| WEDNESDAY, JULY 25 2007 06:00:00 PM |
| About a year ago, the News-Press got in trouble with some folks (we’re always so bad!) for publishing an exclusive report on declining trends in the regional real estate market that included expert insights from inside the realty business. Lots of real estate types got their knickers in a twist and protested loudly. Naturally, we published all their protestations in letters to the editor.
Well, we’ve seen what’s happened in the last year. It took barely more than a month for official data to confirm the thrust of our report. No one wrote us to apologize for trying to take us to the woodshed, so to speak, or to compliment our prescience. Now, the question is just how bad it is going to get around here before it starts to get any better. Talking to one prominent local developer, he says it can’t get any worse than it is right now. But that’s looking at it from a developer’s point of view: nothing is selling in the residential condo market right now, period. But the remarks this week of the CEO of one of the nation’s largest mortgage lenders suggests that it could get worse, maybe even a lot worse. This is not good news for the City of Falls Church, a jurisdiction that is overwhelmingly dependent on residential real estate taxes for its operating and school budgets. Countrywide’s Angelo Mozilo, in a widely-reported conference call with some of his top investors Tuesday following a steep decline in his company’s stock, said the market will get worse in the next year, and said the housing situation in the U.S. right now is the worst since the Great Depression. Any time a reference to the Great Depression is included in talk about the economy, it may be a time to shudder. The impact of the declining market on so-called “sub-prime” mortgages has been reported for a while, and statistics now show the percentage of sub-prime mortgage holders who are 30 days or more behind on their monthly payments has jumped from 15.3% a year ago to 23.7% now. Many have adjustable-rate, interest-only mortgages secured without a down payment and their monthly payment obligations are suddenly beginning to soar. Many planned to skate out of such a box by flipping their homes for a nice profit, but now are caught in a total bind as home values decline. But the most ominous news now is that “prime” mortgage holders are now also manifesting trouble. The percentage of those late on their first mortgage payments jumped from 2.1% to 3.4% in the last 12 months, and the percentage of those late on their prime home-equity loans, or second mortgages, has grown from 3.1% to 4.6%. Falls Church has not yet measured these trends since adopting its latest budget, according to City Hall, and won’t get a snapshot until October, at best. But brace yourself for what it may find by then. |
