– Foreclosure rates in New York City are climbing to heights not seen since the recession.
– There were 920 NYC foreclosures in the first quarter, up a 31% year-over-year.
– The number of foreclosures in the city continued to climb this year, with Staten Island and Brooklyn seeing the largest upticks in scheduled auctions.
In the first quarter of 2018, 920 homes were slated for foreclosure for the first time — a 31% year-over-year increase, according to a new report by PropertyShark. This represents the largest number of foreclosures seen in any quarter since 2009. New foreclosures in Staten Island jumped 226% to 189, compared to 58 in the first quarter of 2017, according to the report. Brooklyn experienced a 64% increase year-over-year, logging 275 scheduled foreclosures. The Bronx followed with 113 foreclosures — a 33% increase — and Queens had 303, representing a 13% decrease year-over-year. Manhattan had just 38, compared to 2017’s 36. Foreclosures reached 3,306 citywide in 2017, marking the highest volume seen since 2009, according to a separate report by PropertyShark. It should be noted, however, that the number of lis pendens filed — the first step in the foreclosure process — was down 13% this quarter compared to the same time last year. So, while scheduled foreclosures continue to rise, a slowdown may be in sight.
Americans face highest pump prices in years
Americans are spending more at the pump than they have in years. Prices could rise even higher just as drivers hit the road for family vacations. “This summer, in terms of average gas prices, will likely be the highest since 2014,” said Patrick DeHaan, petroleum analyst at GasBuddy, a fuel-tracking app. “There’s been very little question about that.” Crude prices have jumped thanks to continuing production cuts by major exporters. As a result, gasoline is also becoming more expensive. According to the US Energy Information Administration, average regular retail gas prices reached $2.70 a gallon last week — the highest level since 2015. While higher fuel prices could herald an end to the glut that has plagued the energy market since 2014, they also threaten to dampen demand and hit consumers in their pocketbooks. Since the Organization of the Petroleum Exporting Countries and other major oil producers, including Russia, agreed to collectively limit output two years ago, US oil futures have risen about 40%, closing at $62.06 a barrel on Friday. Gasoline futures are up 8.6% this year. “What we’re seeing now at the pump is reflective of OPEC’s decision in 2016 to cut back on oil production,” said Mr. DeHaan.
Part of gasoline’s price increase has also been seasonal, as refiners tend to process less crude oil into fuel during maintenance and are starting to transition to summer-grade gasoline, which is more expensive to make. Prices will likely climb further as the weather warms and driving picks up, according to energy analysts. OPEC’s production cuts have helped offset growing output from US shale, which has repeatedly reached new record weekly highs this year. In January, US crude stockpiles fell to the lowest level since 2015, and are below the five-year average, a closely watched measure of excess supply. Analysts expect global crude inventories to fall to their five-year average this year as well. Gasoline stockpiles have fallen for five consecutive weeks, according to EIA data ended March 30. In recent months, the US has also exported record amounts of gasoline, mostly to Latin and South America. In January, exports totaled more than 33 million barrels, near an all-time monthly high set in November. “That’s a big difference from a decade ago, or even a few years ago,” said Tom Kloza, global head of energy analysis at the Oil Price Information Service. “We’re kind of refiners to the entire Western Hemisphere right now.” Strong global demand has kept oil prices lifted, as synchronized economic expansion has contributed to increased fuel consumption.
ATTOM – the promise and pitfalls of ADUs as affordable housing panacea |
The following is an excerpt from a 9-page white paper published by ATTOM Data Solutions with more in-depth statistics on ADU building permit trends (displayed in easy-to-read charts) along with numerous interviews with real estate investors , developers and innovators across the country who are working with ADUs. Download the full white paper. A paucity of affordable housing that threatens to inflame a burgeoning homelessness crisis and trigger an exodus of well-paying jobs is forcing local governments to consider creative solutions to this intractable problem. One such solution is to streamline the development of accessory dwelling units (ADUs) in the hopes that real estate developers and single-family homeowners can create more affordable housing inventory one granny flat at a time. A trio of California laws that took effect in January 2017 is one of the examples of such attempt to streamline ADU development. The laws (SB 1069, AB 2299, and AB 2406), encourage cities to ease some of the common hurdles to the permitting and building of accessory dwelling units (ADUs) — also known as granny flats, in-law units or just second units — most notably parking requirements, setback requirements, and utility connection fees. An Accessory Dwelling Unit Memorandum published in December 2016 by the California Department of Housing and Community Development claims that these “changes to ADU laws will further reduce barriers, better streamline approval and expand capacity to accommodate the development of ADUs.”
