Re: Foreclosures and short sales
From: Diana Carroll (dianaecarrollgmail.com)
Date: Wed, 11 Feb 2015 10:40:50 -0800 (PST)
25% out of 29 is a statistical anomaly but not statistically significant
enough to demonstrate that it isn't random.

But, more relevant the this discussion, I actually think there are
cohousing-specific factors that come into play.  Again, I don't know
anything about the situation at Yulupa, so I won't speak for them...but I
know a lot about our situation here at Mosaic Commons, in MA.  So far, we
have not had any foreclosures other than three units that the developer was
unable to sell (developer foreclosures are a very different beast than
owner foreclosures), but I suspect we are at above-average RISK for
foreclosures for lots of reasons other than a lack of financial savvy on
the part of our buyers:

1.  Home prices.  Our homes become ready for purchase in late 2008/early
2009...just about the time the bottom fell out of the housing market.  But
the cost of the homes didn't drop -- they were built for a price that made
sense in 2007, and no longer did in 2009...then what?  Those of us who had
been involved in the project's formation had already sunk big bucks into
the project and the only hope we'd EVER get our money back out was by
buying the house and praying.  There's no way at all outside of cohousing
that I would ever have willingly purchased a house priced 50-70% above
market value!  But I was part of the developer org, and I and my fellow
developers would have been f--ked I or others like me had bailed.  The
result is that I have a house that's over $100K underwater, at a higher
than market mortgage rate (5.5%).  Fortunately my family is doing okay and
we can continue to pay for the house at the rate we budgeted for from the
start.  BUT...should we lose a job or myself or my husband die or
whatever...we would be totally UNABLE to sell or refinance the house.
Voila: foreclosure or short sale.

2.  Subsidized housing.  Here at Mosaic, 20% of our homes are part of our
state's affordable housing program, and priced well below market rate.  In
order to qualify to buy these homes, buyers had to meet VERY STRICT income
and asset limits.  Almost by definition they don't have any "margin",
because if they had, they wouldn't have qualified.  All these buyers were
required by the state to take special home buyer classes to qualify, so
they are better educated than most...and yet still at higher risk of
foreclosure simply because of how the rules work.

3.  Higher than anticipated condo fees.  Our initial condo fees were lower
than they ought to have been, in part because we were self-developed and
had to do our best as estimating them long-term...but also because our
project was so financially "distressed" at the end that the contractor cut
lots of corners...corners that turned out to (of course) cost us money in
ways we didn't anticipate.  (For example, our roads and paths are
deteriorating faster than predicted, likely because the contractor used
very poor materials and didn't do proper prep...and now we have to increase
our condo fees to pay for repaving.)  In the 6 years since we moved in, our
condo fees have approximately doubled, and we sure didn't expect that.

Anyway, as i said, no owner foreclosures yet (knock on wood) but I'm kind
of holding my breath.  :-/

Now....DEVELOPER foreclosures...that's a whole different ugly story...

D

On Wed, Feb 11, 2015 at 11:24 AM, R Philip Dowds <rpdowds [at] comcast.net>
wrote:

>
> Actually, that was not my assumption.  Instead, I was calling attention to
> the fact that a 25% forced sale rate was five or six times the national
> average during the recession.  Something made this particular development a
> statistical anomaly.  It might have been a cancer cluster, but I don’t
> think so.
>
> RPD
>
> > On Feb 11, 2015, at 10:57 AM, Diana Carroll <dianaecarroll [at] gmail.com>
> wrote:
> >
> > I'm all in favor of homebuyer education and other measures you
> > mention...but I wanted to call out your assumption that a foreclosure
> ipso
> > facto means someone was "unrealistic about housing costs".   That's just
> a
> > variation on the standard stigma of poverty, that the problem lies within
> > the person.
>
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