Housing market might be on the rebound, but foreclosure and negative equity rates still high

Zanesville Times Recorder - September 24, 2012

H. Sparling

ZANESVILLE — It’s part of the American Dream: a little house with a white picket fence.

But for more than a quarter of local homeowners, that dream isn’t worth much anymore.

In Muskingum County, 26 percent of homes are “underwater” or “upside-down,” meaning the owner owes more on the mortgage than the home is worth, according to CoreLogic, a data and analytics company that focuses on the housing and financial markets. Muskingum’s rate is just slightly higher than the statewide 25 percent.

There also were 425 foreclosure filings in Muskingum County in 2011, down from 530 and 540 in the two previous years, but still alarmingly high to many people in the real estate business.

For comparison, in 1995, there were only 78 foreclosure filings in Muskingum County, according to Policy Matters Ohio, a nonprofit research organization.

While the real estate market may be on the rebound, there’s still a long road ahead.

The bright side

Real estate groups are trumpeting recent successes and growth in the industry, and there is some truth to that. Home sales in Ohio were up 12.9 percent in the first eight months of 2012 compared to the same time a year ago, according to the Ohio Association of Realtors.

The average sale price also increased 4.4 percent during the same period, up to $135,336 in July.

In fact, Ohio has seen 14 consecutive months of sales gains when compared to 2011’s data.

But that’s only part of the story, said Carl Horst, OAR communications director. Those number are “a pretty good foundation,” but Ohio’s numbers regarding foreclosed and underwater homes are still too high for his taste, Horst said.

“(Fourteen) consecutive months of gains is a tremendous step forward, but certainly the marketplace here in Ohio and really across the country took a severe blow in 2008,” he said. “So, we’re making progress, but … we’ve got a long way to go.

“Our numbers (of foreclosed and underwater homes) are still way too high. We’re kind of working our way through that. That’s one of the things hopefully we can get remedied in the coming months.”

Fighting foreclosure

At the Empowering and Strengthening Ohio’s People office on Fourth Street, foreclosure prevention advocate Erin Gray is busy.

ESOP is a statewide nonprofit that offers free foreclosure counseling. Right now, Gray has about 80 active cases for homeowners in eastern Ohio, and that’s just her personal load, she said. There is another full-time foreclosure-prevention advocate at the Zanesville office, along with a part-time volunteer.

“We’re very busy. We don’t have time to scratch our heads and wonder what to do next,” Gray said. “The foreclosure crisis is not over, as far as our offices across the state can tell.”

Homeowners are driven to foreclosure by a multitude of reasons, including job loss, disability, the death of a partner or a major drop in income, Gray said. For her, she’s seen an uptick during the past few years in senior citizens facing foreclosure along with people with disabilities or excessive medical bills.

For some, “it’s a choice between their home and their medicine,” Gray said. “(Industry leaders) may see growth. We still see homeowners losing their homes. We still see homeowners going into foreclosure. So although jobs in this area are slowly trending upward, we still see those people who are having trouble making their mortgage payments.”

Gray and her ESOP cohorts provide several different services for homeowners. They’ll negotiate with lenders on homeowners’ behalf; they’ll help homeowners sift through paperwork to determine what documentation they need to provide; they’ll talk with homeowners about the different assistance programs available; and they will help them apply.

What they won’t do is offer legal advice, Gray said. For that, homeowners will have to go to an attorney.

For some homeowners, just having someone talk them through the process is all they need, Gray said. With all the different applications and the documentation required, such as proof of employment, income, or hardship letters, the process can be overwhelming and confusing, she said.

Statewide, ESOP boasts a 75 percent success rate in negotiating a resolution for homeowners facing foreclosure, whether that be through a loan modification, assistance from a government program or another option.

Little leniency

Once foreclosures have been filed, banks seem to be giving people a little more time than in years past before forcing them out of their homes, said J.B. Miller, Greater Ohio Mortgage operations manager. That way, at least, someone is paying the electric and water bills, he said.

But with lenders, Miller isn’t seeing much give, he said.

Miller works in Muskingum, Guernsey, Coshocton, Licking and Franklin counties, and during the past three years, he only remembers one homeowner who was able to get his loan modified, he said.

“My answer would have to be, ‘No, they are not willing to do things that would keep people in the house,'” Miller said.