The legislation certainly appears to be accomplishing its goal of accommodating the development of ADUs. Statewide in California, building permits for ADUs increased 63% in 2017 compared to 2016, the biggest increase among 20 states with at least 100 ADU building permits issued in 2017, according to an ATTOM Data Solutions analysis of building permit data from Buildfax. Nationwide, building permits for ADUs were unchanged in 2017 compared to 2016. California had the most ADU building permits issued in 2017 of any state, with 4,352, followed by Oregon (1,682), Washington (1,110), Florida (944) and Maryland (872). “As affordability worsens, the incentive for homeowners to build ADUs becomes greater. But the cities just have to let them. That’s the only barrier,” said Holly Tachovsky, CEO at Buildfax, who noted that the rise in ADU building permits in some inventory- and affordability-challenged cities reflects a larger trend she has noticed in remodeling in the wake of the Great Recession. “Americans are now spending more money remodeling homes than they are building new ones. This flipped in 2009 and it has stayed flipped since then. The previous trend in all of recorded data before that — decades and decades — was new construction dollars were more than remodeling dollars.”
Cryptocurrencies slide, shed hundreds of billions in market cap
The last 24 hours have seen big sell-offs in the major cryptocurrencies, with bitcoin falling as low as $6,630, according to CoinDesk, before rebounding a bit to trade above $7,000. Bitcoin peaked just below $20,000 in December. It isn’t just the largest cryptocurrency by market capitalization that is falling ether, Ripple XRP and bitcoin cash have all dropped to fresh lows for the year. There wasn’t any apparent trigger to the sell-off. The cryptocurrencies have struggled since they hit record highs that spread from late 2017 through January. According to data from CoinMarketCap, in the first week of January the major cryptocurrencies hit an overall market capitalization that exceeded $800 billion. As of Friday, the total market cap had dropped to about $275 billion.
Delaware foreclosures among highest in nation
As of February one of every 1,012 “units” in the state was a foreclosure, said Bayard Williams, president of the Delaware Association of Realtors. This puts Delaware among the top five states in the nation in terms of high foreclosure rates. Despite the dubious ranking, Mr. Williams believes there is reason for optimism. “It’s starting to pick up,” he said. “The number of properties that received a foreclosure filing in February was 19% lower than the previous month and that’s down 35% from the same time last year.” Mr. Williams believes that many factors play into the state’s high foreclosure rate. “It’s taken a long time to recover from the 2008 recession, and I don’t think we’ve recovered as quickly as some other parts of the country,” he said. “There’s been lag effect due to the local economy.” The damage caused by the recession appeared for many in the loss of home equity, said Mr. Williams. Homeowners who may haverefinanced on their homes before the recession hit found themselvesin a particularly bad position. “When they refinanced, they pulled as much equity back out as they were allowed prior to the downturn in the market — when the market went south, they ended up upside down on their loans,” he said. “We’re even seeing some people who’ve been in their homes for 20 or 30 years trying to sell and you’d think that they’d have a lot of equity at that point to put toward closing costs and the purchase of their next house. But, that’s not always the case anymore. It’s tighter now.”
On the purchasing end both the housing inventory is low and first time home buyers struggle more than they have in the past, noted Mr. Williams. “We don’t have a ton of high paying jobs in the state, many of the first time home buyers are suffering from stagnant wages and also have to work through heavy student loan debt,” he added. Although it’s too early to tell, Mr. Williams speculates that the state’s increase in the transfer tax rate last year has also had a negative effect on home sales. The rate was hiked 1% in July during the thick of the state’s budget negotiations. Before, the state had split the 3% transfer tax with counties, but the new revenue from the increase to 4% has been added to the state’s general fund. At the time, the change was estimated to take in another $45 million for state coffers during the remainder of 2017 and a possible $71 million this year. “It’s still early to know what the effect has been, but common sense tells you that both sellers and buyers have had to bring more money to the table to close — it’s just another contributing factor working against the market,” said Mr. Williams. Despite the downward pressures, Mr. Williams expects conditions to continue to improve, but not “overnight.” “We’re climbing out,” he said. “As the economy improves in the country and we pick up some extra jobs here in the state, things will likely continue to improve, but there are a lot of factors at play.
