Fore­clo­sures still abun­dant in Newton Co.

Un­em­ploy­ment, fall­ing home val­ues could lead to more fore­clo­sures in 2011

The Covington News - - Front page - By Gabriel Khouli gkhouli@cov­news.com

The re­ces­sion has cut so many jobs and so much value from Amer­i­can homes since it first struck in De­cem­ber 2007, it’s wiped out all the growth since 2000.

Av­er­age home val­ues in Metro At­lanta con­tinue to de­cline, drop­ping by nearly 3 per­cent in Oc­to­ber, ac­cord­ing to S&P/Case-Shiller Home In­dex, which uses re­peat sales data to com­pare his­tor­i­cal home prices.

At­lanta’s av­er­age home price has dropped by 6.2 per­cent in the past year, con­tin­u­ing a pre­cip­i­tous drop that leaves the av­er­age just above where it stood in Oc­to­ber 2000.

The Lost Decade

Joseph Flani­gan’s house is worth $52,000, less than a third of its peak ap­praisal in 2007.

Three years ago, a builder con­structed a house in So­cial Cir­cle and listed it for $602,000. He even­tu­ally lost it to fore­clo­sure and it sold for $250,000 at an auc­tion. “That hurts ev­ery­one in this area when it comes up in the comps,” said next-door neigh­bor Kath­lene Miller on Face­book.

And there’s also Michelle Autry, who is in dan­ger of los­ing her home af­ter be­ing be­hind on mort­gage pay­ments by about two years. She owes more than $120,000, but in a short sale, her house would likely only go for $40,000 to $60,000.

Autry has lived in her home on Liv­ingston Lane for about eight years. She’d pre­fer to stay there, but she re­al­izes that’s un­likely. She and her hus­band had man­aged to get Bank of Amer­ica to agree to a re­fi­nance plan, but when they saw that pay­ments would even­tu­ally bal­loon to $900 a month, they re­al­ized that would only de­lay the in­evitable.

They’re still wait­ing to see if a new agree­ment can be reached, but Autry, who is un­em­ployed and un­able to find work, is pre­par­ing for the pos­si­bil­ity of down­siz­ing to an apart­ment or even mov­ing back in with her par­ents.

Autry is one of a grow­ing num­ber of lo­cal res­i­dents, and home­own­ers across the coun­try, caught in the crunch be­tween chronic un­em­ploy­ment and tum­bling home prices.

If her house goes through a short sale, it will only con­trib­ute to the county’s de­clin­ing home sales prices. On av­er­age, homes in Newton County sold for 17 per­cent less in 2010 com­pared to 2009, ac­cord­ing to the Mul­ti­ple List­ing Ser­vice, which con­tains the ma­jor­ity of prop­er­ties on the mar­ket in Newton County. The av­er­age sales price this year, for both fore­clo­sures and reg­u­lar sales, was $90,617.

“Even if it’s not a fore­clo­sure, sell­ers have to price their house like a fore­clo­sure to sell. Peo­ple are look­ing at prices,” said RE/MAX bro­ker Mar­shall Ginn. “I think we’ll at least see as many fore­clo­sures as last year… 95 per­cent of what I sell is fore­closed prop­erty. That’s pretty much been the way it’s been for the past three to four years.”

The S& P in­dex is pre­dict­ing prices will drop by an ad­di­tional 7 to 10 per­cent in 2011, bot­tom­ing out in the spring.

In ad­di­tion, the United States’ econ­omy has lost 7.24 mil­lion jobs since its peak in De­cem­ber 2007, ac­cord­ing to data from fed­eral Bureau of La­bor Statis­tics. Based on data for De­cem­ber 2010, the econ­omy em­ploys 69,000 fewer work­ers than it did in Jan­uary 2000.

Though Newton County suf­fers from an un­em­ploy­ment rate higher than 12 per­cent, the lo­cal econ­omy still man­aged to net 10,000 jobs from Jan­uary 2000 to Novem­ber 2010.

In­vestors and eco­nomic fore­cast­ers pre­dict the econ­omy will add 2.5 mil­lion jobs in 2011, but be­cause of pop­u­la­tion growth, the U. S. un­em­ploy­ment rate is ex­pected to drop only slightly, to about 9 per­cent. Be­cause the of­fi­cial un­em­ploy­ment rate does not in­clude those who have stopped work­ing and those work­ing tem­po­rary or part-time jobs who would pre­fer full-time work, the true un­em­ploy­ment rate could be closer to 18 per­cent, ac­cord­ing to econ­o­mists.

The Year of Fore­clo­sures

Real­tyTrac, an on­line fore­clo­sure mar­ket­place, pre­dicts that 1.2 mil­lion homes could be re­pos­sessed in 2011, mark­ing the high­est to­tal since the hous­ing mar­ket col­lapsed.

About 5 mil­lion U. S. bor­row­ers are at least two months be­hind on their mort­gages, ac­cord­ing to a Jan. 13 story by the As­so­ci­ated Press, and in­dus­try ex­perts ex­pect more peo­ple to miss pay­ments be­cause of job losses and strate­gic de­faults, where bor­row­ers stop pay­ing on a home that’s worth far less than what they owe.

Al­though the worst of the sub­prime cri­sis has passed, long-term un­em­ploy­ment is con­tin­u­ing to drag more and more prime bor­row­ers into fore­clo­sure, as they have tapped out sav­ings ac­counts and in­vest­ment port­fo­lios. His­tor­i­cally, prime bor­row­ers could take out a sec­ond mort­gage us­ing the eq­uity in their home, but that’s not hap­pen­ing in 2011.

Wrap­ping up 2010

Al­though the fi­nal fore­clo­sure and sales num­bers for 2010 are not avail­able, Newton County ap­pears to be on track to match 2009 num­bers.

A to­tal of 1,745 fore­clo­sures have oc­curred in Newton County in 2010 through Novem­ber, com­pared to 1,889 in all of 2009. About one third of fore­clo­sures are va­cant lots, ac­cord­ing to data from the Newton County Tax As­ses­sor’s of­fice.

More than 70 per­cent of all fore­clo­sures were sold back into the mar­ket both years.

“ The biggest dif­fer­ence I see is in home fore­clo­sures from houses built from 2000 to cur­rent. That num­ber in­creased 15 per­cent from 2009 to 2010. That tells us al­most seven of ev­ery 10 homes in fore­clo­sure are only 10 years or newer in age. It also tells us older homes in well es­tab­lished neigh­bor­hoods are not los­ing value as much as these newer homes,” said Chief Tax Ap­praiser Tommy Knight in an email.

Knight said that dif­fer­ent neigh­bor­hoods in the county have been af­fected very dif­fer­ently. He said it’s quite pos­si­ble that some ar­eas will con­tinue to see val­ues drop more than 5 per­cent, while oth­ers will re­main sta­ble. The ma­jor­ity of fore­clo­sures have con­tin­ued to be in the western part of the county. His of­fice de­ter­mines val­ues us­ing only ap­pro­pri­ate neigh­bor­hood comps.

The county has about 29,000 to­tal homes, putting the fore­clo­sure rate on homes, not in­clud­ing va­cant lots, at about 4 per­cent. Fore­clo­sure re­sales rep­re­sent 81 per­cent of all res­i­den­tial sales in Newton County; while there have been about 300 reg­u­lar sales through Novem­ber 2010.

Brit­tany Thomas/The Cov­ing­ton News

Fall­ing val­ues: Michelle Autry is at rick of los­ing her home, which has de­pre­ci­ated to a frac­tion of it's orig­i­nal value. She is not alone in Newton County.

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