Short Sales and Confusion Over First Time Buyer Credit Rules

As we suggested some time ago, the percentage of home sales that are short sales continues to increase along with the amount of bank owned property sales, although the inventory being held by the big banks defies logic. It seems as though any measure to artificially inflate home prices and prevent a full free market correction from happening is acceptable. The foreclosures continue to climb, even in the higher ends of the market, with the Assistant Secretary for Financial Institutions, Michael S. Barr admitting,

[W]e recognize that any modification program seeking to avoid preventable foreclosures has limits, HAMP included. Even before the current crisis, when home prices were climbing, there were still many hundreds of thousands of foreclosures. Therefore, even if HAMP is a total success, we should still expect millions of foreclosures, as President Obama noted when he launched the program in February. Economic populist

The Baltimore Sun reports that fully one third of home sales in the area are properties selling for less than the original purchase price.

More than a third of the Baltimore-area homes bought this decade and then resold between January and June changed hands for less than their previous purchase price, according to a Baltimore Sun analysis of state assessment data. In 2008, 19 percent sold for a loss. In 2007, it was just 5 percent. Baltimore Sun

A number of luxury real estate firms are seeing the light and aware of the specialized nature of dealing with short sales, setting up specific divisions to deal with them. The latest to launch a specialized short sale division is Michael Saunders in Sarasota.

Rejoining Michael Saunders & Company as the new division’s Lead Account Manager is Cristy Carrington Lewis. Lewis will combine her experience as an award-winning real estate agent with a focused legal background that includes extensive experience facilitating short sales for a Sarasota law firm. “Our goal is to unburden our clients and their agents from the massive amount of time and effort it currently takes to facilitate a short sale,” Lewis says. “Ultimately, our mission is to make sure that everything possible has been done on their behalf to complete a timely and successful short sale transaction.” All things real estate

Continuing confusion and delays over the first time buyer credit are sending mixed messages to the market – especially when these are mixed up with a complex short sale procedure and suggestions that the credit may be extended or increased are not helping.

Internationally, the lawsuits are still flying – in Germany, after the German authorities forced minority shareholders to sell out their Hypo Real Estate Bank holdings after a $150 billion bailout – J.C. Flowers has filed suit alleging that the squeeze-out violates laws protecting the right of ownership. Bloomberg

Across in Great Britain, the Bank Of England has just been given the go ahead to continue printing money out of thin air, with Gordon “no more boom and bust” Brown, stating that he will be selling government assets to the tune of £16 billion. I am not really sure how this makes any sense when the BoE is busy printing £175 billion.

Property sales in the UK have all but stalled, down some 80% from peak, with the entire country holding their breath to see if an extra 175 billion pounds injected into the wealthiest pockets in the country will help prevent prices from falling below five times average salaries.

Unemployment is still rising – with more than one million young people between the ages of 16-24 now unemployed. Still – no doubt the assurance that no matter what the government is determined to ensure they will never be able to afford to buy a home of their own should go some way to alleviating the rising levels of dissatisfaction amongst the younger members of society.

On a more positive note, the commercial property investors in Europe are having a field day – at least those with cash to spend. and commercial investment bounced back up from a low last quarter to almost E18 billion as vulture funds began picking of distressed properties, especially in the hardest hit markets. I wouldn’t say the problem is completely over and I wouldn’t call a return to this level of investment a “flood,” as some pundits are doing, but it certainly is a step in the right direction. I will be waiting until after Christmas to see how many retailers bite the dust before calling bottom. According to Jones Lang LaSalle in Budapest:

“In line with the general outlook in Europe, the summer has shown a encouraging trend in Hungary with the closing of few large deals. It is not fantastic but we want to see a signal that institutional investors are looking again at opportunities” Benjamin Perez-Ellischewitz