Sunday, June 25, 2006

A'Rash Of Foreclosures' In South Bend

The Chicago Tribune reports on foreclsoures in Indiana. "The symbol of Notre Dame University, described by the school as "the world's most recognized campus landmark," stands watch over an area where real estate prices are crumbling at nearly the fastest rate in the country. The 10.2 percent year-over-year drop in first-quarter home prices, to a median of $81,800, provided something of a shock recently when it was reported by the NAR."

"But South Bend realty agents and sellers say the problem isn't simply that house prices are tumbling. They say the city has been victimized by a rash of home foreclosures. 'We have been hit very hard by foreclosures. But if you exclude that factor, house prices have been very steady, rising by 2 percent or 3 percent a year,' said Marsha Lambright, an agent in Mishawaka, which adjoins South Bend."

"Some homeowners take out two loans on a house, she said, and end up owing 130 percent of what it is worth, before lending institutions move in and they face eviction. Signs are seen on some South Bend houses that say 'public auction' or 'sale forced by lender.'"

"Because of the rash of foreclosures, Lambright said, 'investors are a big category here. They buy the houses in a sheriff's sale and fix them up for resale.'"

"Looking through the local listings, there are plenty of eye-popping deals. For instance: Roomy 2-bedroom ranch house, over 1,300 square feet. Nice-size family room, laundry area, garage. $38,000. Drastically reduced: Three-bedroom house with two full baths, 5 minutes from Notre Dame campus. Taxes $445 a year. Will give $1,000 toward new flooring. $99,999."

"While such offers may have a ring of desperation, most sellers remain confident, even if they sense that they might not get their asking price. Kenneth Parmelee is offering his ranch house, about two miles north of the Notre Dame campus, for $147,000. 'We're not worried about selling, because we aren't in any hurry,' said Parmelee. 'We will hold an open house and, no matter what, we will still make money when we sell,' he said."

"The problem of home loans going into default has caused Indiana to be dubbed the foreclosure capital of the country, a title it recently lost to Georgia. However, as industrial jobs have vanished, cities such as South Bend and Elkhart, which is about 25 miles away, have watched residents lose income."

"Many are unable to keep up with monthly house payments, especially as they face a need to refinance adjustable-rate mortgages. 'ARMs are a ticking time bomb," said Brad Geisen, of property tracker Foreclosure.com. 'Through 2006 and 2007, I'm pretty sure we'll see a high volume of foreclosures.'"

"'The availability of easy credit made it easy for them to buy houses that proved to be more than they could afford,' he said."

"'We're clearly seeing a buyer's market emerge, but the question that remains is how far will it go?' Geisen said, adding that all the foreclosures are creating 'a lot of opportunities for investors.'"

"One problem for the South Bend area is that it takes upwards of two hours to get there from the Loop. That means it misses out on the huge second-home market that lies just to the north and west, along Lake Michigan in Indiana and southwest Michigan. Such hot spots as New Buffalo, Mich., command top dollar from Chicago buyers."

"As for people from Chicago looking for bargains in South Bend, agent Anita Hildebrecht said one couple from Lake in the Hills sold their modest home for $250,000 after seeing a much larger house in South Bend, for about the same money. 'The house they bought had all the trimmings, including four bedrooms and a finished basement,' she said."

2 Comments:

At 4:27 PM, Blogger diemos said...

Ben,

You must put this on the housing bubble blog.

'We have been hit very hard by foreclosures. But if you exclude that factor, house prices have been very steady, rising by 2 percent or 3 percent a year,' said Marsha Lambright, an agent in Mishawaka, which adjoins South Bend."

I can't wait to see them rip apart this realtor speak. Our market is doing great, once you ignore all the foreclosures.

 
At 7:46 PM, Blogger Nick Molnar said...

I saw thie Chicago Tribune article too, and found it curious. Can you shed any insight on what a "rash" of foreclosures is? How does South Bend's foreclosure rate actually compare to other cities in the region and the country? If the number of foreclosures is significantly higher than other places, why?

The article seems long on anecdotes and quotes, but short on sourced statistics, tracking of individual properties, and analysis of root causes. Can you add any insight?

 

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