Who pays people to write headlines like this?
Home Prices in U.S. Showed Signs of Stabilizing in June
Filled with optimism, we dive into the copy:
The S&P/Case-Shiller index of property values in 20 cities fell 4.5 percent from June 2010, after a 4.6 percent drop in the 12 months ended May that was the biggest since 2009, the group said today in New York. The median forecast of 31 economists surveyed by Bloomberg News projected a 4.6 percent decline.
Well, that’s cheering. So…where does the bright, sunny headline come from? Anywhere in this story???
Values fell by 0.1 percent in June from the prior month after adjusted for seasonal changes, matching the decrease in May, indicating the deterioration is slowing.
That values continue to drop does not, to my mind, represent “stabilization.” In the next breath, Bloomburg’s reporter adds,
Nonetheless, any recovery in home values is probably years away as foreclosures dump more properties onto the market, while a jobless rate hovering around 9 percent and strict lending rules hurt sales.
Property values have dropped so sharply here that the county is predicting most of us will see a drop in taxes, even though the community college district, which has something like absolute taxing authority, is jacking up the tax rate.
In spite of property tax rates that rank Arizona among the lowest 11 states in that department (and give us a school system to match: yesterday one of my students came up to me, pointed to a word in the syllabus that she couldn’t pronounce, said she’d looked it up in several sources and tried to figure it out, and added that she still could not understand its meaning. The word was urbanization), our doughty citizens continue to call for a Proposition 13, which goes on the ballot here next year.
LOL! The politics here get stupider and stupider. We can say good-bye to our libraries, as well the health and public safety infrastructure. Roads have already gone to Hell, as the city has stopped filling potholes and repairing heat and rain damage. One silver lining: our schools couldn’t get much worse, so I guess we won’t have to bemoan the loss of that service.
Meanwhile, homeownership is going away in this part of the country. My Realtor friends say they’re doing a land-office business. One woman is working 14-hour days, seven days a week. She says she’s selling almost exclusively foreclosures and short sales. One day she closed on seven sales. In one day! Another friend has reinvented himself. He no longer calls himself a real estate salesman. He’s now a “property investment consultant.”
Both say most of their buyers are Canadians, with a few well-heeled American fix-and-flippers. Most of them are buying homes with the specific intention of turning them into rentals.
The rental market here, for obvious reasons, is very hot. We’re told now that even if you’re stuck with an underwater mortgage, you can often rent a house for as much as the mortgage payments. The locals are no longer buying, whether because underemployment will not support a house purchase, because they can’t qualify for a loan no matter how good their credit is, or because they’ve lost their homes and won’t be able to borrow to buy a house anytime in the foreseeable future.
So, large numbers of houses in formerly quiet residential neighborhoods are being turned into commercial properties owned by foreign investors.
Experience suggests that this is not a good thing. The last time hordes of Canadians bought Arizona real estate—in the wake of the savings and loan fiasco—the result was a contagion of blight. When you live in some other country or state, you do not care about the condition of your “investment property.” It does not matter to you whether the lawn is mowed (or even watered), whether the paint is peeling, whether the shingles are curling, whether a public nuisance occupies the place.
This was so when the clown in upstate New York bought the house across the street, where the obnoxious Biker Boob and Bobby McGee resided for a couple of years. Before those two, we had the passel of male roommates, one of whom led a police chase through the neighborhood and had to be subdued in the front yard by the occupants of five cop cruisers plus two motorcycle cops. He finally unloaded the house. Whoever bought it did some fixup on the inside but nothing to the exterior. Unclear whether the owners live there or whether it’s a rental. Various signs suggest the latter, though. People who rent a house do nothing to care for it, and if the landlord doesn’t maintain the place, it quietly (well, sometimes not so quietly) sits there and deteriorates.
A steadily declining rate in property values “stabilization” does not make, any more than an excess of renters “stabilizes” a neighborhood of single-family homes.
You paint renters with a very broad brush. I rent because I don’t want the constant worry (as evidenced by this very blog) of ownership. I like depending on the company for expensive repairs. I do keep up the appearance of my place as I would if it were my own. I get very angry when people paint renters as a homogenous lower class with no pride in their homes and no sense of responsibility to their neighborhoods. I could easily afford to buy a place — but why would I? So I could paint the walls orange? Outgrew that a long time ago.
{sigh} I’m generalizing from my experience, not from the world’s experience. Quite a few houses in my neighborhood have been converted to rentals. With a single exception — a house whose owners hire live in the city and pay a lawn service to care for the exterior — the properties have deteriorated quickly. This is not a lower-class neighborhood; it’s an ethnically diverse middle-class tract of single-family homes adjacent to a very upscale, old-money parkside district. Thus presumably the cost of renting here is not “lower-class.” The point is that when you don’ t have a vested interest in caring for a property, and indeed when you rightfully consider the property’s upkeep to be the landlord’s responsibility, you are going to do little or nothing to maintain it out of your own pocket. Nor should you. When out-of-state and out-of-the-country owners buy these houses, the properties go downhill because from the owners’ point of view, the houses are out of sight and out of mind.
To say that absentee landlords frequently allow properties to deteriorate and then sell them when they no longer can command enough rent to pay the mortgage is not the same as slamming the renters themselves.
I was thinking, we [most of us] will blame the absent owner of a property near us that has become a rental property. However, I had to caution myself, that appearances can be deceiving – it is possible that a local company was hired to care for the property and pick caring renters and the locals fell down on the job.
Either case is possible and I don’t think it makes any difference to the neighbors which it is since the result for the neighborhood is the same.
It is just more comforting to think that it is the fault of people from away.
I’ll just hope that the homes in your area improve and surprise you in a good way!!
Best of luck.