To Miller, lenders’ refusal to budge on loans doesn’t make financial sense. He thinks lenders would make more if they renegotiated so homeowners could keep making payments rather than filing for foreclosure, but that’s not what he’s seeing, he said.

“To me it doesn’t make any sense. I just scratch my head on that one,” he said.

For people facing or nearing foreclosure, Miller’s best advise is to get an attorney, he said. Homeowners with attorneys have a much better chance of stalling the proceedings or renegotiating a mortgage, he said. If homeowners try to take on lenders themselves, “they will call and basically they’ll tell you they can’t help,” he said.

The government has made a point of addressing foreclosures, but from what Miller has seen, most of those programs aren’t getting great results, either. There are so many stipulations and so much red tape that few homeowners actually are getting the help they need, he said.

The thoughts behind the regulations and programs are good, but “a lot of hoops is the problem,” Miller said. “A lot of people get frustrated and basically say, ‘The heck with it.'”

To Miller, the future of the housing industry depends on jobs. When people are employed, they have money to buy homes and make mortgage payments.

Ohio has seen some improvement in its employment opportunities. During the first half of 2012, there were 60,069 new business filings, a slight increase from 56,883 filings during the same time period last year, according to the Secretary of State’s office.

Locally, Muskingum County is seeing growth with the addition of companies such as Halliburton and Fanatics Inc, which promise to add about 300 jobs each.

In July, though, Muskingum County’s unemployment rate still was the 13th highest in the state at 9.6 percent. The state unemployment rate was 7.2 percent in July and August, according to the Ohio Department of Job and Family Services.

Some people who have managed to find work aren’t earning the same level of pay and benefits they were before the recession, Miller said.

“I think we’ve got a ways to go” with the housing market, he said. “And I think it’ll come down to employment.”

A buyer’s market

The housing market peaked around 2006 or 2007, said Kevin McCollister, a broker with McCollister & Associates in Zanesville. Then, “obviously that had to correct itself,” he said, and the bubble burst.

The market seems to be climbing back now, but it’s still nowhere near where it was before the recession, and it probably won’t be for a few years, McCollister said.

What is happening now is that homes finally are starting sell, he said. At McCollister & Associates, pending inventory, homes that that are under contract to sell but have not yet closed, is twice what it’s been in the past few years, McCollister said. That’s something that just started picking up as recently as March, he said.

Why? McCollister isn’t sure.

“But the market can’t be terrible forever,” he said. “Prices have come down, and I think finally they got to a point with low prices and low interest rates that stimulate people to go ahead and take advantage of a buyer’s market.”

McCollister just hopes the recent sales uptick is a trend that continues and not a short-term spike, but it’s still too early to tell, he said.

Lisa Wellman has experienced firsthand the increase in homes being sold. Wellman has been house hunting in Zanesville since June 11, when she started her job as health and safety manager at glassmaker O-I on State Street.

Wellman was relocated from Weston by her company, so her husband still is there trying to sell that house while Wellman is here trying to find a new one, she said.

Wellman’s problem is that it seems every time she finds a great house, one she’d like to make an offer on once hers sells, someone else buys it first.

“It’s definitely an up and down roller coaster ride,” she said. “Every time we find something, it sells.”

From what she’s heard, part of that may be due to the growing market for Utica Shale drilling, Wellman said. As businesses such as Halliburton move into the area, there’s a greater demand for housing, and “things that weren’t selling before maybe are now,” she said.

Rich Davis is hoping some of those potential buyers check out his Philo home, which he decided to put on the market a few weeks ago so he and his wife can move into something bigger.

Davis didn’t enlist a real estate agent; he just stuck a “For sale by owner” sign in the front yard and he plans to see what happens, he said. So far he’s only had a few calls about the home, but he’s not in a hurry, Davis said.

“We’re just going to wait and see what happens. If I have to, I’ll list it through a Realtor,” he said. “What’s going to put the pressure on me is if (my wife and I) find something we like. Then we’ll have to do something.”

Davis is experiencing the market from both sides, as a buyer and a seller, and to him, the buyer’s life is a little more carefree, he said.

“I just don’t think the economy is back to normal, and it’s tough for everyone,” he said. “That’s what I see.”

Housing market might be on the rebound, but foreclosure and negative equity rates still high

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