers.

US treasury Sees Millions More Foreclosures

According to this Reuters article, U.S. Treasury sees millions more foreclosures, even with the ever increasing efforts of the Federal Government via the Home Affordable Modification Program, or HAMP, foreclosures will increase.  In fact according to Michael Barr, assistant Treasury secretary for financial institutions, "even if HAMP is a total success, we should still expect millions of foreclosures".

So we have an insiders view that foreclosures will continue to increase.  We also have the readily available news that unemployment keeps increasing.  Can somebody please explain to me how the real estate market is improving in spite of this these things?  To me, an improving real estate market defies logic and reason.  I see no evidence that the real estate market will improve anytime soon.

98 of the Top 100 Metropolitan Areas Lost Jobs Over the Period of June 2008 to June 2009

According to this Nashville Business Journal article, 98 of top 100 metros suffer job losses, almost all major metropolitan areas lost jobs over the period of June 2008 to June 2009. New York City, Los Angeles and Chicago where the hardest hit with over 200,000 jobs lost. Atlanta, Detroit and Phoenix each lost over 100,000 jobs. The Nashville Metropolitan area (generally Nashville, Davidson County, Williamson County (Franklin and Brentwood) and Rutherford County (Murfreesboro and Smyrna) was in the middle of the pack with 32,800 jobs lost. All of this means more unemployed people with a result of more delinquencies, foreclosures (REO's) and short sales. the effect of this will be continued dampening of the real estate market.

Lenders More Open to Short Sales

According to this New York Times article, Lenders More Open to Short Sales, mortgage lenders are trying to make the short sale approval process faster and easier. Short sales are real estate sales where the sale price of the property is less than the mortgage balance(s). According to the article, short sales became more difficult to get approved as the credit crisis deepened since the 2nd mortgage holders were typically unwilling to accept a large enough loss to make the sale go through. Now, it appears, that the 2nd lenders are willing to accept 5 to 10 cents on the dollar in order to satisfy their debt. According to a representative of Bank of America, they are willing to accept 5% for their 2nd mortgages and they expect 2nd mortgage holders to accept the same when Bank of America is the 1st mortgage holder. The Treasury Department has announced that it will increase incentives to mortgage lenders to work out short sales, but declined to comment on the details of those incentives.

All this means that short sales will become more common. However, this is not really new news since they were going to increase anyway due to the declining real estate values and worsening unemployment, which will increase the number of mortgage delinquencies.

More Evidence Banks are Holding Back Foreclosures

According to this Foreclosures.com blog article, More on Stress Tests, due to 10 of 19 big banks needing to raise funds as a result of the "stress tests" the big banks, and other banks, will start selling shares and begin to dump their increasing pool of foreclosures very soon. Foreclosures (non-performing assets/real estate owned/REO's) have been piling up since 70% are not showing up in MLS's as being for sale. That means there is a large pool of foreclosed homes coming on the market soon. I discussed this "hidden foreclosure" problem in a previous blog post. Clearly, this dump of foreclosed homes is going to hurt the real estate market. I see no reason to believe that foreclosures will decline any time soon as the jobless rate hits 10% by the end of the year combined with the fact that too many homeowners have no savings to get them through a period of unemployment (see my previous blog post on this topic).

Too Many Homeowers Have No Savings

According to a Wells Fargo survey mentioned in this Nashville Business Journal article, Survey: 25% of homeowners have no savings, 25% of homeowners have no savings to cover their living expenses if they were to lose their jobs. The article mentions the significant stress that this is causing and the drastic measures people are taking to reduce their expenses.

In my opinion this is going to cause more foreclosures and short sales, particularly in areas where the median home prices are still too high relative to the median incomes (think FL, CA, NV and AR). The foreclosure and short sale problems will only get worse as the economy weakens and unemployment increases.

Given that Middle Tennessee (in particular Murfreesboro TN, Smyrna TN and La Vergne TN in Rutherford County) has higher than average foreclosures and short sales I think it is reasonable to conclude that people here also have less than required savings. This financial stress will continue to hurt the Middle TN housing market.

Prices Still Need to Decline to Make Homes Affordable Again

According to this Forbes.com article, How Low Will Real Estate Go?, home prices need to decline substantially in or der to bring them in line with median incomes, especially given the rising unemployment and increasing foreclosures environment.  Predictably, the article lists the top 10 (or worst 10) markets as being in Florida, California, Arizona and Nevada.  However, even outside these devastated markets other markets in the US will still decline with may seeing double digit declines.  This will result in more homeowners being underwater (i.e. negative equity), which has been shown to increase foreclosures, which in turn increase the rate of home price decline thus creating a nasty cycle of home price declines.  This will continue to get worse for the next 1-2 years.

Tennessee Foreclosures Filings Increase Nearly 20% in March 2009

According to this article in the Memphis Busines Journal, RealtyTrac: Tennessee foreclosures up in March but trending down in 1Q, foreclosures increased in March 2009 compared to February 2009 by 19.7% and by 13.1% when March 2009 was compared to March 2008.  According to the article, the overall foreclosures in the 1^st Quarter of 2009 are 16.3% lower than the 1^st Quarter of 2008.  Unfortunately, the writer of the article used an article of the title that misrepresents the facts.  The sad truth is that in order for foreclosures in the first quarter of 2009 relative to 2008 and still have foreclosures soar in March 2009 by 19.7% it means that in January 2009 foreclosures dropped substantially, but that drop was followed by huge increases.  It is normal for foreclosures to be low in January so this is not abnormal.  However, a near 20% increase for March is not good.  According to the article, Tennessee has one foreclosure filing per 263 households.  That ranks 17^th nationally.  For comparison purposes, Pennsylvania (my home state) has only one foreclosure per 464 households.  This means Tennessee’s foreclosure rate is 76% higher than Pennsylvania’s rate.  Not good.  Contrary to whatever nonsense and spin is out there in the media foreclosures are going to increase for the next several months, if not longer due to general economic problems (think unemployment) and continuing financial problems (think bank failures).

Higher Unemployment = More Foreclosures

According to this New York Times article, unemployment increased in March 2009 with another 663,000 jobs lost bringing the total jobs lost in this recession to over 5,000,000.  No doubt this will mean more foreclosures.