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September 2006 |
A Publication of ELLIOTT®
& Company Appraisers |
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HIGHER
DELINQUENCY RATE SOARS
LEAD TO MORE FORECLOSURES |
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 Higher
delinquency rates in home equity loans are leading to more
foreclosures.
Moody’s Investors Service reported recently that the delinquency
rate in the home equity loan market increased 11% for the quarter,
which ended in April, compared to the rate in the same quarter of
last year. Almost 7% of home equity loans are delinquent, according
to Moody’s report. It marked the 11th consecutive month that the
home equity delinquency growth rate increased.
"The home price drop-off has been aggravated by the rising inability
of current and potential homeowners to fulfill loan obligations,"
said Moody’s executive Ben Garber. "The rising rates of these
delinquencies portend a period of nominal home price deflation, the
extent of which will determine whether or not the U.S. economy will
be able to experience a soft landing."
RealtyTrac, which bills itself as the No. 1 database of
preforeclosure, auction and REO properties, reported one new
foreclosure for every 425 U.S. households during the second quarter
of 2006. That figure is higher than any from last year. Colorado had
the highest ratio of all states in the second quarter with one new
foreclosure for every 158 households. Georgia had one per every 202
households and Texas had one for every 203 households.
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APARTMENT POPULARITY
INCREASES AS CONDO MARKET DROPS |
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 Builder
confidence in the apartment market reached record highs in this year’s
second quarter as builder confidence in the condominium market dropped.
While vacancy rates for apartments are falling and rents are rising,
there is an oversupply of unsold condo units.
Builders say that this trend was caused, in part, by the recent
transformation of apartment units into condominiums. Many of these same
builders are urging local governments not to require such large numbers
of low-income apartments that it would squeeze up rental pricing for
higher end apartments.
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COSTS TO BUILD A
HOME RISING SIGNIFICANTLY |
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According to a report from the
Bureau of Labor Statistics and the Associated General
Contractors of America, the cost of building materials used for
homebuilding rose by 8% from July 2005 to July 2006. The largest
increases in that time period were in the costs of copper and
brass, which surged 88% during that time period.
Last year there was a shortfall in copper production.
Speculators then bought up copper and drove up its price.
Experts estimate that about 440 pounds of wire is used in a
modest single-family home; 200 pounds in wire and 175 pounds in
pipe and plumbing fixtures. High copper prices are expected to
remain in effect for several years. Copper is a significant
ingredient in the production of brass.
Other increases that increased the cost of homebuilding were
those in the prices of gypsum boards (27%), plastics (20%) and
cement (11%).
Housing costs for borrowers went up 4% during this period. |
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QUOTES OF WIT &
WISDOM |
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"The stupid neither forgive nor
forget; the naïve forgive and forget; the wise forgive but
do not forget." -- Thomas Szasz
"Education is a progressive discovery of our own ignorance."
-- Will Durant
"The reason why so few good books are being written is that
so few people who can write know anything."
-- Walter Bagehot
"Fear is that little darkroom where negatives are
developed."
-- Michael Pritchard
"Half our life is spent trying to find something to do with
the time we have rushed through life trying to save."
-- Will Rogers
"Every mistake has a halfway moment, a split second when it
can be recalled and perhaps remedied."
-- Pearl Buck
"The dead cannot cry out for justice; it is a duty of the
living to do so for them." --
Lois McMaster Bujold
"Habit is not to be flung out of the window, but coaxed
downstairs one step at a time."
-- Mark Twain
"The foolish man seeks happiness in the distance; the wise
man grows it under his feet."
-- James Oppenheim
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