Housing Woes Extend Beyond The Subprime Market

From the New York Times:

Nearly a year after the mortgage meltdown became front-page news, the Schneiders’ travails reflect how the nation’s housing woes have moved beyond subprime borrowers in working-class neighborhoods and into the realm of upper-middle-class homeowners.

Last week, a new report showed that house prices nationwide were off 14.1 percent from a year ago, while the Commerce Department said sales of new homes remained near their lowest levels since 1991.

Sales of existing homes here are down 22.5 percent from the first quarter of 2007, according to G. Donald Jud, a University of North Carolina economist who tracks the market for local Realtors, compared with a 21.7 percent drop in home sales nationally. Unemployment in the Greensboro area averaged 5.1 percent in April, versus 5 percent nationwide. The mortgage delinquency rate of 4.04 percent, meanwhile, is nearly identical to the country’s rate, 4.35 percent.

“In some ways, Greensboro got caught up in the national housing boom,” Mr. Jud says. “The market is still weakening, inventories are growing and sales prices are dropping.” Across the nation, foreclosures are expected to keep rising, flooding the market with more homes.

In Greensboro at the end of the first quarter, nearly 2,500 homes were on the market, up nearly 12 percent from December. While sales of properties valued at less than $150,000 are down 13.3 percent from a year ago, sales of homes between $150,000 and $350,000 are off more than 27 percent.

The one exception to this otherwise sobering picture is Irving Park, a gracious neighborhood where some of Greensboro’s original tobacco and textile heirs still reside. Like other wealthy enclaves such as Menlo Park, Calif., Irving Park has escaped much of the downdraft affecting outlying suburbs like Summerfield, where the Schneiders’ home is for sale.

“Hopefully, we can buy enough time to sell off their properties.”

To make matters worse, these outlying suburbs were built on the premise of cheap gasoline, says Keith G. Debbage, a geography professor at the University of North Carolina at Greensboro who tracks the local economy. Oak Ridge and Summerfield are bedroom communities, he notes, and many commuters drive 30 to 45 minutes each way to jobs in Greensboro and Winston-Salem. Now reality has caught up with the hopes that animated so many real estate markets around the country. “We’ve kind of gone back to the old days,” says Christie Caldwell, who has worked as a mortgage broker in Greensboro since 1986. Kavanagh Homes, a local builder that specializes in the middle and low end of the market, has cut its work force by half. Mr. Alexander, 48, grew up in Irving Park and still enjoys driving past fashionable addresses like Country Club Drive, telling stories about Greensboro’s old-money families, like the Cones, who founded Cone Mills and made the denim for Levi’s jeans. “New money has flooded into the neighborhood, with younger people buying older homes and tearing them down,” Mr. Alexander says. Sitting in the Sunset Bar of the Greensboro Country Club, Gary Jobe is still enthusiastic about Irving Park, especially the profitability of pulling down older homes on big lots and putting up one, or sometimes two, in their place. A third-generation Greensboro builder with a high-end clientele, Mr. Jobe’s business in Irving Park is thriving.

Mr. Debbage says the very top end of the market in Irving Park is unlikely to feel anywhere near as much pain as newer, middle-class neighborhoods. For those in Greensboro who are less fortunate than many residents of Irving Park, this is a time of waiting. Not just for all those empty houses to start selling again, or for gas prices to drop. LOCAL residents are also talking up the opening of two projects they hope will replace some of the high-paying jobs lost when the domestic textile industry foundered. Driving down the country roads near his horse farm in Oak Ridge late last year, David Tolbert spotted a sign announcing an auction by a local builder who’d run into trouble. He ended up buying the house — the four-bedroom that Mrs. Tillman is now trying to sell for him. Like the Schneiders, Mr. Tolbert had always quickly sold his past homes for more than he’d paid.

 

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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