The rash of foreclosures isn’t as bad in Kent County (one in 1,221 units) as it is in New Castle County (one in 838 units). Cynthia Witt of Woodburn Realty in Dover, who’s been tracking foreclosures in Kent County for many years, said the rate remains high, but does seem to be slowly improving. “Last year, 11% of total real estate sales were sheriff sales,” she said. “We averaged almost 27% of sales that were either bank owned or sheriff sales. But, back in 2012 that was 37%, so numbers have been improving.” However, Ms. Witt points out that the character of the foreclosures seems to be changing. While in the wake of the recession many foreclosures seemed to be a product of lost equity, many of the newer foreclosure filings seem to be related to poorly timed refinancing and sluggish appreciation. “Shortly after 2008, a lot of sheriff sales went through because someone had bought something they could barely afford before the recession, and then they lost their job, got pregnant, got sick or divorced and wound up upside down on their mortgage,” said Ms. Witt. “Now, there are a lot of people who refinanced and just can’t get their money back out of the house. The rate at which houses appreciate has taken a dive, so that only makes it harder. “Back in the ‘80s we used to be able to confidently tell people if they stayed in a house for 3 years, they could sell it and walk away. “Now, someone may have bought a house for $259,000 five years ago and they’re selling it for $262,000. That’s not even enough to cover transfer taxes and closing costs.”
Heirs inheriting houses with more debt against them than they’re worth has also kept the foreclosure rate high, Ms. Witt thinks. Reverse mortgages, where a home owner agrees to sell back their home equity to a lender for regular payments usually to supplement retirement income, have been particularly pernicious in this respect. “There’s been a tremendous increase in the amount of sheriff sales for the property of deceased owners,” said Ms. Witt. “Lots of times an heir will inherit a property and they just don’t see the point of trying to go through the process of selling it because it isn’t worth what’s owed on it. It doesn’t hurt their credit to let it get foreclosed on, so that’s often what they do.” Kent County Sheriff Jason Mollohan noted that he’s seen a significant rise in the number of estates being represented by next of kin during recent auctions — usually indicating an inheritance of the property. However, like Mr. Williams, Ms. Witt sees room for hope. “Based on raw numbers I’d say the market is still healthy,” she said. “Numbers are still being bolstered up because there is still a lot of new construction being sold — particularly in the Smyrna, Camden and Magnolia areas. Many of the buyers seem to be out- of- staters possibly retiring here.”
Another encouraging trend Ms. Witt sees is that a scrappy cohort of contractors seem to be taking advantage of cheap real estate being foreclosed on. “I’m seeing a lot of this happening in Dover, some in Harrington and Smyrna too — it’s usually concentrated in the urban areas,” she said. “There are probably a dozen or so small contractors that are very active in picking up property that goes at a sheriff sale for way below what you’d expect. “They buy it, fix it up and flip it. There is a lot of this going on — probably about eight to ten houses per month. “They’re playing a very necessary role in the market right now. These houses would probably just be sitting and crumbling otherwise.” Through their activities, Ms. Witt says the contractors are upgrading housing stock that first time home buyers might have been steered away from by their realtors or home inspectors because of the upfront costs of renovation. “When I started this business, and old house was something built before 1800, but now, an ‘old house’ is something built over five years ago,” she laughed. “The work these contractors are doing, though, is bringing these older homes and neighborhoods downtown to a more desirable level. I believe if it continues, it may get to the point in five years where you drive through these neighborhoods and really notice the difference.” Sheriff Mollohan agrees, noting that he’s started to see a greater number of “familiar faces” at auctions. “That’s absolutely going on at our foreclosure sales. We’re seeing a good number of the same people come in,” he said. “Not only that, but the level of interest between both foreclosures and tax sales has been increasing on the bidder side. It’s tricky to judge because we don’t preregister people, but I can tell there is more interest lately.”
Housing obstacles can’t hold back homebuyer demand
It’s no secret that affordable housing continues to be more difficult to find, and competition among first-time homebuyers continues to remain fierce. Now, some cities are beginning to take action against the affordable housing crisis. Over the weekend, a 130-unit housing project in San Francisco will be the first to take advantage of a new law that allows developers to skip expensive and lengthy environmental reviews in exchange for building a certain amount of affordable apartments, according to an article by J.K. Dineen for the San Francisco Chronicle. From the article: “Under the law by state Sen. Scott Wiener, D-San Francisco, developers of certain projects can bypass the environmental analysis typically required. In exchange for expedited approvals the developer must commit to a certain percentage of permanently affordable units. The amount of affordable units ranges from 10 to 100%, depending on the community and how much housing it produces. In San Francisco, a developer looking to take advantage of SB35 must commit to making at least 50% of the units affordable.” Mission Economic Development Agency and the Tenderloin Neighborhood Corp. submitted an application to invoke Senate Bill 35. Developers explained this legislation could cut the process by six months to a year, and allows them to build an extra two stories. However, some say the legislation doesn’t go far enough, claiming that the minimum requirement of 10% doesn’t go far enough for the affordable housing needs of San Francisco.